CITY OF DRAPER, UTAH COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDING - JUNE 30, 2017

Transcription

1 CITY OF DRAPER, UTAH COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDING - JUNE 30, E. Pioneer Road, Draper, UT P: (801) Draper.ut.us

2 CITY OF DRAPER State of Utah COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 PREPARED BY: DRAPER CITY FINANCE DEPARTMENT

3 Table of Contents TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal... i List of Elected and Appointed Officials... iv Other Bodies Under the Direction of the City Council... v Organization Chart... vi FINANCIAL SECTION Independent Auditor s Report... 1 Management s Discussion and Analysis... 4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position Statement of Activities Governmental Funds Financial Statements Balance Sheet Governmental Funds Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds to the Statement of Activities Proprietary Funds Financial Statements Statement of Net Position Proprietary Funds Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Notes to the Financial Statements Required Supplementary Information Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Redevelopment Agency Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Municipal Building Authority Schedule of Proportionate Share of the Net Pension Liability Schedule of Pension Contributions Notes to the Required Supplementary Information Supplemental Information Combining Balance Sheet Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances Major Capital Projects Fund Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Fire Impact Fee Capital Projects Fund Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Transportation Impact Fee Capital Projects Fund Budget and Actual Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

4 Table of Contents Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Park Impact Fee Capital Projects Fund Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Police Impact Fee Capital Projects Fund Budget and Actual Schedule of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Traverse Ridge Special Service District Special Revenue Fund Budget and Actual STATISTICAL SECTION Financial Trend Data Schedule 1 - Net Position by Component Schedule 2 - Changes in Net Position Schedule 3 - Fund Balances Governmental Funds Schedule 4 - Changes in Fund Balances Governmental Funds Revenue Capacity Data Schedule 5 Tax Revenues by Source Governmental Funds Schedule 6 - Assessed Value and Estimated Actual Value of Taxable Property Schedule 7 - Direct and Overlapping Property Tax Rates Schedule 8 - Property Tax Levied and Collected Schedule 9 - Principal Property Tax Payers Schedule 10 - Direct and Overlapping Sales Tax Rates Schedule 11 Principal Sales Tax Payers Debt Capacity Data Schedule 12 - Ratios of General Bonded Debt Outstanding Schedule 13 - Ratios of Outstanding Debt by Type Schedule 14 - Direct and Overlapping Governmental Activities Debt Schedule 15 - Legal Debt Margin Information Schedule 16 - Pledged Revenue Coverage Demographic and Economic Information Schedule 17 - Demographic and Economic Statistics Schedule 18 - Principal Employers Operating Information Schedule 19 - Full Time Equivalent City Government Employees by Function/Program Schedule 20 - Operating Indicators by Function/Program Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

5 Introductory Section INTRODUCTORY SECTION Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

6 Troy Walker, Mayor William Rappleye, Council Member Jeff Stenquist, Council Member Alan Summerhays, Council Member Marsha Vawdrey, Council Member Michelle Weeks, Council Member November 21, East Pioneer Road Draper, Utah Phone: (801) Fax: (801) Website: To the Honorable Mayor, Members of the City Council and Citizens of City of Draper: The Comprehensive Annual Financial Report (CAFR) of the City of Draper, Utah for the fiscal year ended June 30, 2017 is submitted herewith. This report has been prepared by the City s Finance Department in accordance with Generally Accepted Accounting Principles (GAAP) and audited in accordance with Government Auditing Standards by a firm of licensed certified public accountants. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures and supplementary information, rests with the City s management. State law requires that general-purpose local governments publish a complete set of financial statements in accordance with GAAP within six months of the close of each fiscal year. State law also requires that the report be audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. As required by State law, Draper City s financial statements have been audited by Hansen, Bradshaw, Malmrose, and Erickson PC, a firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements for the fiscal year ended June 30, 2017 are free of material misstatements. The audit involved examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded that there was a reasonable basis for rendering an unqualified opinion of the City s financial statements for the fiscal year ended June 30, Their report is included in the financial section of this report. GAAP require management to provide a narrative, introduction, overview and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City s MD&A immediately follows the independent auditors report. To provide a reasonable basis for making these representations, the management of Draper City has established a comprehensive internal control framework that is designed both to protect the government s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of Draper City s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, Draper City s framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material Page i

7 misstatement. As management, we assert that to the best of our knowledge, this financial report is complete and reliable in all material respects. City s Profile The City of Draper, Utah was incorporated on February 22, The City has a population of approximately 47,328, making it the 16 th largest city in the state and a city of the third class, as defined by the State of Utah. At build-out, the City is projected to have a population of 75,000. Draper City is located within the Salt Lake metropolitan area, and is approximately square miles in size. The City provides a full range of services to its businesses and residents. These include police and fire protection, culinary water, storm drain, solid waste and recycling collection and disposal, construction and maintenance of roadways, parks and recreation facilities, street lighting, and Draper Days along with other community and cultural events. Draper City operates under the council-manager form of municipal government. The City Council is the legislative branch of the city government and is composed of the mayor and five council members. The term for each of these elected offices is four years. The City Council is responsible for passing ordinances, adopting the budget, appointing the city manager and other city officials required through state or local policy to be appointed by council. They are also responsible for appointing committees. The city manager serves as the chief administrative officer responsible for directing the day-to-day operations of city affairs, and the implementation of City Council ordinances and policies as adopted. As the City Council s chief advisor, the city manager prepares a recommended budget for Council s consideration and recruits, hires and supervises city staff. Utah state law requires the City to adopt a budget for all funds on an annual basis, and requires that all funds maintain a balanced budget, with some limited exceptions. State law also requires that departmental expenditures do not exceed appropriate funding levels, except in cases of emergency (such as a natural disaster). Authority to revise the approved budget rests with the City Council, which may be accomplished following the completion of noticing and hearing requirements. Economic Condition Job growth continued for the year with companies like Dell EMC and Edwards adding hundreds of jobs, and Alliance Data Systems announcing a new building in Draper with over 815 jobs. The Larry H. Miller Ford dealership opened during the year resulting in new sales tax revenue to the city. And their new Mercedes dealership is under construction and is expected to open in December A few other new retailers also opened new stores, including Ace Hardware and Honeybee grocery store. While the rate of growth in the retail sector has slowed down compared to previous years, the long-term economic development outlook remains positive as the City sees continued interest and growth from new businesses, as well as expansion from current companies. Page ii

8 Long-term Financial Planning The City has taken and will continue to take significant steps to address long term financial stability. Some of these are: Revenue diversification Reviewing fees for service to reflect the cost of that service s delivery Continuing the funding of the infrastructure maintenance program Continuing the funding of reserve accounts Targeting expenditure reductions to match community priorities Continuing to follow conservative financial practices and policies Supporting innovation to promote continuous improvement All of these were accomplished while continuing to focus on the City s long-term strategic vision and priorities. The City has been judicious in the use of debt financing, and as such has positioned itself to be able to take advantage of low interest rates and low construction costs to fund infrastructure and other city facilities if needed. Relevant Financial Policies Cash during the year was invested in the Public Treasurer s Investment Fund and certificates of deposit. The City s investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. The City s bank deposits are uncollateralized and insured up to $250,000 per institution by the FDIC. Utah operates under state statute allowing investments to be uncollateralized if state guidelines are followed. The City is self-insured for unemployment costs. The City is also self-insured to $7,500 for general liability. The City is a member of the Utah Risk Management Mutual Association, which provides general liability coverage for claims in excess of the self-insured amount up to $6,000,000. The City pays unused vacation, holiday, and compensatory time balances at termination. Acknowledgements The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated service of the entire staff of the Finance Department. Each member of the Department has our sincere appreciation for the contributions made in the preparation of this report. In closing, without the leadership and support of the City Council, preparation of this report would not have been possible. Respectfully submitted, David Dobbins City Manager Bob Wylie Finance Director Page iii

9 LIST OF ELECTED AND APPOINTED OFFICIALS Introductory Section Elected and Appointed Officials ELECTED OFFICIALS Mayor..... Troy Walker City Council Member.. William Rappleye City Council Member......Jeff Stenquist City Council Member.. Alan Summerhays City Council Member Marsha Vawdrey City Council Member... Michelle Weeks APPOINTED OFFICIALS AND DEPARTMENT HEADS City Manager..... David Dobbins Assistant City Manager Russell Fox City Attorney...Mike Barker City Engineer..... Scott Cooley City Recorder..... Rachelle Conner City Treasurer.... Lourdes Ramos Community Development Director Vacant Finance Director... Robert Wylie Human Resources Director.. Hazel Dunsmore Information Technology Director... Steven Alsop Justice Court Judge. Daniel Bertch Police Chief... Bryan Roberts Public Works Director... Glade Robbins Recreation Director Rhett Ogden Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page iv

10 OTHER BODIES UNDER THE DIRECTION OF THE CITY COUNCIL Introductory Section Other Bodies BOARDS Appeals Board Board of Adjustment Emergency Preparedness Executive Committee Equestrian Center Advisory Board Municipal Building Authority Board Redevelopment Agency Board Youth Council Advisory Board Traverse Ridge Special Service District Administrative Control Board (TRSSDACB) COMMISSIONS Planning Commission Tree Commission Historic Preservation Commission COMMITTEES Parks, Trails and Recreation Committee Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page v

11 Introductory Section Organization Chart ORGANIZATIONAL CHART CITIZENS OF DRAPER CITY, UTAH MAYOR AND CITY COUNCIL CITY MANAGER CITY MANAGER COMMUNITY DEVELOPMENT FINANCE FIRE HUMAN RESOURCES ASSISTANT CITY MANAGER INFORMATION TECHNOLOGY SERVICES LEGAL POLICE PUBLIC WORKS PARKS & RECREATION CITY RECORDER BUILDING COURTS Fire Operations EMERGENCY PREPAREDNESS PROSECUTOR ANIMAL CONTROL FACILITIES TRAILS ECONOMIC DEVELOPMENT BUSINESS LICENSING TREASURER Ambulance RISK MANAGEMENT PEER COURT ENGINEERING PARKS GIS CODE ENFORCEMEN T UTILITY BILLING FLEET SPECIAL EVENTS PUBLIC RELATIONS PLANNING PURCHASING SOLID WASTE RECREATION PROGRAMS STORM WATER CEMETERY STREETS WATER Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page vi

12 Financial Section FINANCIAL SECTION Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

13 Hansen, Bradshaw, Malmrose & Erickson A Professional Corporation CERTIFIED PUBLIC ACCOUNTANTS 559 West 500 South Bountiful, Utah Fax E. Lynn Hansen, CPA Clarke R. Bradshaw, CPA Gary E. Malmrose, CPA Edwin L. Erickson, CPA Michael L. Smith, CPA Jason L. Tanner, CPA Robert D. Wood, CPA Aaron R. Hixson, CPA Ted C. Gardiner, CPA Jeffrey B. Miles, CPA Donald M. Jack, CPA Members of the American Institute of Certified Public Accountants Members of the Private Company Practice Section Independent Auditors Report Honorable Mayor and Members of the City Council City of Draper, Utah Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Draper, Utah ( the City ), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements The City s 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. 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 auditors 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 City 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 City 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. Page 1

14 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 businesstype activities, each major fund, and the aggregate remaining fund information of City of Draper, Utah, as of June 30, 2017, 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 4-15, the budgetary comparison information on pages 58-61, and pension schedules on pages 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 City s basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison information, and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and budgetary comparison information 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 combining and individual nonmajor fund financial statements and budgetary comparison Page 2

15 information 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 9, 2017 on our consideration of the City 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 the City s internal control over financial reporting and compliance. November 9, 2017 Page 3

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17 Financial Section Management s Discussion and Analysis MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2017 Draper City Corporation s management presents to the readers of its financial statements this narrative information. It contains an overview and analysis of the financial position and results of operations as of and for the twelve months ended June 30, As management of the City, we encourage readers to consider information contained in this discussion and the City s financial statements, which follow this section. Financial Highlights The assets and deferred outflows of resources of the City exceeded the liabilities and deferred inflows at the close of Fiscal Year 2017 (FY2017) by $519,598,673 (net position). Of this amount, $70,284,694 is in unrestricted net position which is available to meet ongoing obligations. Draper City s net position increased by $19,011,914. Of this increase, $15,415,655 is attributable to governmental activities. Business-type activities accounted for $3,596,259 increase to the City s net position. FY2016 financials have been restated to reflect prior period capital asset adjustments. Governmental activities had an adjustment of $9,437,465, water fund had an adjustment of ($1,094,006) and the storm water fund an adjustment of ($1,624,977). These adjustments reflect properly the contributions from developers. FY2017 General Fund final revenues before other financing sources was $35,461,227. This is an increase of $2,278,166 (or 6.87%) over the prior FY2016. Revenues from taxes continued to be the largest source of the increase which accounted for $2,006,180 of the increase. Overall, tax revenues increased by 8.7%. Actual expenditures for operations in the General Fund were $32,106,798 before other financing uses. All departments within the general fund came in under budget. The excess of revenues over expenditures within the general fund was $3,354,429 before other financing sources (uses). The net other financing sources (uses) was $177,240. This resulted in a net change in fund balance of $3,531,669. The outstanding bonds at year-end decreased by $2,738,666 after scheduled bond payments and refunding one bond, leaving total bonds payable at $38,953,917. The city also had outstanding notes payable of $11,902,317. Report Overview This discussion and analysis is intended to serve as an introduction to the City of Draper s basic financial statements. The City of Draper s basic financial statements comprise three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplemental information and other supplementary information in addition to the basic financial statements themselves that will help the reader to gain a more in-depth understanding of the City. Government-wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of the City of Draper s financial position as well as changes in financial position. This is similar to consolidated financial statements in a private sector business. The statements consist of the Statement of Net Position and the Statement of Activities. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 4

18 Financial Section Management s Discussion and Analysis (continued) The Statement of Net Position presents information on all of the City of Draper s assets and liabilities, with the difference between the two reported as net position. An increase or decrease in net position over time may be used as an indicator of whether the financial condition of the City is improving or declining. The Statement of Activities presents information on how the City of Draper s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses reported in this statement for some items will result in cash flows in future fiscal periods (e.g., debt interest payment when the fiscal year ends between interest payments). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety (police & fire), streets, planning, economic development, and parks and recreation. The business-type activities of the City include culinary water, storm drain, sanitation, and ambulance. The government-wide financial statements include not only the City of Draper (the primary government), but also three legally separate component units, the Municipal Building Authority of the City of Draper, the Redevelopment Agency of the City of Draper and Traverse Ridge Special Service District, for which the City is financially accountable. Financial information for these blended component units are presented with the financial statements for the City. The government-wide financial statements are found immediately following this discussion and analysis. Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by State law and/or bond covenants. All of the City s funds can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - Most of the City s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. The funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short- term view to cash, as well as to the basic services and operations of the governmental funds. Governmental fund information helps to determine whether there are changes in the financial resources available to finance the City s programs in the near future. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are described in the reconciliations after the fund financial statements. The City maintains the following ten (10) individual governmental funds: General Municipal Building Authority Capital Improvement Projects Fire Impact Fee Transportation Impact Fee Park Impact Fee Police Impact Fee Redevelopment Agency Cemetery Permanent Fund Traverse Ridge Special Service District (special revenue) Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 5

19 Financial Section Management s Discussion and Analysis (continued) Proprietary Funds - When the City charges customers for the services it provides whether to outside customers or to other units of the City these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the City s enterprise funds (a component of proprietary funds) are the same as the business-type activities reported in the government-wide statements but with additional detail, such as cash flows. The City maintains the following four individual proprietary funds: Water (includes Impact Fees) Storm Water (includes Impact Fees) Solid Waste (Sanitation) Ambulance Notes to the Financial Statements - The notes provide additional information which is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately after the statements for major funds. Other Information - In addition to the basic financial statements and accompanying notes, this report also presents the combining statements referred to earlier in connection with nonmajor governmental funds. Combining and individual fund statements and schedules can be found after the notes in the financial section. Draper City s Statement of Net Position: As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the City of Draper, assets exceeded liabilities by $519,598,673 at the close of FY2017. By far, the largest portion of the City s net position (83%) reflects its investment in capital assets less any related outstanding debt. Capital assets are used to provide services to citizens; and as such, they are not available for future spending. Although the investment in 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. Unrestricted net position may be used to meet the City s ongoing obligations to residents and creditors. The City continues to report positive balances in all three categories of net position - the government as a whole, as well as for its separate governmental activities and business-type activities. Fiscal Year Comparision of Net Position Governmental Activities Business-type Activities Total Primary Government Current and other assets $105,296,162 $93,574,631 $18,907,309 $16,561,564 $124,203,471 $110,136,195 Capital assets 429,256, ,392,147 48,939,227 47,558, ,195, ,950,469 Total Assets 534,552, ,966,778 67,846,536 64,119, ,398, ,086,664 Deferred outflows of resources Deferred loss on refunding 262, , , ,983 Deferred outflows related to pensions 3,009,386 2,269, , ,500 3,428,957 2,583,781 Total Deferred outflows of resources 3,271,963 2,470, , ,500 3,691,534 2,784,764 Current and other liabilities 10,793,626 8,882,440 1,331, ,548 12,125,556 9,808,988 Long-term debt outstanding 54,657,528 56,075,311 4,149,484 4,347,670 58,807,012 60,422,981 Total liabilities 65,451,154 64,957,751 5,481,414 5,274,218 70,932,568 70,231,969 Deferred inflows of resources Deferred revenue-propoerty taxes 14,514,121 13,235, ,514,121 13,235,127 Deferred inflows related to pensions 917, , ,336 99,070 1,044, ,573 Total deferred inflows of resources 15,431,728 13,953, ,336 99,070 15,559,064 14,052,700 Net position: Net investment in capital assets 381,985, ,200,371 47,343,227 45,874, ,328, ,074,693 Restricted 19,765,746 22,188, , ,470 19,985,034 22,394,794 Unrestricted 55,189,852 45,136,966 15,094,842 12,980,306 70,284,694 58,117,272 Total net position $456,941,316 $441,525,661 $62,657,357 $59,061, ,598, ,586,759 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 6

20 Financial Section Management s Discussion and Analysis (continued) Analysis of the City s Operations The following table provides a summary of the City s operations for the year- ended June 30, Net position for government activities increased $15,415,655. This increase is attributable to several items. The largest single item with the revenues was the gain on sale and disposal of assets. In FY2017, the city sold two major pieces of property. The first was a portion of the public works facility and the second was the sale on 110 acres on Traverse Mountain. Both of these, sales along with other minor asset sales, netted a gain of $8,511,186, which is an increase from the prior year of $8,450,977. General sales, use tax and franchise tax increased by $1,370,479 or 8.71%. There was a decrease in expenses in governmental activities of $3,256,392. Net position for business-type activities increased $3,596,259. Revenue for business-type activities totaled $12,045,289. Charges for services had an increase from the previous year of $945,516. The charges for services totaled 85.47% of the total revenues. Capital grants and contributions had a decrease of $2,105,983 from the previous year. Expenses for business-type activities totaled $8,449,030. This is an increase of $624,726 from the previous year. The addition of the Ambulance fund contributed $235,224 of the increase, with the remaining increase from higher operational costs including depreciation expense. Depreciation expense in the storm water fund increased $154,220 which was a result on several CIP projects being finished and moved to fixed assets. Overall, the City s revenues of $66,727,664 exceeded expenses of $47,715,750, translating into an increase in net position for both governmental and business-type activities of $19,011,914. Comparison of Changes in Net Position Governmental Activities Business-type Activities Total Primary Government Revenues: Program revenues: Charges for services $ 6,853,946 $ 7,077,318 $ 10,295,207 $ 9,349,691 $17,149,153 $16,427,009 Operating grants & contributions 7,258,729 7,008, ,258,729 7,008,060 Capital grants & contributions 5,207,304 5,665,882 1,284,316 3,390,299 6,491,620 9,056,181 General revenues: Property taxes 8,913,119 8,216, ,913,119 8,216,888 General sales and franchise tax 17,103,466 15,732, ,103,466 15,732,987 Unrestricted investment earnings 1,179, , ,214 84,883 1,338,839 1,011,698 Equity investment - - (38,448) 106,832-38, ,832 Gain on sale and disposal of assets 8,511,186 60,209-2,069 8,511,186 62,278 Transfers - net (345,000) (3,200) 345,000 3, Total revenues 54,682,375 44,684,959 12,045,289 12,936,974 66,727,664 57,621,933 Expenses: General government 8,583,411 16,920, ,583,411 16,920,589 Public safety 12,527,353 10,336, ,527,353 10,336,154 Highway & streets 10,395,696 9,928, ,395,696 9,928,621 Community development 1,953, ,953,945 - Parks & recreation 4,687,923 4,063, ,687,923 4,063,272 Interest on long-term debt 1,118,392 1,274, ,118,392 1,274,476 Water - - 4,622,995 4,444,945 4,622,995 4,444,945 Storm drain - - 1,732,415 1,509,626 1,732,415 1,509,626 Solid waste - - 1,858,396 1,869,733 1,858,396 1,869,733 Ambulance , ,224 - Total expenses 39,266,720 42,523,112 8,449,030 7,824,304 47,715,750 50,347,416 Increase in net position 15,415,655 2,161,847 3,596,259 5,112,670 19,011,914 7,274,517 Net positon - beginning - restated 441,525, ,363,814 59,061,098 53,948, ,586, ,312,242 Net position, ending $ 456,941,316 $ 441,525,661 $ 62,657,357 $ 59,061,098 $ 519,598,673 $ 500,586,759 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 7

21 Financial Section Management s Discussion and Analysis (continued) Capital grants consist primarily of developer-donated infrastructure assets and change from year to year based on acceptance of such infrastructure by the City. The primary source of charges for services was utility fees in the government-wide revenues, while taxes contributed the majority of general fund revenue. The following two graphs display Draper City s government-wide revenues and expenses for the fiscal year-ended June 30, Total Government Wide Revenues FY2017 Total Government Wide Expenditures FY2017 Unrestricted Investment Earnings 2.00% Equity Investment 0.06% Gain on Sale and disposal of assets 12.74% Charges for Services 25.67% Interest on long term debt 2.34% Water 9.69% Storm Water 3.63% Solid Waste 3.89% Ambulance 0.49% General Government 17.99% Parks & Recreation 9.82% General Sales and Use Tax 25.60% Property Taxes 13.34% Capital grants & contributions 9.72% Operating grants & contributions 10.87% Community Development 4.09% Highway & Streets 21.79% Public Safety 26.25% Financial Analysis of the Government s Funds: The City s governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds provide information on the short-term resource inflows and outflows and account balances at the end of the fiscal year. The total fund balance is a measure of total available resources and the unassigned portion of this total fund balance is a measure of the available resources at June 30, As the City completed the year, its governmental funds reported a combined fund balance of $77,592,695, which is an increase of $8,478,991 compared to the prior fiscal year. Of that available fund balance, $44,435,435 is available for spending (assigned & unassigned). The remaining balances are nonspendable or restricted. The nonspendable amount is $13,391,514 which is primarily the note receivable from the Loveland Planet Aquarium for the Series 2012C bond debt service. The restricted amount is $19,765,746. This is in the form of impact fees ($11,732,405), B&C road ($3,024,997), grants ($4,122,428), debt service ($715,657) and perpetual care ($170,259). The assigned balance is $28,101,131. This is the amount assigned by the City Council for subsequent years capital expenditures and other uses which leaves the unassigned balance of $16,334,304. The main increase in the total governmental fund balances came from the sale of capital assets which recognized a gain of $9,129,664. General Fund: The general fund as reported consists of both the general government fund and class B&C roads fund. At June 30, 2017, the fund balance of the combined general fund was $33,466,472, which is an increase of ($3,531,669). The increase is related to the prior mentioned sale of property and the cash associated with that sale. General Government Fund The general government fund accounts for all of the general services provided by the City of Draper. At June 30, 2017, the unassigned fund balance of the general fund was $16,334,304. Revenues exceeded expenditures by $3,354,429 before other financing sources. The current general fund unassigned fund balance is 46% of estimated non-restricted general fund revenue. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 8

22 Financial Section Management s Discussion and Analysis (continued) General Fund Revenues As a whole, revenue sources recognized growth in 2017 with an increase of $2,278,166 (or 6.87%). Taxes continued to be the largest source of revenue in the general government fund and represented 70% of total general fund revenues. This category was made up of sales tax, property tax, energy tax, and franchise tax. Tax rates remained constant, but tax revenues increased by $2,006,180 (or 8.67%) when compared to the prior year. Sales tax revenues were the largest tax revenue contributor in 2017, and increased by $1,212,974 (or 11.5%) as compared to This increase is the direct result of improved sales across all categories of business in the community. Property tax revenues increased by $635,701 (or 8.59%) in This change was the result of construction of new growth in both residential and commercial property. Franchise and energy tax increased by $157,505, which is an increase of 3.05% from the previous year. License and permit revenues decreased by $460,896 (or 11.7%) from the previous year. Building permit fees had the single largest decrease of $603,083 (or 27.8%) over FY2016. In 2017, the City realized $3,483,912 in license and permit revenue. Fines and forfeitures increased by $94,718 (or 12.7%) for total fines and forfeitures revenues of $842,952. Intergovernmental revenue decreased by $112,186 from the prior year. The majority of the decrease came from the reduction of federal, county and local grants. Class B&C road money increased $183,689 from FY2016. This B&C road money is the portion the city receives from the allocation of the state gasoline tax. Finally, charges for services recognized a decrease of $310,492 which decreased from $2,270,778 in FY2016 to $1,960,286 in FY2017. The fees in this classification include the administrative overhead fee charged to other funds of the City based on operational expenditures, rents & leases, recreation program fees and park reservation fees. The programs supported by general fund revenues (in order of how much they depend on general revenues to operate, with percentage of funding coming from general fund revenues) are: Amount of % of program Program funded with Program funded w/gf General revenues 1st Public Safety $ 11,251, % 2nd Highways and public improvements 5,320, % 3rd Parks and recreation 2,657, % 4th General government 1,162, % 5th Interest on long-tern debt 1,118, % 6th Community development (1,562,422) 0.00% Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 9

23 The following charts illustrate general fund revenues by source and type. Financial Section Management s Discussion and Analysis (continued) General Fund Revenue by Source FY2017 $35,461,227 $2,050,829 Interest & Mi s c. Revenue 5.78% $8,040,395 Property Taxes 22.67% $3,652,702 Energy & Tra ns ient Room Use Ta x 10.30% $3,483,912 Licenses and permits 9.82% $1,979,387 Intergovernmental (Cl a ss C & Gra nts) 5.58% Taxes 69.73% $842,952 Fines & Forfeitures 2.38% $1,960,286 Charges for Services 5.53% $1,676,429 Franchise Taxes 4.73% $11,774,335 Sa l es Taxes 33.20% The next chart compares the normal general fund revenue for Fiscal-Year 2016 and Property Tax Energy Use & Franchise Room Tax Class C Roads Fines and Forfeitures License and Permits Franchise Tax Interest & Miscellaneous Charges for Services Intergovernmental Revenue General fund revenue comparison 2016 to 2017 Sales Tax $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13 Millions Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 10

24 ) General Fund Expenditures Class B&C Roads Fund

25 Financial Section Management s Discussion and Analysis (continued) The next chart compares general fund spending for 2016 and 2017 by governmental activity. General Fund spending comparison 2016 to Public Safety General Government Community Development Parks, Recreation and Public Property Highways and Public improvements Debt Service $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13 $14 Millions General Fund Budgetary Highlights The fiscal year 2017 originally adopted expenditure budget for the general fund totaled $31,325,741 before other financing sources (uses). The final adopted budget for the general fund totaled $38,583,180. The majority of the increase in budgeted expenditures was due to the creation of the Draper City Fire Department and the purchase and acquisition of vehicles and equipment. The increase in budget for these purchases was $4,798,592. The other increase was in B&C road budgeted expenditures by $2,456,000 for additional road projects. The City Council approved six budget revisions during the year August 2016, October 2016, December 2016, February 2017, May 2017 and June Other Governmental Funds Capital Improvement Projects Fund The capital projects fund has a total fund balance of $19,702,762 at June 30, 2017, all of which is either externally restricted or assigned for unfinished projects. This is an increase of $3,440,830. The majority of this increase is related to capital parks and road projects that have been approved. Redevelopment Fund Revenue from the six previously established redevelopment areas increased 10% from the prior year for a total of $5,615,496. Five of the six areas had increased collections reflecting increased property valuations in FY2017. This is due in part to the Redevelopment Agency s continued investment in the areas to maintain value. Impact Fee Funds Impact fee revenues decreased for the year by $2,116,182. The total revenue for governmental related impact fees was $2,463,363. Impact fees are meant to provide the necessary infrastructure to support new development, budgets are developed using current resources. The largest impact fee balance is with the park impact fund that ended the year with $6,241,865. The other impact related balances are transportation impact fund with $4,086,799, fire impact fund with $1,318,242 and police impact fund with $85,499. The total restricted impact fee balance at the end of the fiscal year is $11,732,405. Municipal Building Authority Fund Lease revenue is intended to offset debt service. Revenues and expenditures remained constant in this fund. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 12

26 Financial Section Management s Discussion and Analysis (continued) Proprietary (Enterprise) Funds: Water Fund Unrestricted net position in the water fund increased by $582,939 when compared to the previous year, with an ending unrestricted net position at June 30, 2017 of $3,512,598. Operating revenues from water activities increased $489,970 as compared to the previous fiscal year Operating expenses showed an increase of $180,224 from $4,401,750 in FY2016 to $4,581,974 in FY2017. The water fund recognized $480,533 operating income before nonoperating revenues/expenses and before capital contributions/transfers. The water fund posted a positive change in net position of $1,106,257. Storm Water Fund Unrestricted net position in the storm water fund increased $1,062,769 which left a balance of $6,389,186 at June 30, This increase is the result of increased billing of the storm water utility. Revenues from storm water utility fees increased $416,264 (or 18%) as compared to the previous fiscal year Operating expenses i n creased $222,789 from $1,509,626 in FY2016 to $1,732,415 in FY2017. The storm water fund recognized an operating income of $1,019,653 before nonoperating revenues/expenses and before capital contributions. After capital contributions of $1,093,264 and other nonoperating revenue of $73,611, the storm sewer fund had a positive change in net position of $1,744,524. Solid Waste Fund Unrestricted net position in the solid waste fund increased $734,090 leaving a balance of $5,458,320 at June 30, Revenues from solid waste utility fees increased $43,668 as compared to the previous fiscal year Operating expenses showed an increase of $38,001 from $1,751,964 in FY2016 to $1,789,965 in FY2017. The s olid waste fund recognized operating income of $690,667 before nonoperating revenues/expenses and before capital contributions. After nonoperating revenues (expenses) of $(75,036) the solid waste fund had a positive change in net position of $615,631. The City began providing collection services in December 2009 in an effort to contain costs. These services were previously contracted to an outside provider. Ambulance Fund The ambulance fund was created in FY2017 with the establishment of the Draper City Fire Department. This fund is intended to capture the revenue and expenditures related to 911 EMS calls and inter-facility transports. The revenue will come from the charges/billings for these services. The expenditures are the related costs to provide these services. In FY2017, only operating expenses were incurred to begin the service by July 1, These operating expenses totaled $235,224. The first chart illustrates operating program revenues to operating expenses per the Statement of Activities. The second chart illustrates the revenues by source which includes capital contributions from developers. Operating Expenses and Revenues (Business type) Expenses Revenue Water Storm Water Solid Waste Ambulance Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 13

27 Financial Section Management s Discussion and Analysis (continued) Capital Assets and Debt Administration The City s investment in capital assets for its government and business type activities total $478 million net of combine depreciation and amortization on June 30, Types of assets included in this category are land, right of ways, land improvements, buildings, machinery and equipment, park and recreation facilities, roads (including curb and gutter), street lights, traffic signals, parking facilities, water distribution system, and storm water collection system. The change for the current year was $4,863,926 in governmental activities and business-type activities has a net increase of $1,380,905 for a combine increase of $4,244,831. Additional information regarding the City s capital assets can be found in Note 6. Governmental Activities 2016 Governmental Activities 2017 Business-type Activities 2016 Business-type Activities 2017 Land and right of ways $326,287,236 $327,787,498 $ - $ - Intangible asset - water tank capacity - - 2,000,000 2,000,000 Water shares , ,907 Infrastructure 57,048,066 58,885, Buildings 17,005,615 17,134, , ,573 Improvements - other than buildings 10,690,726 10,035,884 40,422,831 41,906,257 Machinery and equipment 2,449,119 3,718,448 2,198,939 2,478,598 Furniture and fixtures , ,891 Construction in progress 10,911,385 11,694,678 2,288,655 1,941,001 Total capital assets $424,392,147 $429,256,073 $ 47,558,321 $ 48,939,227 Long-term Debt As of June 30, 2017, the city s outstanding bonds and notes payable amount to $50,856,234. This is a decrease of $3,203,365. The City has issued several bonds in previous years to assist in building and acquiring capital assets. The City has one general obligation bond outstanding with an outstanding balance of $3,680,000. As of June 30, 2017, the city has six sales tax revenue bonds outstanding totaling $28,550,000. In August 2017, the city was able to defease the Sales Tax Revenue Refunding Bonds, Series 2012A with a balance of $4,915,000. The City also reported an obligation as a note payable to a developer for infrastructure improvements that were installed and completed in which the city has accepted and are listing them with their capital assets. The portion related to governmental activities is $10,175,015 and the business-type activities are $1,727,302. The obligation will be paid back to the developer through transportation, water and storm water impact fees. The business-type activities have one outstanding water revenue bond for $1,596,000. Governmental Activities 2016 Governmental Activities 2017 Business-type Activities 2016 Business-type Activities 2017 Bonds payable $ 40,008,583 $ 37,357,917 $ 1,684,000 $ 1,596,000 Notes payable 10,384,176 10,175,015 1,982,840 1,727,302 Total debt $ 50,392,759 $ 47,532,932 $ 3,666,840 $ 3,323,302 Additional information on the City s long-term debt can be found in Note 9 of the Notes to Financial Statements. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 14

28 Financial Section Management s Discussion and Analysis (continued) Requests for information: This financial report is designed to provide our residents, taxpayers, investors and creditors with a general overview of the City s finances and to show the City s accountability for the funds and assets it receives. If you have questions about this report, or should you need additional financial information, contact the City s Finance Department at City of Draper, 1020 East Pioneer Road, Draper, UT 84020, or call (801) , or to bob.wylie@draper.ut.us. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 15

29 Financial Section Basic Financial Statements BASIC FINANCIAL STATEMENTS Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

30 Financial Section Government wide Financial Statements GOVERNMENT WIDE FINANCIAL STATEMENTS STATEMENT OF NET POSITION JUNE 30, 2017 CITY OF DRAPER, UTAH Gove rnme ntal Busine ss-type ASSETS Activitie s Activitie s Total Cash and cash equivalents $ 26,876,757 $ 15,234,927 $ 42,111,684 Investments 20,371,024-20,371,024 Receivables: Accounts, net 3,524,035 1,343,568 4,867,603 Property taxes 14,514,121-14,514,121 Internal balances 246,674 (246,674) - Prepaids 1,848,472 57,332 1,905,804 Notes receivable 11,873,255-11,873,255 Restricted cash and cash equivalents 26,038, ,556 26,259,046 Equity investments in joint venture - 2,297,140 2,297,140 Net pension asset 3, ,794 Capital assets, not being depreciated: Land and right of ways 327,787, ,787,498 Intangible asset - water tank capacity - 2,000,000 2,000,000 Water shares - 131, ,907 Construction in progress 11,694,678 1,941,001 13,635,679 Capital assets, net of accumulated depreciation: Buildings 17,134, ,573 17,481,010 Improvements other than buildings 10,035,884 41,906,257 51,942,141 Machinery and equipment 3,718,448 2,478,598 6,197,046 Furniture and fixtures - 134, ,891 Infrastructure 58,885,128-58,885,128 Total assets 534,552,235 67,846, ,398,771 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding 262, ,577 Deferred outflows related to pensions 3,009, ,571 3,428,957 Total deferred outflows of resources 3,271, ,571 3,691,534 LIABILITIES Accounts payable 2,708,281 1,041,972 3,750,253 Accrued liabilities 1,573, ,269 1,823,142 Accrued interest payable 238,728 39, ,149 Developer and customer deposits 6,272,744 1,268 6,274,012 Noncurrent liabilities: Due within one year 3,438, ,279 3,671,098 Due in more than one year 45,701,875 3,152,423 48,854,298 Net pension liability 5,516, ,782 6,281,616 Total liabilities 65,451,154 5,481,414 70,932,568 DEFERRED INFLOWS OF RESOURCES Deferred revenue-property taxes 14,514,121-14,514,121 Deferred inflows related to pensions 917, ,336 1,044,943 Total deferred inflows of resources 15,431, ,336 15,559,064 NET POSITION Net investment in capital assets 381,985,718 47,343, ,328,945 Restricted for: Debt service 715, , ,945 Impact fees 11,732,405-11,732,405 Perpetual care 170, ,259 Capital projects 3,024,997-3,024,997 Grants 4,122,428-4,122,428 Unrestricted 55,189,852 15,094,842 70,284,694 Total net position $ 456,941,316 $ 62,657,357 $ 519,598,673 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 16

31 Financial Section Government wide Financial Statements (continued) STATEMENT OF ACTIVITIES JUNE 30, 2017 CITY OF DRAPER, UTAH Program Revenues Net (Expense) Revenues Operating Capital and Changes in Net Position Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total Primary government: Governmental activities General government $ 8,583,411 $ 1,617,580 $ 4,959,423 $ 844,194 $ (1,162,214) $ (1,162,214) Public safety 12,527, , , ,849 (11,251,093) (11,251,093) Highways and public improvements 10,395, ,480 2,120,778 2,663,396 (5,320,042) (5,320,042) Community development 1,953,945 3,463,617 52,750-1,562,422 1,562,422 Parks and recreation 4,687, ,636-1,531,865 (2,657,422) (2,657,422) Interest on long-term debt 1,118, (1,118,392) (1,118,392) Total governmental activities 39,266,720 6,853,946 7,258,729 5,207,304 (19,946,741) (19,946,741) Business-type activities Water 4,622,995 5,062, ,056 $ 1,052,568 1,052,568 Storm water 1,732,415 2,752, ,260 1,670,913 1,670,913 Solid Waste 1,858,396 2,480, , ,236 Ambulance 235, ,000 (215,224) (215,224) Total business-type activities 8,449,030 10,295,207-1,284,316 3,130,493 3,130,493 Total primary government $ 47,715,750 $ 17,149,153 $ 7,258,729 $ 6,491,620 (19,946,741) 3,130,493 (16,816,248) General Revenues: Taxes Property 8,913,119-8,913,119 Sales 11,774,335-11,774,335 Franchise 5,329,131-5,329,131 Investment earnings 1,179, ,214 1,338,839 Equity investment loss - (38,448) (38,448) Gain on sale and disposal of assets 8,511,186-8,511,186 Transfers - net (345,000) 345,000 - Total general revenue 35,362, ,766 35,828,162 Change in net position 15,415,655 3,596,259 19,011,914 Net position - beginning, as restated 441,525,661 59,061, ,586,759 Net position - ending $ 456,941,316 $ 62,657,357 $ 519,598,673 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 17

32 Financial Section Governmental Funds Financial Statements BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2017 CITY OF DRAPER, UTAH Capital Municipal Nonmajor Total General Projects Redevelopment Building Governmental Governmental Fund Fund Agency Authority Funds Funds ASSETS Cash and cash equivalents $ - $ 12,301,976 $ 8,760,505 $ 937,474 $ 2,404,939 $ 24,404,894 Investments 20,371, ,371,024 Receivables: Property taxes 6,906,340-7,423, ,413 14,514,121 Other, net 3,515,561 4, ,453 3,521,014 Due from other funds 319,124 4,560, ,201 5,207,397 Prepaids 1,687, ,675 1,848,472 Restricted cash and cash equivalents 10,010,394 4,125, ,902,664 26,038,490 Notes receivable 11,873, ,873,255 Total assets $ 54,683,495 $ 20,991,480 $ 16,183,873 $ 937,474 $ 14,982,345 $ 107,778,667 LIABILITIES Accounts payable $ 1,409,259 $ 1,285,714 $ - $ - $ - $ 2,694,973 Accrued liabilities 1,573, ,573,873 Due to other funds 4,888, ,450 4,960,723 Developer and customer deposits 6,269,740 3, ,272,744 Total liabilities 14,141,145 1,288, ,450 15,502,313 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-property taxes 6,906,340-7,423, ,413 14,514,121 Unavailable revenue-notes receivable 169, ,538 Total deferred inflows of resources 7,075,878-7,423, ,413 14,683,659 FUND BALANCES Nonspendable 13,391, ,391,514 Restricted: Debt service 715, ,657 Perpetual care , ,259 Grants - 4,122, ,122,428 B & C roads 3,024, ,024,997 Impact fees ,732,405 11,732,405 Assigned: Capital projects - 15,580, ,580,334 RDA fund and projects - - 8,760, ,760,505 MBA fund , ,474 Traverse ridge fund ,822,818 2,822,818 Unassigned 16,334, ,334,304 Total fund balances 33,466,472 19,702,762 8,760, ,474 14,725,482 77,592,695 Total liabilities, deferred inflows of resources and fund balances $ 54,683,495 $ 20,991,480 $ 16,183,873 $ 937,474 $ 14,982,345 $ 107,778,667 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 18

33 Financial Section Governmental Funds Financial Statements (continued) RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2017 CITY OF DRAPER, UTAH Amounts reported for governmental activities in the Statement of Net Position are different because: Total fund balances for governmental funds (page 18) $ 77,592,695 Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 429,256,073 Other long-term assets are not available for current period expenditures and, therefore, are not reported in the funds balance sheet. $ 3,275,297 Accrued interest on long-term debt is not due and payable in the current period and, therefore, is not recorded in the funds. (238,728) Long-term liabilities, including bonds, capital leases, compensated absences, and notes are not due and payable in the current period and, therefore, are not reported in the funds. (49,140,694) Other long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds balance sheet. (6,434,441) Deferred inflows of resources associated with the General Fund's notes receivable are removed in the Statement of Net Position. 169,538 The internal service fund is used by management to charge the cost of insurance and claims to other funds. The assets and liabilities of the internal services fund are included in the governmental activities in the Statement of Net Position. 2,461,576 Net position of governmental activities (page 16) $ 456,941,316 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 19

34 Financial Section Governmental Funds Financial Statements (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH REVENUES Taxes: Property 8,040,395 Capital Municipal Nonmajor Total General Projects Redevelopment Building Governmental Governmental Fund Fund Agency Authority Funds Funds $ $ - $ 664,353 $ - $ 208,371 $ 8,913,119 Sales 11,774, ,774,335 Franchise 5,329, ,329,131 Licenses and permits 3,483, ,483,912 Intergovernmental 1,979, ,042 4,951, ,199 7,903,771 Charges for services 1,960, ,960,286 Impact fees ,463,363 2,463,363 Fines and forfeitures 842, ,952 Interest 892, , ,633 1,159,284 Donations and reimbursements 844, , ,344,194 Miscellaneous 314, , ,286 Total revenues 35,461,227 1,145,042 5,720,798-3,391,566 45,718,633 EXPENDITURES Current: General government 6,404, ,969 6,499,824 Public safety 12,578, ,578,561 Highways and public improvements 4,709, ,748 5,153,195 Community development 1,902, ,902,542 Park, recreation, and public property 3,452, ,452,201 RDA expenditures - - 2,100, ,100,264 Capital outlay - 10,262, ,262,592 Debt service: Principal 1,835, , , ,000-2,720,161 Interest 1,191, ,377 67,238-1,362,315 Bond issuance costs 32, ,502 Total expenditures 32,106,798 10,471,753 2,719, , ,717 46,064,157 Excess (deficiency) of revenues over (under) expenditures 3,354,429 (9,326,711) 3,001,157 (227,248) 2,852,849 (345,524) OTHER FINANCING SOURCES (USES) Issuance of bonds 1,919, ,919,000 Payments to bond escrow agent (1,879,149) (1,879,149) Sale of capital assets 9,116, ,048 9,129,664 Transfers in 950,696 12,767, ,799-13,984,036 Transfers out (9,929,923) - (707,825) - (3,691,288) (14,329,036) Total other financing sources (uses) 177,240 12,767,541 (707,825) 265,799 (3,678,240) 8,824,515 Net change in fund balances 3,531,669 3,440,830 2,293,332 38,551 (825,391) 8,478,991 Fund balances, beginning 29,934,803 16,261,932 6,467, ,923 15,550,873 69,113,704 Fund balances, ending $ 33,466,472 $ 19,702,762 $ 8,760,505 $ 937,474 $ 14,725,482 $ 77,592,695 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 20

35 Financial Section Governmental Funds Financial Statements (continued) RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances for governmental funds (page 20) $ 8,478,991 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, assets with an initial cost of $5,000 or more are capitalized and the cost is allocated over the assest estimated useful lives and reported as depreciation expense. Capital outlay 11,289,283 Depreciation expense (6,561,584) Contributed assets are not recorded in governmental funds because current resources are not expended for acquisition. The Statement of Activities records these contributed assets at their estimated fair value on the date of contribution. 754,705 Principal payments from recipients on certain notes are recorded as revenue in the governmental funds. However, these payments are recorded as a decrease in the notes receivable in the Statement of Net Position. 22,510 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the payment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither type of transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. These amounts are the net effect of these differences in the treatment of long-term debt and related items. Issuance of Bonds (1,919,000) Reduction of long-term liability 4,599,310 Amortization of bond premiums and deferred loss on refunding 233,762 Accrued pension costs are not reported as an expenditure in the current period for governmental funds but are recorded as an expense in the statement of activities. (391,781) Governmental assets deleted during the year with the respective gain (loss) on disposal are not shown in governmental funds. (618,478) Expenses are recognized in the governmental funds when paid or due; however, the Statement of Activities is presented on the accrualbasis and expenses andliabilities are reported when incurred, regardless of when financial resources are available or expenses are paid or due. Accrued interest 42,663 Compensated absences (158,025) Internalservice fund is used by management to charge the cost of centralized services to individual funds. The net income of the internal service fund is reported with governmental activities. (356,701) Change in net position of governmental activities (page 17) $ 15,415,655 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 21

36 Financial Section Proprietary Funds Financial Statements STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2017 CITY OF DRAPER, UTAH Governmental Business-type Activities - Enterprise Funds Activities Storm Solid Nonmajor Internal Water Water Waste Ambulance Total Service Fund ASSETS Current assets: Cash and cash equivalents $ 5,036,624 $ 7,013,535 $ 3,184,768 $ - $ 15,234,927 $ 2,471,863 Accounts receivable, net 851, , ,999-1,343,568 3,021 Prepaids ,332 57,332 - Total current assets 5,887,792 7,269,936 3,420,767 57,332 16,635,827 2,474,884 Noncurrent assets: Restricted cash and cash equivalents 220, ,556 - Capital assets: Intangible asset - water tank 2,000, ,000,000 - Water shares 131, ,907 - Construction in progress 865,883 1,075, ,941,001 - Buildings 91, , ,079 - Improvements other than buildings 30,965,468 36,028, ,994,389 - Machinery and equipment 381, ,577 3,294, ,215 4,938,504 - Furniture and fixtures 74,833 53,030 53, ,892 - Accumulated depreciation (13,040,832) (12,989,603) (1,644,004) (10,106) (27,684,545) - Net capital assets 21,470,303 25,025,043 2,048, ,109 48,939,227 - Other assets: Equity investment in joint venture - - 2,297,140-2,297,140 - Net pension asset Total other assets ,297,303-2,297,600 - Total noncurrent assets 21,691,020 25,025,179 4,346, ,109 51,457,383 - Total assets 27,578,812 32,295,115 7,766, ,441 68,093,210 2,474,884 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions 150, , ,254 4, ,571 - Total deferred outflows of resources 150, , ,254 4, ,571 - (continued) The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 22

37 Financial Section Proprietary Funds Financial Statements (continued) STATEMENT OF NET POSITION PROPRIETARY FUNDS (continued) JUNE 30, 2017 CITY OF DRAPER, UTAH Governmental Business-type Activities - Enterprise Funds Activities Storm Solid Nonmajor Internal Water Water Waste Ambulance Total Service Fund LIABILITIES Current liabilities: Accounts payable $ 502,950 $ 439,048 $ 68,743 $ 31,231 $ 1,041,972 $ 13,308 Accrued liabilities 185,410 23,801 20,407 19, ,269 - Deposits 1, ,268 - Due to other funds , ,674 - Accrued interest payable 39, ,421 - Compensated absences 2,203 2,236 3,312 4,528 12,279 - Bonds payable 90, ,000 - Notes payable 30, , ,000 - Claims and judgments ,938 Total current liabilities 851, ,085 92, ,084 1,810, ,246 Noncurrent liabilities: Compensated absences 8,813 8,134 14,060 18,114 49,121 - Bonds payable 1,506, ,506,000 - Notes payable 1,436, , ,597,302 - Net pension liability 274, , ,084 5, ,782 - Claims and judgments ,416 Total noncurrent liabilities 3,226, , ,144 23,835 3,917, ,416 Total liabilities 4,077, , , ,919 5,728,088 1,041,662 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 45,740 39,975 40,398 1, ,336 - Total deferred outflows of resources 45,740 39,975 40,398 1, ,336 - NET POSITION Net investment in capital assets 19,874,303 25,025,043 2,048, ,109 47,343,227 - Restricted for debt service 219, ,288 - Unrestricted 3,512,598 6,389,186 5,458,320 (265,262) 15,094,842 1,433,222 Total net position $ 23,606,189 $ 31,414,229 $ 7,507,092 $ 129,847 $ 62,657,357 $ 1,433,222 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 23

38 Financial Section Proprietary Funds Financial Statements (continued) STATEMENT REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Governmental Business-type Activities - Enterprise Funds Activities Storm Solid Nonmajor Internal Water Water Waste Ambulance Total Service Fund OPERATING REVENUES Sales and charges for services $ 5,015,503 $ 2,719,950 $ 2,452,365 $ - $ 10,187,818 $ 639,081 Connection fees 30, ,260 - Miscellaneous income 16,744 32,118 28,267-77,129 78,716 Total operating revenues 5,062,507 2,752,068 2,480,632-10,295, ,797 OPERATING EXPENSES Salaries and benefits 656, , , ,889 1,914,506 - Utilities 354,676 3,062 4,325 1, ,151 - Water charges 1,937, ,937,700 - Landfill fees , ,791 - Supplies and repairs 219, , , , ,314 - Claims and insurance 92,970 47,327 52, ,555 1,094,839 Administrative 341, , ,016 3, ,594 - Depreciation 979, , ,130 10,106 1,975,967 - Total operating expenses 4,581,974 1,732,415 1,789, ,224 8,339,578 1,094,839 Operating income 480,533 1,019, ,667 (235,224) 1,955,629 (377,042) NONOPERATING REVENUES (EXPENSES) Equity loss of joint venture - - (38,448) - (38,448) - Interest income 53,689 73,611 31, ,214 20,341 Interest and fiscal expenses (41,021) (41,021) - Gain/(loss) on disposal of assets - - (68,431) - (68,431) - Total nonoperating revenues (expenses) 12,668 73,611 (75,036) 71 11,314 20,341 Income (loss) before contributions and transfers 493,201 1,093, ,631 (235,153) 1,966,943 (356,701) Capital contributions 613, ,260-20,000 1,284,316 - Transfers in , ,000 - Change in net position 1,106,257 1,744, , ,847 3,596,259 (356,701) Total net position, beginning, as restated 22,499,932 29,669,705 6,891,461-59,061,098 1,789,923 Total net position, ending $ 23,606,189 $ 31,414,229 $ 7,507,092 $ 129,847 $ 62,657,357 $ 1,433,222 The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 24

39 Financial Section Proprietary Funds Financial Statements (continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Enterprise Funds Governmental Activities Storm Solid Internal Service Water Water Waste Ambulance Total Fund Cash flows from operating activities Receipts from customers and users $ 4,885,787 $ 2,952,266 $ 2,479,449 $ - $ 10,317,502 $ 714,776 Payments to suppliers (2,851,606) (229,444) (889,722) (135,330) (4,106,102) (728,587) Payments to employees (644,535) (587,097) (521,740) (71,200) (1,824,572) - Net cash provided (used) by operating activities 1,389,646 2,135,725 1,067,987 (206,530) 4,386,828 (13,811) Cash flows from noncapital financing activities Transfers from other funds , ,000 - Advances from other funds , ,674 Net cash provided (used) by noncapital financing activities , ,674 - Cash flows from capital and related financing activities Aquisition of capital assets (1,259,974) (1,210,407) (305,879) (405,215) (3,181,475) - Capital grants 471, ,691-20,000 1,023,711 - Proceeds from sale of assets ,777-16,777 - Principal paid on capital debt (88,000) (255,538) - - (343,538) - Interest paid on capital debt (43,195) (43,195) - Net cash provided (used) by capital and related financing activities (920,149) (933,254) (289,102) (385,215) (2,527,720) - Cash flows from investing activities Interest received 53,689 73,611 31, ,214 20,341 Net cash provided by investing activities 53,689 73,611 31, ,214 20,341 Net increase (decrease) in cash and cash equivalents 523,186 1,276, ,728-2,609,996 6,530 Cash and cash equivalents, beginning of year 4,733,994 5,737,453 2,374,040-12,845,487 2,465,333 Cash and cash equivalents, end of year $ 5,257,180 $ 7,013,535 $ 3,184,768 $ - $ 15,455,483 $ 2,471,863 Unrestricted cash $ 5,036,624 $ 7,013,535 $ 3,184,768 $ - $ 15,234,927 $ 2,471,863 Restricted cash 220, ,556 - Total cash and cash equivalents $ 5,257,180 $ 7,013,535 $ 3,184,768 $ - $ 15,455,483 $ 2,471,863 (continued) The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 25

40 Financial Section Proprietary Funds Financial Statements (continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (continued) FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Enterprise Funds Governmental Activities Storm Solid Internal Service Water Water Waste Ambulance Total Fund Reconciliation of operating income to net cash provided (used) by operating activities Operating income $ 480,533 $ 1,019,653 $ 690,667 $ (235,224) $ 1,955,629 $ (377,042) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation 979, , ,130 10,106 1,975,967 - Changes in assets and liabilities: Accounts receivable (162,795) 200,198 (1,183) - 36,220 (3,021) Prepaids (57,332) (57,332) - Accounts payable 94, ,763 21,746 31, ,335 13,223 Accrued liabilities (1,581) 1,373 1,703 19,651 21,146 - Deposits (13,925) (13,925) - Compensated absences (6,592) (3,106) ,642 13,183 - Net pension liability 19,901 17,623 15,685 2,396 55,605 - Claims and judgments ,029 Net cash provided (used) by operating activities $ 1,389,646 $ 2,135,725 $ 1,067,987 $ (206,530) $ 4,386,828 $ (13,811) Noncash investing, capital and financing activities Capital contributions - developers $ 142,036 $ 118,569 $ - $ - $ 260,605 $ - Equity investment adjustment for net income and ownership changes $ - $ - $ (38,448) $ - $ (38,448) $ - The accompanying notes are an integral part of this financial statement. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 26

41 NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Section Notes to the Financial Statements The City of Draper (the City) was incorporated on February 22, 1978, as a third-class City under the provisions of the State of Utah and operates under a council-city manager form of government. The governing body consists of five elected council members and a mayor, each of which are elected to serve a four-year term. The heads of the various departments, formed to provide various services, are under the direct supervision of the City Manager. The City provides the following services as authorized by its charter: general administrative services, public safety (police and fire), highway and streets, solid waste, water, storm water, recreation and parks, public improvements, and planning and zoning. The City s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant accounting policies established in GAAP and used by the City are discussed below. REPORTING ENTITY The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the primary government s operations. Thus, blended component units are appropriately presented as funds of the primary government. The City of Draper Redevelopment Agency (RDA) was established to prepare and carry out plans to improve, rehabilitate and redevelop blighted areas within the City. The RDA is governed by a board composed of the members of the City Council. Although it is a legally separate entity from the City, the RDA is reported as if it were part of the primary government because of the City s ability to impose its will upon the operations of the RDA. In conformity with accounting principles generally accepted in the United States of America, the financial statements of the RDA have been included in the financial reporting entity as a blended component unit. The RDA is included in these financial statements as the Redevelopment Agency Special Revenue Fund. Separate financial statements are not issued for the RDA. The City of Draper Municipal Building Authority (MBA) was established to finance and construct municipal buildings that are then leased to the City. The MBA is governed by a board composed of the members of the City Council. Although it is a legally separate entity from the City, the MBA is reported as if it were part of the primary government because of the City s ability to impose its will upon the operations of the MBA. In conformity with accounting principles generally accepted in the United States of America, the financial statements of the MBA have been included in the financial reporting entity as a blended component unit. The MBA is included in these financial statements as the Municipal Building Authority Special Revenue Fund. Separate financial statements are not issued for the MBA. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 27

42 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) REPORTING ENTITY (continued) The Traverse Ridge Special Service District (TRSSD) was established to provide highway and transportation services, for the area within the City known as Suncrest. Services provided by the TRSSD include: snow removal, street lighting, road repair and maintenance, sweeping and disposal services. The TRSSD is governed by a board composed of the members appointed by the City Council. Although it is a legally separate entity from the City, the TRSSD is reported as if it were part of the primary government because of the City s ability to impose its will upon the operations of the TRSSD. In conformity with accounting principles generally accepted in the United States of America, the financial statements of the TRSSD have been included in the financial reporting entity as a blended component unit. The TRSSD is included in these financial statements as the Traverse Ridge Special Service District Special Revenue Fund. Separate financial statements are not issued for the TRSSD. The City is not a component unit of any other entity. The City s basic financial statements include all City operations. GOVERNMENT WIDE AND FUND FINANCIAL STATEMENTS The City s basic financial statements include both government wide (reporting the City as a whole) and fund financial statements (reporting the City s major funds). Both the government wide and fund financial statements categorize primary activities as either governmental or business type. The City s general administrative services, police and fire protection (public safety), parks and recreation, and highways and public improvements are classified as governmental activities. The City s water, storm water, and solid waste services are classified as business type activities. The government wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes, charges for services, and intergovernmental revenues, are reported separately from business type activities, which rely, to a significant extent, on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those which are clearly identifiable with a specific function or segment. 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 or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items properly excluded from program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 28

43 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION The government wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they become available. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The use of financial resources to acquire capital assets are capitalized as assets in the government wide financial statements, rather than reported as expenditures. Proceeds of long term debt are recorded as a liability in the government wide financial statements, rather than as other financing source. Amounts paid to reduce long term debt of the City are reported as reductions of the related liability, rather than expenditures in the government wide financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectable within the current period or soon enough thereafter to pay liabilities of the current period. The City s policy for revenues to be considered available is if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absence and claims and judgments, are recorded only when payment is due. Property taxes, sales tax, franchise taxes, licenses, interest, and earned but unreimbursed state and federal grants associated with the current fiscal period are all considered to be susceptible to accrual and have been so have been recognized as revenues of the current fiscal period. Property taxes are measurable as of the date levied (assessed) and are recognized as revenues when they become available. Available means when due, or past due, and received within the current period or collected soon enough thereafter (within 60 days) to be used to pay liabilities of the current period. All other revenues are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The General Fund is the City s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund. Principal sources of revenue are taxes, licenses and permits, and intergovernmental revenues. Primary expenses are for general government, public safety, public works, and parks and recreation. The Capital Projects Fund account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets (other than those financed by Proprietary Funds and Special Revenue Funds). Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 29

44 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (continued) The Redevelopment Agency is a Special Revenue Fund. Special Revenue Funds are used to account for and report proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes other than debt service or capital projects. This fund accounts for property tax increment revenues from redevelopment areas within the City, which will be used to revitalize and upgrade these areas with qualifying developments. The Municipal Building Authority is a special revenue fund used to account for lease revenue proceeds which are used to remit payments for the related long-term debt. The City reports the following major proprietary funds: The Water Fund accounts for the activities of the City s water distribution system including, billing and collection from customers, water purchases, and system repairs and improvements. The Storm Water Fund accounts for the activities of the City s storm drain collection system including, billing customers, collections from customers, and system repairs and improvements. The Solid Waste Fund accounts for the activities of the City s solid waste collection operations including, billing customers, collections from customers, garbage pick-up, and tipping and disposal fees. The City also accounts for the activities of the Ambulance Fund as a nonmajor proprietary fund. Additionally, the City reports the following fund type: As previously mentioned, special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The City reports the following nonmajor special revenue fund: Traverse Ridge Special Service District (TRSSD) is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes in the District. As previously mentioned, capital projects funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets (other than those financed by Proprietary Funds and Special Revenue Funds). The City reports the following nonmajor capital projects funds: The Fire Impact Fund accounts for fire related impact fees derived from new development and the need or related capital assets. The Transportation Impact Fund accounts for road related impact fees derived from new development and the need for related capital assets. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 30

45 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (continued) The Park Impact Fund accounts for park related system impact fees derived from new development and the need for related capital assets. The Police Impact Fund accounts for police related impact fees derived from new development and the need for related capital assets. Permanent funds (Cemetery Fund) account for resources that are legally restricted to the extent that only earnings, and not principal, may be used to support the City s maintenance and care of the Cemetery. Internal service funds are used to account for the central financing of services provided by an internal service fund to various departments of the City on a cost-reimbursement basis. The Risk Management internal service fund accounts for the City s insurance activities. As a general rule the effect of interfund activity has been eliminated from the government wide financial statements. Exceptions to this general rule are payments to the General Fund by various enterprise funds for providing administrative and billing services for such funds. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. General revenues include all taxes imposed by the City. Proprietary funds distinguish 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 all enterprise funds are charges to customers of the system for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. BUDGETARY DATA Annual budgets are prepared and adopted, in accordance with State law, by the City Council on or before June 22 for the following fiscal year. Estimated revenues and appropriations may be increased or decreased by resolution of the City Council at any time during the year. A public hearing must be held prior to any proposed increase in a fund's appropriations. Budgets include activities in several different funds, including the General Fund, Special Revenue Funds and Enterprise Funds. The Cemetery Fund (Permanent Fund) does not adopt an annual budget. Annual budgets are also adopted for capital projects which may include activities which overlap several fiscal years. The level of the City's budgetary control (that is, the level at which the City's expenditures cannot legally exceed the appropriated amounts) is established at the department level. Each department head is responsible to the City Manager and City Council for operating within the budget for their departments. All annual budgets lapse at fiscal year end. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 31

46 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) BUDGETARY DATA (continued) Utah State law prohibits the appropriation of the sum of unassigned, assigned, and committed General Fund balance until it exceeds 5% of the General Fund revenues. Until the sum of the stated fund balance categories is greater than the above amount, it cannot be budgeted, but is used to provide working capital until tax revenue is received, to meet emergency expenditures, and to cover unanticipated deficits. Utah State law also prohibits the accumulation of the stated fund balance categories in the General Fund in any amounts greater than 25% of the current year s total actual revenues. Once adopted, the budget can be amended by subsequent City Council action. The City Council can amend the budget to any extent, provided the budgeted expenditures do not exceed budgeted revenues and appropriated fund balance, in which case a public hearing must be held. With the consent of the City Manager and Finance Director, department heads may reallocate unexpended appropriated balances from one expenditure account to another within that department during the budget year. Budgets for the General Fund, Special Revenue Funds, and Capital Projects Funds are prepared on the modified accrual method of accounting. Encumbrance accounting is not used by the City. Although Utah State law requires the initial preparation of budgets for all City funds (both governmental and proprietary), it only requires the reporting of budget versus actual for governmental funds. Expenditures in the Capital Projects Funds are budgeted annually on a project by project basis. Although it is the intention of the City that each project be funded by a specific revenue source, the adopted budget reflects only total anticipated revenues by source. Since it is not practicable or appropriate to separate revenues and fund balance on a project-by-project basis, the Capital Projects Fund is reported as individual fund in the accompanying financial statements. TAX REVENUES On or before June 22 of each year, the City sets the property tax rate for various municipal purposes. If the City intends to increase property tax revenues above the tax rate of the previous year, State law requires the City to provide public notice to property owners and hold public hearings. When these special public hearings are necessary, the adoption of the final budget must be done before August 17. All property taxes levied by the City are assessed and collected by Salt Lake County and Utah County. Taxes are levied as of January 1 and are due November 30; any delinquent taxes are subject to a penalty. Unless the delinquent taxes and penalties are paid before January 15, a lien is attached to the property, and the amount of taxes and penalties bears interest from January 1 until paid. Tax liens are placed on a property on the January 1 following the due date of unpaid taxes. If after five years, delinquent taxes have not been paid, the County sells the property at a tax sale. Tax collections are remitted to the City from the County on a monthly basis. An accrual of delinquent current and prior year s property tax beyond that which was received within 60 days after fiscal year end has not been made, as the amounts are not deemed to be material. Sales tax, 911 taxes, and telecom taxes are collected by the Utah State Tax Commission and remitted to the City monthly. An accrual has been made for all taxes received by the State for the period ended June 30 and, thus, due and payable to the City. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 32

47 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) TAX REVENUES (continued) Franchise taxes are collected by telephone, mobile phone, natural gas, electric utilities, and cable television companies and remitted to the City periodically. An accrual has been made for fees due and payable to the City at June 30. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS AND NET POSITION Cash and Cash Equivalents, Deposits and Investments: The City considers all cash and investments with original maturities of three months or less to be cash and cash equivalents and includes deposits with financial institutions, money market accounts, bond reserve accounts, and accounts at the Utah Public Treasurer s Investment Trust (the State Treasurer s Pool). For the purpose of the statement of cash flows, cash and cash equivalents are defined as the cash and cash equivalent accounts and the restricted cash and cash equivalents accounts. Investments consist of debt securities and term deposits with financial institutions. Investments of the City are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income. Receivables and Payables: Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as due to/from other funds (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not available financial resources. Other receivables at June 30, 2017, consist of property taxes, franchise taxes, sales tax, grants and accounts (billings for user charged services, including unbilled utility services) and are shown net of an allowance for uncollectibles. The utility billings for charged services are billed to customers on a monthly basis. Management has estimated the allowance for uncollectibles to be $72,776 (all funds combined), which is estimated based on historical trends related to collections of accounts receivable. Restricted Assets: Assets whose use is restricted for construction, debt service or by other independent third parties, enabling legislation, or other laws and statutes. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first, then unrestricted resources as they are needed. Prepaids: Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government wide and fund financial statements. Equity Investment in Joint Venture: The investment in Trans Jordan Cities Landfill, a 10.27% owned joint venture is accounted for by the equity method of accounting. Under this method, the Solid Waste Fund (enterprise fund) records its share of the joint venture s net income or loss for each period. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 33

48 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS AND NET POSITION (continued) Capital Assets: Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business type activities columns in the government wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City reports infrastructure assets on a network and subsystem basis. Accordingly, the amounts spent for the construction or acquisition of infrastructure assets are capitalized and reported in the government wide financial statements. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed. Upon retirement or disposition of capital assets, the cost and related accumulated depreciation are removed from the respective accounts. Depreciation of capital assets is computed using the straight line method over their estimated useful lives as follows: Assets Years Water tanks 100 Infrastructure Buildings and improvements 7-40 Improvements other than buildings 7-40 Machinery and equipment 5-15 Vehicles 5-10 Furniture and equipment 5-10 Office equipment 3-7 Unearned Revenue: Unearned revenue arises when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the revenue is recognized. Compensated Absences: Accumulated unpaid vacation is accrued as incurred on the government-wide financial statements, based on the years of service for each employee. Vacation time is accumulated on a biweekly basis and is fully vested when earned. The maximum annual carry-forward of accrued vacation hours is 40 hours plus the current year maximum accrual. When an employee leaves or is terminated they are paid out at their current hourly rate. The General Fund is used for liquidating compensated for governmental fund employees, whereas the proprietary funds fully recognize these benefits as expenses and liabilities as incurred. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 34

49 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS AND NET POSITION (continued) Deferred Inflows and Outflows of Resources: In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items that qualify for reporting in this category. The governmental funds report unavailable revenues from two sources: property taxes (property taxes which will be levied and collected more than 60 days after year end) and certain long-term notes receivable (repayments on this note will be collected more than 60 days after year end). These amounts are deferred and recognized as an inflow of resources in the period in which the amounts become available. The City also has deferred inflows relating to pensions as of June 30, Deferred outflows of resources represent a consumption of net position that applies to a future period, and is therefore deferred until that time. A deferred loss on refunding results from the difference in the carrying value of the refunded debt and the reacquisition price. The City also has deferred outflows relating to pensions as of June 30, 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 Utah Retirement Systems Pension Plan (URS) and additions to/deductions from URS's fiduciary net position have been determined on the same basis as they are reported by URS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Long term Obligations: In the government wide financial statements and proprietary funds, long term debt and other long term obligations are reported as liabilities in the applicable governmental activities, business type activities, or proprietary funds Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the applicable debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period as other financing sources or uses. The face amount of debt issued is also reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures in the current period. Fund Balance and Net Position: Net position is classified in the government-wide financial statements in three components: (1) Net investment in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. (2) Restricted net position - consists of net position with constraints placed on the use either by (a) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (b) law through constitutional provisions or enabling legislation. (3) Unrestricted net position - All other net position that does not meet the definition of restricted or net investment in capital assets. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 35

50 Financial Section Notes to the Financial Statements (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS AND NET POSITION (continued) Fund Balance and Net Position (continued) GASB Statement No. 54 provided new reporting categories for fund balance in governmental funds. The categories and descriptions are as follows: (1) Nonspendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. (2) Restricted fund balance classifications are restricted by enabling legislation. Also reported if, (a) externally imposed by creditor, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. (3) Committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government s highest level of decision-making authority. The governing council is the highest level of decision-making authority for the government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. (4) Assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The governing council (council) has by resolution authorized the finance director to assign fund balance. The council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. (5) Unassigned fund balance classification is the residual classification for the General Fund or funds with deficit fund balances. This classification represents fund balance that has not been assigned to other funds and that has not be restricted, committed, or assigned to specific purposes within the General Fund. Proprietary funds report net position in the same manner as the government-wide statements. When restricted, committed, assigned, or unassigned resources are available for use, it is the City s policy to use restricted resources first, followed by committed resources, then assigned, and then unassigned as they are needed. Estimates: The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain financial statement balances. Actual results could vary from those estimates. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 36

51 Financial Section Notes to the Financial Statements (continued) 2. DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Cash includes amounts in demand deposits as well as term deposits. Each fund's portion of this pool is displayed on the combined balance sheet as "cash and cash equivalents and restricted cash and cash equivalents, which includes cash accounts that are separately held by several of the City's funds. The State of Utah Money Management Council has the responsibility to advise the State Treasurer about investment policies, promote measures and rules that will assist in strengthening the banking and credit structure of the state, and review the rules adopted under the authority of the State of Utah Money Management Act (UMMA) that relate to the deposit and investment of public funds. The City follows the requirements of UMMA (Utah Code, Title 51, Chapter 7) in handling its depository and investment transactions. The Act requires the depositing of City funds in a qualified depository, which is defined as a financial institution whose deposits are insured by an agency of the Federal Government and which has been certified by the State Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council. UMMA defines types of securities authorized as appropriate investments for the City s funds and the conditions for making investment transactions. Investment transactions may be conducted only through qualified depositories, certified dealers, or directly with issuers of the investment securities. Statutes authorize the City to invest in negotiable or nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as first tier by two nationally recognized statistical rating organizations; bankers acceptances; obligations of the United States Treasury including bills, notes, and bonds; obligations, other than mortgage derivative products, issued by U.S. government sponsored enterprises (U.S. Agencies) such as the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation (Freddie Mac), and Federal National Mortgage Association (Fannie Mae); bonds, notes, and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rated A or higher, or the equivalent of A or higher, by two nationally recognized statistical rating organizations; shares or certificates in a money market mutual fund as defined in UMMA; and the Utah State Public Treasurers Investment Fund. The City has complied with the UMMA and rules of the Money Management Council with regard to deposits and investments. The City does not have a separate deposit and investment policy that addresses specific types of deposit and investment risks to which the City is exposed. The Utah State Treasurer s Office operates the Public Treasurers Investment Fund (PTIF). The PTIF is available for investment of funds administered by any Utah public treasurer and is not registered with the SEC as an investment company. The PTIF is authorized and regulated by UMMA. The Act established the Money Management Council which oversees the activities of the State Treasurer and the PTIF and details the types of authorized investments. Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains or losses on investments. The PTIF operates and reports to participants on an amortized cost basis. The income, gains, and losses of the PTIF, net of administration fees, are allocated based upon the participant s average daily balance. The fair value of the PTIF investment pool is approximately equal to the value of the pool shares. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 37

52 2. DEPOSITS AND INVESTMENTS (CONTINUED) Fair Value of Investments Financial Section Notes to the Financial Statements (continued) The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instruments. The prices are determined using significant unobservable inputs or valuation techniques. Quoted prices for identical investments in active markets. At June 30, 2017, the City had the following recurring fair value measurements. Fair Value Measurements Using 06/30/17 Level 1 Level 2 Level 3 Debt Securities PTIF $ 66,734,171 $ - $ 66,734,171 $ - Certificates of deposit 250, ,000 - Agency bonds 7,999,076 7,999, Corporate bonds 12,110,945 12,110, Money market funds 11,003-11,003 - Total debt securities $ 87,105,195 $ 20,110,021 $ 66,995,174 $ - The City s cash and cash equivalents and investments are exposed to certain risks as outlined below: Custodial credit risk deposits is the risk that in the event of a bank failure, the City s deposits may not be returned. As of June 30, 2017, $2,142,818 of the City s $2,432,599 bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. UMMA does not require deposits to be insured or collateralized and the City has no formal policy regarding deposit credit risk. UMMA requires that the City keep deposits in a qualified depository, which the City has done. Custodial credit risk investments is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments that are in the possession of an outside party. Of the City s investment in the Utah Public Treasurer s Investment Fund (PTIF) of $66,734,171, the government has no custodial credit risk exposure as the PTIF is an external investment pool managed by the Utah State Treasurer and is not categorized as to custodial credit risk. Of the City s investment in certificates of deposit of $250,000, the government has no custodial credit risk exposure. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City s policy for limiting the credit risks of investments is to comply with UMMA. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 38

53 2. DEPOSITS AND INVESTMENTS (CONTINUED) AS of June 30, 2017, the City had the following investments and quality rating: Financial Section Notes to the Financial Statements (continued) Quality Ratings Investment Type 06/30/17 AAA AA A Unrated PTIF $ 66,734,171 $ - $ - $ - $ 66,734,171 Certificates of deposit 250, , Agency bonds 7,999,076 7,999, Corporate bonds 12,110,945-1,005,197 11,105,748 Money market funds 11, ,003 Total debt securities $ 87,105,195 $ 8,249,076 $ 1,005,197 $ 11,105,748 $ 66,745,174 Interest rate risk is the risk that changes in the interest rates will adversely affect the fair value of an investment. The City has no formal policy relating to specific investment-related interest rate risk. The City manages its exposure by investing mainly in the PTIF and by adhering to the Money Management Act. The Act requires that the remaining term to maturity may not exceed the period of availability of the funds to be invested. The Act further limits the remaining term to maturity on all investments in commercial paper, bankers acceptances, fixed rate negotiable deposits, and fixed rate corporate obligations to 270 days - 15 months or less. The Act further limits the remaining term to maturity on all investments in obligations of the United States Treasury; obligations issued by U.S. government sponsored enterprises; and bonds, notes, and other evidence of indebtedness of political subdivisions of the State to 5 years. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding 3 years. As of June 30, 2017, the City s investments had the following maturities: Investment Maturities (in Years) Investment Type Fair Value Less Than PTIF $ 66,734,171 $ 66,734,171 $ - Certificates of deposit 250, ,000 Agency bonds 7,999,076-7,999,076 Corporate bonds 12,110,945 3,318,271 8,792,674 Money market funds 11,003 11,003 - $ 87,105,195 $ 70,063,445 $ 17,041,750 Concentration of credit risk is the risk of loss attributed to the magnitude of a City s investment in a single issuer. The City s policy for reducing this risk of loss is to comply with the rules of the Money Management Council. Rule 17 of the Money Management Council limits investments in a single issuer of commercial paper and corporate obligations to 5-10% depending upon the total dollar amount held in the portfolio. The City s investment in the PTIF has no concentration of credit risk as the PTIF is an external investment pool managed by the Utah State Treasurer. The City also had no concentration of credit risk in its other investments. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 39

54 2. DEPOSITS AND INVESTMENTS (CONTINUED) Financial Section Notes to the Financial Statements (continued) The PTIF invests in high-grade securities which are delivered to the custody of the Utah State Treasurer, assuring a perfected interest in the securities, and, therefore, there is very little credit risk except in the most unusual and unforeseen circumstances. The maximum weighted average life of the portfolio does not exceed 90 days. Twice a year, at June 30 and December 31, which are the accounting periods for public entities, the investments are valued at fair value and participants are informed of the fair value valuation factor. Additional information is available at the Utah State Treasurer s Office. For the year ended June 30, 2017, the City had investments of $66,734,171 with the PTIF. The fair value of these investments was $67,049,107 using a fair value factor of Following are the City s cash and investments at June 30, 2017: 3. INTERFUND TRANSFERS Carrying Value Cash on hand and on deposit: Cash on hand $ 1,700 Cash on deposit 1,634,859 PTIF accounts 66,734,171 Total cash on hand and deposit $ 68,370,730 Investments: Term deposits $ 250,000 Debt securities 20,121,024 $ 20,371,024 The purpose of the transfers was to provide cash flows, pay operating expenses, and to fund capital projects. Transfers among the funds during the current year were: Transfers In Transfers Out General Fund $ 950,696 $ 9,929,923 MBA Fund 265,799 - Capital Projects Fund 12,767,541 - Redevelopment Agency - 707,825 Nonmajor Governmental Funds - 3,691,288 Ambulance Fund 345,000 - $ 14,329,036 $ 14,329,036 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 40

55 4. RESTRICTED CASH AND CASH EQUIVALENTS Financial Section Notes to the Financial Statements (continued) Certain cash and cash equivalents are restricted to use as follows as of June 30, 2017: Amount Governmental activities Restricted for debt service $ 715,657 Restricted for cemetery 170,259 Restricted for future development - impact fees 11,732,405 Restricted for grants 4,122,428 Restricted for developer and customer deposits 6,272,744 Restricted for "C" roads 3,024,997 Total governmental activities 26,038,490 Business-type activities Restricted for debt service 219,288 Restricted for developer and customer deposits 1,268 Total business-type activities 220,556 Total restricted cash and cash equivalents $ 26,259, EQUITY INVESTMENT IN JOINT VENTURE TRANS JORDAN CITIES LANDFILL The Solid Waste Fund has a 10.27% ownership in the Trans-Jordan Cities Landfill (Trans-Jordan), which is accounted for using the equity method. In addition to the City, the Trans-Jordan Cities Landfill is owned by the cities of Midvale, Murray, Sandy, South Jordan, West Jordan and Riverton which own 5.18%, 8.27%, 29.60%, 14.31%, 21.19% and 11.18% of the landfill, respectively. Trans-Jordan Cities Landfill is a separate legal entity and political subdivision of the State of Utah and was formed pursuant to the provisions of the Interlocal Cooperation Act in The City has no firm commitment to make additional equity investments in the Trans- Jordan Cities Landfill. The City s ownership in Trans-Jordan is calculated from the tipping fees for the preceding ten fiscal years. Tipping fees are paid from the solid waste fund and were $250,817 for fiscal year Trans-Jordan Cities Landfill was formed to construct, operate, and maintain a refuse dumping facility. Trans-Jordan is governed by its Board of Directors. Under the organization agreement, the Board of Directors are appointed by the member cities and are composed of the Mayors or their appointed representatives. The Board of Directors appoints the management and staff of the Trans-Jordan association and approves all financial matters such as the operating budget and usage fees. Annually, the City recognizes its pro rata share of Trans Jordan s operating income or loss. For fiscal year 2017, Trans Jordan reported a decrease in net position of $440,728. The City recognized its 10.27% of the landfill s loss, as well as a change in the City s percent of ownership in the landfill, as equity loss of a joint venture of $38,448 in the Solid Waste enterprise fund under the nonoperating revenues heading. The complete financial statements for Trans Jordan Cities Landfill for the year ended June 30, 2017, can be obtained from Trans Jordan Cities, S 7200 W, South Jordan, UT Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 41

56 Financial Section Notes to the Financial Statements (continued) 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2017, was as follows: 6/30/16 Increases Decreases 06/30/17 Governmental activities (restated) Capital assets, not being depreciated: Land $ 93,410,603 $ 543,323 $ (617,830) $ 93,336,096 Right of ways - canals 636, ,300 Right of ways - roads 232,240,333 1,574, ,815,102 Construction in progress 10,911,385 6,574,594 (5,791,301) 11,694,678 Total capital assets, not being depreciated 337,198,621 8,692,686 (6,409,131) 339,482,176 Capital assets, being depreciated: Buildings 20,099, ,400-20,788,412 Building improvements 1,683, ,683,784 Improvements 7,132, ,028-7,301,226 Park assets/sporting fields 10,365, ,372-10,466,729 Paved trails 2,126,366 21,806-2,148,172 Machinery and equipment 3,975,384 1,265,578 (287,009) 4,953,953 Vehicles 4,626, ,242 (446,070) 4,810,402 Office equipment 475, ,656 (10,007) 936,605 Furniture and fixtures 450, ,780 Infrastructure: roadways 95,495,621 5,915, ,410,792 Infrastructure: sidewalks 14,969,134 86,332-15,055,466 Infrastructure: street lights 1,828, ,828,692 Infrastructure: surfaces - parking lots 1,136,114 90,193-1,226,307 Infrastructure: traffic lights 343, ,028 Total capital assets, being depreciated 164,707,656 9,439,778 (743,086) 173,404,348 Accumulated depreciation: Buildings (3,957,151) (503,767) - (4,460,918) Building improvements (820,030) (56,811) - (876,841) Improvements (5,133,638) (303,868) - (5,437,506) Park assets/sporting fields (3,188,331) (545,459) - (3,733,790) Paved trails (611,226) (97,721) - (708,947) Machinery and equipment (3,086,600) (538,127) 287,009 (3,337,718) Vehicles (3,200,032) (216,416) 10,007 (3,406,441) Office equipment (341,819) (44,781) 148,247 (238,353) Furniture and fixtures (450,780) - - (450,780) Infrastructure: roadways (48,100,024) (3,650,529) - (51,750,553) Infrastructure: sidewalks (6,799,500) (492,599) - (7,292,099) Infrastructure: street lights (1,387,025) (50,694) - (1,437,719) Infrastructure: surfaces - parking lots (371,886) (43,661) - (415,547) Infrastructure: traffic lights (66,088) (17,151) - (83,239) Total accumulated depreciation (77,514,130) (6,561,584) 445,263 (83,630,451) Total capital assets being depreciated, net 87,193,526 2,878,194 (297,823) 89,773,897 Governmental capital assets, net $ 424,392,147 $ 11,570,880 $ (6,706,954) $ 429,256,073 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 42

57 Financial Section Notes to the Financial Statements (continued) 6. CAPITAL ASSETS (CONTINUED) 6/30/16 Increases Decreases 06/30/17 Business-type activtities (restated) Capital assets, not being depreciated: Intangible - water tank capacity $ 2,000,000 $ - $ - $ 2,000,000 Water shares 131, ,907 Construction in progress 2,288,655 1,928,371 (2,276,025) 1,941,001 Total capital assets, not being depreciated 4,420,562 1,928,371 (2,276,025) 4,072,908 Capital assets, being depreciated: Buildings and improvements 437, ,079 Water tanks 4,185, ,185,508 Distribution systems 59,796,019 3,012,862-62,808,881 Vehicles 2,413, ,723 (232,723) 2,600,030 Machinery and equipment 2,041, ,149 (60,379) 2,338,474 Office equipment 169, ,058 Furniture and fixtures 11, ,834 Total capital assets, depreciated 69,054,232 3,789,734 (293,102) 72,550,864 Accumulated depreciation: Buildings and improvements (78,780) (11,726) - (90,506) Water tanks (436,280) (42,298) - (478,578) Distribution systems (23,122,415) (1,487,139) - (24,609,554) Vehicles (1,146,728) (273,491) 159,027 (1,261,192) Machinery and equipment (1,109,067) (138,514) 48,867 (1,198,714) Office equipment (11,368) (22,799) - (34,167) Furniture and fixtures (11,834) - - (11,834) Total accumulated depreciation (25,916,472) (1,975,967) 207,894 (27,684,545) Total capital assets being depreciated, net 43,137,760 1,813,767 (85,208) 44,866,319 Business-type capital assets, net $ 47,558,322 $ 3,742,138 $ (2,361,233) $ 48,939,227 In the government wide financial statements depreciation was charged a follows by program or activity: Governmental activities: General government $ 272,735 Public safety 547,694 Highways and public improvements 4,525,102 Parks and recreation 1,216,053 Total depreciation expense - governmental activities $ 6,561,584 Business-type activities: Water Fund $ 979,510 Storm Water Fund 647,221 Solid Waste Fund 339,130 Ambulance Fund 10,106 Total depreciation expense - business-type activities $ 1,975,967 The City has also purchased five million gallons of water storage capacity in another governmental entity s storage tank. The cost in purchasing this capacity was $2,000,000. The City reviews this asset on an annual basis to determine if impairment has occurred. No impairment has been recorded in the current year. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 43

58 Financial Section Notes to the Financial Statements (continued) 7. DEVELOPER AND CUSTOMER DEPOSITS Developer and customer deposits are principally deposits from customers that are held by the City for water connections or for construction projects and development agreements until such time that refund or forfeiture is warranted. 8. DEFERRED INFLOW OF RESOURCES In conjunction with GASB pronouncement 33, Accounting and Financial Reporting for Nonexchange Transactions the City has accrued property tax receivable and a deferred inflow of resources for unavailable property tax revenue in the General Fund, TRSSD and Redevelopment Agency in the amounts of $6,906,340, $184,413, and $7,423,368, respectively at June 30, Property taxes recorded in the governmental funds are recorded using the modified accrual basis of accounting, wherein revenues are recognized when they are both measurable and available (expected to be received within 60 days). Property taxes attach as an enforceable lien on property as of the first day of January. Taxes are levied on October 1, and then are due and payable at November 30. Since the property tax levied on October 1 was not expected to be received within 60 days after the year ended June 30, 2017, the City was required to record a receivable and unearned revenue of the estimated amount of the total property tax to be levied on October 1, LONG TERM DEBT CHANGES IN LONG TERM LIABILITIES Long term debt activity for the year ended June 30, 2017, was as follows: 6/30/16 Increases Decreases 06/30/17 Governmental activities Bonds payable: General obligation bonds $ 4,090,000 $ - $ (410,000) 3,680,000 Due in One Year $ $ 420,000 Sales tax revenue bonds 30,491,000 - (1,941,000) 28,550,000 1,991,000 Municipal Building Authority lease revenue bonds 2,090,000 1,919,000 (1,940,000) 2,069, ,000 Plus: unamortized premiums 3,337,583 - (278,666) 3,058,917 - Total bonds payable 40,008,583 1,919,000 (4,569,666) 37,357,917 2,601,000 Notes payable 10,384,176 - (209,161) 10,175, ,000 Compensated absences 421, ,382 (484,357) 579, ,881 Other liabilities - URMMA 675,325 1,094,519 (741,490) 1,028, ,938 Governmental activities, long-term liabilities $ 51,489,467 $ 3,655,901 $ (6,004,674) $ 49,140,694 $ 3,438,819 Business-type activities Water revenue bonds $ 1,684,000 $ - $ (88,000) 1,596,000 $ 90,000 Notes payable 1,982,840 - (396,110) 1,727, ,000 Compensated absences 48,217 33,801 (20,618) 61,400 12,279 Business-type activities, long-term liabilities $ 3,715,057 $ 33,801 $ (504,728) $ 3,384,702 $ 232,279 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 44

59 Financial Section Notes to the Financial Statements (continued) 9. LONG TERM DEBT (CONTINUED) The following is a summary and description of the individual bonds and debt obligations of the City during the year ended June 30, 2017: GOVERNMENTAL ACTIVITIES: General Obliagation Bonds Amount Series 2014 General Obligation Refunding Bonds, original issue of $4,490,000, principal due in annual installments beginning February 2016, interest at 2.00% to 3.00% due in semi-annual installments beginning February 2015, with the final payment due February The bonds were issued to finance the refunding of the Series 2006 General Obligation Bonds that were originally used for the acquistion of land in order to preserve open space within the City. $ 3,680,000 Total General Obligation Bonds - Governmental Activities $ 3,680,000 Sales Tax Revenue Bonds Series 2014 Sales Tax Revenue Refunding Bonds, original issue of $3,890,000, principal due in annual installments beginning November 2015, interest at 2.00% to 4.00% due in semi-annual installments beginning May 2015, with the final payment due November The bonds were issued to finance the refunding of the Series 2005 Municipal Building Authority Lease Revenue and Refunding Bonds that were originally used for the acquisition park and recreation land and related contruction. $ 3,255,000 Series 2012A Sales Tax Revenue Bonds, original issue of $4,915,000, principal due in annual installments beginning May 2025, interest at 4.50% to 5.00% due in semi-annual installments beginning May 2013, with the final payment due May The bonds were issued to finance the costs of purchasing open space land. 4,915,000 Series 2012B Sales Tax Revenue Refunding Bonds (2004 refunding), original issue of $2,320,000, principal due in annual installments beginning May 2013, interest at 2.00% to 4.00% due in semi-annual installments beginning May 2013, with the final payment due May The bonds were issued for the crossover advanced refunding of the Series 2004 Sales Tax Revenue Bonds, retired on May ,705,000 Series 2012B Sales Tax Revenue Refunding Bonds (2002B refunding), original issue of $4,795,000, principal due in annual installments beginning May 2013, interest at 2.00% to 4.00% due in semi-annual installments beginning May 2013, with the final payment due May The bonds were issued for the current refunding of the Series 2002B Municipal Building Authority Lease Revenue Bonds, originial issue of $7,770,000. 3,135,000 Series 2012C Sales Tax Revenue Bonds, original issue of $12,530,000, principal due in annual installments beginning May 2015, interest at 2.00% to 5.00% due in semi-annual installments beginning May 2013, with the final payment due May The bonds were issued to finance a non-profit organization's costs of designing and constructing an aquarium within City limits. 11,020,000 Redevelopment Agency Tax Increment and Subordinated Sales Tax Revenue Refunding Bonds Series 2015, original issue of $5,612,000, principal due in annual installments beginning April 2016, interest at 2.02% due in semi-annual installments beginning April 2016, with the final payment due April The bonds were issued to payoff three outstanding RDA tax increment agreements. 4,520,000 Total Sales Tax Revenue Bonds - Governmental Activities $ 28,550,000 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 45

60 Financial Section Notes to the Financial Statements (continued) 9. LONG TERM DEBT (CONTINUED) GOVERNMENTAL ACTIVITIES (continued): Municipal Building Authority Lease Revenue Bonds Amount Municipal Building Authority Lease Revenue and Refunding Bonds Series 2007, original issue of $3,355,000, principal due in annual installments beginning March 2008, interest at 4.00% to 5.00% due in semi-annual installments beginning March 2008, with the final paymentdue March The bonds were issued to finance construction costs of a new fire station and to refund the MBA Series 2002 Lease Revenue Bonds. A portion of these bonds, $1,780,000, was refunded in 2016 with the issuance of the Series 2016 Municipal Building Authority Lease Revenue Refunding Bonds. $ 160,000 Municipal Building Authority Lease Revenue Refunding Bonds Series 2016, original issue of $1,919,000, principal due in annual installments beginning March 2017, interest at 1.10% to 2.14% due in semi-annual installments beginning March 2017, with the final payment due March The bonds were issued to finance the refunding of the Series 2007 Municipal Building Authority Lease Revenue and Refunding Bonds. 1,909,000 Total Municipal Building Authority Lease Revenue Bonds - Governmental Activities $ 2,069,000 BUSINESS-TYPE ACTIVITIES: Revenue Bonds Amount Series 2011 Water Revenue Bonds, original issue of $2,015,000, principal due in annual installments beginning July 2011, interest at 2.47% due in annual installments beginning July 2011, with the final payment due July The bonds were issued for the purpose of financing the costs of acquiring, constructing, and installing water lines, a storage tank, and related water improvements. $ 1,596,000 Total Water Revenue Bonds - Business-type Activities $ 1,596,000 GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES: Notes Payable Amount Vista Project Area, original amount of $14,298,208, payments due from future impact fees City will assess and collect on all development activities within this designated Master Developer Parcel, beginning in fiscal year 2015, with the final payment to be determined based on impact fee collections for transportation, storm water, and culinary water for this specific area. The principal payments are made from the Capital Projects Fund, Water Fund, and Storm Water Fund. The note was used to acquire right of ways, road and underpass construction, and water and storm drain system installations. $ 11,902,317 Total Notes Payable - Governmental Activities $ 10,175,015 Total Notes Payable - Business-type Activities $ 1,727,302 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 46

61 Financial Section Notes to the Financial Statements (continued) 9. LONG TERM DEBT (CONTINUED) All of the City s Sales Tax Revenue Bonds, Municipal Building Authority Lease Revenue Bonds and Water Revenue Bonds are payable solely by a pledge and assignment of their associated revenue sources. An estimated $37,655,506 in sales tax has been pledged through Total future lease revenues of $2,360,793 have been pledged through Total future RDA tax increments have been pledged for RDA commitments through Total future water net revenues of $1,928,661 have been pledged through The current revenue recognized during the period for pledged Sales Tax Revenue bonds was $11,774,335 compared to principal and interest of $2,502,675, which equals a coverage multiple of The current revenue recognized during the period for pledged Municipal Building Authority Lease Revenue bonds was $227,248 compared to principal and interest of $227,238 which equals a coverage multiple of The current year revenue recognized during the year for pledged Water Revenue was $5,015,503 compared to principal and interest of $127,421 which equals a coverage ratio of The annual debt service requirements to maturity are as follows: Governmental Activities Year Ending June 30, Principal General Obligation Bonds Interest Totals 2018 $ 420, ,775 $ 520, ,000 92, , ,000 82, , ,000 71, , ,000 58, , ,475,000 89,250 1,564,250 $ 3,680,000 $ 495,000 $ 4,175,000 Governmental Activities Year Ending June 30, Principal Sales Tax Revenue Bonds Interest Totals 2018 $ 1,991,000 $ 1,118,379 $ 3,109, ,062,000 1,054,692 3,116, ,128, ,681 3,114, ,208, ,662 3,123, ,281, ,665 3,122, ,090,000 2,988,427 13,078, ,790,000 1,200,000 8,990,000 $ 28,550,000 $ 9,105,506 $ 37,655,506 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 47

62 Financial Section Notes to the Financial Statements (continued) 9. LONG TERM DEBT (CONTINUED) Governmental Activities Year Ending June 30, Principal MBA Lease Revenue Bonds Interest Totals 2018 $ 190,000 $ 115,487 $ 305, ,000 31, , ,000 29, , ,000 26, , ,000 23, , ,075,000 65,436 1,140,436 $ 2,069,000 $ 291,793 $ 2,360,793 Business-type Activities Year Ending June 30, Principal Water Revenue Bonds Interest Totals 2018 $ 90,000 $ 39,421 $ 129, ,000 37, , ,000 34, , ,000 32, , ,000 30, , , , , ,000 44, ,855 $ 1,596,000 $ 332,661 $ 1,928,661 Year Ending June 30, Notes Payable 2018 (estimated) $ 630,000 To be determined 11,272,317 Total notes payable $ 11,902,317 The bond sinking fund requirements to maturity for the long-term debt, as of June 30, 2017, are as follows: Bond Sinking Fund Par Amount Maturity Series 2012A Series 2012C 5/1/25 $ 525,000 $ - 5/1/26 545, ,000 5/1/27 570, ,000 5/1/28 600, ,000 5/1/29 620, ,000 5/1/30 650, ,000 5/1/31 685, ,000 5/1/32 720, ,000 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 48

63 Financial Section Notes to the Financial Statements (continued) 9. LONG TERM DEBT (CONTINUED) Bond Refunding In October 2016, the City issued $1,910,000 in Municipal Building Authority Lease Revenue Refunding Bonds, Series The proceeds were used to refund $1,780,000 of outstanding Series 2007 Municipal Building Authority Lease Revenue Bonds. The net proceeds of $1,879,149 were deposited in an irrevocable trust with an escrow agent to provide funds for the future debt service payment on the refunded bonds. As a result, $1,780,000 of the Series 2007 Municipal Building Authority Lease Revenue and Refunding Bonds are considered defeased and the liability for those bonds has been removed from the Statement of Net Position. The reacquisition price exceeded the net carrying amount of the old debt by $91,824. This amount is being amortized over the remaining life of the refunding debt. The City advance refunded the Series 2007 Municipal Building Authority Lease Revenue and Refunding Bonds to reduce its total debt service payments by $168,503 and to obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of $155, RISK MANAGEMENT The City 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 for which the City carries commercial insurance. This insurance covers all of these risks except natural disasters. The government is self-insured for risk of loss involving employees, which amounts are based on work risk factors and experience as set forth by worker s compensation insurance. Claims and settlements against the City have not exceeded the insurance coverage in each of the past three years. The City is also a member of the Utah Risk Management Association (URMMA) which is an insurance pool of municipalities in the state for liability insurance. The pool purchases umbrella insurance against large claims, and each city has a $7,500 deductible before the pool pays from its reserves and/or policy. 11. RETIREMENT PLANS GENERAL INFORMATION ABOUT THE PENSION PLAN Plan Description Eligible plan participants are provided with pensions through the Utah Retirement Systems (URS). URS is comprised of the following pension trust funds: Defined Benefit Plans Public Employees Noncontributory Retirement System (Noncontributory System) and Firefighters Retirement System (Firefighter System); are multiple-employer, cost-sharing, retirement systems. The Public Safety Retirement System (Public Safety System) is a mixed agent and cost-sharing, multiple-employer public employee retirement system. Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System); is a multiple employer, cost-sharing, public employee retirement systems. Tier 2 Public Safety and Firefighter Contributory Retirement System (Tier 2 Public Safety and Firefighters System) is a multiple employer, cost-sharing, public employee retirement systems. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 49

64 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) GENERAL INFORMATION ABOUT THE PENSION PLAN (continued) The Tier 2 Public Employees System became effective July 1, All eligible employees beginning work on or after July 1, 2011, who have no previous service credit with URS, are members of the Tier 2 Retirement System. The Utah Retirement Systems (Systems) are established and governed by the respective sections of Title 49 of the Utah Code Annotated 1953, as amended. The Systems defined benefit plans are amended statutorily by the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of the Systems under the direction of the Utah State Retirement Board, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension (and other employee benefit) trust funds. URS is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and amend the benefit terms. URS issues a publicly available financial report that can be obtained by writing Utah Retirement Systems, 560 East 200 South, Salt Lake City, Utah or visiting the website: Benefits Provided URS provides retirement, disability, and death benefits. Retirement benefits are as follows: Summary of Benefits by System System Final Average Salary Years of Service Required and/or Age Eligible for Benefit Benefit Percent Per Year of Service COLA** Noncontributory System Highest 3 years 30 years any age 2.0% per year all years Up to 4% 25 years any age* 20 years age 60* 10 years age 62* 4 years age 65 Public Safety System Highest 3 years 20 years any age 2.5% per year up to 20 years; 10 years age % per year over 20 years Up to 2.5% to 4 years age 65 present 4% depending on employer Firefighter System Highest 3 years 20 years any age 2.5% per year up to 20 years; Up to 4% 10 years age % per year over 20 years 4 years age 65 present Tier 2 Public Employees System Highest 5 years 35 years any age 1.5% per year all years Up to 20 years any age 60* 2.50% 10 years age 62* 4 years age 65 Tier 2 Public Safety and Firefighter Highest 5 years 25 years any age 1.5% per year all years Up to System 20 years any age 60* 2.50% 10 years age 62* 4 years age 65 *with actuarial reductions **All post-retirement cost-of-living adjustments are non-compounding and are based on the original benefit except for Judges, which is a compounding benefit. The cost-of-living adjustments are also limited to the actual Consumer Price Index (CPI) increase for the year, although unused CPI increases not met may be carried forward to subsequent years. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 50

65 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) GENERAL INFORMATION ABOUT THE PENSION PLAN (continued) Contributions As a condition of participation in the Systems, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and specified by the Utah State Retirement Board. Contributions are actuarially determined as an amount that, when combined with employee contributions (where applicable) is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued liability. Contribution rates as of June 30, 2017 are as follows: Utah Retirement Systems Employer Employee Employer 401(k) Contributory System Local Governmental Division Tier 2 N/A 14.91% 1.78% Noncontributory System 15 - Local Governmental Division Tier 1 N/A 18.47% N/A Public Safety System Contributory Tier 2 DB Hybrid Public Safety N/A 22.55% 1.33% Noncontributory 43 - Other Div A with 2.5% COLA N/A 34.04% N/A Firefighters Retirement System 31 - Other Division A 15.05% 3.89% N/A Tier 2 DC Only 211- Local Government N/A 6.69% 10.00% Public Safety N/A 11.83% 12.00% Tier 2 rates include a statutory required contribution to finance the unfunded actuarial accrued liability of the Tier 1 plans. For fiscal year ended June 30, 2017, the employer and employee contributions to the Systems were as follows: Employer Employee System Contributions Contributions Noncontributory System $ 911,224 N/A Public Safety System 526,122 - Firefighter System 10, Tier 2 Public Employees System 200,932 - Tier 2 Public Safety and Firefighter System 80,715 - Tier 2 DC Only System 10,928 N/A Tier 2 DC Public Safety and Firefighter System 15,488 N/A Total Contributions $ 1,755,771 $ 724 Contributions reported are the URS Board approved required contributions by System. Contribution in Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 51

66 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) PENSION ASSETS, LIABILITIES, EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS At June 30, 2017, the City reported a net pension asset of $3,794 and a net pension liability of $6,281,616. (Measurement Date): December 31, 2016 Net Net Proportionate Pension Pension Proportionate Share Asset Liability Share December 31, 2015 Change Noncontributory System $ - $ 3,926, % % % Public Safety System - 2,338, % % % Firefighter System % % % Tier 2 Public Employees System - 16, % % % Tier 2 Public Safety and Firefighter System 2, % % % Total Net Pension Asset / Liability $ 3,794 $ 6,281,616 The net pension asset and liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension asset and liability was determined by an actuarial valuation as of January 1, 2016 and rolled-forward using generally accepted actuarial procedures. The proportion of the net pension asset and liability is equal to the ratio of the employer s actual contributions to the Systems during the plan year over the total of all employer contributions to the Systems during the plan year. For the year ended June 30, 2017, the City recognized pension expense of $2,201,105. At June 30, 2017, the reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 87,442 $ 312,334 Changes in assumptions 953, ,955 Net difference between projected and actual earnings on pension plan investments 1,379, ,790 Changes in proportion and differences between contributions and proportionate share of contributions 190, ,864 Contributions subsequent to the measurement date 817,843 - Total $ 3,428,956 $ 1,044,943 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 52

67 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) PENSION ASSETS, LIABILITIES, EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (continued) The $817,843 reported as deferred outflows of resources related to pensions results from contributions made by the City prior to the fiscal year end, but subsequent to the measurement date of December 31, These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Deferred Outflows (Inflows) of Year Ended December 31, Resources 2017 $ 448, , , (26,622) 2021 (108) Thereafter 10,406 ACTUARIAL ASSUMPTIONS The total pension liability in the December 31, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.60 percent percent, average, including inflation 7.20 percent, net of pension plan investment expense, including inflation Mortality rates were developed from actual experiences and mortality tables, based on gender, occupation, and age, as appropriate, with adjustments for future improvement in mortality based on a Scale AA, a model developed by the Society of Actuaries. The actuarial assumptions used in the January 1, 2016 valuation were based on the results of an actuarial experience study for the five year period ending December 31, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 53

68 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) ACTUARIAL ASSUMPTIONS (continued) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan 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 allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Expected Return Arithmetic Basis Real Return Long-Term Expected Target Asset Arithmetic Portfolio Real Asset Class Allocation Basis Rate of Return Equity securities 40% 7.06% 2.82% Debt securities 20% 0.80% 0.16% Real assets 13% 5.10% 0.66% Private equity 9% 11.30% 1.02% Absolute return 18% 3.15% 0.57% Cash and cash equivalents 0% 0.00% 0.00% Totals 100% 5.23% Inflation 2.60% Expected arithmetic nominal return 7.83% The 7.20% assumed investment rate of return is comprised of an inflation rate of 2.60% and a real return of 4.60% that is net of investment expense. Discount Rate The discount rate used to measure the total pension liability was 7.20%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from all participating employers will be made at contractually required rates that are actuarially determined and certified by the URS Board. 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. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate does not use the Municipal Bond Index Rate. The discount rate was reduced to 7.20% from 7.50% from the prior measurement period. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 54

69 Financial Section Notes to the Financial Statements (continued) 11. RETIREMENT PLANS (CONTINUED) ACTUARIAL ASSUMPTIONS (continued) Sensitivity of the Proportionate Share of the Net Pension Asset and Liability to Changes in the Discount Rate The following table presents the proportionate share of the net pension liability calculated using the discount rate of 7.20%, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage-point lower (6.20%) or one percentage-point higher (8.20%) than the current rate: 1% Discount 1% Decrease Rate Increase System (6.20%) (7.20%) (8.20%) Noncontributory System $ 8,132,152 $ 3,926,037 $ 416,263 Public Safety System 4,864,501 2,338, ,035 Firefighters System 31,319 (866) (26,981) Tier 2 Public Employees System 113,142 16,622 (56,805) Tier 2 Public Safety and Firefighter System 20,487 (2,928) (20,922) Total $ 13,161,601 $ 6,277,822 $ 597,590 PENSION PLAN FIDUCIARY NET POSITION Detailed information about the pension plan s fiduciary net position is available in the separately issued URS financial report. DEFINED CONTRIBUTION SAVINGS PLANS The Defined Contribution Savings Plans are administered by the Utah State Retirement Systems Board and are generally supplemental plans to the basic retirement benefits of the Retirement Systems, but may also be used as a primary retirement plan. These plans are voluntary tax-advantaged retirement savings programs authorized under sections 401(k), 457(b) and 408 of the Internal Revenue code. Detailed information regarding plan provisions is available in the separately issued URS financial report. The City participates in a 401(k), 457(b), and Roth IRS Defined Contribution Savings Plans with URS. Employee and employer contributions to these plans for the year ended June 30, were as follows: (k) Plan* Employer contributions $ 227,804 $ 194,499 $ 184,257 Employee contributions 362, , , Plan Employer contributions 19,509 14,597 10,919 Employee contributions 98,367 89,858 81,195 Roth IRA Plan Employer contributions N/A N/A N/A Employee contributions * The employer paid 401(k) contributions include the totals paid for employees in the Tier 2 Defined Contribution 401(k) Plan. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 55

70 12. REDEVELOPMENT AGENCY OF DRAPER CITY Financial Section Notes to the Financial Statements (continued) In accordance with Utah State law, the City makes the following disclosures relative to the City of Draper Redevelopment Agency (RDA): The RDA collected $5,615,496 of tax increment monies for its project areas of which $3,013,548 was paid for development incentives and bond obligations. The RDA has several commitments for reimbursement to developers associated with the RDA project areas; see Note 13 for terms and schedules on notes. These commitments are contingent on the future collection of tax increments on the associated properties or project areas. The developers also have specific benchmarks written into these agreements that they must meet in order to qualify for the incentives or reimbursements. The RDA nor the City is reducing any amount of the property taxes that are assessed on the property. During 2017, the RDA expended $413,918 for administrative and other general costs. 13. COMMITMENTS AND AGREEMENTS RDA COMMITMENTS The RDA has an agreement to pay Egg and I, $700,000 over five years in annual payments of $140,000 as reimbursement for tenant improvements for a new restaurant in the Hidden Valley Shopping Center. All reimbursement payments are contingent upon the RDA receiving sufficient tax increment funds from property with the Sand Hills redevelopment area. The reimbursement is also contingent upon the restaurant remaining in operation at that location for five years from the original opening date. Payments under this agreement totaling $420,000 have been made to Egg and I from inception through June 30, The RDA has another agreement within the Sand Hills project area with Utah Steakburgers L.L.C, which does business as Freddy s. This agreement was entered into on June 8, Reimbursement payments will be spread over five years with an annual payment of $140,000. The first payment will be made in July The RDA has an agreement to reimburse the developer (BG Vista Station, L.C. and Draper Holdings, LLC.) an estimated amount equal to $18,765,898. These payments are to be paid from the tax increment generated in the FrontRunner Project area. This project area was created in 2012 and triggered on October 28, The project area has a life of 20 years and will expire in The original purpose of the FrontRunner Project Area was to create a transit supportive development around the FrontRunner station in the City. The initial base year value of the Project Area was $6,055,340. The current year value (tax year 2016) is $226,211,513. Tax year 2016 (FY2017) was the second-year tax that increment was received for $1,762,498. The estimated revenue for tax year 2017 (FY2018) is $2,815,080. OTHER COMMITMENTS AND AGREEMENTS The City has entered into an agreement with Jordan Valley Water Conservancy District in January 2011 to purchase a minimum amount of water in perpetuity unless the agreement is terminated or amended by the mutual consent of the two parties. The agreement stipulates a minimum gallon per minute (GPM) water flow annual average of 3,800 with a maximum of 5,665 for calendar year 2015 and thereafter. During the year ended June 30, 2017 the City made water purchases of $1,937,700 under this agreement. The City has construction commitments outstanding at year end for projects which have been awarded and construction has begun, but which have not been paid for at year end. Total unpaid construction commitments at June 30, 2017 were $9,073,738 on original contracts totaling $11,370,512. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 56

71 Financial Section Notes to the Financial Statements (continued) 14. ENCROACHMENT AGREEMENTS Periodically the Draper City Council authorizes the sale of small portions of the City's open space upon which abutting property owners have encroached. After a public hearing is held to declare the property surplus the abutting property owners purchase the encroached portion from the City. The buyers are given the option to either pay the entire sales price to the City upfront or enter into an agreement to make periodic payments with interest over time. Upon payment in full of principal and interest a quitclaim deed is issued by the City to the buyer for the property. Agreements in effect at June 30, 2017 have an interest rate of 4% with original terms ranging from 5 to 30 years. The final agreement is scheduled to end in December The remaining unpaid principal balance of the agreements due the City at June 30, 2017 was $169, CONDUIT DEBT OBLIGATIONS In December 2010, the City issued Recovery Zone Facility Revenue Bonds, Series 2010 of $10,250,000 to provide financial assistance to a private-sector entity for the acquisition, construction, improvement, and equipment of hotel facilities deemed to promote the general welfare of the residents of the state of Utah. The bonds are payable solely and exclusively from the revenues arising from the pledge of a note which the private company has given as security for the bonds. Neither the City, 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, 2017 the outstanding amount of this obligation is $8,956, PRIOR PERIOD ADJUSTMENTS During the fiscal year 2017, it was noted that several contributed capital assets from fiscal years had been erroneously reported in or excluded from the City s financial statements. These asset removals included distribution systems, roads, sidewalks, street lights, and other assets that are privately owned by businesses, individuals, or communities and not the City. In addition, land under roads that are owned by the City were added with an estimated value of $11,764,360. The following table represents the prior period adjustments made to properly recognize the contributed capital assets that belong to and are maintained by the City. Storm Water Business-Type Governmental Water Fund Fund Activities Activities Net position, June 30, 2016, as previously reported $ 23,593,938 $ 31,294,682 $ 61,780,081 $ 432,088,196 Capital asset adjustments, net (1,094,006) (1,624,977) (2,718,983) 9,437,465 Net position, June 30, 2016, as restated $ 22,499,932 $ 29,669,705 $ 59,061,098 $ 441,525, SUBSEQUENT EVENTS The City, in August 2017, defeased the Series 2012A Sales Tax Revenue Bonds for $4,915,000 by depositing $5,630,205 in cash with an escrow agent for the servicing of these bonds to their full call date. The City was able to reduce its total debt service payments by $1,586,475 and obtain an economic gain of $836,760. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 57

72 Required Supplementary Information REQUIRED SUPPLEMENTARY INFORMATION Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

73 Financial Section Required Supplementary Information STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH REVENUES Taxes: Property 7,687,540 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget $ $ 7,687,540 $ 8,040,395 $ 352,855 Sales 10,500,000 10,780,286 11,774, ,049 Franchise 5,370,654 5,370,654 5,329,131 (41,523) Licenses and permits 3,466,050 3,466,050 3,483,912 17,862 Intergovernmental 5,555,853 5,555,853 1,979,387 (3,576,466) Charges for services 2,025,049 2,090,049 1,960,286 (129,763) Fines and forfeitures 592, , , ,002 Interest 1,235,105 1,235, ,349 (342,756) Donations - 524, , ,817 Miscellaneous 15, , ,286 71,827 Total revenues 36,448,201 37,545,323 35,461,227 (2,084,096) EXPENDITURES Current: General government: Legislative: Mayor and city council 250, , ,738 23,924 Executive: City manager 990, , , ,792 Recorder 301, , ,883 32,932 Elections 80,000 80, ,814 Legal services 544, , ,504 34,049 Economic development 679, , , ,644 Information systems 543, , ,404 25,797 GIS 263, , ,434 21,115 Administrative Services: Human resources 356, , ,471 73,985 Finance 809, , ,259 82,887 Facilities: Facilities maintenance 1,171, , ,860 62,968 Fleet management 800,269 1,150,269 1,110,939 39,330 Nondepartmental: Nondepartmental 518, , , ,822 Total general government 7,309,404 7,377,904 6,404, ,059 (continued) Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 58

74 Financial Section Required Supplementary Information (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH (CONTINUED) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Public safety: Police 5,758,003 5,793,378 5,513, ,822 Fire 4,169,600 8,968,192 6,305,043 2,663,149 Court 547, , ,365 8,896 Animal control 238, , ,597 16,737 Total public safety 10,713,198 15,547,165 12,578,561 2,968,604 Highways and public improvements: Public works 389, , ,413 8,469 Engineering 900, , ,523 38,584 Streets 1,592,256 1,592,256 1,662,212 (69,956) B & C road expenditures 1,460,071 3,916,071 1,778,299 2,137,772 Total highways and public improvements 4,342,820 6,824,316 4,709,447 2,114,869 Community Development: Development services 349, , , ,907 Planning 636, , , ,103 Ordinance enforcement 121, ,916 89,104 32,812 Building 1,110,594 1,110,594 1,060,966 49,628 Total community development 2,217,992 2,217,992 1,902, ,450 Parks, recreation, and public property: Parks and recreation 3,694,377 3,528,002 3,437,031 90,971 Cemetery 19,650 19,650 15,170 4,480 Total parks and recreation 3,714,027 3,547,652 3,452,201 95,451 Debt service: Principal 1,835,000 1,835,000 1,835,000 - Interest 1,193,300 1,193,300 1,191,700 1,600 Bond issuance costs - 39,851 32,502 7,349 Total debt service 3,028,300 3,068,151 3,059,202 8,949 Total expenditures 31,325,741 38,583,180 32,106,798 6,476,382 Excess (deficiency) of revenues over (under) expenditures 5,122,460 (1,037,857) 3,354,429 4,392,286 OTHER FINANCING SOURCES (USES) Sale of capital assets - 1,812,000 9,116,616 7,304,616 Issuance of bonds - 1,919,000 1,919,000 - Payments to bond escrow agent - (1,879,149) (1,879,149) - Transfers in 707,076 2,451, ,696 (1,500,751) Transfers out (5,911,541) (13,697,253) (9,929,923) 3,767,330 Net other financing sources (uses) (5,204,465) (9,393,955) 177,240 9,571,195 Net change in fund balance $ (82,005) $ (10,431,812) 3,531,669 $ 13,963,481 Fund balance, beginning of year 29,934,803 Fund balance, end of year $ 33,466,472 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 59

75 Financial Section Required Supplementary Information (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL REDEVELOPMENT AGENCY FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes $ 622,343 $ 700,083 $ 664,353 $ (35,730) Intergovernmental 4,637,930 5,217,276 4,951,143 (266,133) Interest 27,608 27, ,302 77,694 Total revenues 5,287,881 5,944,967 5,720,798 (224,169) EXPENDITURES Current: RDA expenditures 1,824,173 2,481,259 2,100, ,995 Debt service: Principal 516, , ,000 - Interest 103, , ,377 (150) Total debt service 619, , ,377 (150) Total expenditures 2,443,400 3,100,486 2,719, ,845 Excess (deficiency) of revenues over (under) expenditures 2,844,481 2,844,481 3,001, ,676 OTHER FINANCING SOURCES (USES) Transfers out (708,576) (933,576) (707,825) 225,751 Net other financing sources (uses) (708,576) (933,576) (707,825) 225,751 Net change in fund balance $ 2,135,905 $ 1,910,905 2,293,332 $ 382,427 Fund balance, beginning of year 6,467,173 Fund balance, end of year $ 8,760,505 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 60

76 Financial Section Required Supplementary Information (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL MUNICIPAL BUILDING AUTHORITY FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Lease revenue $ 242,871 $ - $ - $ - Total revenues 242, EXPENDITURES Current: General government (10) Debt service: Principal 150, , ,000 (10,000) Interest 92,871 92,871 67,238 25,633 Total debt service 242, , ,238 15,633 Total expenditures 242, , ,248 15,623 Deficiency of revenues under expenditures - (242,871) (227,248) 15,623 OTHER FINANCING SOURCES (USES) Transfers in - 242, ,799 22,928 Net other financing sources (uses) - 242, ,799 22,928 Net change in fund balance $ - $ - 38,551 $ 38,551 Fund balance, beginning of year 898,923 Fund balance, end of year $ 937,474 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 61

77 Financial Section Required Supplementary Information (continued) SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY LAST 10 FISCAL YEARS* - CITY OF DRAPER, UTAH Proportionate Share Plan Fiduciary of the Net Pension Net Position as Proportionate Liability (Asset) as a Percentage Proportion of Share of the Covered a Percentage of its of its Covered- As of Net Pension Net Pension Employee Covered-employee Employee December 31, Liability (Asset) Liability (Asset) Payroll Payroll Payroll Noncontributory System % $ 2,620,429 $ 5,156, % 90.20% % 3,243,172 4,876, % 87.80% % 3,926,036 5,235, % 87.30% Public Safety System % $ 1,411,518 $ 1,690, % 90.50% % 1,975,284 1,675, % 87.10% % 2,338,957 1,782, % 86.50% Firefighters System % $ - $ % 0.00% % % 0.00% % (866) 31, % % Tier 2 Public Employees System % $ (3,008) $ 487, % % % (250) 741, % % % 16,622 1,222, % 95.10% Tier 2 Public Safety and Firefighter System % $ (6,157) $ 172, % % % (5,577) 227, % % % (2,928) 278, % % Note: * This schedule usually covers the 10 most recent fiscal years; however, this is the information available as of the implementation year of GASB 68. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 62

78 SCHEDULE OF PENSION CONTRIBUTIONS LAST 10 FISCAL YEARS* - CITY OF DRAPER, UTAH Financial Section Required Supplementary Information (continued) Contributions in Contributions Relation to the as a Percentage As of fiscal Actuarial Contractually Contribution Covered of Covered year ended Determined Required Deficiency Employee Employee June 30, Contributions Contribution (Excess) Payroll Payroll Noncontributory System 2014 $ 895,181 $ 895,181 $ - $ 5,216, % , ,297-4,977, % , ,963-4,996, % , ,224-4,995, % Public Safety System 2014 $ 481,149 $ 481,149 $ - $ 1,653, % , ,933-1,646, % , ,812-1,731, % , ,122-1,689, % Firefighters System 2014 $ - $ - $ - $ % % % ,362 10, , % Tier 2 Public Employees System* 2014 $ 56,096 $ 56,096 $ - $ 400, % ,256 84, , % , , , % , ,932-1,348, % Tier 2 Public Safety and Firefighter System* 2014 $ 24,508 $ 24,508 $ - $ 117, % ,790 42, , % ,864 51, , % ,715 80, , % Tier 2 DC Only System* 2014 $ 2,265 $ 2,265 $ - $ 40, % ,753 4,753-76, % ,480 6,480-96, % ,928 10, , % Tier 2 DC Public Safety and Firefighter System* 2014 $ 8,523 $ 8,523 $ - $ 85, % ,291 12, , % ,717 13, , % ,488 15, , % Note: This schedule usually covers the 10 most recent fiscal years; however, this is the information available as of the implementation year of GASB 68. Contributions as a percentage of covered-employee payroll may be different than the Board certified rate due to rounding or other administrative issues. * Contributions in Tier 2 include an amortization rate to help fund the unfunded liabilities in the Tier 1 systems. Tier 2 systems were created effective July 1, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 63

79 Financial Section Required Supplementary Information (continued) NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, CITY OF DRAPER, UTAH 1. ACTUARIALLY DETERMINED PENSION CONTRIBUTIONS Contribution rates include an amount for normal cost, the estimated amount necessary to finance benefits earned by the members during the current year, and an amount for amortization of the unfunded or excess funded actuarial accrued liability over a closed 20-year amortization period. The rates are determined using the entry age actuarial cost method. Contributions made were in accordance with actuarially computed funding requirements. For contribution rate purposes the actuary evaluates the assets of the plan based on a 5-year smoothed expected return wherein 20 percent of a year s excess or shortfall of expected return is recognized each year for five years. 2. CHANGES IN ASSUMPTIONS The following actuarial assumption changes were adopted January 1, The assumed investment return assumption was decreased from 7.50% to 7.20% and the assumed inflation rate was decreased from 2.75% to 2.60%. With the decrease in the assumed rate of inflation, both the payroll growth and wage inflation assumptions were decreased by 0.15% from the prior year s assumption. 3. BUDGETARY INFORMATION See note 1 in the notes to the financial statements. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 64

80 Supplemental Information SUPPLEMENTAL INFORMATION Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

81 Financial Section Supplementary Section COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2017 CITY OF DRAPER, UTAH Capital Project Funds Special Revenue Permanent Total Fire Transportation Park Police Nonmajor Impact Impact Impact Impact Traverse Cemetery Governmental Fund Fund Fund Fund Ridge Fund Funds ASSETS Cash and cash equivalents $ - $ - $ - $ - $ 2,404,939 $ - $ 2,404,939 Receivables: Accounts, net ,453-1,453 Property taxes , ,413 Due from other funds , ,201 Prepaids , ,675 Restricted cash and cash equivalents 1,318,242 4,086,799 6,241,865 85, ,259 11,902,664 Total assets $ 1,318,242 $ 4,086,799 $ 6,241,865 $ 85,499 $ 3,079,681 $ 170,259 $ 14,982,345 LIABILITIES Due to other funds $ - $ - $ - $ - $ 72,450 $ - $ 72,450 Total liabilities ,450-72,450 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-property taxes , ,413 Total deferred inflows of resources , ,413 FUND BALANCES Restricted: Impact fees 1,318,242 4,086,799 6,241,865 85, ,732,405 Perpetual care 170, ,259 Assigned ,822,818-2,822,818 Total fund balances 1,318,242 4,086,799 6,241,865 85,499 2,822, ,259 14,725,482 Total liabilities and fund balances $ 1,318,242 $ 4,086,799 $ 6,241,865 $ 85,499 $ 3,079,681 $ 170,259 $ 14,982,345 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 65

82 Financial Section Supplementary Section (continued) COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH ` Special Capital Project Funds Revenue Permanent Total Fire Transportation Park Police Nonmajor Impact Impact Impact Impact Traverse Cemetery Governmental Fund Fund Fund Fund Ridge Fund Funds REVENUES Property taxes $ - $ - $ - $ - $ 208,371 $ - $ 208,371 Intergovernmental , ,199 Impact fees 99,077 1,263,649 1,031,865 68, ,463,363 Interest 14,374 52,239 66, , ,633 Miscellaneous , ,000 Total revenues 113,451 1,315,888 1,098,772 69, ,934-3,391,566 EXPENDITURES Current: General government ,969 2,000 94,969 Highways and public improvements , ,748 Total expenditures ,717 2, ,717 Excess of revenues over (under) expenditures 113,451 1,315,888 1,098,772 69, ,217 (2,000) 2,852,849 OTHER FINANCING SOURCES (USES) Sale of capital assets ,048-13,048 Transfers out (242,871) (2,937,025) (511,392) (3,691,288) Total other financing sources (uses) (242,871) (2,937,025) (511,392) - 13,048 - (3,678,240) Net change in fund balance (129,420) (1,621,137) 587,380 69, ,265 (2,000) (825,391) Fund balance, beginning of year 1,447,662 5,707,936 5,654,485 15,978 2,552, ,259 15,550,873 Fund balance, end of year $ 1,318,242 $ 4,086,799 $ 6,241,865 $ 85,499 $ 2,822,818 $ 170,259 $ 14,725,482 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 66

83 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES MAJOR CAPITAL PROJECTS FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental $ - $ - $ 645,042 $ 645,042 Donations and reimbursements - 15, , ,000 Total revenues - 15,000 1,145,042 1,130,042 EXPENDITURES Capital outlay 28,019,084 40,072,065 10,262,592 29,809,473 Debt service: principal ,161 (209,161) Total expenditures 28,019,084 40,072,065 10,471,753 29,600,312 Excess (deficiency) of revenues over (under) expenditures (28,019,084) (40,057,065) (9,326,711) 30,730,354 OTHER FINANCING SOURCES (USES) Transfers in 12,338,168 24,376,149 12,767,541 (11,608,608) Net other financing sources (uses) 12,338,168 24,376,149 12,767,541 (11,608,608) Net change in fund balance $ (15,680,916) $ (15,680,916) 3,440,830 $ 19,121,746 Fund balance, beginning of year 16,261,932 Fund balance, end of year $ 19,702,762 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 67

84 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR FIRE IMPACT FEE CAPITAL PROJECTS FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Impact fees $ - $ - $ 99,077 $ 99,077 Interest ,374 14,374 Total revenues , ,451 EXPENDITURES Capital outlay Total expenditures Excess of revenues over expenditures , ,451 OTHER FINANCING SOURCES (USES) Transfers out - (1,742,871) (242,871) 1,500,000 Net other financing sources (uses) - (1,742,871) (242,871) 1,500,000 Net change in fund balance $ - $ (1,742,871) (129,420) $ 1,613,451 Fund balance, beginning of year 1,447,662 Fund balance, end of year $ 1,318,242 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 68

85 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR TRANSPORTATION IMPACT FEE CAPITAL PROJECTS FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Impact fees $ - $ - $ 1,263,649 $ 1,263,649 Interest 36,731 36,731 52,239 15,508 Total revenues 36,731 36,731 1,315,888 1,279,157 EXPENDITURES Capital outlay Total expenditures Excess of revenues over expenditures 36,731 36,731 1,315,888 1,279,157 OTHER FINANCING SOURCES (USES) Transfers out (6,135,330) (5,945,619) (2,937,025) 3,008,594 Net other financing sources (uses) (6,135,330) (5,945,619) (2,937,025) 3,008,594 Net change in fund balance $ (6,098,599) $ (5,908,888) (1,621,137) $ 4,287,751 Fund balance, beginning of year 5,707,936 Fund balance, end of year $ 4,086,799 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 69

86 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PARK IMPACT FEE CAPITAL PROJECTS FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Impact fees $ - $ - $ 1,031,865 $ 1,031,865 Interest 27,334 27,334 66,907 39,573 Total revenues 27,334 27,334 1,098,772 1,071,438 EXPENDITURES Current: Parks Total expenditures Excess of revenues over expenditures 27,334 27,334 1,098,772 1,071,438 OTHER FINANCING SOURCES (USES) Transfers out (534,168) (5,096,148) (511,392) 4,584,756 Net other financing sources (uses) (534,168) (5,096,148) (511,392) 4,584,756 Net change in fund balance $ (506,834) $ (5,068,814) 587,380 $ 5,656,194 Fund balance, beginning of year 5,654,485 Fund balance, end of year $ 6,241,865 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 70

87 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR POLICE IMPACT FEE CAPITAL PROJECTS FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Impact fees $ - $ - $ 68,772 $ 68,772 Interest Total revenues ,521 69,521 EXPENDITURES Capital outlay Total expenditures Net change in fund balance $ - $ - 69,521 $ 69,521 Fund balance, beginning of year 15,978 Fund balance, end of year $ 85,499 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 71

88 Financial Section Supplementary Section (continued) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR TRAVERSE RIDGE SPECIAL SERVICE DISTRICT SPECIAL REVENUE FUND BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 CITY OF DRAPER, UTAH Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes $ 180,000 $ 180,000 $ 208,371 $ 28,371 Intergovernmental 340, , ,199 (11,801) Interest 14,000 14,000 27,364 13,364 Miscellaneous , ,000 Total revenues 534, , , ,934 EXPENDITURES Current: General government 71,500 71,500 92,969 (21,469) Highways and public improvements 642, , , ,617 Total expenditures 713, , , ,148 Excess (deficiency) of revenues over (under) expenditures (179,865) (179,865) 257, ,082 OTHER FINANCING SOURCES (USES) Sale of capital assets ,048 13,048 Net other financing sources (uses) ,048 13,048 Net change in fund balance $ (179,865) $ (179,865) 270,265 $ 450,130 Fund balance, beginning of year 2,552,553 Fund balance, end of year $ 2,822,818 Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Page 72

89 Statistical Section STATISTICAL SECTION Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017

90 Schedule 1 CITY OF DRAPER, UTAH Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Governmental Activities Net investment in capital assets $ 347,553,110 $ 360,289,317 $ 360,249,757 $ 366,814,545 $ 374,636,191 Restricted 11,692,064 23,506,257 19,761,376 24,737,866 12,635,617 Unrestricted 15,383,284 9,744,796 13,968,806 4,704,822 19,191,593 Total Governmental Activities Net Position Business-Type Activities $ 374,628,458 $ 393,540,370 $ 393,979,939 $ 396,257,233 $ 406,463,401 Net investment in capital assets $ 30,503,250 $ 34,016,586 $ 35,745,175 $ 37,879,103 $ 40,798,373 Restricted 2,543,174 2,685,650 2,519,275 2,868,937 2,994,064 Unrestricted 6,146,061 4,743,843 5,108,982 5,034,851 6,686,311 Total Business-type Activities Net Position Primary Government $ 39,192,485 $ 41,446,079 $ 43,373,432 $ 45,782,891 $ 50,478,748 Net investment in capital assets $ 378,056,360 $ 394,305,903 $ 395,994,932 $ 404,693,648 $ 415,434,564 Restricted 14,235,238 26,191,907 22,280,651 27,606,803 15,629,681 Unrestricted 21,529,345 14,488,639 19,077,788 9,739,673 25,877,904 Total Primary Government Net Position $ 413,820,943 $ 434,986,449 $ 437,353,371 $ 442,040,124 $ 456,942,149 Governmental Activities Net investment in capital assets $ 374,535,703 $ 374,159,100 $ 368,851,874 $ 364,762,906 $ 381,985,718 Restricted 19,481,754 22,865,924 23,906,211 22,188,324 19,765,746 Unrestricted 19,898,797 28,020,527 37,168,264 45,136,966 55,189,852 Prior Period Adjustment (3,820,891) 9,437,465 Total Governmental Activities Net Position Business-Type Activities $ 413,916,254 $ 421,224,660 $ 429,926,349 $ 441,525,661 $ 456,941,316 Net investment in capital assets $ 40,975,643 $ 41,142,086 $ 46,344,018 $ 48,593,305 $ 47,343,227 Restricted 2,224,174 1,414, , , ,288 Unrestricted 8,521,299 10,620,200 10,130,630 12,980,306 15,094,842 Prior Period Adjustment (525,816) (2,718,983) Total Business-type Activities Net Position Primary Government $ 51,721,116 $ 52,651,172 $ 56,667,411 $ 59,061,098 $ 62,657,357 Net investment in capital assets $ 415,511,346 $ 415,301,186 $ 415,195,892 $ 413,356,211 $ 429,328,945 Restricted 21,705,928 24,280,626 24,098,974 22,394,794 19,985,034 Unrestricted 28,420,096 38,640,727 47,298,894 58,117,272 70,284,694 Prior Period Adjustment (4,346,707) 6,718,482 Total Primary Government Net Position $ 465,637,370 $ 473,875,832 $ 486,593,760 $ 500,586,759 $ 519,598,673 Notes: Prior period adjustments in FY2014 represent the implemenation of GASB 68. Adjustments in FY16 represent corrects to how capital assets were reported for years between 2007 and Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 73

91 Schedule 2 CITY OF DRAPER, UTAH Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities: General government $ 10,161,544 $ 8,680,507 $ 8,236,556 $ 10,248,559 $ 10,982,453 Public safety 8,903,761 8,880,296 9,072,990 8,596,218 8,459,500 Highway and public improvements 5,209,833 6,228,705 8,224,856 6,539,451 8,977,668 Parks and recreation 2,127,758 2,211,123 2,468,834 2,702,567 3,089,016 Interest on long-term debt 1,134,944 1,163,367 1,079,959 1,040,680 1,071,024 Total governmental activities expenses 27,537,840 27,163,998 29,083,195 29,127,475 32,579,661 Business-type activities: Water 2,786,647 3,170,973 3,405,643 3,532,503 4,163,414 Storm water 1,138,727 1,272,049 1,415,147 1,704,534 2,261,103 Solid waste 1,440,284 1,681,085 1,764,367 1,620,502 1,702,063 Total business-type activities expenses 5,365,658 6,124,107 6,585,157 6,857,539 8,126,580 Total primary government expenses $ 32,903,498 $ 33,288,105 $ 35,668,352 $ 35,985,014 $ 40,706,241 Program Revenues Governmental activities: Charges for services General government $ 4,649,607 $ 2,271,755 $ 2,872,279 $ 3,257,719 $ 3,944,976 Public safety 1,447, , , , ,198 Highway and public improvments 298,605 19,160 11, ,239 3,557 Parks and recreation 13,520 48, , , ,544 Operating grants and contributions 1,532,823 12,569,391 1,793,503 1,789,624 1,460,727 Capital grants and contributions 3,129,781 9,433,281 2,689,054 3,104,535 11,915,979 Total governmental activities program rev. 11,072,139 25,100,443 8,393,357 9,348,480 18,277,981 Business-type activities: Charges for services: Water 2,594,823 3,055,846 3,461,248 3,598,694 4,081,037 Storm water 1,018, , ,853 1,022,805 1,208,062 Solid waste 1,927,638 1,968,513 2,092,800 2,194,246 2,218,451 Capital grants and contributions 536,323 2,404,582 1,975,405-5,220,742 Total business-type activities program rev. 6,077,384 8,276,715 8,467,306 9,197,404 12,728,292 Total primary government program rev. $ 17,149,523 $ 33,377,158 $ 16,860,663 $ 18,545,884 $ 31,006,273 Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 74

92 Schedule 2 (continued) CITY OF DRAPER, UTAH Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities: General government $ 9,280,255 $ 9,481,731 $ 9,783,775 $ 16,920,589 $ 8,583,411 Public safety 8,994,974 9,956,075 9,797,729 10,336,154 12,527,353 Highway and public improvements 7,479,013 6,688,271 10,283,258 9,928,621 10,395,696 Community Development ,953,945 Parks and recreation 3,474,203 3,827,766 3,728,661 4,063,272 4,687,923 Interest on long-term debt 1,213,615 1,429,969 1,261,076 1,274,476 1,118,392 Total governmental activities expenses 30,442,060 31,383,812 34,854,499 42,523,112 39,266,720 Business-type activities: Water $ 4,243,935 $ 3,899,803 $ 4,013,873 $ 4,444,945 $ 4,622,995 Storm water 2,014,894 2,112,147 1,546,988 1,509,626 1,732,415 Solid waste 1,706,160 1,738,238 1,898,969 1,869,733 1,858,396 Ambulance ,224 Total business-type activities expenses 7,964,989 7,750,188 7,459,830 7,824,304 8,449,030 Total primary government expenses $ 38,407,049 $ 39,134,000 $ 42,314,329 $ 50,347,416 $ 47,715,750 Program Revenues Governmental activities: Charges for services General government $ 4,099,233 $ 4,724,132 $ 5,197,605 $ 5,777,093 $ 1,617,580 Public safety 652, , , , ,633 Highway and public improvments 19, ,699 7,261 6, ,480 Community Development ,463,617 Parks and recreation 342, , , , ,636 Operating grants and contributions 1,503,827 1,598,512 6,140,914 7,008,060 7,258,729 Capital grants and contributions 6,908,876 8,138,397 7,747,155 5,665,882 5,207,304 Total governmental activities program rev. 13,525,551 16,522,648 20,186,120 19,751,260 19,319,979 Business-type activities: Charges for services: Water 4,438,556 4,233,154 4,539,139 4,572,537 5,062,507 Storm water 1,336,765 1,644,936 1,999,172 2,340,590 2,752,068 Solid waste 2,275,899 2,346,468 2,419,692 2,436,564 2,480,632 Ambulance Capital grants and contributions 922, ,418 2,381,080 3,390,299 1,284,316 Total business-type activities program rev. 8,973,959 8,976,976 11,339,083 12,739,990 11,579,523 Total primary government program rev. $ 22,499,510 $ 25,499,624 $ 31,525,203 $ 32,491,250 $ 30,899,502 Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 75

93 Schedule 2 (continued) CITY OF DRAPER, UTAH Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Net (Expense)/Revenue Governmental activities $ (16,465,701) $ (2,063,555) $ (20,689,838) $ (26,022,940) $ (14,301,680) Business-type activities 711,726 2,152,608 1,882,149 (4,475,880) 4,601,712 Total primary government net (exp) rev. $ (15,753,975) $ 89,053 $ (18,807,689) $ (30,498,820) $ (9,699,968) General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes $ 9,217,558 $ 9,737,597 $ 10,236,923 $ 10,764,481 $ 12,205,223 Sales taxes 7,442,507 6,794,978 6,574,579 6,815,929 7,434,613 Franchise taxes 3,938,830 4,078,070 4,068,090 4,254,768 4,412,562 Unrestricted investment earnings 1,277, , , , ,589 Gain (loss) on sale of capital assets - (193,792) - 27, ,861 Total governmental activities 21,876,492 20,975,470 21,129,407 22,056,289 24,507,848 Business-type activities: Unrestricted investment earnings 249, ,107 45,204 69,594 94,145 Gain (loss) on sale of capital assets - (44,121) Equity investment income (loss) 72, Total business-type activities 321, ,986 45,204 69,594 94,145 Total primary government $ 22,198,270 $ 21,076,456 $ 21,174,611 $ 22,125,883 $ 24,601,993 Change in Net Position Governmental activities $ 5,410,791 $ 18,911,915 $ 439,569 $ (3,966,651) $ 10,206,168 Business-type activities 1,033,504 2,253,594 1,927,353 (4,406,286) 4,695,857 Total primary government $ 6,444,295 $ 21,165,509 $ 2,366,922 $ (8,372,937) $ 14,902,025 Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 76

94 Schedule 2 (continued) CITY OF DRAPER, UTAH Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Net (Expense)/Revenue Government activities $ (16,916,509) $ (14,861,164) $ (14,668,379) $ (22,771,852) $ (19,946,741) Business-type activities 1,008,970 1,226,788 3,879,253 4,915,686 3,130,493 Total primary government net (expense) revenue $ (15,907,539) $ (13,634,376) $ (10,789,126) $ (17,856,166) $ (16,816,248) General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes $ 11,842,416 $ 11,947,977 $ 7,690,018 $ 8,216,888 $ 8,913,119 Sales taxes 8,009,456 8,790,098 9,967,402 10,561,361 11,774,335 Franchise taxes 4,737,336 4,921,554 4,888,625 5,171,626 5,329,131 Unrestricted investment earnings 285, , , ,815 1,179,625 Gain (loss) on sale of capital assets ,209 8,511,186 Transfers (3,200) (345,000) Total governmental activities 24,874,746 25,990,461 23,370,068 24,933,699 35,362,396 Business-type activities: Unrestricted investment earnings 85,263 50,839 68,602 84, ,214 Gain (loss) on sale of capital assets ,069 - Equity investment income (loss) 163, ,245 68, ,832 (38,448) Transfers , ,000 Total business-type activities 248, , , , ,766 Total primary government $ 25,123,558 $ 26,219,545 $ 23,507,054 $ 25,130,683 $ 35,828,162 Change in Net Position Governmental activities $ 7,958,237 $ 11,129,297 $ 8,701,689 $ 2,161,847 $ 15,415,655 Prior Period Adjustment $ (3,820,891) $ 9,437,465 Business-type activities 1,257,782 1,455,872 4,016,239 5,112,670 3,596,259 Prior Period Adjustment (525,816) (2,718,983) Total primary government $ 9,216,019 $ 8,238,462 $ 12,717,928 $ 13,992,999 $ 19,011,914 Notes: Prior period adjustments in FY2014 represent the implemenation of GASB 68. Adjustments in FY16 represent corrects to how capital assets were reported for years between 2007 and Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 77

95 Schedule 3 CITY OF DRAPER, UTAH Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) General Fund Reserved $ 2,077,255 $ 14,307,798 $ 10,461,677 $ - $ - Unreserved 3,683,311 3,684,179 4,100, Non-spendable ,699 13,538 Restricted ,146,172 3,544,006 Assigned Unassigned ,933,355 4,243,942 Total General Fund $ 5,760,566 $ 17,991,977 $ 14,562,045 $ 9,084,226 $ 7,801,486 All other governmental funds Reserved $ 10,526,248 $ 9,198,459 $ 9,299,699 $ - $ - Unreserved, reported in: Capital projects funds 6,261,431 3,280,324 7,188, Special revenue funds 1,771,149 2,570,508 2,482, Debt service funds 1,374, Capital projects funds ,617,956 9,091,608 Special revenue funds ,362,363 15,575,844 Total all other gov. funds $ 19,933,545 $ 15,049,291 $ 18,970,014 $ 20,980,319 $ 24,667,452 Total governmental funds $ 25,694,111 $ 33,041,268 $ 33,532,059 $ 30,064,545 $ 32,468, General Fund Non-spendable $ 13,312 $ 985,711 $ 12,856,584 $ 13,347,903 $ 13,391,514 Restricted 17,300,416 4,785,367 5,903,264 3,802,273 3,740,654 Assigned , Unassigned 5,083,615 8,012,152 16,374,448 12,784,627 16,334,304 Total General Fund $ 22,397,343 $ 13,783,230 $ 35,511,676 $ 29,934,803 $ 33,466,472 All other governmental funds Restricted, reported in: Capital projects funds - 7,852,043 6,094,989 5,387,731 4,122,428 Special revenue funds - 10,228,514 11,907,958 12,998,320 11,902,664 Assigned, reported in: Capital projects funds 15,742,080 12,382,118 4,035,374 10,874,201 15,580,334 Special revenue funds 15,936,723 7,091,185 9,067,181 9,918,649 12,520,797 Total all other gov. funds $ 31,678,803 $ 37,553,860 $ 31,105,502 $ 39,178,901 $ 44,126,223 Total governmental funds $ 54,076,146 $ 51,337,090 $ 66,617,178 $ 69,113,704 $ 77,592,695 Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 78

96 Schedule 4 CITY OF DRAPER, UTAH Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Revenues: Taxes $ 20,598,893 $ 20,610,642 $ 20,876,490 $ 21,835,178 $ 24,065,089 Licenses and permits 2,288,703 1,184,133 1,381,240 1,620,627 2,100,542 Intergovernmental 1,748,356 12,619,889 1,931,459 1,810,323 1,528,473 Charges for services 1,533,260 1,127,309 1,683,917 1,943,230 2,140,575 Impact fees 2,219, , , ,059 1,814,747 Fines and forfeitures 884, , , , ,624 Interest 1,277, , , , ,742 Lease revenue 1,295,567 1,560,086 1,451,482 1,446,147 1,449,031 Donations and reimbursements 81,064 48,875 9, ,044 1,074,534 Proceeds from insurance 21, Miscellaneous 555, , , , ,563 Total revenues 32,505,400 39,683,026 29,053,077 30,949,180 35,225,920 Expenditures: General government 7,783,482 6,895,011 6,892,421 7,961,086 8,594,510 Public safety 8,631,638 8,937,592 8,757,905 8,461,058 8,323,122 Highways and public improvements 2,308,445 3,013,282 4,641,992 2,944,482 4,467,542 Parks, recreation and public property 1,583,271 1,922,880 2,065,936 2,247,215 2,573,320 Redevelopment agency 1,731,547 2,083,308 1,576,807 2,731,017 2,887,728 Capital outlay 12,479,413 7,903,893 2,873,161 7,986,583 3,846,843 Debt service Principal 1,285,781 1,271,000 1,210,000 1,250,000 1,310,000 Interest 1,069,277 1,121,966 1,074,848 1,028, ,618 Bond issuance cost 91, Total expenditures 36,963,934 33,148,932 29,093,070 34,609,551 32,995,683 Excess (deficiency) of revenues over(under) expenditures (4,458,534) 6,534,094 (39,993) (3,660,371) 2,230,237 Other financing sources (uses): Transfers in 10,679,697 5,268,494 8,174,441 9,487,183 6,898,838 Transfers out (10,679,697) (5,268,494) (8,174,441) (9,487,183) (6,898,838) Bond and loan proceeds 3,355, Premium on bond issued 19, Pmt. to refunding bond escrow agent (435,141) Sale of assets 4,500 21, , , ,156 Total other financing sources(uses) 2,943,797 21, , , ,156 Net change in fund balances $ (1,514,737) $ 6,556,090 $ 490,791 $ (3,467,514) $ 2,404,393 Debt service as a percentage of non-capital expenditures 10% 9% 9% 9% 8% Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 79

97 Schedule 4 (continued) CITY OF DRAPER, UTAH Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Revenues: Taxes $ 24,589,208 $ 25,659,629 $ 22,546,045 $ 23,949,875 $ 26,016,585 Licenses and permits 2,753,909 2,608,799 3,135,690 3,944,808 3,483,912 Intergovernmental 1,559,341 7,282,464 8,214,289 7,056,946 7,903,771 Charges for services 2,281,193 1,759,568 2,521,990 2,270,778 1,960,286 Impact fees 3,151,050 2,197,123 3,285,017 4,579,545 2,463,363 Fines and forfeitures 614, , , , ,952 Interest 285, , , ,815 1,159,284 Lease revenue 1,475, , Donations and reimbursements 68, , ,387 1,344,194 Miscellaneous 3,098, , , , ,286 Total revenues 39,878,316 41,482,828 41,421,175 43,738,730 45,718,633 Expenditures: General government 7,903,409 7,144,127 8,078,547 8,590,004 6,499,824 Public safety 8,760,349 9,418,513 9,633,865 10,165,655 12,578,561 Highways and public improvements 3,024,464 2,065,900 3,944,068 5,515,786 5,153,195 Community Development 1,902,542 Parks, recreation and public property 2,659,074 2,693,997 2,689,688 3,009,632 3,452,201 Redevelopment agency 1,861,704 1,600,250 2,083,389 8,926,596 2,100,264 Capital outlay 11,131,675 6,499,274 9,793,752 5,178,629 10,262,592 Debt service Principal 6,690,000 3,705,000 1,460,000 3,114,789 2,720,161 Interest 1,276,035 1,682,033 1,435,872 1,375,710 1,362,315 Bond issuance cost 339, ,815 60,985 32,502 Total expenditures 43,646,536 34,809,094 39,270,996 45,937,786 46,064,157 Excess (deficiency) of revenues over(under) expenditures (3,768,220) 6,673,734 2,150,179 (2,199,056) (345,524) Other financing sources (uses): Transfers in 18,254,838 8,063,840 8,480,713 13,303,348 13,984,036 Transfers out (18,254,838) (8,063,840) (9,247,796) (14,306,548) (14,329,036) Bond and loan proceeds 24,560,000-8,936,759 5,612,000 1,919,000 Premium on bond issued 3,579, Pmt. to refunding bond escrow agent (3,045,771) (10,463,256) (8,778,746) - (1,879,149) Impact fee reimbursment (450,000) Sale of assets 661,344 1,050, ,248 86,782 9,129,664 Total other financing sources(uses) 25,305,006 (9,412,790) (204,822) 4,695,582 8,824,515 Net change in fund balances $ 21,536,786 $ (2,739,056) $ 1,945,357 $ 2,496,526 $ 8,478,991 Debt service as a percentage of non-capital expenditures 26% 19% 10% 11% 11% Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 80

98 Fiscal Year Property Taxes (1) Schedule 5 CITY OF DRAPER, UTAH Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Sales and Use Taxes Franchise Taxes Other Taxes Total 2008 $ 9,217, $ 7,442, $ 3,938, $ 54, $ 20,653, ,737,594 6,794,978 4,078,070-20,610, ,236,923 6,574,579 4,068,090-20,879, ,764,481 6,815,929 4,254,768-21,835, ,217,914 7,434,613 4,412,562-24,065, ,842,416 8,009,456 4,737,336 24,589, ,947,977 8,790,098 4,921,554 25,659, ,690,018 9,967,402 4,888,625 22,546, ,216,888 10,561,361 5,171,626 23,949, ,913,119 11,774,335 5,329,131 26,016,585 Growth (304,439) 4,331,828 1,390,302 (54,649) 5,363,042 Note: Since 2003, the redevelopment agency is included with the governmental funds per Generally Accepted Accounting Principles; however, beginning in 2015 only the property tax that is levied by Draper City is reported here. All Non-Draper levied taxes are now reported as intergovernmental revenues. (1) Property tax includes current and delinquent property tax, motor vehicle in-lieu tax, and special assessment tax for the Traverse Ridge Special Service District. Tax Revenue by Source $30,000, $25,000, $20,000, $15,000, $10,000, $5,000, Other Taxes Franchise Taxes Sales and Use Taxes Property Taxes (1) $ Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 81

99 Fiscal Year Tax Year Primary Residental Property Schedule 6 CITY OF DRAPER, UTAH Assessed Value and Estimate Actual Value of Taxable Property Last Ten Fiscal Years Other Property Total Taxable Assessed Value Total Direct Tax Rate Estimated Actual Value (1) Assessed Value as a Percentage of Actual Value ,522,056,612 1,557,932,548 4,079,989, ,143,490, % ,813,106,199 1,754,281,505 4,567,387, ,869,020, % ,222,092,030 1,721,482,935 3,943,574, ,761,650, % ,165,506,188 1,696,353,040 3,861,859, ,633,637, % ,029,669,287 1,488,211,613 3,517,880, ,178,519, % ,027,602,106 1,493,230,644 3,520,832, ,179,779, % ,189,569,543 1,620,562,159 3,810,131, ,601,597, % ,400,626,003 1,674,447,789 4,075,073, ,039,222, % ,621,176,154 1,862,255,732 4,483,431, ,628,030, % ,862,871,812 2,214,897,547 5,077,769, ,420,119, % Source: Utah State Tax Commission Note: Property in Draper City is reassessed once every five years on average. The City assess property at approximately 55 percent of actual value for residential property and 100 percent of actual value for all other categories. Estimated actual taxable value is calculated by dividing taxable assessed value by those percentages. (1) Assessed values are reported by the County on a calendar year basis rather than July 1 to June 30 fiscal year. Assessed Value as a Percentage of Actual Value 69.00% 68.50% 68.00% 67.50% 67.00% 66.50% 66.00% 65.50% 65.00% Comprehensive Annual Financial Report - for the Fiscal Year Ended June 30, 2017 Page 82