V aconnor DAVIES ACCOUNTANTS ANO ADVISORS TOWNSHIP OF NORTH BERGEN HUDSON COUNTY, NEW JERSEY REPORT ON EXAMINATION OF ACCOUNTS FOR THE YEARS ENDED

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2 HUDSON COUNTY, NEW JERSEY REPORT ON EXAMINATION OF ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 r'epkr V aconnor DAVIES ACCOUNTANTS ANO ADVISORS

3 COUNTY OF HUDSON, NEW JERSEY CONTENTS PARTI Independent Auditor's Report Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statement Performed in Accordance with Government Auditing Standards FINANCIAL STATEMENTS CURRENT FUND EXHIBIT A A-1 A-2 A-2a A-2b A-2c A-3 Comparative Balance Sheets.... Comparative Statement of Operations and Change in Fund Balance.... Statement of Revenues Statement of Revenue - Analysis of Miscellaneous Revenue.... Statement of Revenue - Analysis of Taxes..... Statement of Revenue - Analysis of Nonbudget Revenue Statement of Expenditures.... PAGE TRUST FUND B B-1 Comparative Balance Sheets Statement of Trust Fund Balance GENERAL CAPITAL FUND c C-1 Comparative Balance Sheets Statement of Fund Balance PUBLIC ASSISTANCE TRUST FUND D Comparative Balance Sheets CAPITAL FIXED ASSETS F Balance Sheet ii

4 FINANCIAL STATEMENTS (Continued) PAGE NOTES TO FINANCIAL STATEMENTS SUPPLEMENTARY DATA CURRENT FUND EXHIBIT A-4 A-5 A-6 A-7 A-8 A-9 A-10 A-11 A-12 A-13 A-14 A-15 A-16 A-17 A-18 A-19 A-20 A-21 A-22 A-23 A-24 A-25 A-26 A-27 A-28 Cash Receipts and Disbursements Change Fund..... Due from State of New Jersey per Chapter 129, P.L Taxes Receivable and Analysis of Property Tax Levy.... Tax Title Liens Property Acquired for Taxes (At Assessed Valuation) Other Accounts Receivable Other Municipal Liens Revenue Accounts Receivable lnterfunds Receivable.... Deferred Charges Emergency Appropriation.... Appropriation Reserves.... Accounts Payable County Taxes Payable Local School District Taxes Due to the State of New Jersey lnterfunds Payable Federal and State Grant Fund - lnterfunds Due to Claims Fund.... Tax Overpayments Prepaid Taxes.... Other Reserve Accounts Grants Receivable Appropriation Reserves Unappropriated Reserves TRUST FUND B-2 B-3 B-4 Cash Receipts and Disbursements - Treasurer Due from Housing and Urban Development - Community Development Block Grant.... Account Receivable iii

5 SUPPLEMENTARY DATA (Continued) TRUST FUND (Continued) EXHIBIT B-5 B-6 B-7 B-8 B-9 B-10 B-11 B-1 2 B-13 B-14 B-15 lnterfunds - Other Trust Funds Due to State of New Jersey - Animal Control Trust Fund.... Payroll Deductions Payable Due From Current Fund Due to Claims Fund.... lnterfunds Payable Accounts Payable.... Reserve for Animal Control Expenditures.... Special Deposits Reserve for Community Development Block Grant - Department of Housing and Urban Development..... Reserve for Various Insurance Funds PAGE GENERAL CAPITAL FUND C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 C-17 C-18 Cash Receipts and Disbursements - Treasurer.... Analysis of Capital Cash lnterfunds Due from State of New Jersey - Green Acres Trust Program Due From Town of Guttenberg Deferred Charges to Future Taxation - Funded.... Deferred Charges to Future Taxation - Unfunded.... Improvement Authorizations Capital Improvement Fund Reserve for Future Improvements Reserve for State Grants and Other Receivables Green Acres Loans Payable - Green Trust Capital Leases Payable Hudson County Improvement Authority Environmental Infrastructure Loan Payable Bond Anticipation Notes General Serial Bonds.... Bonds and Notes Authorized But Not Issued - General Projects PUBLIC ASSISTANCE TRUST FUND D-1 D-2 D-3 Cash Receipts and Disbursements Reserves for Expenditures - Trust Fund Account..... Due from Claims Fund iv

6 SUPPLEMENTARY DATA (Continued) CLAIMS FUND EXHIBIT E-1 E-2 Cash Receipts and Disbursements - Treasurer lnterfunds PAGE PART II OFFICIALS IN OFFICE AND REPORT ON SURETY BONDS. COMMENTS AND RECOMMENDATIONS Officials in Office and Report on Surety Bonds as of December 31, Comments and Recommendations v

7 PART I REPORT OF EXAMINATION FINANICAL STATEMENTS NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTARY EXHIBITS FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015

8 r\9pkr V aconnor DAVIES ACCOUNTANTS AND ADVISORS The Honorable Mayor and Members of the Township Council Township of North Bergen North Bergen, New Jersey Independent Auditors' Report Report on the Financial Statements We have audited the accompanying regulatory-basis financial statements of the various funds and account group of the Township of North Bergen, Hudson County, New Jersey (the ''Township") which comprise the balance sheets as of and for the years ended December 31, 2016 and 2015, and the related statements of revenues, expenditures and changes in fund balances for the years then ended, statements of revenues, statements of expenditures and the related notes to the financial statements, which collectively comprise the Township's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"). Management is also responsible for 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, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States; and the audit requirements prescribed by the Division. Those standards and requirements prescribed by the Division require that we plan and perform the audit to obtain reasonable assurance about whether the regulatory-basis financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Township'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 Township's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. PKF O'CONNOR DAVIES, LLP 293 Eisenhower Parkway, Suite 270, Livingston, NJ I Tel: I Fax: I PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

9 The Honorable Mayor and Members of the Township Council Township of North Bergen Page 2 Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles As described in Note 2, the financial statements are prepared by the Township on the basis of the financial reporting provisions of the Division to demonstrate compliance with Division's regulatory-basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the Basis for the Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the financial statements referred to above do not present fairly in accordance with accounting principles generally accepted in the United States of America the financial position of each fund of the Township as of December 31, 2016 and 2015 and the results of its operations and changes in fund balance, for the years then ended. Unmodified Opinion on Regulatory Basis of Accounting In our opinion, the regulatory-basis financial statements referred to above present fairly, in all material respects, the respective financial position of the various funds and account group of the Township of North Bergen, Hudson County, New Jersey, as of December 31, 2016 and 2015, and the respective results of its operations and changes in fund balance for the years then ended in accordance with the financial reporting provisions of the Division, as described in Note 2 to the financial statements. Report on Supplementary Information as Required by the Division in Accordance with Regulatory Basis Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Township's basic financial statements. The supplementary information, as identified as exhibits A-4 through E-2, the comments and recommendations and supplementary information in the table of contents, is presented for purposes of additional analysis as required by the Division and is not a required part of the 2016 regulatory-basis financial statements of the Township. Such information is the responsibility of management and was derived from and relates 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 financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

10 The Honorable Mayor and Members of the Township Council Township of North Bergen Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 25, 2017 on our consideration of the Township'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 fi nancial 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 Township's internal control over financial reporting and compliance. Pl(F tj'~ 1auw. LLfJ Livingston, New Jersey Anl~)2017 r/v?-1-7'~ John Lauria, RMA Licensed Registered Municipal Accountant# 403

11 ~ PKF' V aconnor DAVIES ACCOUNTANTS ANO ADVISORS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Mayor and Members of the Township Council Township of North Bergen North Bergen, New Jersey Independent Auditors' Report We have audited, in accordance with the auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"), the regulatory-basis financial statements of the various funds and account group of the Township of North Bergen, Hudson County, New Jersey (the "Township"), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise Township's basic financial statements, and have issued our report thereon dated April 25, 2017, in which we expressed an adverse opinion on the conformity of the statements with accounting principles generally accepted in the United States of America due to the differences between those principles and the financial reporting provisions of the Division. Internal Control Over Financial Reporting In planning and performing our audit of the regulatory basis financial statements, we considered the Township's internal control over financial reporting ("internal control") to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the regulatory basis financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Township's internal control. Accordingly, we do not express an opinion on the effectiveness of the Township's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. PKF O'CONNOR DAVIES, LLP 293 Eisenhower Parkway, Suite 270, Livingston, NJ I Tel: I Fax: I PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

12 The Honorable Mayor and Members of the Township Council Township of North Bergen Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Township's regulatory-basis financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Livingston, New Jersey AP:7'~ John Lauria, RMA Licensed Registered Municipal Accountant# 403

13 TOWNSHIP QF NORTH BERGEN CURRENT FUND COMPARATIVE BALANCE SHEETS REGULATORY BASIS DECEMBER AND Sheet# 1 Balance Balance ASSETS Ref. De~mb~r 31, 2Q12 De~m!;!~r~1, 2Q15 Regular Fund Cash - Treasurer A-4 $ 23,393, $ 20,619, Cash - Change Fund A ,394, ,620, Due from State of New Jersey A-6 82, , Receivables and Other Assets with Offsetting Reserves: Delinquent Property Taxes A-7 1,813, ,213, Tax Title Liens A-8 1,401, ,278, Property Acquired for Taxes A-9 6,543, ,543, Other Accounts Receivable A-10 2, , Other Municipal Liens A-11 7, , Revenue Accounts Receivable A , lnterfunds Receivable A-13 16, , ,031, ,307' Deferred Charges: Special Emergency Authorizations: (N.J.S.A. 40A: 4-53) A , ,508, ,288, Fegeral and!!le Grant F!.!nQ Cash A-4 223, , Federal and State Grants Receivable A-26 3,075, ,426, ,299, ,429, $ 36,807, $ 34, 718, See accompanying notes to financial statements. -7-

14 CURRENT FUND COMPARATIVE BALANCE SHEETS REGULATORY BASIS DECEMBER AND Sheet# 2 LIABILITIES. RESERVES AND FUND BALANCE Balance December 31, 2016 Balance December 31, 2015 Regular Fund Appropriation Reserves: Encumbered Unencumbered Accounts Payable County Taxes Payable School Taxes Payable Tax Overpayments Prepaid Taxes Other Reserve Accounts A-3,15 A-3, 15 A-16 A-17 A-18 A-23 A-24 A-25 $ 585, ,766, , , ,217, ,441, ,284, ,316, $ 443, ,484, , , ,672, ,289, ,090, ,276, Reserve for Receivables and Other Assets Fund Balance A-1 10,031, ,160, ,508, ,307, ,704, ,288, Federal and State Grant Fund lnterfunds Payable Due to State of New Jersey Appropriated Reserves Unappropriated Reserves A-21 A-19 A-27 A , , ,587, , , , , ,452, , ,429, $ 36,807, $ 34,718, See accompanying notes to financial statements. -8-

15 CURRENT FUND COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGE IN FUND BALANCE REGULATORY BASIS YEARS ENDED DECEMBER AND 2015 Rev!,lnue and Oth!,lr Income Realized Fund Balance Utilized Miscellaneous Revenue Anticipated Receipts from Delinquent Taxes Receipts from Current Taxes NonbudgetRevenue Other Credits to Income: lnterfunds Liquidated Excess Dog License Fees Appropriation Reserves Lapsed Other Municipal Liens Collected Other Receiveables Liquidated Grant Reserves Canceled Expenditures Budget Appropriations: Operations: Salaries and Wages Other Expenses Deferred Charges and Statutory Expenditures Capital Improvements Municipal Debt Service County Taxes Local School District Taxes Senior Citizen Adjustment - Prior Year Tax Court Judgements lnterfunds Advanced Cancelation of Grant Receivables Refund of Prior Years' Revenue Excess in Revenue Fund Balance Balance, Beginning of Year Decreased by: Utilized as Anticipated Revenue Balance, End of Year Ref. December A-2 $ 3,900, A-2 20,878, A-2b 2,261, A-2b 137,103, A-2c 906, A , A , A-15 2,096, A-11 5, A-10 18, ,428, A-3 24,192, A-3 50,277, A-3 5,368, A-3 150, A-3 6,019, ,007, A-17 27,216, A-18 47,640, A-6 15, A , ,072, ,355, A 10,704, ,060, Above 3,900, A $ 13,160, December $ 2,000, ,466, ,473, ,772, , ,103, , ,745, ,303, ,342, , 105, , ,508, ,402, ,854, ,103, , , , , , ,908, ,836, ,868, ,704, ,000, $ 10,704, See accompanying notes to financial statements. -9-

16 CURRENT FUND STATEMENT OF REVENUES REGULATORY BASIS A-2 YEAR ENDED DECEMBER Sheet #1 (Deficit) or Ref. Budget Realized Excess Fund Balance Appropriated A-1 $ 3,900, $ 3,900, Miscellaneous Revenues Licenses: Alcoholic Beverages A-12 88, , $ (694.00) Other A , , (8,531.00) Fees and Permits A-2a 451, , , Fines and Costs: Municipal Court A-2a 1,723, ,232, , Interest and Cost on Taxes A , , , Interest on Investments and Deposits A , , , Pool Membership Fees A , , , North Bergen Cable Television - Franchise Fees A , , Payment in Lieu of Taxes - Floral Park, Inc. A-2a 642, , (13,908.00) Payment in Lieu of Taxes - North Bergen Housing Auth. A-2a 215, , , Payment in Lieu of Taxes - Fritz Reuter A-2a 174, , Payment in Lieu of Taxes - Avalon Bay A-2a 261, , , Payment in Lieu of Taxes - LWH A-2a 1,121, ,072, (48,642.18) rd Urban Renewal A-2a 258, , , Ambulance Fees A , , (66,536.53) Hotel Tax A , , (15,285.43) Consolidated Municipal Property Tax Relief Aid A-12 1,330, ,330, Energy Receipts Tax (P.L. 1997, Chapters 162 and 167) A-12 5,854, ,854, Uniform Construction Code Fees A-2a 1,355, ,575, , Grants: Clean Communities Program A , , Municipal Alliance on Alcoholism and Drug Abuse A-26 52, , Highway Safety Grant A-26 15, , Drunk Driving Enforcement Fund A-26 6, , DOT - Municipal Aid A , , State Housing Inspection Program: A-26 55, , FEMA - Emergency Management A-26 10, , Pedestrian Safety Grant A-26 16, , Summer Food Program A-26 41, , Bulletproof Vest Program A-26 3, , Body Armor Fund A-26 9, , Alcohol Education and Rehabilitation A-26 3, , Host Fees A , , , Uniform Fire Safety Act A , , (4, ) NJ Transit Tax A , , , MUA -5% of Annual Costs of Operations A , , See accompanying notes to financial statements

17 CURRENT FUND STATEMENT OF REVENUES REGULATORY BASIS A-2 YEAR ENDED DECEMBER Sheet#2 Excess or Ref. Budget Realized (Deficit) Mi~i.ellaneQ11s R!iMinue~ NJ Meadowlands Lease A-12 $ 201, $ 202, $ 1, General Capital Surplus A , , Parking Authority Building Lease A-12 90, , , Trust Reserves A-12 9, , Parking Authority Surplus A-12 50, , MUA Debt Service Payment A-12 61, , Total Miscellaneous Revenue A-1 19,294, ,878, ,583, Receipts from Delinquent Taxes A-2b 2,250, ,261, , Amount to be Raised by Taxes for Support of Municipal Budget: Local Tax for Municipal Purposes 61,875, Minimum Library Tax 1.715, Total Amount to be Raised by Taxes for Support of Municipal Budget A-2b, A-7 63,591, ,188, , ,035, ,227, , 192, NonbudgetRevenue A-2c 906, , A-3 $ 89,035, $ 93, 134, $ 4,099, See accompanying notes to financial statements

18 CURRENT FUND STATEMENT OF REVENUE ANALYSIS OF MISCELLANEOUS REVENUE REGULA TORY BASIS YEAR ENDED DECEMBER Ref. Other Fees and Permits: Tax Collector Tax Assessor Rent Control Township Clerk HealthNital Statistics Police Returned Check Board of Adjustments Planning Application Fees Record Room Purchasing Less: Refunds A-12 $ 22, A-12 1, A-12 41, A-12 3, A-12 93, A , A A-12 35, A-12 37, A-12 49, A-12 2, A-22 A-2 $ 916, , $ 906, Uniform Construction Code Fees: Collections A-12 Less: Refunds A-22 A-2 Payments in Lieu of Taxes A-12 Less: Refunds A-22 A-2 Municipal Court: Collections A-12 Less: Payments to North Bergen Parking Authority A-22 A-2 $ 1,631, , $ 1,575, $ 2,707, , $ 2,667, $ 3,078, , $ 2,232, See accompanying notes to financial statements

19 CURRENT FUND STATEMENT OF REVENUE ANALYSIS OF TAXES REGULA TORY BASIS YEAR ENDED DECEMBER Allocation of Tax Collection Due from State of New Jersey Collections Tax Title Liens Overpayments Applied Prepaid Taxes Applied Total Revenue Allocated to: County Levy and Added Taxes Local School District Taxes Plus: Reserve for Uncollected Taxes Realized Revenue Amount to be Receipts from Raised by Delinquent Ref. Taxation Taxes A-6, A-7 $ 123, A-7 135,722, $ 2,215, A-8 45, A-7,23 167, A-24 1,090, A-1 137,103, ,261, A-17 (27,216,346.41) A-18 (47,640,510.00) A-3 2,941, A-2 $ 65,188, $ 2,261, Total $ 123, ,937, , , ,090, ,364, (27,216,346.41) (47,640,510.00) 2,941, $ 67,449, See accompanying notes to financial statements

20 CURRENT FUND STATEMENT OF REVENUE ANALYSIS OF NON BUDGET REVENUE REGULATORY BASIS YEAR ENDED DECEMBER Ref. Nonbudget Revenue Prior Year Insurance Reimbursements $ 208, FEMA Reimbursements 135, Administrative Fee - State of N.J. Senior Citizens and Veterans 2, North Bergen Library Reimbursement 181, Board of Education Reimbursements 100, State of New Jersey - Boswell Project 16, Parking Authority Reimbursements 32, NJDMV Reimbursement 5, Community Action Rent 20, Union City Parking Rental 20, Snack Bar - Pool Complex 8, Marriage and Civil Ceremonies 18, State Restitution - Courts 1, Utility Rebates 56, Guttenberg Recreation 11, Bus Shelter Fee 20, Rinaldi Bus Parking 30, Sale of Township Property - Gov. Deals.Com 14, Other 24, A-4 Less: Adjustment A-1, A-2 $ 906, $ 906, See accompanying notes to financial statements. -14-

21 CURRENT FUND A-3 Sheet#1 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER ~ Aporooriation Budget Appropriations Modified Budget Paid or Charged Expended ~ Encumbered Unencumbered Unexpended Balance Canceled APPROPRIATIONS WITHIN "CAPS" I -u. DEPARTMENT OF PUBLIC AFFAIRS Directof's Office: Salaries and Wages Other Expenses Purchasing: Salaries and Wages Other Expenses Central Purchasing Township Administrator. Salaries and Wages Other Expenses Township Clerl('s Office: Salaries and Wages Other Expenses North Hudson Council of Mayors: Other Expenses Elections: Other Expenses Public lnfonnation: Other Expenses Printing and Legal Advertising: Other Expenses Consulting Services: Other Expenses Community Services: Salaries and Wages Other Expenses Rent Control: Salaries and Wages Other Expenses Legal Services and Costs: Salaries and Wages Miscellaneous Other Expenses Registrar of Vital Statistics: Salaries and Wages Other Expenses Consumer Affairs Office: Salaries and Wages Board of Health: Salaries and Wages Other Expenses Special Lttigation: Other Expenses License Officer. Salaries and Wages Other Expenses Animal Control: Other Expenses Economic Development : Other Expenses Municipal Court: Salaries and Wages Other Expenses Group Health Insurance Health Benefit Waiver 222, $ 232, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,557, ,557, , , $ 231, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,301, , $ $ , , , , , , , , , , , , , , , , , , , , , ,256, , See accompanying notes to financial statements.

22 A-3 CURRENT FUN() Sheet #2 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER 31, 2016 APPROPRIATIONS WITHIN "CAPS" A~e!oeriations Expended Unexpended Modified Paid or ~ Balance Aporopriation Budget Budget Charged Encumbered Unencumbered Canceled DEPARTMENT OF PUBLIC AFFAIRS Other Insurance $ 1,509, $ 1,509, $ 1,499, $ 9, Unemployment Insurance , Total Department of Public Affairs , ,610, $ 130, ~ DEPARTMENT OF REVENUE AND FINANCE Director's Office: Salartes and Wages 97, , , Other Expenses 6, , , , Tax Collector: Salaries and Wages 275, , , Other Expenses 34, , , , , Tax Assessor. Salaries and Wages 163, , , Other Expenses 34, , , Tax Assessor Consultant: Other Expenses 100, , , , , Financial Administration: Salaries and Wages 271, , , Other Expenses 130, , , , , I Annual Aud~ 112, , , Special Se111ices 100, , , , ~ 29, Housing Inspections: Salaries and Wages 120, , , , Other Expenses 4, , , Postage Total Department of Revenue and Finance , !!Q,, DEPARTMENT OF PUBLIC SAFETY Director's Office: Salaries and Wages 302, , , Other Expenses 7, , , , School Crossing Guards: Salaries and Wages 769, , , , Other Expenses 5, , , , Police: Salaries and Wages 11,561, ,486, ,248, , Other Expenses 571, , , , , Clothing Allowance 81, , , CCTV: Salartes and Wages 275, , , , Ambulance: Salaries and Wages 865, , , , Other Expenses 59, , , , , Traffic Committee: Other Expenses 6, , , , Alarm System: Salartes and Wages 155, , , , Other Expenses 10, , , ABC Board: Other Expenses 40, , , , Chaplains: Other Expenses 2, , , , Un~orm Fire Safety Act: Salaries and Wages 206, , , , See accompanying notes to financial statements.

23 TQWNSHIP OF NORTH BERGEN A-3 CURRENT FUND Sheet #3 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER APPROPRIATIONS WITHIN "CAPS" Ae~~ations Ex~nded Unexpended Modified Paid or Reserved Balance Appropriation Budget Budget Charged Encumbered Unencumbered Canceled DEPARTMENT OF PUBLIC SAFETY Municipal Prosecutor. Salaries and Wages $ 97, $ 98, $ 98, $ 1.72 Other Expenses 10, , , , Vehicle Maintenance: Salaries and Wages 532, , , , Other Expenses $ Total Department of Public Safety 16,21 5, ,034, , , , I Other --.J DEPARTMENT OF PUBLIC WORKS Directofs Office: Salaries and Wages 187, , , Other Expenses 10, , , , , Engineering: Other Expenses 85, , , , Streets and Roads: Salaries and Wages 2,644, ,628, ,397, , Other Expenses 850, , , , , Board of Adjustment: Expenses 70, , , , Planning Board: Other Expenses Total Department of Public Wort<s 3,937, ,935, ,335, , , DEPARTMENT OF PARKS AND PUBLIC PROPERTY Directofs Office: Salaries and Wages 192, , , Other Expenses 3, , , , Part<s and Playgrounds: Salaries and Wages 994, , , , Other Expenses 95, , , , , Poot: Salaries and Wages 240, , , Other Expenses 130, , , Public Events: Other Expenses 60, , , , Public Buildings and Grounds: Salaries and Wages 182, , , , Other Expenses 222, , , , , Recreation: Salaries and Wages 702, , , , Other Expenses Total Department of Part<s and Public Property 3,053, ,0?4~246,82 2.W...d2~41_ --~E1_9_ ---~ UNIFORM CONSTRUCTION CODE Chief Administrator of Enforcement Salaries and Wages 90, , , Other Expenses 1, , Building Department: Salaries and Wages 513, , , , Other Expenses 19, , , , , Plumbing Department: Salaries and Wages 127, , , Other Expenses 2, , , , See accompanying notes to financial statements.

24 CURRENT FUND A-3 Sheet#4 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER Approoriation Budget Aeeropriations Modified Budget Paid or Charged Ex~nded Reserved Encumbered Unencumbered Unexpended Balance Canceled APPROPRIATIONS WITHIN "CAPS"!.!~IFQRM QQN~TR!,!QTIQ~ QQQ!;!QQNTIN!.!!;QI Fire Protection Officials: Other Expenses Total Un~orm Construction Code $ $ $ $ $ !l., ' QC!,!NCLASSIFIEQ Municipal Utilities Authority Gasoline Electricity Telephone Street Lighting Fire Hydrant Service Water Total Unclassified CQNTINGENT Total Operations Wrthin "CAPS" 6,500, ,500, , , , , , , , , , , ,899, ,444, ,400, ,500, , , , , , ,237, , , , , , , , , , ,577, Detail: Salaries and Wages Other Expenses 24,974, ,976, (),!7Q,480,()Q 3JA_24,10llllL 23,243, ~7_.99],30IJ6_ 732, _585,877,22 2,844, DEFERRED CHARGES AND STATUTORY EXPENQITURES Statutory Expenditures: Contribution to: Social Security System Public Employees' Retirement System Pension Adjustment Fund Police & Fireman's Retirement System Total Deferred Charges and Statutory Expendttures 1, 110, , 154, ,333, ,333, , , , , , 147, ,331, , ~0, ~ , , , Total Appropriations Wrthin "CAPS" 60,488, ,488, ,301, , ,601, APPRQPRIATIQN~!;XQ~!.!Q!;Q FRQM "QAPS" QJHER QPERATIQNS Group Insurance Maintenance of Free Public Library Operations - 911: Salaries and Wages Reserve to Pay Tax Appeals Total Other Operations 227, , ,244, ,244, , , _ 4L092, _4,092,357,00 227, ,244, , ~90, L092, See accompanying notes to financial statements.

25 CURRENT FUND A-3 Sheet#5 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER Aopropriation Budget Aeei: E!!i!!tions Modified Budget Paid or Charged E!!Eended ~ Encumbered Unencumbered Unexpended Balance.f.anceled APPROPRIATIONS EXCLUDED FROM "CAPS" INTERLOCAL MUNICIPAL AGREEMENTS North Hudson Regional Fire and Rescue: Other Expenses $ Regional Communications: Other Expenses 14,080, $ 14,080, , $ 13,927, t $ 152,9" ' Summer -\Q Total Other Operations STATE AND FEDERAL PROGRAMS OFFSET!;!Y RfVfN!.!!; Food Program: Other Expenses Salaries and Wages Other Expenses Clean Communities Grant Other Expenses Pedestrian Safety Grant: Other Expenses Bulletproof Vest: Other Expenses Body Armor Fund: Other Expenses Division of Highway Safety: Other Expenses Emergency Management: FEMA Grant Drunk Driving Enforcement Grant State Housing Inspection Program: Other Expenses DOT NJ Transportation Trust: Other Expenses Alcohol Education and Rehabilitation: Other Expenses Matching Funds f0< Grants Matching Funds Drug Alliance ,302, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , g_ , , See accompanying notes to financial statements.

26 CURRENT FUND A-3 Sheet#6 STATEMENT OF EXPENDITURES REGULATORY BASIS YEAR ENDED DECEMBER AooroOriation BudQet Aee~nalions Modified Budget Paid or Charged Exeended Reserved Encumbered Unencumbered Unexpended Balance Canceled APPROPRIATIONS EXCLUDED FROM "CAPS" Total Operations Excluded from "CAPS" $ $ $ ~~]25.40 Detail: Salaries and Wages Other Expenses 173, , ~~~?._ "15, ~ _1El5, CAPITAL IMPROVEMENTS Capital Improvement Fund 150, , , MUNICIPAL DEBT SERVICE Payment of Bond Principal Payment of Bond Anticipation Notes Interest on Bonds Interest on Notes N ' -= Green Trust Loan Program: ' Loan Repayments for Principal and Interest MUNNJEIT Pipeline Debt NHRF Lease Payable 1,975, , 175, ,353, ,353, ,122, , , , , , , , ,110, , 110, , 175, ,351, , , , , ,109, $ 1, , , , Total Municipal Debt Service 6,061, ,061, ,019, , DEFERRED CHARGES Emergency Authorization Special Emergency Authorizations DEFERRED CHARGES Judgments Total Appropriations Excluded from "CAPS" Sub-Total Appropriations 85,536, ,093, ,654, , , 766, , Reserve for Uncollected Taxes Tota! Appropriations $ $ $ 84,596, $ 585,87722 $ 3,766, $ 86, Adopted Budget Added by Chapter 159 $ 88,478, Above $ 89,035, See accompanying notes to financial statements

27 CURRENT FUND A-3 Sheet#7 STATEMENT OF EXPENDITURES REGULA TORY BASIS YEAR ENDED DECEMBER A-3 Appropriation Ref. Ap~ro~riations Modified Budget Paid or Charged Ex~ended Unexpended Reserved Balance Encumbered Unencumbered Canceled Modified Budget Emergency Appropriation Reserve for Uncollected Taxes Cash Disbursed lnterfunds Receivable, Net lnterfunds Payable Claims Fund Tax Overpayments Encumbered Unencumbered Cancelled A-2 A-14 A-2b A-4 A-1 3 A-20 A-22 A-23 A, A-3 Sheet #Q A, A-3 Sheet #Q A, A-3 Sheet #Q $ 89,035, $ 280, (2,941,596.45) 2,941, ,073, ,915, , ,370, ,490, {86,357.37) $ 585, $ 3,766, $ 86, $ 86,007, $ 84,596, $ 585, $ 3, 766, $ 86, ' N -I Ref. A-1 A-3 Sheet #S A A Above See accompanying notes to financial statements.

28 TRUST FUND COMPARATIVE BALANCE SHEETS REGULATORY BASIS DECEMBER 31 I 2016 AND 2015 B Sheet# 1 ASSETS Animal Control Trust Fund Cash Other Funds Cash Account Receivable Insurance Fund Cash Balance Ref. December B-2 $ 23, B-2 5,253, B-4 919, , 172, B-2 644, Balance December $ 19, ,508, , ,956, , Community Develo12ment Trust Fund Cash B-2 179, Due from Housing and Urban Development B-3 1,285, ,464, Payroll Fund Cash B-2 263, $ 8,569, , ,380, ,387, , $ 8,295, See accompanying notes to financial statements

29 TRUST FUND COMPARATIVE BALANCE SHEETS REGULA TORY BASIS DECEMBER AND 2015 B Sheet# 2 LIABILITIES. RESERVES AND FUND BALANCES Ref. Balance December Balance December Animal Control Trust Fund Due to State of New Jersey Due to Current Fund Reserve for Animal Control Expenditures B-6 B-10 B-12 $ 16, , , $ , , Other Funds lnterfund Payable Reserve for Special Deposits Accounts Payable Fund Balance B-10 B-13 B-13 B-1 788, ,360, , ,172, , ,592, ,956, Insurance Fund Accounts Payable Reserve for: Unemployment Compensation Insurance Self-Insurance B-15 B , , , , , , , Community Development Trust Fund lnterfund Payable Reserve for Community Development Trust Fund: Department of Housing and Urban Development B-10 B , ,356, ,464, , ,281, ,387, Payroll Fund Payroll Deductions Payable B-7 263, , , , $ 8,569, $ 8,295, See accompanying notes to financial statements. -23-

30 TRUST FUND STATEMENT OF TRUST FUND BALANCE REGULATORY BASIS YEAR ENDED DECEMBER Balance, December 31, 2016 and 2015 B Other Trust Fund $ See accompanying notes to financial statements. -24-

31 GENERAL CAPITAL FUND COMPARATIVE BALANCE SHEETS REGULA TORY BASIS DECEMBER AND 2015 g_ Balance Balance A~SETS AND Df;;F!;RREQ CHARGES Ref. December 31, 2016 December 31, 2015 Cash C-2 $ 3,624, $ 2,230, lnterfunds Receivable C-4 1,588, ,160, Due from State of New Jersey: Green Acres Trust Program C-5 1,500, ,500, Due from Town of Guttenberg C-6 338, , Deferred Charges to Future Taxation - Funded C-7 33,717, ,339, Deferred Charges to Future Taxation - Unfunded C-8 30,776, ,302, $ 71,546, $ 69,871, LIABILITIE~ RE~ERY:~~ AND FUND BALA~QE General Serial Bonds C-17 $ 25,347, $ 27,557, Bond Anticipation Notes Payable C-16 28,937, ,463, Capital Leases Payable C-14 6,835, ,689, Green Acres Loans Payable C , , Environmental Infrastructure Loan Payable C-15 1,266, ,787, Capital Improvement Fund 26, Improvement Authorizations: Funded C-9 34, , Unfunded C-9 6,338, ,572, Reserve for Future Improvements C , , Reserve for Grants and Other Receivables C-12 1,838, ,838, Fund Balance C-1 346, , $ 71,546, $ 69,871, Bonds and Notes Authorized but Not Issued C-18 $ 1,838, $ 1,838, See accompanying notes to financial statements

32 GENERAL CAPITAL FUND STATEMENT OF FUND BALANCE REGULA TORY BASIS YEAR ENDED DECEMBER Balance, December 31, 2015 Increased by: Premium on Sale of Notes Ref. c C-2 $ 265, , , Decreased by: Anticipated Revenue C-2 $ 185, Applied to Improvement Authorizations C-9 77, Balance, December 31, 2016 c 262, $ 346, See accompanying notes to financial statements. -26-

33 PUBLIC ASSISTANCE TRUST FUND COMPARATIVE BALANCE SHEETS REGULATORY BASIS DECEMBER AND 2015 D ASSETS Trust Fund Account #1 Cash Balance Ref. December 31, 2016 D-1 $ 5, Balance December 31, 2015 $ 1, LIABILITIES AND FUND BALANCE Trust Fund Account #1 Reserve for Expenditures D-2 $ 5, $ 1, See accompanying notes to financial statements. -27-

34

35 NOTES TO FINANCIAL STATEMENTS

36 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND REPORTING ENTITY Reporting Entity Since 1931, The Township of North Bergen, Hudson County, New Jersey (the "Township"), has been governed under the Walsh Act form of New Jersey municipal government. The government consists of five commissioners elected at large to the Township Committee in non-partisan elections to serve four year terms of office on a concurrent basis. After each election, the Commissioners select one of their members to serve as mayor and each individual is assigned to head one of the five Commissions. The Township's major operations include public safety, road repair and maintenance, sanitation, fire protection, recreation and parks, health services, water and sewer, and general administrative services. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Township conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"), which is another reporting framework other than accounting principles generally accepted in the United States of America ("GAAP"). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Borough accounts for its financial transactions through the separate funds, which differ from the fund structure in accordance with GAAP. The Governmental Accounting Standards Board and subsequent Codification (collectively, "GASB") is the accepted standard-setting body for establishing governmental accounting and financial reporting principles for state and local governments. The GASB establishes seven fund types and two account groups to be used by governmental units when reporting financial position and results of operations in accordance with GAAP. GASB has issued Statement No. 14 which requires the financial reporting entity to include both the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board, and either a) the ability to impose will by the primary government, or b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. However, the municipalities in the State of New Jersey do not prepare financial statements in accordance with GAAP and thus do not comply with all of the GASB pronouncements. The financial statements contained herein include only those boards, bodies, officers or commissions as required by the provisions of N.J.S.A. 40A:5-5. The financial statements of the Township, however, do not include the operations of the Municipal Library, Municipal Parking Authority or the Municipal Utilities Authority, which are separate entities subject to a separate examination. The Township uses funds, as required by the Division, to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial administration by segregating transactions related to certain Township functions or activities. An account group, on the other hand, is designed to provide accountability for certain assets and liabilities that are not recorded in those Funds. The Township has the following funds and account groups: Current Fund - Encompasses resources and expenditures for basic governmental operations. Fiscal activity of Federal and State grant programs are also included therein. Trust Funds - The records of receipts, disbursements and custodianship of monies in accordance with the purpose for which each account was created are maintained in Trust Funds. These include the Animal Control Fund, General Trust Fund, Federal Housing and Urban Development Fund, Payroll Account and the Self-Insurance Fund

37 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) General Capital Fund - The receipts and expenditure records for the acquisition of general infrastructure and other capital facilities, other than those acquired in the Current Fund, are maintained in this Fund, as well as related long-term debt accounts. Public Assistance Trust Fund - Receipts and disbursements of funds that provide assistance to certain residents of the Township which are not covered under the provisions of Title 44 of the New Jersey statutes are maintained in the Public Assistance Trust Fund. General Fixed Assets Account Group - These accounts reflect estimated valuations of land, buildings and certain moveable fixed assets of the Township. Basis of Accounting The Township follows the regulatory basis of accounting. Under this method of accounting, revenues, except for Federal and State Aid, are recognized when received and expenditures are recorded when incurred. The accounting principles and practices prescribed or permitted for municipalities by the Division ("regulatory basis of accounting") differ in certain respects from US GAAP applicable to local government units. The more significant differences are as follows: Property Taxes and Other Revenue Real property taxes are assessed locally, based upon the assessed value of the property. The tax bill includes a levy for Municipal, County, and School purposes. The bills are mailed annually in June for that calendar year's levy. Taxes are payable in four quarterly installments on February 1, May 1, August 1, and November 1. The amounts of the first and second installments are determined as one-quarter of the total tax levied against the property for the preceding year. The installment due the third and fourth quarters is determined by taking the current year levy less the amount previously charged for the first and second installments, with the remainder being divided equally. If unpaid on these dates, the amount due becomes delinquent and subject to interest at 8% per annum, or 18% on any delinquency amount in excess of $1,500. The School levy is turned over to the Board of Education as expenditures are incurred, and the balance, if any, must be transferred as of June 30 of each fiscal year. County taxes are paid quarterly on February 15, May 15, August 15 and November 15, to the County by the Town. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on April 1 in the year following the calendar year levy when the same became in arrears, the collector in the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placing the property on a standard tax sale. The Town also has the option when unpaid taxes or any municipal lien, or part thereof, on real property remains in arrears on the 11th day of the 11 1 h month in the fiscal year when the taxes or lien became in arrears, the collector in the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placing property on an accelerated tax sale, provided that the sale is conducted and completed no earlier than in the last month of the fiscal year. The Town may institute annual in rem tax foreclosure proceedings to enforce the tax collection or acquisition of title to the property. In accordance with the accounting principles prescribed by the State of New Jersey, current and delinquent taxes are realized as revenue when collected. Since delinquent taxes and liens are fully reserved, no provision has been made to estimate that portion of the tax receivable and tax title liens that are uncollectible. US GAAP requires property tax revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both levied and available), reduced by an allowance for doubtful accounts. Grant and Similar Award Programs Federal and State grants, entitlements or shared revenue received for purposes normally financed through the Current Fund are recognized when anticipated in the Township budget. GAAP requires such revenue to be recognized in the accounting period when they become susceptible to accrual. -30-

38 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Miscellaneous Revenue Miscellaneous revenues are recognized on a cash basis. Receivables for miscellaneous items that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the Town's Current Fund. US GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both measurable and available). Budgets and Budgetary Accounting An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanying financial statements represent amounts adopted by the Township and approved by the Division per N.J.S.A. 40A:4 et seq. The Township is not required to adopt budgets for the following funds: Trust Funds General Capital Fund The governing body is required to introduce and approve the annual budget no later than the last day in February of the fiscal year. The budget is required to be adopted no later than April 20, and prior to adoption, must be certified by the Division. The Director of the Division, with the approval of the Local Finance Board, may extend the introduction and approval and adoption dates of the municipal budget. The budget is prepared by fund, function, activity and line item (salary or other expense) and includes information on the previous year. The legal level of control for appropriations is exercised at the individual line item level for all operating budgets adopted. The governing body of the municipality may authorize emergency appropriations and the inclusion of certain special items of revenue to the budget after its adoption and determination of the tax rate. During the last two months of the fiscal year, the governing body may, by a 2/3 vote, amend the budget through line item transfers. Management has no authority to amend the budget without the approval of the governing body. Expenditures may not legally exceed budgeted appropriations at the line item level. Expenditures Expenditures for general operations are generally recorded on the accrual basis. Unexpended appropriation balances, except for amounts which may have been cancelled by the governing body or by statutory regulation, are automatically recorded as liabilities at year end, under the title of "Appropriation Reserves". Amounts unexpended at the end of the second year are lapsed and are recorded as income. Grant appropriations are charged upon budget adoption to create separate spending reserves. Budgeted transfers to the Capital Improvement Fund are recorded as expenditures to the extent permitted by law. Expenditures from Trust and Capital Funds are recorded upon occurrence and charged to accounts statutorily established for specific purposes. Budget Appropriations for interest on General Capital is recognized on the cash basis and is not accrued on the records ; interest on Utility Debt is recognized on the accrual basis and so recorded. GAAP requires expenditures to be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt, which should be recognized when due. -31-

39 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Encumbrances As of January 1, 1986, all local units were required to maintain an encumbrance accounting system. This directive states that contractual orders outstanding at year end, are reported as expenditures through the establishment of an encumbrance payable. Encumbrances do not constitute expenditures under GAAP. Appropriation Reserves Appropriation reserves are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding year. Lapsed appropriation reserves are recorded as additions to income. Appropriation reserves do not exist under GAAP. Operating Deficits Deficits resulting from expenditures and other debits which exceed cash revenues, other realized revenues and credits to income in such fiscal year, are recorded as deferred charges on the balance sheet of the respective operating fund at year end and are required to be funded in the succeeding year's budget. US GAAP does not permit the deferral of operating deficits at year end. Compensated Absences Expenditures relating to obligations for unused vested accumulated sick pay are not recorded until paid. GAAP requires that the amount that would normally be liquidated with expendable available financial resources be recorded as an expenditure in the operating funds and the remaining obligations be recorded as a long-term obligation. Property Acquired for Taxes Property Acquired for Taxes (Foreclosed Property) is recorded in the Current Fund at the assessed valuation during the year when such property was acquired by deed or foreclosure and is offset by a corresponding reserve account. GAAP requires such property to be recorded in the capital fixed assets at appraised value on the date of acquisition. Self-Insurance Contributions Contributions to self-insurance funds are charged to budget appropriations. GAAP requires that payments be accounted for as an operating transfer and not as an expenditure. lnterfunds Receivable lnterfunds Receivable in the Current Fund are generally recorded with offsetting reserves which are established by charges to operations. Collections are recognized as income in the year that the receivables are realized. lnterfunds Receivable of all other funds are recorded as accrued and are not offset with reserve accounts. lnterfunds Receivable of one fund are offset with lnterfunds Payable of the fund. GAAP does not require the establishment of an offsetting reserve. Inventories of Supplies Materials and supplies purchased by all funds are recorded as expenditures. An annual inventory of materials and supplies for utilities is required, by regulation, to be prepared by Township personnel for inclusion on the Utility Operating Funds' Balance Sheet. Annual changes in valuations, offset with a Reserve Account, are not considered as affecting results of operations. Materials and supplies of other funds are not inventoried nor included on their respective balance sheet. The Township does not maintain a utility. -32-

40 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deposits Deposits includes amounts on demand deposits, as well as short-term investments with a maturity date within three months of the date acquired by the government. Investments are reported at cost and are limited by N.J.S.A. 40A:5-15.I et seq. US GAAP requires that all investments be reported at fair value. Incurred But Not Reported OBNR) Reserves and Claims Pavable The Township has not created a reserve for any potential unreported self-insurance losses which may have taken place. Additionally, the Town has not recorded a liability for those claims filed, but which have not been paid (i.e. claims payable). US GAAP requires that the amount that would normally be liquidated with expendable available financial resources be recorded as an expenditure in the operating funds and the remaining potential claims are recorded as a long-term obligation in the government-wide financial statements, however that is not required under the Division's regulatory-basis of accounting. Tax Appeals and Other Contingent Losses Losses arising from tax appeals and other contingent losses are recognized at the time a decision is rendered by an administrative or judicial body; however, municipalities may establish reserves transferred from tax collections or by budget appropriation for future payments of tax appeal losses. US GAAP requires such amounts to be recorded when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. General Fixed Assets In accordance with N.J.A.C. 5:30-5.6, Accounting for Governmental Fixed Assets, the Town has developed a fixed assets accounting and reporting system. Fixed assets are defined by the Town as assets with an initial, individual cost of $2,000 and an estimated useful life in excess of two years. Fixed assets used in governmental operations (general fixed assets) are accounted for in the General Fixed Assets Account Group. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks are not capitalized. Fixed Assets purchased after December 31, 1999 are stated at cost. Donated fixed assets are recorded at estimated fair market value at the date of donation. Fixed Assets purchased prior to December 31, 1999 are stated as follows: Land and Buildings Machinery and Equipment Assessed Value Replacement Costs No depreciation has been provided for in the financial statements. Expenditures for construction in progress are recorded in the Capital Funds until such time as the construction is completed and put into operation. Basic Financial Statements The GASS also defines the financial statements of a governmental unit to be presented in the general purpose financial statements to be in accordance with GAAP. The Township presents the financial statements listed in the table of contents, which are required by the Division and which differ from the financial statements required by GAAP. In addition, the Division requires the financial statements listed in the table of contents to be referenced to the supplementary schedules. This practice differs from GAAP. -33-

41 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Pronouncements The GASS issued Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions in June This Statement replaces the requirements of Statement 45 and the primary objective of this Statement is to improve accounting and reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPES). It also improves information provided by state and local government employers about financial support for OPEB that is provided by other entities. The requirements of this Statement are effective for financial statements for reporting periods beginning after June 15, Management has not yet determined the impact of the Statement on the financial statements. The GASS issued Statement 77, Tax Abatement Disclosures in August This Statement is intended to improve financial reporting by requiring disclosure of tax abatement information about a reporting government's own tax abatement agreements and those that are entered into by other governments and that reduce the reporting government's tax revenues. The requirements of this Statement are effective for financial statements for reporting periods beginning after December 15, The Township has implemented this standard in the current year. The detail is reflected in footnote DEPOSITS AND INVESTMENTS DEPOSITS New Jersey statutes permit the deposit of public funds in institutions located in New Jersey, which are insured by the Federal Deposit Insurance Corporation (FDIC) or any other agencies of the United States that insures deposits or the State of New Jersey Cash Management Fund. Cash on deposit is partially insured by federal deposit insurance in the amount of $250, in each depository. Balances above the federal deposit insurance amount are insured by the Government Unit Deposit Protection Act (GUDPA}, N.J.S.A. 17:941, et seq., which insures all New Jersey governmental units' deposits in excess of the federal deposit insurance maximums. Based on GASB criteria, the Township considers cash and cash equivalents to include petty cash, change funds, demand deposits, money market accounts, short-term investments and cash management money market mutual funds The State of New Jersey Cash Management Fund is authorized by statute and regulations of the State Investment Council to invest in fixed income and debt securities which mature or are redeemed within one year. Twenty-five percent of the Fund may be invested in eligible securities which mature within two years provided, however, the average maturity of all investments in the Fund shall not exceed one year. Collateralization of fund investments is generally not required. In addition, by regulation of the Division, municipalities are allowed to deposit funds in the Municipal Bond Insurance Association (MBIA) through their investment management company, the Municipal Investors Service Corporation. In accordance with the provisions of the Governmental Unit Deposit Protection Act of New Jersey (GUDPA), public depositories are required to maintain collateral for deposits of public funds that exceed insurance limits as follows: The market value of the collateral must equal five percent of the average daily balance of public funds or; If the public funds deposited exceed 75 percent of the capital funds of the depository, the depository must provide collateral having a market value equal to 100 percent of the amount exceeding 75 percent. -34-

42 3. DEPOSITS AND INVESTMENTS (CONTINUED) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 All collateral must be deposited with the Federal Reserve Board, The Federal Home Loan Bank Board or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000, Cash and cash equivalents have original maturities of three months or less from the date of purchase. Investments are stated at cost, which approximates fair value. At December 31, 2016 and 2015, the book values of the deposits of the Township consisted of the following: Book Balance December 31, December 31, Cash (Demand Accounts) $ 33,611, $ 29,320, Change Funds (On-Hand) Total $ 33,611, $ 29,321, Custodial Credit Risk - Deposits - Custodial credit risk is the risk that in the event of a bank failure, the Township's deposits may not be returned. The government does not have a specific deposit policy for custodial credit risk other than those policies that adhere to the requirements of statute and to deposit all of its funds in banks covered by FDIC and GUDPA. At least five percent of the Township's deposits were fully collateralized by funds held by the financial institution, but not in the name of the Township. Due to the nature of GUDPA, further information is not available regarding the full amount that is collateralized. At December 31, 2016 and 2015 the Township of North Bergen had the following depository accounts. All deposits are carried at cost. $430, and $381, held in agency and payroll accounts for the years ended December 31, 2016 and 2015, respectively are not covered by GUDPA. Depository Account Bank Balance December 31, December 31, FDIC Insured $ 500, $ 500, GUPDA Insured 32,830, , 712, Total $ 33,330, $ 29,212, Investments New Jersey statutes permit the Township to purchase the following types of securities: Bonds or other obligations of the United States of America or obligations guaranteed by the United States of America. This includes instruments such as Treasury bills, notes and bonds. Government money market mutual funds. Any federal agency or instrumentality obligation authorized by Congress that matures within 397 days from the date of purchase, and has a fixed rate of interest not dependent on any index or external factors. -35-

43 3. DEPOSITS AND INVESTMENTS (CONTINUED) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Bonds or other obligations of the local unit or school districts of which the local unit is a part. Any other obligations with maturities not exceeding 397 days, as permitted by the Division of Investments. Local government investment pools, such as New Jersey CLASS, and the New Jersey Arbitrage Rebate Management Program. New Jersey State Cash Management Fund. Repurchase agreements of fully collateralized securities, subject to special conditions. The Township did not maintain any investments during 2016 and TAXES AND TAX TITLE LIENS RECEIVABLE Property assessments are determined on true values and taxes are assessed based upon these values. The residential tax bill includes the levies for the Township, County and School purposes. Certified adopted budgets are submitted to the County Board of Taxation (the "Board") by each taxing district. The tax rate is determined by the Board upon the filing of these budgets. Municipalities operating under a calendar fiscal year budget are required by statute to mail tax bills once a year on or about July 20 1 h. Tax installments not paid by the above due dates are subject to interest penalties. The rate of interest is 8% per annum on the first $1, of delinquency and 18% on any delinquency in excess of $1, The resolution also sets a grace period of ten days before interest is calculated. Taxes unpaid on the 11 1 h day of the eleventh month in the fiscal year when the taxes became in arrears are subject to the tax sale provisions of the New Jersey statutes. The municipality may institute in rem foreclosure proceedings after six months from the date of the sale if the lien has not been redeemed. The following is a five year comparison of certain statistical information relative to property taxes and property tax collections: Comparative Schedule of Tax Rates Calendar Year 2016 Calendar Year 2015 Calendar Year 2014 Tax Rate $ $ $ Apportionment of Tax Rate: Municipal (including Library) County School Open Space - County $ $ $

44 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND TAXES AND TAX TITLE LIENS RECEIVABLE (continued) Assessed Valuations Calendar Year Amount 2016 $ 2,529,615, ,537, 135, ,485,024, Tax Levies and Collections Percentage Year Tax Lew Collections of Collections CY 2016 $ 139,077, $ 137, 103, % CY ,669, ,772, CY ,389, ,412, Delinquent Taxes and Tax Title Liens Amount of Amount of Percentage Tax Title Delinquent Total of Year Liens Taxes Delinquent Tax Lew CY 2016 $ 1,401, $ 1,813, $ 3,214, % CY ,278, ,213, ,491, CY , 133, ,441, ,574, PROPERTY ACQUIRED BY TAX TITLE LIEN LIQUIDATION The value of properties acquired by tax title lien liquidation is carried at assessed valuation in the year of acquisition, was as follows: Year Amount $ 6,543, ,543, ,543, FUND BALANCES APPROPRIATED Year Balance ut111zed rn Budgets of Succeeding Year Current Fund: CY2016 CY2015 CY2014 $ 13, 160, ,704, ,868, $ 2,500, ,900, ,000,

45 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND MUNICIPAL DEBT The Local Bond Law governs the issuance of bonds and notes to finance general capital expenditures. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the Township are general obligation bonds, backed by the full faith and credit of the Township. Pursuant to N.J.S.A. 40A:2-8, bond anticipation notes, which are issued to temporarily finance capital projects, cannot be renewed past the third anniversary unless an amount equal to at least the first legal requirement is paid prior to each anniversary and must be paid off within ten years and five months or retired by the issuance of bonds. Summary of Municipal Debt (Excluding Operating and School Debt) Calendar Year2016 Calendar Year2015 Issued General: Bonds and Notes Green Trust Loan Environmental Infrastructure Loan $ 54,284, , ,266, $ 53,020, , ,787, Bonds Issued by Another Public Entity Guaranteed by Municipality Total Issued 49,471, ,291, , 178, ,291, Authorized but Not Issued General: Bonds and Notes 1,838, ,838, Net Bonds and Notes Issued and Authorized but Not Issued $ 107, 130, $ 112, 130, Summary of Statutory Debt Condition - Annual Debt Statement The summary statement of debt condition which follows is prepared in accordance with the required method of setting up the Annual Debt Statement and indicates a statutory net debt of 1.131%. Gross Debt Deductions Net Debt Local School District General Debt $ 3,300, $ 3,300, , 130, ,471, $ 57,659, $ 110,430, $ 52,771, $ 57,659, Net Debt, $57,659,095.79, divided by Equalized Valuation Basis per N.J.S.A. 40A:2-2 as amended,$5,098,733, equals 1.131%.The foregoing is in agreement with the revised annual debt statement submitted with the audit report. -38-

46 7. MUNICIPAL DEBT (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Borrowing Power Under N.J.S.A. 40A:2-6 as Amended 3 1/2% of Equalized Valuation Basis Net Debt $ 178,455, ,659, Remaining Borrowing Capacity $ 120,796, School Debt Deductions _ School debt is deductible up to the extent of 4.0% of the Average Equalized Assessed Valuations of real property for the Local School District. The Board of Education of the Township is a Type fl school district. The members of the Board of Education are elected by the voters of the school district on the third Tuesday in April. At each annual school election, the Board of Education shall submit to the voters of the district the amount of money fixed and determined in its budget, excluding interest and debt redemption charges, to be voted upon for the use of the public schools of the district for the ensuing school year. Long-Term Debt The Township issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. The full faith and credit of the Township are irrevocably pledged for the payment of the principal of the bonds and interest thereon. As of December 31, 2016 and 2015, the Township's long-term debt is as follows: General Obligation Bonds $11,000,000, 2008 Refunding Bonds, due in annual installments of $580,000 through August 2018, interest at 5.00% $ 1, 160, $ 1, 740, $3,800,000 Tax Appeal Bonds, matured during ,000, $22,472,000, 2009 Bonds, were partially refunded by the 2016 refunding bond. Annual installment of $1,072,000 to $1,390,000 through February 2020 remain due at an interest rate of 4.00% 4,712, ,472, $3, 145,000, 2012 Refunding Bonds, due in annual installments of $385,000 to $395,000 through April 2021, interest 3.00% to 4.00% 1,950, ,345, $17, 725, Refunding Bonds, due in annual installments of$1,360,000 to $1,490,000, interest at 3.00% to 5.00% 17,525, $ 25,347, $ 27,557,

47 7. MUNICIPAL DEBT (continued) 2016 Bonds Refunding TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Pursuant to a bonds purchase contract entered into between the Township and the underwriter, the bonds are being purchased at an aggregate purchase price of $20,059, (representing the principal amount of the bonds of $17,725,000.00, plus an original issue premium of $2,423, and less the underwriter's discount of $88,625.00). The difference between cash flows required to service the old debt and the cash flows to service the new debt was $834, The economic gain (net present value) resulting from the refunding was $683, As a result of the refunding, $17,760, of the defeased debt is still outstanding at December 31, Changes in Long-Term Municipal Debt The Town's long term capital debt activity for 2016 and 2015 is as follows: Balance December 31, 2015 Increases Reductions Balance December 31, 2016 Due Within One Year General Capital Fund Bonds Payable $ 27,557, $ 17,725, $ 19,935, $ 25,347, $ 2,047, Balance December 31, 2014 Increases Reductions Balance December 31, 2015 Due Within One Year General Capital Fund Bonds Payable $ 29,487, $ ======== $ 1,930, $ 27,557, $ 1,975, A Schedule of Annual Debt Service for Principal and Interest for Bonded Debt is as follows: Fiscal General -- Year Principal Interest Total 2017 $ 2,047, $ 999, $ 3,046, ,070, , ,000, ,540, , ,381, ,780, , ,554, ,745, , ,449, ,300, ,552, ,852, ,420, , ,318, ,445, , ,466, $ 25,347, $ 7, 723, $ 33,070,

48 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND MUNICIPAL DEBT (continued) Green Acres Trust Loans The Township was issued loans from the New Jersey Department of Environmental Protection for the purpose of improvements to the Township parks at an interest rate of 2%. Two new loans were issued to the Township in fiscal year 2010 at a zero percent interest rate. Loans payable at December 31, 2016 in the amount of $269, are as follows: Soccer Field $ 5, th Street Park , Ri\eNiew Park , th Street Park , th Street Field , $ 269, The following is a Schedule of Annual Principal and Interest for the Green Acres Trust Loan Year Principal Interest Total 2017 $ 37, $ $ 37, , , , , , , , , , , $ 269, $ $ 269, Environmental Infrastructure Trust Loan The Township has a service contract with the North Bergen Municipal Utility Authority (MUA) in which the MUA provides for the operation of a sewerage system for the Township. The MUA applied for and received an Environmental Infrastructure Trust loan from the State of New Jersey for system upgrades. The Township has agreed to pay fifty percent (50%) of the debt service on the loan. The Township's portion of the loan payable as of December 31, 2016 is as follows: Year Principal Interest Total 2017 $ 113, $ 20, $ 133, , , , , , , , , , , , , , , , , , $ 1,266, $ 89, $ 1,355,

49 7. MUNICIPAL DEBT (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Hudson County Improvement Authority (HCIAJ The Township entered into a regional agreement with other municipalities to establish the North Hudson Regional Fire and Rescue. Debt was issued through the HCIA to build fire houses and for other capital expenditures. Each municipality was apportioned a share of the debt. At December 31, 2016 and 2015, the Township's share was $6,835, and $7,689,368.50, respectively. The Township's schedule of capital lease payments at December 31, 2016 are as follows: YEAR AMOUNTS Thereafter 1, 165, ,367, , 165, , 165, , 153, ,785, Total minimum lease payment Less amount representing interest Present value of net future minimum lease payments 8,802, {1,967, ) 6,835, North Bergen Municipal Utilities Authority The Township guarantees the debt of the Utilities Authority. Debt was issued for construction of a wastewater treatment plant and other capital projects. At December 31, 2016 and 2015, the Authority's debt guaranteed by the Township was $49,471, and $55, 178, and, respectively. Bond Anticipation Notes Outstanding Bond Anticipation Notes are summarized as follows: Short Terrm Debt Balance December 31, 2015 Additions Reductions Balance December 31, 2016 Bond Anticipation Notes General Capital Fund $ 25,463, $ 28,937, $ 25,463, $ 28,937, Balance December 31, 2014 Additions Reductions Balance December 31, 2015 Bond Anticipation Notes General Capital Fund $ 24,619, $ 25,463, $ 24,619, $ 25,463,

50 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND DEFERRED CHARGES TO BE RAISED IN SUCCEEDING YEARS BUDGET Under N.J.S.A. 40A:4-53, special emergencies, the Township must raise twenty percent each per year for accumulated absences. At December 31, 2015, there were deferred charges totaling $280, The breakdown of the emergency is as follows: Purpose Amount 2011 Accumulated Vacation and Sick Pay $ In 2016, the Township had no deferred charges. 9. PENSION & RETIREMENT PLANS Public Employee Retirement System The Public Employee Retirement System is a cost-sharing, multiple employer defined benefit pension plan as defined in GASB Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the PERS Plan are as follows: Plan Membership and Contributing Employers- Substantially all full-time employees of the State of New Jersey or any county, municipality, school district or public agency are enrolled in PERS, provided the employee is not required to be a member of another state-administered retirement system or other state pension fund or other jurisdiction's pension fund. Membership and contributing employers of the defined benefit pension plans consisted of the following at June 30, 2016 and 2015: Inactive plan members or beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members , , , , 161 Total Contributing Employers - 1, 710 ~ ~ Significant Legislation - For State of New Jersey contributions to PERS, Chapter 1, P.L. 2010, effective May 21, 2010, required the State to resume making actuarially recommended contributions to the pension plan on a phased-in basis over a seven year period beginning in the fiscal year ended June 30, For State fiscal year 2016, the State was required to make a minimum contribution representing 5/ih of the actuarially determined contribution amount based on the July 1, 2014 actuarial valuation. Chapter 19, P.L. 2009, effective March 17, 2009, provided an option for local employers of PERS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State Fiscal Year Such an employer will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of PERS, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets. Pursuant to the provision of Chapter 78, P.L. 2011, COLA increases were suspended for all current and future retirees of PERS. -43-

51 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 For the year ended December 31, 2016 and 2015 the Township's total payroll for all employees was $22, 191,575 and $22, 118,259, respectively. Total PERS covered payroll was $10,419, 102 and $10,419,096 respectively. Covered payroll refers to pensionable compensation, rather than total compensation, paid by the Township to active employees covered by the Plan. Specific Contribution Requirements and benefit provisions - The contribution policy is set by N.J.S.A 43: 15 and requires contributions by active members and contributing employers. Members contribute at a uniform rate. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contribution rate increased from 5.5% of annual compensation to 6.5% plus an additional 1% phased-in over 7 years beginning in July The member contribution rate was 6.92% in State fiscal year 2015 and increased to 7.06 for State fiscal year 2016, commencing July 1, The phase-in of the additional incremental member contribution rate will take place in July of each subsequent State fiscal year. Employers' contribution amounts are based on an actuarially determined rate. The annual employer contributions include funding for basic retirement allowances and noncontributory death benefits. Township contributions are due and payable on April 1 51 in the second fiscal period subsequent to plan year for which the contributions requirements were calculated. Township payments to PERS for the years ending December 31, 2016 and 2015 consisted of the following: 2015 Total Regular Billing $ $ The Township recognizes liabilities to PERS and records expenditures for same in the fiscal period that bills become due. The vesting and benefit provisions are set by N.J.S.A. 43:15. PERS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for medical benefits, which vest after 25 years of service or under the disability provisions of PERS. The following represents the membership tiers for PERS: Tier Definition 1 Members who were enrolled prior to July 1, Members who were eligible to enroll on or after July 1, 2007 and prior to November 8, Members who were eligible on or after November 2, 2008 and prior to May 22, Members who were eligible to enroll on or after May 22, 201 O and prior to June 28, Members who were eligible to enroll on or after June 28, 2011 A service retirement benefit of 1/55 1 h of final average salary for each year of service credit is available to tier 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1/60 1 h of final average salary for each year of service credit is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65. Early retirement benefits are available to tier 1 and 2 members before reaching age 60, to tier 3 and 4 members before age 62 and tier 5 members with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the retirement age of his/her respective tier. Deferred retirement is available to members who have at least 1 O years of service credit and have not reached the service retirement age for the respective tier. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions - The regulatory basis of accounting which is basis for the preparation of the Township's basic financial statements does not require or permit the inclusion of entity-wide, full accrual basis financial statements. Accordingly, the Township does not recognize pension liabilities for any current or prior period until the fiscal period in which such payments will become due and payable. -44-

52 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 At June 30, 2016, the PERS reported a net pension liability of $29,617,131,759 for its Non-State Employer Member Group. The Township's proportionate share of the net pension liability for the Non State Employer Member Group that is attributable to the Township was $44,206,780 or %. The net pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, At June 30, 2015, the PERS reported a net pension liability of $22,447,996, 119 for its Non-State Employer Member Group. The proportionate share of the State of New Jersey's the net pension liability for the Non-State Employer Member Group that is attributable to the Township was $34,817,390 or %. At December 31, 2016, the Township's deferred outflows of resources and deferred inflows of resources related to PERS were from the following sources, if GASB 68 was recognized: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expended and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan in-.estments Changes in proportion and differences between Township contributions and proportionate share of contributions Township contributions subsequent to the measurement date Total $ $ 822, 112 9, 157,284 1,685, ,612 $ 1,433,399 1,326,012 13,586,665 $ 1,433,399 $1,326,012 is reflected above as deferred outflows of resources related to pensions resulting from Township contributions subsequent to the measurement date. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions would be recognized in pension expense on the GAAP basis as follows: Year ended December 31, Total Amount $ 2,442,734 2,442,735 2,862, 112 2,401, $ Actuarial Assumptions- The total pension liability in the June 30, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement Inflation Salary Increases ( ) Thereafter Investment rate of return June 30, % % Based on age % Based on age 7.65% June 30, % % Based on age % Based on age 7.90% -45-

53

54 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Discount Rate - The discount rate used to measure the total pension liability was 3.98% as of June 30, This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65% and a municipal bond rate of 2.85% as of June 30, 2016 based on the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of APJAa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 30% of the actuarially determined contributions and the local employers contributed 100% of their actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2034 and the municipal bond rate was applied to projeqted benefit payments after that date in determining the total pension liability. Sensitivity of Net Pension Uabi/ity - the following presents the net pension liability of PERS calculated using the discount rates as disclosed above as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage rate higher than the current rate At 1 % Decrease PERS $ At Current Discount Rate $ At 1 % Increase $ Plan Fiduciary Net Position - The plan fiduciary net position for PERS including the State of New Jersey at June 30, 2016 and 2015 were $26,762,070,610 and $28,553,566,906, respectively. The portion of the Plan Fiduciary Net Position that was allocable to the Local (Non-State) Group at June 30, 2016 and 2015 was $19,857,566,387 and $20,661,583,919, respectively. Additional Information Collective balances at June 30, 2016 are as follows: Collective deferred outflows of resources Collective deferred inflows of resources Collective net pension liability - Local group Township's Proportion $ 8,685,338, , 133,595 29,617, 131, % Collective Local Group pension expense for the Local Group for the measurement period ended June 30, 2015 and 2016 was $1,481,308,816 and $2,830,763,540, respectively. The average of the expected remaining service lives of all plan members if 5.57, 5.72 and 6.44 years for 2016, 2015 and 2014, respectively. Police and Firemen's Retirement System The Police and Firemen's Retirement System is a cost-sharing, multiple employer defined benefit pension plan as defined in GASB Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the PFRS Plan are as follows: - 47-

55 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Plan Membership and Contributing Employers- Substantially all full-time county and municipal police and firemen and state firemen or officer employees with police powers appointed after June 30, 1944 are enrolled in PFRS Membership and contributing employers of the defined benefit pension plans consisted of the following at June 30, 2016 and 2015: Inactive plan members or beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members , , Total Contributing Employers ~6j ~ Significant Legislation - For State of New Jersey contributions to PFRS, Chapter 1, P.L. 2010, effective May 21, 2010, required the State to resume making actuarially recommended contributions to the pension plan on a phased-in basis over a seven year period beginning in the fiscal year ended June 30, For State fiscal year 2016, the State was required to make a minimum contribution representing 5/ih of the actuarially determined contribution amount based on the July 1, 2014 actuarial valuation. Pursuant to the provision of Chapter 78, P.L. 2011, COLA increases were suspended for all current and future retirees of PFRS. For the year ended December 2016 and 2015 the Township's total payroll for all employees was $22, 191,575 and $22, 118,259, respectively. Total PFRS covered payroll was $10,553,357 and $10,117,315, respectively. Covered payroll refers to pensionable compensation, rather than total compensation, paid by the Township to active employees covered by the Plan. Specific Contribution Requirements and benefit provisions - The contribution policy is set by N.J.S.A. 43:16A and requ ires contributions by active members and contributing employers. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contributions rate increased from 8.5% of annual compensation to 10.0% in October Employer contribution amounts are based on an actuarially determined rate. The annual employer contributions include funding for basic retirement allowances and noncontributory death benefits. Township contributions are due and payable on April 1 51 in the second fiscal period subsequent to plan year for which the contributions requirements were calculated. Township payments to PFRS made in the years ending December 31, 2016 and 2015 consisted of the following: Total PFRS Payment - Regular $ $ rn The Township recognizes liabilities to PFRS and records expenditures for same in the fiscal period that bills become due. The vesting and benefit provisions are set by N.J.S.A. 43:16A. PFRS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for disability benefits, which vest after 4 years of service. -48-

56 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 The following represents the membership tiers for PFRS: Tier Definition 1 Members who were enrolled prior to May 22, Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, Members who were eligible on or after June 28, 2011 Service retirement benefits are available at age 55 and are generally determined to be 2% of final compensation for each year of creditable service, as defined, up to 30 years plus 1 % for each year of service in excess of 30 years. Members may seek special retirement after achieving 25 years of creditable service, in which benefits would equal 65% (tiers 1 and 2 members) and 60% (tier 3 members) of final compensation plus 1 % for each year of creditable service over 25 years but not to exceed 30 years. Members may elect deferred retirement benefits after achieving ten years of service, in which case benefits would begin at age 55 equal to 2% of final compensation for each year of service. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions - The regulatory basis of accounting which is basis for the preparation of the Township's basic financial statements does not require or permit the inclusion of entity-wide, full accrual basis financial statements. Accordingly, the Township does not recognize pension liabilities for any current or prior period until the fiscal period in which such payments will become due and payable. At June 30, 2016, the PFRS reported a net pension liability of $20, 706,699,056 for its Non-State, Non Special Funding Situation Employer Member Group. The Township's proportionate share of the net pension liability for the Non-State Non-Special Funding Situation Employer Member Group was $59,755,768, or %. The pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, At June 30, 2015, the PFRS reported a net pension liability of $13,933,627,178 for its Non-State, Non Special Funding Situation Employer Member Group. The Township's proportionate share of the net pension liability for the Non-State Non-Special Funding Situation Employer Member Group was $52,677,972, or %. At December 31, 2016, the Township's deferred outflows of resources and deferred inflows of resources related to PERS were from the following sources, if GASB No. 68 was recognized: Differences between expended and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan in\estments Changes in proportion and differences between Township contributions and proportionate share of contributions Township contributions subsequent to the measurement date Deferred Outflows of Resources $ 8,276,665 4, 186,966 1,401,210 2,550,512 Deferred Inflows of Resources $ 391, ,993 Totals $ 16,415,353 $ 1,089,

57 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 $2,550,512 is reflected above as deferred outflows of resources related to pensions resulting from Township contributions subsequent to the measurement date. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions would be recognized in pension expense on the GAAP basis as follows: Year ended December Total Amount $ 3,157,864 3, 157,866 4,184,112 2,238, $ Actuarial Assumptions- The total pension liability in the June 30, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary Increases ( ) Thereafter Investment rate of return June % % based on age % based on age 7.65% June % % based on age % based on age 7.90% Pre-retirement mortality rates were based on the RP-2000 Pre-Retirement mortality tables projected thirteen years using Projection Scale BB and then projected on a generational basis using the plan actuary's modified 2014 projection scales. Post-retirement mortality rates for male service retirements and beneficiaries are based the RP-2000 Combined Healthy Mortality Tables projected one year using Projection Scale AA and two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's 2014 projection scales. Post-retirement mortality rates for female service retirements and beneficiaries were based the RP-2000 Combined Healthy Mortality Tables projected thirteen years using Projection Scale BB and then two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's modified 2014 projection scales. Disability mortality tables were based on special mortality tables used for the period after disability retirement. The actuarial assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2010 to June 30,

58

59 9. PENSION & RETIREMENT PLANS (continued) TOWNSHIP OF NORTH BERGEN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND 2015 Sensitivity of Net Pension Liability - the following presents the net pension liability of PFRS calculated using the discount rates as disclosed above as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage rate higher than the current rate: At 1 % Decrease At current discount rate At 1 % increase PFRS $77,050,681 $59, 755, 768 $45,652,807 Plan Fiduciary Net Position - The plan fiduciary net position for PFRS at June 30, 2016 and 2015 was $23,984, 726,664 and $25, 106,858,921, respectively. The Defined Contribution Retirement Plan (DCRP) is a multiple employer defined contribution plan as defined in GASS Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the DCRP are as follows: Additional Information Collective Local Group balances at June 30, 2016 are as follows: Collective deferred outflows of resources Collective deferred inflows of resources Collective net pension liability - Local group Township's Proportion $4,547,316, , 197,590 20,706,699, % Collective pension expense for the Local Group for the measurement period ended June 30, 2015 and 2016 is $1,645,612,699 and $2,255,296,958, respectively. The average of the expected remaining service lives of all plan members if 5.58, 5.53 and 6.17 years for 2016, 2015 and 2014, respectively. Special Funding Situation- Under N.J.S.A 43:16A-15, local participating employers are responsible for their own contributions based on actuarially determined amounts, except where legislation was passed which legally obligated the State if certain circumstances occurred. The amounts contributed on behalf of the local participating employers under this legislation is considered to be a special funding situation and state is treated as a non-employer entity. The non-employer contributing entities' total proportionate share of the collective net pension liability that is associated with the Township as of June 30, 2016 and 2015 for police and fire is % and %, respectively. The the non-employer contributing entities' contribution for the year ended June 30, 2016 and 2015 was $192,275 and $240,478, respectively. The state's proportionate share of net pension liability attributable to the Township as of June 30,2016 and 2015 was $5,018,002 and $4,619,681, respectively. 10. DEFINED CONTRIBUTION RETIREMENT PROGRAM Plan Membership and Contributing Employers- Enrollment in the DCRP is required for state or local officials, elected or appointed on or after July 1, 2007; employees enrolled in PFRS or PERS on or after July 1, 2007, who earn salary in excess of established "maximum compensation" limits; employees otherwise eligible to enroll in PFRS or PERS on or after November 2, 2008, who do not earn the minimum annual salary for tier 3 enrollment but who earn salary of at least $5,000 annually; and employees otherwise eligible to enroll in PFRS or PERS after May 21, 2010, who do not work the minimum number of hours per week required for tier 4 or tier 5 enrollment, but who earn salary of at least $5,000 annually. At June 30, 2015, the membership in the DCRP, based on the information within the Division's database, was 28,

60 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND DEFINED CONTRIBUTION RETIREMENT PROGRAM (continued) Contribution Requirement and Benefit Provisions - State and local government employers contribute 3% of the employee's base salary. Active members contribute 5.5% of base salary. Eligible members are provided with a defined contribution retirement plan intended to qualify for favorable Federal income tax treatment under IRC Section 401 (a), a noncontributory group life insurance plan and a noncontributory group disability benefit plan. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employee contributions shall immediately become and shall at all times remain fully vested and non-forfeitable. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employer contributions shall be vested and non-forfeitable on the date the participant commences the second year of employment or upon his or her attainment of age 65, while employed by an employer, whichever occurs first. 11. OTHER POST EMPLOYMENT HEALTHCARE PLAN Plan Description The Township has a single-employee defined benefit healthcare plan for retired employees ("OPES") administered by Horizon Blue Cross Blue Shield of New Jersey. The OPEB provides medical, prescription drug, dental and vision. For retirees hired prior to January 1, 2008, there is a choice of an indemnity plan or a PPO plan and the retirees hired on or after January 1, 2008, there is only an indemnity plan. There are different retirement requirements for the different unions within the Township. Medical benefits coordinates with Medicare as primary and the Township Plan secondary for retirees eligible for Medicare. Medicare eligible retirees and dependents are required to enroll in Medicare Part B. The Township does not reimburse Medicare eligible retirees and dependents for the Medicare Part B premium. The surviving spouse and dependents of a deceased member active or retired, are eligible for continued benefits. Benefits continue for the surviving spouse for life. Funding Policy The Township's funding policy is pay as you go. Annual OPES Cost and Net OPES Obligation The Township's annual OPES cost (expense) is calculated based on the annual required contribution ("ARC") of the employer, an amount actuarially-determined in accordance with the parameters of GASS Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a 30 year period. The Township had an actuarial evaluation performed as of December 31, The results of the actuary study and other pertinent information is as follows: In March 2010, the Patient Protection and Affordable Care Act (PPACA) were signed into law. An adjustment in the liabilities for possible future benefit changes due to PPACA; specifically, we have included a provision in the Actuarial Accrued Liability for the "Cadillac" excise tax. Additionally, on June 28, 2011 P.L c. 78 (chapter 78) was enacted. Chapter 78 contained many changes to the retirement and healthcare plans offered to employees and retirees of New Jersey State and local government. Among these changes was the requirement for certain retirees to pay a varying portion of postretirement healthcare costs. This valuation reflects the Chapter 78 contribution change. -53-

61 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND OTHER POST EMPLOYMENT HEALTHCARE PLAN (continued) The results of the valuation are as follows: The Actuarial Accrued Liability for retiree healthcare coverage is $201,008,000 with respect to current and future retirees and for the PPACA Cadillac tax is $41,105,000 for a total accrued liability of $245, 113,000. Additionally: The discount rate used in this valuation is 4.5%. The estimated cash cost for retiree healthcare benefits for the fiscal year beginning January 1, 2016 is $6,316,000. Demographic data as of January 2016 includes 298 current retires and 319 active employees. The Annual Required Contribution (ARC) for the fiscal years ending December 31, 2015 and December 31, 2016 is $22,563,000 and $22,324,000, respectively. This is based on a 30-year amortization of the Unfunded Actuarial Accrued Liability. Healthcare cost trend rates for 2016 and 2015 are 6.75%, 5.00%, 11.50%, and 4.00% for medical (pre-65), medical (post-65), prescription, and dental/vision, respectively. Based on plan type, the premiums range from $ to $2, for medical, $ to $ for prescription, $22.95 to $63.95 for dental and $9.26 for vision. The Annual OPES Cost for the fiscal year ending December 31, 2015 and December 31, 2016 under the GASB accounting standard are $21,347',000 and $20,861,000 respectively. These are based on a 30-year amortization of the Unfunded Actuarial Accrued Liability. The Net OPEB Obligation (NOO) as of December 31, 2016 is $103,816,000, based on estimated cash payments and annual OPES costs for the period July 1, 2009 through December 31, The annual healthcare cost to the Township for the years December 31, 2016 and 2015 was $13,535,428 and $13,307, 148,respectively. Actuarial valuations, using the Projected Unit Credit Method, of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARC are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial cost method used to determine the plan's funding requirements is the Projected Unit Credit Method. Under this method an actuarial liability is determined as the actuarial present value of the portion of projected benefits which is allocated to service before the current plan year. In addition, a normal cost is determined as the actuarial present value of the portion of projected benefits which is allocated to service in the current plan year for each active participant under the assumed retirement age. -54-

62 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND , RISK MANAGEMENT The Township maintains a self-insurance fund for general liability and workers' compensation. Under the terms of the Garden State Joint lnsurance Fund (the "JlF"), the first $100, of exposure is a self-insurance layer. The next $150, of exposure is backed by the joint resources of the JIF and any exposure beyond that amount is covered by the JIF as follows: Coveraoe Deductible Limits 1. Property (Blanket Building and Contents) $ 1,000 $600,000, Earthquake $ 25,000 $ 25,000, Flood (Zone X) $ 50,000 $ 25,000, Flood (Zone A) $250,000 $ 5,000, Flood (Zone V) Not Covered 4. Crime $ 1,000 $ 1,000, Auto Liability $100,000 $ 15,000, General Liability $100,000 $ 15,000, Auto Physical Damage $1,000/Comp/Collision 9. Law Enforcement Liability $100,000 $ 15,000, Workers' Comp $100,000 Statutory 1 1. Public Officials Liability $ 15,000,000 POL $20,000 plus 20% coinsurance/$so,000 max EPL $20,000 plus 20% coinsurance/$50,000 max Sexual Abuse Liability $100, Cyber Liability $ 25,000 $ 1,000, INTERFUND RECEIVABLES AND PAYABLES As of December 31,2016December 31,2016December 31, 2016 and 2015 interfund receivables and payables that resulted from various interfund transactions were as follows: ',t5 Due ftom Due to Due fom Due to Other Funds Other Funds Other Funds Other Funds Cunent Fund $ 16, Federal and State Grant Fund Community De\elopment Trusl Fund General Capital Fund 1,588, Animal Control Fund General Trust Fund $ 691, , , , $ ,160, s 949, , , , HEALTH INSURANCE COVERAGE $ 1,605, $ 1,605, $ 1,418, $ 1,418, The State of New Jersey adopted P.L Chapter 78 which requires all municipalities to increase the share of health benefit coverage paid by public employees and retirees who receive employer paid health benefits. The law changes the health care contributions standards set in Chapter 2 ot 2010, by increasing the amounts contributed. The contribution rates are increased over a four year period and are based on an employee's contractual salary. The law became effective for non-union contract agreements on July 1, 201 1, which was then extended to Octobell and for all union contracts after they expire

63 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND HEALTH INSURANCE COVERAGE (continued) In the Township, all union contracts expired December 31, The new contribution rates began on January 1, CONTINGENT LIABILITIES a. Accrued Sick and Vacation Benefits The Township has permitted employees to accrue sick and vacation pay, which may be taken as time off or paid at a later date at an agreed upon rate. The Township has estimated the current cost at December 31, 2016 and 2015 of such unpaid compensation to be $3,798, and $3,914,635.00, respectively. The Township has established a reserve account at December 31, 2016 and 2015 of $192, and $72,591.72, respectively in the Trust Fund to fund a portion of the estimated potential liabilities. These estimates by management are unaudited. b. Tax Appeals As of December 31, 2016, there were tax appeals pending before the New Jersey Tax Court of an undetermined amount. Judgments favorable to the taxpayers generally extend to two years following the year adjudicated and would also subject the Township to a liability for statutory interest on the amount of taxes refunded from the date of payment to the date of refund (R.S. 54:3-27.2). County taxes paid on the reductions in assessed valuations are subject to credits against the County tax levy of the year subsequent to the year in which the appeals are adjudicated. c. Federal and State Awards The Township participates in several federal and state grant programs which are governed by various rules and regulations of the grantor agencies; therefore, to the extent that the Township has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivable at December 31, 2016 may be impaired. In the opinion of management, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provisions have been recorded in the accompanying regulatory basis financial statements for such contingencies. d. Litigation Local governments are required to disclose contingencies based on criteria set forth in FASB Accounting Standards Codification 450, Contingencies. There are currently a number of liability cases outstanding and workers' compensation claims outstanding. These claims are being handled through the New Jersey Municipal Self Insurer's Joint Insurance Fund (NJMSIJIF). The Township has a $100,000 self-insured retention limit (SIR) and after that amount is exhausted the cases are then covered by NJMSIJIF for the next $200,000. Exposure beyond $300,000 is covered by the Municipal Excess Liability Fund (MELF). Coverage after January 1, 2016 after the first $100,000 SIR will be by Garden State Joint Insurance Fund (GSJIF) for the next $200,000. There is one case whereby the Township's insurance has a $20,000 deductible and a 20% copayment required on the next $250,000 with a 2,000,000 limit. There is one case pending whereby the Township's employment practices liability coverage has a $100,000 deductible and a 20% copayment required on the next $2,000,000. The Township's potential liability if any could not be determined at this time

64 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND GASB 77 TAX ABATEMENTS The Township has entered into several property tax abatement agreements in order to provide incentives to redevelop areas that are in need for improvement or to create economic growth. These agreements are authorized under various New Jersey state statutes. The following represent the Township's most significant tax abatement agreements: Comrencerrent Termnation Pilot Taxes W Billed Abated Entity Name Date Date Billing In Full Taxes Payment in Lieu of Truces - Avalon Bay March 15, 2011 March 14, 2039 $ 277, $ 1, $ 726, Payment in Lieu of Taxes - LWH July 1, 2014 June 30, ,059, ,341, ,282, rd Urban Renew al February 1, 2013 January 31, , , , Total $1,597, $ 4,135, $ 2,538, FIXED ASSETS General Fixed Assets The following is a summary of changes in the General Fixed Assets account group as of December 31, 2016 and 2015: Balance Balance December 31, 2015 Additions Retirements December 31, 2016 Land and Land lmprowments Buildings and Building lmprowments Machinery and Equipment $ 15,915, ,411, ,343, $ 185, $ 57,670, $ 185, $ $ 15,915, ,411, ,528, $ 57,855, Balance December 31, 2014 Additions Retirements Balance December 31, 2015 Land and Land lmprowments Buildings and Building lmprowments Machinery and Equipment $ 15,915, ,031, ,007, $1,380, ,336, $ 15,915, ,411, ,343, $ 49,953, $7,716, $ $ 57,670, DEFERRED COMPENSA TJON PLAN The township Deferred Compensation Plan was established pursuant to Section 457 of the Internal Revenue Code and P.L. 1977, C. 381; P.L. 1978, C. 39; and P.L. 1980, C. 78 of the Statutes of New Jersey. The Plan is an arrangement whereby a public employer may establish a plan and permit its employees to voluntarily authorize a portion of their current salary to be withheld and invested in one or more of the types of investments permitted under the governing regulations. The program balances are not recorded in the Trust Fund of the Township. The Township does not make any contributions to the plan and the deferred compensation is not available to employees until termination, retirement, death or unforeseeable hardship. -57-

65 NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2016 AND DEFERRED COMPENSATION PLAN (continued) In accordance with the requirements of the Small Business Job Protection Act of 1996 and the funding requirements of the Internal Revenue Code Section 457(g}, the Township's plan was amended to require that all amounts of compensation deferred under the Plan are held for the exclusive benefits of plan participants and beneficiaries. All assets and income under the plan are held in trust, in annuity contracts or custodial accounts. The plan's assets are not the property of the Township and therefore are not presented in the financial statements. 19. SUBSEQUENT EVENTS The Township has evaluated subsequent events occurring after the balance sheet date through April 25, 2017, which is the date the financial statements were available to be issued. Based on this evaluation, the Township entered into a new bond issue at various interest rates for general improvements in the amount of $31,683, maturing 2018 though

66 CURRENT FUND CASH RECEIPTS AND DISBURSEMENTS YEAR ENDED DECEMBER 31 I 2016 Ref. Current Fund State and Federal Grant Fund Balance, December 31, 2015 A $ 20,619, $ 2, Increased by Receipts: Nonbudget Revenue Due from State of New Jersey - Ch. 129, P.L Taxes Receivable Tax Title Liens Receivable Other Accounts Receivable Other Municipal Liens Revenue Accounts Receivable lnterfunds Receivable Other Reserves Accounts Payable lnterfunds Payable, Net Tax Overpayments Prepaid Taxes Grants Receivable A-2c $ 906, A-6 107, A-7 137,937, A-8 45, A-10 18, A- 11 5, A-12 20,230, A-13 2,219, A , A , A-21 A , A-24 1,284, A-26 $ 456, , , 779, ,398, , , Decreased by Disbursements: Budget Appropriations lnterfunds Receivable, Net County Taxes Payable lnterfunds Payable Due to Claims Fund A-3 4,073, A-13 28,542, A ' 143, A-20,A , A ,721, , Balance, December 31, ,005, A $ 23,393, , $ 223, See Independent Auditors' Report -59-

67 CURRENT FUND CHANGE FUND DECEMBER Balance, December 31, 2016 and 2015 A $ Analysis of Balance Township Clerk Tax Collector $ $ See Independent Auditors' Report -60-

68 CURRENT FUND DUE FROM STATE OF NEW JERSEY PER CHAPTER 129, P.L YEAR ENDED DECEMBER 31 I 2016 Balance, December 31, 2015 Ref. A $ 81, Increased by: Exemptions per Tax Duplicate: Senior Citizens and Veterans $ 119, Deductions Allowed by Tax Collector: Senior Citizens and Veterans 4, A-2b, A-7 123, Less: Prior Year Senior Citizens Disallowed by Tax Collector A-1 15, Decreased by: Collections A-4 108, , , Balance, December 31, 2016 A $ 82, See Independent Auditors' Report -61-

69 CURRENT FUND TAXES RECEIVABLE AND ANALYSIS OF PROPERTY TAX LEVY YEAR ENDED DECEMBER A-7 Balance Year December 31, 2015 Prior Years $ 2, ,213, $ 2,213, Added Collected Transferred to 2016 Le~ Taxes Pre(:!aid 2016 Tax Title Liens $ 2, $ 19, ,212, $ 7, , ,215, , $ 139,077, $ 1,090, ,013, $ $ $ 1,090, $ 138,228, $ 167, Cancellations I Balance Adjustments December 31, 2016 $ 0.75 $ 1, , , , , $ 10, $ 1,813, Ref. A Below Reserve A-24 Below A-8 Reserve A Ref. Collections A-2b, A-4 $ 137,937, Applied from Tax Overpayments A-2b, A , Senior Citizens' and Veterans' Deductions A-2b,A-6 123, I O'I I "' Above $ 138,228, ANALYSIS OF PRQPEBTY TAX LEVY Ref. Ref. Tax Yield General Purpose Added Taxes Tax Lew $ 138,294, County Tax A L County Open Space A-17 County Added and Omitted Taxes A-17 Local School District Taxes (Abstract) A-18 Local Tax for Municipal Purposes A-2 Local Tax for Library Purposes A-2 Additional Taxes Levied Reserve $ 26,541, , , ,640, ,875, ,715, , $ 74,856, ,220, Above $ 139,077, Above $ 139,077, See Independent Auditors' Report

70 CURRENT FUND TAX TITLE LIENS YEAR ENDED DECEMBER Balance, December 31, 2015 Ref. A $ 1,278, Increased by: Transferred from Taxes Receivable A-7 $ 167, Interest and Costs of Tax Sale Reserve 1, , ,447, Decreased by: Collections A-2b, A-4 45, Balance, December 31, 2016 A $ 1,401, PROPERTY ACQUIRED FOR TAXES (AT ASSESSED VALUATION) DECEMBER Balance, December 31, 2016 and 2015 A $ 6,543, See Independent Auditors' Report -63-

71 CURRENT FUND OTHER ACCOUNTS RECEIVABLE YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 Increased by: Lot Cleaning Charges A Reserve $ 4, , , Decreased by: Cash Collections Transferred to Other Municipal Liens A-1, A-4 A-11 $ 18, ,024, 13 Balance, December 31, 2016 A $ 2,305,96 OTHER MUNICIPAL LIENS YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 A $ 11, Increased by: Transfer from Other Accounts Receivable Transfer from Water/Sewer - MUA A-10 Reserve $ , ,937,57 13,111,23 Decreased by: Cash Receipt A-1, A-4 5, , Balance, December 31, 2016 A $ 7, See Independent Auditors' Report -64-

72 TOWNSHIP QF NORTH BERGEN CURRENT FUND REVENUE ACCOUNTS RECEIVABLE DECEMBER A Collected in Revenue &!. Accrued 2016 Receivable Borough Clerk: Alcoholic Beverage Licenses A-2 $ 87, $ 87, $ Other Licenses A-2 301, , Construction Code Official: Uniform Construction Code Fees A-2a 1,631, ,631, Fees and Permits: Tax Collector A-2a 22, , Tax Assessor A-2a 1, , Rent Control A-2a 41, , Clerk A-2a 3, , HealthMtal Statistics A-2a 93, , Police A-2a 629, , Returned Check A-2a Board of Adjustments A-2a 35, , Planning Application Fees A-2a 37, , Purchasing A-2a 2, , Record Room A-2a 49, , Recreation: Pool Fees A-2 458, , Collector of Taxes: Interest and Cost on Taxes A-2 573, , Interest on Investments A-2 184, , Municipal Court: Fines and Costs A-2a 3,326, ,078, , State Aid: Energy Receipt Tax A-2 5,854, ,854, Consolidated Municipal Property Tax Relief Aid A-2 1,330, ,330, North Bergen Cable TV - Franchise Fee A-2 611, , Payment in Lieu of Taxes: Floral Park, Inc. A-2a 628, , North Bergen Housing Authority A-2a 248, , Fritz Reuter A-2a 174, , Avalon Bay A-2a 288, , LWH A-2a 1,097, , 097, Urban Renewal A-2a 269, , Host Fees A-2 817, , Trust Fund - Street Openings A-2 9, , Ambulance Fees A-2 813, , General Capital Surplus A-2 185, , Hotel Tax A-2 432, , NJ Transit Tax A-2 203, , Uniform Fire Safety Rebates A-2 145, , Meadowlands Lease A-2 202, , MUA - 5% of Operating Costs A-2 450, , Parking Authority Surplus A-2 50, , Parking Authority Building Lease A-2 92, , MUA Debt Service Payment A $ 21,447, $ , $ 247, &!. Reserve Below A Cash Receipts A-4 $ 20,230, lnterfunds Receivable A Above $ 21, 199, See Independent Auditors' Report -65-

73 CURRENT FUND INTERFUNDS RECEIVABLE YEAR ENDED DECEMBER A-13. Animal General Federal/State Control Capital Payroll Trust Grant Grant Ref. Total Fund Fund Account Account Fund Trust Balance, December 31, 2015 A $ 257, $ $ $ $ $ 257, $ Increased by: Revenue Accounts Receivable A , , , Miscellaneous Revenue Anticipated A-2 629, , Excess Dog License Fees A-1 16, , Expenses Paid by Budget Appropriation A-3 48, , , Expenses Paid by Appropriation Reserves A Due to Claims Fund A , , Cash Disbursements A-4 28,542, ,073, , 160, , , , ,445, , ,258, , 160, ,478, ,351, , Sub-Total 30,702, , ,258, ,160, ,478, ,608, , Decreased by: Q'\ Q'\ Budget Appropriation A-3 I Cash Receipts A-4 27,963, ,219, ,258, ,040, , , , , , Appropriation Reserves A , , ,686, ,258, , 160, ,478, ,608, , Balance. December 31, 2016 A $ 16, $ 16, $ - $ $ $ - $ Net Credit to Operations Balance December 31, 2015 A $ 257, Balance December 31, 2016 A - 16, Net Credit A-1 $ 241, See Independent Auditors Report

74 CURRENT FUND DEFERRED CHARGES EMERGENCY APPROPRIATION YEAR ENDED DECEMBER 31 I 2016 Balance, December 31, 2015 Decreased by: Budget Appropriation Balance, December 31, 2016 Ref. A A-3 $ 280, $ 280, See Independent Auditors' Report -67-

75 TOWNSHIP OF NORTH t;!erqen CURRENT FUND APPROPRIATIQN RESERV!;;S YEAR ENDED DECEMBER A-15 Sheet#1 Balance Balance December After Paid or Balance Encumbered Unencumbered Transfers Charged ~sed Department of Public Affairs Director's Office: Salaries and Wages $ 4, Other Expenses $ , $ 25, $ 8, $ 17, Purchasing: Salaries and Wages Other Expenses , , , Central Purchasing 6, , , , Township Clerk's Office: Salaries and Wages Other Expenses Elections: Other Expenses 1, , , , Public tnfonmation: Other Expenses 47, , , , , Printing and Legat Advertising: Other Expenses 1, , Township Administrator: Salaries and Wages Other Expenses , , , Consulting Services: Other Expenses , , , Rent Control: Salaries and Wages Other Expenses 16, , (375.00) 17, Legal Services and Costs: I O'I Salaries and Wages ':o Other Expenses , , , , Registrar of Vital Statistics: Salaries and Wages Other Expenses 1, , , Office of Community Services: Salaries and Wages 12, Other Expenses 5, , , North Hudson Council of Mayors: Other Expenses 15, , , Board of Health: Salaries and Wages Other Expenses 6, , , , , Special Litigation: Other Expenses 67, , , , License Officer: Other Expenses , , , Dog Regulation: Other Expenses Municipal Court: Salaries and Wages 31, Other Expenses 11, , , , , Group Health Insurance 1,330, ,330, ,324, , Health Benefit Waiver 23, , , Other Insurance 7, , , , ,593, ,853, ,643, , See Independent Auditors' Report

76 TQWNSHIP QF NQRTH BERGEN CURRENT FUND APPROPRIATION RESERVES YEAR ENDED DEQEMBER A-15 Sheet#2 ' ID Balance Balance December After Paid or Balance Encumbered Unencumbered Transfers Charged Lapsed Department of Revenue and Finance Directofs Office: Other Expenses $ $ 25, $ 25, Assessment of Taxes: Salaries and Wages Other Expenses 33, , , Collection of Taxes: Salaries and Wages 5, Other Expenses $ 4, , , $ 4, , Tax Assessor Consultant Other Expenses 1, , Bureau of Housing Inspection: 50, , , Salaries and Wages 3, Other Expenses 1, , , Postage 4, , , Financial Administration: Salaries and Wages 1, Annual Audit Other Expenses 11, , , , , Special Services 1, , , , , , L Department of Public Safety Director's Office: ' Salaries and Wages 3, Other Expenses 2, , , ' Vehicle Maintenance: Salaries and Wages 14, Other Expenses 63, , , , , Police: Salaries and Wages 463, , , Clothing Allowance 3, Other Expenses 42, , , , , CCTV: Salaries and Wages 39, Ambulance: Salaries and Wages 38, Other Expenses 9, , , , , Alarm System: Salaries and Wages Other Expenses 7, , , ABC Board: Other Expenses , Chaplains: 25, , , Other Expenses (500.00) 1, School Crossing Guards: Salaries and Wages 40, Uniform Fire Safety Act: Salaries and Wages 32, Municipal Prosecutor: Salaries and Wages Other Expenses 8, , , , , , , , , See Independent Auditors' Report

77 TOWNSHIP OF NORTH BERQEN CURRENT FUND APPROPRIATION RESERVES YEAR ENDED DECEMBER A-15 Sheet#3 Balance Balance December After Paid or Balance Encumbered Unencumbered Transfers Charoed Lapsed Department of Public Works Director's Office: Salaries and Wages $ Other Expenses $ , $ 25, $ $ 25, Engineering: Other Expenses 6, , , , Streets and Roads: Salaries and Wages 303, Other Expenses 38, , , , , Zoning Board of Adjustment: Other Expenses , , , , Planning Board: Other Expenses 68, , , , , , , ~ Department of Parks and Public Property Director's Office: Salaries and Wages 26, Other Expenses , , , Parks and Playgrounds: Salaries and Wages 11, , , Other Expenses 6, , , , , Pool: Salaries and Wages 1, , ' Other Expenses 5, , , , , = Celebration of Public Events: ' Other Expenses , , , Public Buildings and Grounds: Salaries and Wages 2, Other Expenses 4, , , , , Recreation: Salaries and Wages 78, , , , Other Expenses , , , , , , , See Independent Auditors' Report

78 TOWNSHIP QF NQRTH BERGEN CURRENT FUND APPROPRIATION RESERVES YEAR ENDED Q!;~EMBER A-15 Sheet#4 Balance Balance December After Paid or Balance Encumbered Unencumbered Transfers Char_g_ed Lapsed Unifonn Constniction Code Chief Administrator of Enforcement: Salaries and Wages $ Other Expenses 1, $ 1, $ 1, Building Department: Salaries and Wages 4, Other Expense $ 1, , , $ t, , Plumbing Inspectors: Other Expenses 1, , Fire Protection Officials: Salaries and Wages Other Expenses 1, , , , , , Unclassified Gasoline 19, , , , , Electricity 25, , , , , Telephone 2, , , , Municipal Utilities Authority Street Lighting 4, , , , , Fire Hydrant Service 34, , , , , Water , , , , , , , I -.J - Public ' Statutory Expenditures Contribution to: Social Security System 4, , , Employees Retirement System 1, , , Consolidated Police and Firemen's Retirement System of New Jersey Pension Adjustment Fund 8, , , , , Contingent 25, , , lnter1ocal Agreements North Hudson Regional Fire and Rescue - Other Expenses 150, , , Regional Communications - Other Expenses 7, , , STATE ANO FEDERAL PROGRAMS OFFSET BY REVENUE Matching Funds for Grants 4, , , CAPITAL IMPROVEMENTS Capital Improvement Fund 2, , , Total Appropriations $ 443, $ 4,484, $ 4,928, $ 2,831, $ 2,096, Ref. A A Below A-1 Ref. lnterfunds Payable A-13 $ 502, lnterfunds Receivable A-13 (999.42) Due to Claims Fund A-22 2,329, $ 2,831.! See Independent Auditors' Report

79 CURRENT FUND ACCOUNTS PAYABLE YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 Increased by: Due to State of New Jersey: Marriage Licenses Construction Surcharge Burial Permits County Taxes: PILOT Agreements Due to North Bergen Parking Authority Decreased by: Due to Claims Fund Balance, December 31, 2016 Ref. A A-4 $ 3, , , , A , A $ 183, , , , $ 105, COUNTY TAXES PAYABLE YEAR ENDED DECEMBER Balance, December 31, 2015 Ref. A $ 84, Increased by: County Tax Levy - Year 2016 Open Space Added Assessments A-1, A-2b, A-7 $ 26,541, , , ,216, ,300, Decreased by: Payments A-4 27, 143, Balance, December 31, 2016 A $ 157, See Independent Auditors' Report -72-

80 CURRENT FUND LOCAL SCHOOL DISTRICT TAXES YEAR ENDED DECEMBER Balance, December 31, 2015 Increased by: Levy Year 2016 Decreased by: Claims Fund Balance, December 31, 2016 Ref. A A-1, A- 2b, A-7 A-22 A $ 2,672, ,640, ,312, ,095, $ 2,217, See Independent Auditors' Report -73-

81 CURRENT FUND DUE TO STATE OF NEW JERSEY FEDERAL AND STATE GRANT FUND DECEMBER Balance, December 31, 2016 and 2015 A $ 14, See Independent Auditors' Report -74-

82 CURRENT FUND INTERFUNDS PAYABLE YEAR ENDED DECEMBER A-20 Ref. Total SUI Insurance JIF Insurance Animal Control Fund Balance. December 31, 2015 A $ - $ - $ - $ Increased by: Budget Appropriation A-3 Due to Claims Fund A , , , , , , ' -..! 'f' 525, , , Decreased by: Cash Receipts A-4 525, , , Balance, December 31, 2016 $ - $ - $ - $ See Independent Auditors' Report

83 CURRENT FUND FEDERAL AND ST ATE GRANT FUND INTERFUNDS YEAR ENDED DECEMBER A-21 Ref. Current Claims Total Fund Fund Payroll Fund General ~ital Fund Balance, December 31, Due to A $ 949, $ 257, $ - $ - $ 691, Increased by: Cash Receipts A-4 Anticipated Revenue A-26 Appropriated Reserves Paid A , , , , , , , ,615, ,354, , , , J ' 'f' 2,564, ,612, , , , Decreased by: Cash Disbursements A-4 Grant Budget A-27 Unappropriated Grant A-28 Grants Received by Other Funds A-26 Balance, December 31, Due To A $ 260, , , , , , , , ,872, ,612, , , $ - $ - 5, , $ - $ 691, See Independent Auditors' Report

84 CURRENT FUND DUE TO CLAIMS FUND YEAR ENDED DECEMBER 31 I 2016 Increased by: lnterfunds Receiveable Revenue Refunds Budget Appropriations Appropriation Reserves Accounts Payable Local School Taxes Payable lnterfunds Payable Tax Overpayments A-13 A-2a A-3 A-15 A-16 A-18 A-20 A-23 $ 238, , , 370, ,329, , ,095, ,551, $ 100,721, Decreased by: Cash Disbursements A-4 100,721, $ See Independent Auditors' Report -77-

85 CURRENT FUND TAX OVERPAYMENTS A-23 YEAR ENDED DECEMBER Ref. Balance, December 31, 2015 A $ 1,289, Increased by: State Tax Court Judgments A-1 $ 193, Transferred from Appropriations A-3 1,490, Collections A-4 187, Decreased by: Applied to Taxes Receivable A-2b, A-7 $ 167, Due to Claims Fund A-22 1,551, ,871, ,160, ,718, Balance, December 31, 2016 A $ 1,441, PREPAID TAXES YEAR ENDED DECEMBER A-24 Ref. Balance, December 31, 2015 A $ 1,090, Increased by: Collections A-4 1,284, ,374, Decreased by: Applied to Taxes Receivable A-2b, A-7 1,090, Balance, December 31, 2016 A $ 1,284, See Independent Auditors' Report -78-

86 CURRENT FUND OTHER RESERVE ACCOUNTS DECEMBER A-25 Balance December 31, 2015 Increase ~~~e December31, 2016 Reserve for Preparation of Tax Maps $ 28, $ 28, Reserve for Sale of Property 0.87 $ 729, , $ 28, $ 729, $ 757, I... \C I Ref. A A-4 A See Independent Auditors' Report

87 FEDERAUSTATE GRANT FUND GRANTS RECEIVABLE YEAR ENDED DECEMBER 31, 2016 A-26 Balance Balance Dec 31,2015 Revenue Collections Canceled Dec 31,2016 Handicapped Recreational $ 20, $ 17, $ 2, Drunk Driving Enforcement Grant $ 6, , Drug Alliance 21, , , , Open Space-Parks Projects 500, , Bullet Proof Vest , , HUD - JFK Blvd. East Streetscape 285, , , DOT: Year , , , Blvd East Streetscape 400, ,000._00 Year28 210, , , Year , , NJ Department of Transportation Trust 79, , Summer Food 41, , Click It or Ticket 5, , $ EMAA - Emergency Management Agency 10, , FEMA - Hazard Mitigation - Generators 382, , Hudson River Foundation 10, , Housing Inspection Program 55, , , I QC Impaired Driving Crackdown 5, , 'f' Drive Sober or Get Pulled Over 10, , , Clean Communities 102, , Pedestrian Safety Grant , , , Pedestrian Safety Grant , , , NJ Law Public Safety - Body Armor 9, , Alcohol Education and Rehabilitation 3, , Sustainable Jersey 5, , NJ Transit - Community Shuttle 20, , NJ Meadowlands Commission - COAH 25, , NJ Meadowlands Commission - COAH , , Green Acres - 76th Street Little League Improvements 1, 100, ,100, NJ EPA - Green Communities 3, , $ 3,426, $ 629, $ 979, $ 1, $ 3,075, Reference A A-21 Below A-27 A Cash Receipts A-4 $ 25, Transferred from Unappropriated Reserves A-28 13, lnterfunds A , $ See Independent Auditors' Report

88 FEDERAUSTATE GRANT FUND APPROPRIATED RESERVES YEAR ENDED DECEMBER 31, 2016 A-27 Sheet# 1 Balance Dec. 31,2015 Budget Appropriated under NJSA- 40A:4-87 Balance Exeended Canceled _Dec. 31, ' ' Drug Alliance Drug Alliance Drug Alliance DOT: Blvd. East Street scape Year30 Year29 Year31 Hudson River Foundation Summer Food 2016 Hazard Mitigation - Generators NJDEP - Green Communities Drunk Driving Enforcement Alcohol Education and Rehabilitation EMMA - Emergency Management Handicapped Recreational Walmart Target Pedestrian Safety Grant Body Armor Open Space Park Street Junior Police Academy NJ Transit - Implementation Reforestation Plan $ 12, , , , , , , , , , , , , , , , $ 88, , $ 312, , , , , , $ 80, $ 8, , , , , , , , , , , , , , , , , , , , $ 1, , , , , , , See Independent Auditors' Report

89 FEDERAUSTATE GRANT FUND APPROPRIATED RESERVES YEAR ENDED DECEMBER 31, 2016 A-27 Sheet# 2... ' Appropriated Balance under NJSA- Balance Dec. 31, 2015 Budget 40A:4-87 Ex2ended Canceled Dec. 31, 2016 Clean Communities $ $ 102, $ 44, $ 57, Drive Sober or Get pulled Over 10, , , NJ Department of Community Affairs Housing Inspection $ 13, , , , Impaired Driving Crackdown Grant 5, , Click it or Ticket 5, , $ Bullet Proof Vest , , Sustainable Jersey 10, , Green Acres - 76th Street Park Improvements 1, 100, , 100, NJ Meadowlands Commission: ' COAH Fair Housing 22, , QC $ 2,452, $ 108, $ 557, $ 529, $ 1, $ 2,587, Reference A A-21 A-21 A-21 A-26 A See Independent Auditors' Report

90 CURRENT FUND UNAPPROPRIATED RESERVES YEAR ENDED DECEMBER Ref. Balance December 31, 2015 Increased by: Due from Current Fund Decreased by: Revenue Realized Balance December 31, 2016 Analysis of Balance Summer Food Program $ 13, A-21 5, , A-26 13, A $ 5, $ 5, See Independent Auditors' Report -83-

91 TRUST FUND CASH RECEIPTS AND DISBURSEMENTS - TREASURER YEAR ENDED DECEMBER 31 I 2016 B-2 Sheet #1 Ref. Animal Other Total Unemployment Control Trust Insurance Compensation Fund Fund Fund Insurance Fund Self- Insurance Fund Community Development Block Grant Balance, December 31, 2015 B $ 19, $ 5,508, $ 682, $ 79, $ 603, $ 7, Increased by Receipts: Due State of New Jersey B-6 Due from H.U.D. - CDBG B-3 Accounts Receivable B-4 lnterfunds Receivable B-5 Due from Current Fund 8-8 Dog License Collection B-12 ' Special Deposits 8-13 QC ~ lnterfunds Payable 8-10 Insurance Funds B-15 1, , , ,564, ,231, , , ,997, , , ,949, , , , ,243, ,591, , ~418, , , ,752, ,274, , ,021, , Decreased by Disbursements: lnterfunds Receivable B-5 Due to Claims Fund B-9 lnterfunds Payable B-10 Special Deposits B-13 Insurance Fund B , , ,048, ,381, , , , 775, ,247, ,257, ,247, , , , ,498, ,629, , ,505, , Balance, December 31, 2016 B $ 23, $ 5,253, $ 644, $ 129, $ 515, $ 179, See Independent Auditors' Report

92 TRUST FUND CASH RECEIPTS AND DISBURSEMENTS - TREASURER YEAR ENDED DECEMBER 31 I 2016 B-2 Sheet# 2 Ref. Payroll Fund Balance, December 31, 2015 B $ Increased by Receipts: Net Payroll $ 18,416, Payroll Deductions 11,556, B-7 Decreased by Disbursements: Net Payroll B-7 18,416, Payroll Deductions B-7 11,541, Balance, December 31, 2016 B $ 248, ,972, ,221, ,957, , See Independent Auditors' Report -85-

93 TRUST FUND DUE FROM HOUSING AND URBAN DEVELOPMENT GOMMUNITY DEVELOPMENT BLOCK GRANT YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 B $ 1,380, Increased by: Grant Award B , ,015, Decreased by: Collections Cancelled B-2 B-14 $ 605, , , Balance, December 31, 2016 B $ 1,285, ACCOUNTS RECEIVABLE YEAR ENDED DECEMBER 31, 2016 B-4 Balance, December 31, 2015 Increased by: Due from Developer's - Police Special Duty Decreased by: Cash Receipts Balance, December 31, 2016 Ref. B B-13 B-2 B $ 447, , ,367, , $ 919, See Independent Auditors' Report -86-

94 TRUST FUNDS INTERFUNDS RECEIVABLE OTHER TRUST FUNDS B-5 YEAR ENDED DECEMBER General Current Capital Salary Ref. Total - Fund Fund Account Balance, December 31, 2015 ~ $ - $ - $ - $ Increased by: Cash Disbursements B-2 650, , Special Deposits B , , Transferred to lnterfund Payable B , , ,604, , , , I QC ~ 1,604, , , , Decreased by: Cash Receipts B-2 1,564, , , , Special Deposits B-13 39, , ,604, , , , Balance, December 31, 2016 $ - $ - $ - $ See Independent Auditors' Report

95 TRUST FUND DUE TO STATE OF NEW JERSEY 8-6 ANIMAL CONTROL TRUST FUND YEAR ENDED DECEMBER 31 I 2016 State Share License Pilot Population Ref. Total Fee Clinic Control Balance, December 31, 2015 B $ 6.60 $ 3.00 $ 0.60 $ 3.00 Increased by: Fees Collected B-2 1, , Decreased by: Paid to State - Claims Fund 8-9 1, , Balance, December 31, 2016 $ $ $ $ See Independent Auditors' Report -88-

96 TRUST FUND PAYROLL DEDUCTION PAYABLE B-7 YEAR ENDED DECEMBER Balance Balance Dec. 31,2015 Receipts Disbursements Dec. 31, 2016 Net Payroll $ $ 18,416, $ 18,416, $ Federal Withholding 3,682, ,682, Social Security 2,397, ,397, State Income Tax 950, , Unemployment Compensation Insurance 66, , Public Employees' Retirement System: Pension 89, ,024, ,016, , Contributory Insurance 5, , , , Supplemental Insurance 1, , , , Police and Firemen's Retirement Pension 136, ,585, ,577, , Supplemental Insurance 9, , , , ING Insurance 2, , Boston Mutual Premium 7, , Teamsters Local #11 2, , , Teamsters Local # , , (1,629.71) Garnishments , , PBA Local # , , PBA Local #18M Superiors , , AFLAC 1, , , Medical-23 1, 185, , 185, Vision/Dental-52 3, , AAA Equitable 78, , (50.00) VALIC , , FSA (104.25) 3, , (104.25) Liberty Mutual 13, , (390.78) NY Life Unallocated 1, , , ,556, ,541, , Total $ 248, $ 29,972, $ 29,957, $ 263, Ref. B B-2 B-2 B See Independent Auditors' Report -89-

97 TRUST FUND DUE FROM CURRENT FUND YEAR ENDED DECEMBER 31, 2016 Increased by: Budget Appropriations Decreased by: Cash Receipts Balance, December 31, 2016 Ref. B-15 B-2 Insurance Funds $ 594, $ 594, See Independent Auditors' Report -90-

98 TRUST FUND DUE TO CLAIMS FUND YEAR ENDED DECEMBER 31 I 2016 Ref. Animal Control Fund Other Trust Funds Insurance Funds Grant Funds Increased by: Due to State of New Jersey B-6 Accounts Payable B-11 Special Deposits B-13 Grant Expenditures B-14 Insurance Claims B-15 Decreased by: Disbursements B-2 $ 1, $ 1,048, , ,048, , ,048, $ $ $ 123, $ 237, ,257, ,381, , ,381, , $ $ See Independent Auditors' Report -91-

99 TRUST FUNDS INTERFUNDS PAYABLE YEAR ENDED DECEMBER B-10 Ref. Community Development Animal Other Block Grant Control Fund Trust Fund Current Salary General Current General Total Fund Account caeital Fund caeital... I Balance, December 31, 2015 B $ 468, $ - $ - $ 106, $ - $ 362, Increased by: Transferred from/to lnterfunds Receivable , , Excess Dog License Fees B-12 16, , CDBG Expenditures B , , , , Cash Receipts B-2 150, , I 814, , , , , , IQ 1,283, , , , , Decreased by: Cash Disbursements B-2 370, , , , , , , , Balance, December 31, 2016 B $ 913, $ - $ - $ 108, $ 16, $ 788, See Independent Auditors' Report

100 TRUST FUND ACCOUNTS PAYABLE YEAR ENDED DECEMBER Balance, December 31, 2015 Increased by: Accounts Payable Established Decreased by: Due to Claims Fund Balance, December 31, 2016 Ref. B B-15 B-9 Insurance Funds $ 28, $ 95, , , RESERVE FOR ANIMAL CONTROL EXPENDITURES YEAR ENDED DECEMBER Ref. Balance, December 31, 2015 B $ 19, Increased by: Receipts from Dog License Miscellaneous Receipts 8-2 $ 3, , , Decreased by: Due Current Fund Under R. S. 4: B-10 16, Balance, December 31, 2016 B $ 6, License Fees Collected Year Amount 2014 $ 3, , $ 6, Note: R.S. 4: ".... there shall be transferred from such special account to the general funds of the municipality any amount then in such special account which is in excess of the total amount paid into such special account during the last two fiscal years next preceding''. See Independent Auditors' Report -93-

101 TRUST FUND SPECIAL DEPOSITS YEAR ENDED DECEMBER 31, Account Balance Balance Number Dec. 31, 2015 Increase Decrease Dec. 31, Cultural Affairs $ 7, $ 2, $ 9, Street Opening Deposits 19, , $ 14, , Parking Offenses Adjudication Act 88, , , , Planning Board Escrow 54, , , , Rent Leveling Escrow 11, , , , LE.A. Program 261, , , , Affordable Housing 33, , Police Detail 144, ,631, ,588, , Builders Escrow Deposits 1,144, , , ,114, Board of Adjustments Escrow 58, , , , Pool Donation 2, , Donations 3, , , Public Defender 17, , , , Elevator Inspections Deposits 111, , , , Law Enforcement 114, , , , State Police Forfeitures 465, , , , Tax Title Lien Redemptions 1, ,797, ,797, , Tax Title Lien Redemption Premium Account 2,262, ,827, ,822, ,267, Developer's Costs 456, , , , Accumulated Absences 72, , , , Snow Removal 139, , Donations for EMS 2, , Kennedy Blvd Fire Victims Emergency Relief Funds 1, , Board of Education 112, , Recycling 5, , , , Recreation Trust 11, , Police Recovery Fund 7, , $ 5,592, $ 10,654, $ 10,886, $ 5,360, Ref. B Below Below B Ref. Cash Receipts B-2 $ 9,231, Cash Disbursements B-2 $ 9,775, Accounts Receivable B-4 919, lnterfunds B-5 503, , Due to Claims Fund B-9 1,048, Accounts Payable B 22, Above $ 10,654, $ 10,886, See Independent Auditors' Report -94-

102 TRUST FUND RESERVE FOR COMMUNITY DEVELOPMENT BLOCK GRANT B-14 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT YEAR ENDED DECEMBER 31 I 2016 Balance, December 31, 2015 B $ 1,281, Increased by: Grant Award B-3 634, ,916, Ref. Decreased by: Due to Current Fund B-10 $ 30, Due to General Capital Fund B-10 2, Due to Claims Fund B-9 237, Due to Salary Account B , Cancellations B-3 124, , Balance, December 31, 2016 B $ 1,356, See Independent Auditors' Report -95-

103 TRUST FUND RESERVE FOR VARIOUS INSURANCE FUNDS YEAR ENDED DECEMBER Ref. Totals Unemployment Insurance Other Insurance Balance, December 31, 2015 B $ 654, $ 50, $ 603, Increased by: Settlements B-2 Refunds from State of New Jersey B-2 Due from Current Fund B-8 $ 2,949, , $ 48, , , ,591, , ,245, , $ 2,949, , ,418, ,021, I ~ O'>. I Decreased by: Disbursements B-2 Due to Claims Fund B-9 Accounts Payable B-11 1,247, ,257, , , ,600, , ,247, ,257, ~505, Balance, December 31, 2016 B $ 644, $ 129, $ 515, See Independent Auditors' Report

104 GENERAL CAPITAL FUND CASH RECEIPTS AND DISBURSEMENTS -TREASURER C-2 YEAR ENDED DECEMBER Ref. General Capital Balance, December 31, 2015 c $ 2,230, Increased by Receipts: Premium on Sale of Notes and Bonds C-1 $ 343, Capital Improvement Fund C , Reserve for Future Improvements C-11 5, Improvement Authorization Refund C-9 39, Bond Anticipation Notes C-16 28,937, Decreased by Disbursements: lnterfunds Payable C-4 450, Improvement Authorizations C-9 3,334, Anticipated Revenue C-1 185, Bond Anticipation Notes C-16 24,111, ,475, ,705, ,081, Balance, December 31, 2016 c $ 3,624, See Independent Auditors' Report -97-

105 GENERAL CAPITAL FUND ANALYSIS OF CAPITAL CASH YEAR ENDED DECEMBER C-3 Ordinance Balance Number December 31, 2015 Receiets Disbursed Transferred Transferred Balance From To December 31, 2016 Fund Balance $ 265, Capital Improvement Fund 26, Due from Grant Trust Fund (106,447.50) Reserve for Future Improvements 327, Due from Federal and State Grant Fund (691,856.64) Due from General Trust Fund (362,514.00) Bond Anticipation Notes Renewed $ 343, $ 185, , , , ,937, , 111, $ 77, $ 346, , , , (84,524.75) 332, ,826, (691,856.64) (812,514.00) lmgrovement Authorizations Various Capital Improvements Improvements to 76th Street Recreation Facility , Rehabilitation of Properties , \C ~ Riverfront Park Redevelopment (1,466,226.59) Various Capital Improvements , Refunding Tax Appeals Various Capital Improvements , 174, Various Capital Improvements ,522, Various Capital Improvements $ 2,230, , , ,039, , , ,624, $ 29,475, $ 28,081, $ , , (1,466,226.59) 2, , , , ,905, ,080, ,455, ,106, $ 5,106, $ 3,624, Ref. c C-2 C-2 c See Independent Auditors' Report

106 GENERAL CAPITAL FUND INTERFUNDS YEAR ENDED DECEMBER C-4 State and General Federal Grant Ref. Total Trust Fund Grant Fund Trust Fund Balance, December 31, 2015 c $ 1,160, $ 362, $ 691, $ 106, Increased by: Improvement Authorizations C-9 2, , Cash Disbursements C-2 450, , , , , Decreased by: Improvement Authorizations C-9 24, , , , ,612, , , , I ' I Balance, December 31, 2016: ' Due from c $ 1,588, $ 788, $ 691, $ 108, See Independent Auditors' Report

107 DUE FROM STATE OF NEW JERSEY GREEN ACRES TRUST PROGRAM YEAR ENDED DECEMBER Balance, December 31, 2015 and 2016 c $ 1,500, DUE FROM TOWN OF GUTTENBERG YEAR ENDED DECMBER Balance, December 31, 2015 and 2016 Ref c $ 338, See Independent Auditors' Report -100-

108 GENERAL CAPITAL FUND DEFERRED CHARGES TO FUTURE TAXATION - FUNDED YEAR ENDED DECEMBER Balance, December 31, 2015 Ref. c $ 37,339, Increased by: Refunding Bonds Issued C-17 17,725, ,064, Decreased by: Capital Leases C-14 $ 854, Payment of Green Trust Loans C-13 36, Payment and Cancellation of NJEIT Loans C , Payment of Serial Bonds and Refunded Bonds C-17 19,935, Balance, December 31, 2016 c 21,346, $ 33, 717, See Independent Auditors' Report - JO 1-

109 GENERAL CAPITAL FUND DEFERRED CHARGES TO FUTURE TAXATION - UNFUNDED YEAR ENDED DECEMBER C-8 Improvement Balance Number lmorovement Descriotion December 31, Budget Balance Authorizations Aeeroenation December31, 2016 Bond Anticipation Notes Analysis of Balances December 31, 2016 ~nditures Unexpended Improvement Authorizations Renovations to Parks $ 255, $ 6, $ 248, $ 248, Various Capital Improvements 2,916, , ,814, ,814, Acquisition of Real Properily 2,010, , ,984, ,984, Various Capital Improvements 3,429, , ,303, ,303, Various Capital Improvements 3,330, , , 145, ,145, Various Capital Improvements 3,422, , ,330, ,330, Rehabilitation of Properties 422, , , , Riverfront Park Redevelopment 1,838, N ' Various Capital Improvements 3,021, ,838, , ,930, ,930, $ 1,466, $ 372, Refunding Tax Appeals 670, , Various Capital Improvements 3,325, ,325, ,325, Various Capital Improvements 2,660, ,660, ,660, Various Capital Improvements $ 4,826, , , $ 27,302, $ 4,826, $ 1,351, $ 30,776, $ 28,937, $ 1,466, $ B.!tl. c C-9 C-16 c C-16 C-3 C-9 See Independent Auditors' Report

110 GENERAL CAPITAL FUND IMPROVEMENT AUTHORIZATIONS YEAR ENDED DECEMBER ~ Improvement Description Ordinance Number Amount Balance December 31, 2015 Funded Unfunded 2016 Authorization Expended Balance December 31, 2016 Funded Unfunded Office Equipment and Machinery Improvements to 76th Street Recreation Facility Various Capital Improvements Rehabilltation of Properties Riverfront Park Redevelopment Various Capital Improvements Refunding Tax Appeals Various Capita! Improvements Various Capita! Improvements Various Capita! Improvements $ 160, , , 700, , ,850, , 180, , 110, ,500, ,800, ,080, $ , , $ 475, , , ,174, ,522, $ 5,080, $ 11, , ,039, , ,624, $ , $ 466, , , ,905, ~ $ 37, $ 4,572, $ 5,080, $ 3,317, $ 34, $ 6,338, Reference C c Below Below c c ' -= IH ' Due from Grant Trust Fund Due to Police Escrow Cash Receipts Cash Disbursements Deferred Charges to Future Taxation - Unfunded Fund Balance Capital Improvement Fund Ref. C-4 C-4 C-2 C-2 C-18 C-1 C-10 $ 4,826, , , $ ( ) 24, (39,089.00) 3,334, $ 5,080, $ 3,317, See Independent Auditors' Report

111 GENERAL CAPITAL FUND CAPITAL IMPROVEMENT FUND YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 Increased by: Budget Appropriation Decreased by: Utilized to Fund Improvement Authorization Balance, December 31, 2016 c ' C-2 C-9 $ 26, , , , $ See Independent Auditors' Report -104-

112 GENERAL CAPITAL FUND RESERVE FOR FUTURE IMPROVEMENTS YEAR ENDED DECEMBER Balance, December 31, 2015 Increased by: Cash Receipt Balance, December 31, 2016 Ref. c C-2 c $ 327, , $ 332, Analysis of Balance Street and Sewer Improvements $ 332, RESERVE FOR STATE GRANTS AND OTHER RECEIVABLES YEAR ENDED DECEMBER Balance, December 31, 2015 and 2016 c $ 1,838, See Independent Auditors' Report -105-

113 GENERAL CAPITAL FUND GREEN ACRES LOANS PAYABLE GREEN TRUST YEAR ENDED DECEMBER ProjecUlmprovement Balance December 31, 2015 Budget Appropriation Balance December 31, 2016 Soccer Field th Street Park Riverview Park th Street Park 76th Street Park $ 5, $ , , , , , , , , $ 306, $ 36, Ref. c C-7 $ 5, , , , , $ 269, c See Independent Auditors' Report -106-

114 GENERAL CAPITAL FUND CAPITAL LEASES PAYABLE HUDSON COUNTY IMPROVEMENT AUTHORITY YEAR ENDED DECEMBER 31 I 2016 C-14 Balance, December 31, 2015 Ref. c $ 7,689, Decreased by: Lease Payments and adjustments C-7 Balance, December 31, 2016 c 854, $ 6,835, See Independent Auditors' Report

115 GENERAL CAPITAL FUND ENVIRONMENTAL INFRASTRUCTURE LOAN PAYABLE YEAR ENDED DECEMBER 31, 2016 Balance, December 31, 2015 c $ 1,787, Decreased by: Loan payments Cancelations C-7 $ 110, , , Balance, December 31, 2016 c $ 1,266, See Independent Auditors' Report -108-

116 GENERAL CAPITAL FUND BOND ANTICIPATION NOTES YEAR ENDED DECEMBER C-16 Date of Issue of Ordinance Original Number lmerovement Descrietion Note Issue Interest Balance Maturi!Y Rate December 31, 2015 Balance Increase Decrease ~ecember 31, Various Park Improvements 6/02/10 4/01/16 3/31/ $ 255, $ 248, $ 255, $ 248, Various Capital Improvements 6/02/10 4/01/16 3/31/ ,916, ,814, ,916, ,814, Acquisition of Real Property 6/02/10 4/01/16 3/31/ ,010, ,984, ,010, ,984, Various Capital Improvements 6/02/11 4/01/16 3/31/ ,429, ,303, ,429, ,303, Various Capital Improvements 4/03/12 4/01/16 3/31/ ,330, ,145, ,330, , 145, I -= 1-C I Various Capital Improvements 4/03/ Rehabilitation of Properties 4/03/12 4/01/16 4/01/16 3/31/ ,422, /31/ , ,330, ,422, ,330, , , , Various Capital Improvements 4/03/13 4/01/16 3/31/ ,021, ,930, ,021, ,930, Refunding Tax Appeals 12/30/13 4/01/16 3/31/ , , Various Capital Improvements 4/24/14 4/01/16 3/31/ ,325, ,325, ,325, ,325, Various Capital Improvements 4/01/15 4/01/16 3/31/ ,660, ,660, ,660, ,660, Various Capital Improvements 3/31/16 3/31/16 3/31/ ,826, ,826, Ref $ 25,463, c $ 28,937, $ 25,463, $ 28,937, C-2 Below c Cash Disbursements Paid by Budget Appropriation Ref. C-2 $ 24,111, C-8 1,351, Above $ 25,463, See Independent Auditors' Report

117 TOWNSHIP OF NORTH B!;;R!;2!;N!;2ENERAL CAPITAL FUND GENERAL SERIAL BONDS YEAR ENDED DECEMBER Q:.11 Maturities of Bonds Original Outstanding Date of December31, ~OJ6 Interest Balance Bonds Balance Purpose Issue Amount Date Amount Rate December 31, 2015 Issued Decrease December 31, 2016 Refunding Bonds 2/15/08 $ 11,000, /15/17 $ 580, % 8/15/18 580, % $ 1.740, $ 580, $ 1, 160, Tax Appeal Bonds 5115/09 3,800, ,000, ,000, General Improvements 5115/09 22,472, /01/17 1,072, % 2101/18 1,100, % ,150, % 2101/20 1,390, % 2101/21 1,390, % 1,390, /22 1,470, % 1,470, /23 1,490, % 1,490, /01/24 1,490, % 1,490, /25 1,490, % 1,490, /26 1,490, % 1,490, /01/28 1,490, % 1,490, /27 1,490, % 1,490, /29 1,490, % 1,490, ' 2101/30 1,490, % 1,490, = 2/01/31 1,490, % 1,490, ' 2101/32 1,490, % 22,472, ,490, ,712, Refunding Bonds 5/10/12 3, 145, /01/17 395, % 4/01/18 390, % 4/01/19 390, % 4/01/20 390, % 4/01/21 385, % 2,345, , ,950, Refunding Bonds 5/18/ , /21 1,360, % 211/22 1,440, % 2/1/23 1,460, % 211/24 1,460, % 211/25 1,465, % 211/26 1,475, % ,490, % 211/28 1,490, % 211/29 1,490, % 211/30 1,480, % 211/31 1,470, % 211/32 1,445, % 17,725, , ,525, $ 27,557, $ 17,725, $ 19,935, $ 25,347, Ref. c C-1 C-7 c See Independent A uditors' Report

118 GENERAL CAPITAL FUND BONDS AND NOTES AUTHORIZED BUT NOT ISSUED GENERAL PROJECTS YEAR ENDED DECEMBER C-18 Improvement Number Improvement Description Increased by Decreased Balance 2016 by BANs December 31, 2015 Authorizations Issued Balance December 31, Riverfront Park Redevelopment $ 1,838, $ 1,838, Various Capital Improvements - $ 4,826, $ 4,826, $ 1,838, $ 4,826, $ 4,826, $ 1,838, ' -. Ref. c C-9 C-16 c See Independent Auditors' Report

119 PUBLIC ASSISTANCE TRUST FUND CASH RECEIPTS AND DISBURSEMENTS YEAR ENDED DECEMBER Ref. Balance, December 31, 2015 Increased by: Petty Cash Returned Decreased by: Payment of Claims D $ 1, D-2 3, , D Balance, December 31, 2016 D $ 5, See Independent Auditors' Report -112-

120 PUBLIC ASSISTANCE TRUST FUND RESERVES FOR EXPENDITURES D-2 TRUST FUND ACCOUNT# 1 YEAR ENDED DECEMBER 31 I 2016 Ref. Balance, December 31, 2015 D $ 1, Increased by: Petty Cash Returned D-1 Decreased by: Payment of Claims D-3 3, , Balance, December 31, 2016 D $ 5, DUE TO CLAIMS FUND YEAR ENDED DECEMBER Increased by: Reserve for Expenditures D-2 Decreased by: Cash Disbursements D-1 Balance, December 31, 2016 $ $ See Independent Auditors' Report -113-

121 CLAIMS FUND CASH RECEIPTS AND DISBURSEMENTS-TREASURER E-1 YEAR ENDED DECEMBER 31 I 2016 Increased by Receipts: lnterfunds Decreased by Disbursements: lnterfunds Balance, December 31, 2016 E-2 E-2 $ 107,924, $ 107,924, See Independent Auditors' Report

122 CLAIMS FUND INTERFUNDS YEAR ENDED DECEMBER 31 I 2016 Due to Current Fund Due to Federal and State Grant Fund Due to Community Development Trust Fund Due to Public Assistance Fund Due to Animal Control Fund Due to General Capital Fund Due to Other Trust Fund Due to Unemployment Compensation Insurance Trust Fund Due to Self-Insurance Trust Fund Contra Receipts $ 100,721, , , , ,295, ,048, , ,257, $ 107,924, Disbursed $100,721, , , , ,295, ,048, , ,257, $ 107,924, Ref. E-1 E-1 See Independent Auditors' Report

123 PART II ROSTER OF OFFICIALS AND COMMENTS AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015

124 OFFICIALS IN OFFICE AND REPORT ON SURETY BONDS The following are the officials in office: Position Nicolas J. Sacco Allen Pascual Frank Gargiulo Hugo Cabrera Julio Marenco Christopher Pianese Erin Barillas Denise Zambardino Nino Falcone James Coviello Heather D. Luzzi-Miller Robert Pittfield Thomas Kobin Elsie Vargas Mayor and Director of Public Affairs Director of Public Safety Director of Public Works Director of Public Parks and Playgrounds Director of Revenue and Finance Township Administrator Township Clerk Tax Collector Magistrate Magistrate Court Administrator Chief Financial Officer Township Attorney Township Treasurer The following is a list of employees with surety bond coverage: Heather D. Luzzi-Miller Nino Falcone Public Employees' Dishonesty Bond Violations Department Blanket Bond Christopher Pianese Robert Pittfield Court Administrator Judge Township Administrator Chief Financial Officer Effective January 1, 2007 these individuals, along with any assistant job titles, are covered under a blanket bond issued through the Municipal Excess Liability Joint Insurance Fund in the sum of $1,000, It is also noted that Court personnel are covered under a separate Court blanket bond

125 COMMENTS AND RECOMMENDATIONS Contracts and Agreements Required to be Advertised for (N.J.S.A. 40A:11-4) N.J.S.A. 40A: 11-4, as amended, states "Every contract or agreement, for the performance of any work or the furnishing or hiring of any materials or supplies, the cost or the contract price whereof is to be paid with or out of public funds not included within the terms of Section 3 of this act, shall be made or awarded only by the Governing Body of the contracting unit after public advertising for bids and bidding therefore, except as is provided otherwise in this act or specifically by any other law. No work, materials or supplies shall be undertaken, acquired or furnished for a sum exceeding in the aggregate the amount set forth in, or the amount calculated by the Governor pursuant to N.J.S.A. 40A:11-3, except by contract or agreement." It is pointed out that the Township Commissioners have the responsibility of determining whether the expenditures in any category will exceed the threshold set for the fiscal year and, where question arises as to whether any contract or agreement might result in violation of the statute, the opinion of the Township Attorney should be sought before a commitment is made. The bidding threshold for the period under review was $40, in accordance with the provisions of N.J.S.A. 40A: 11-3a, based on the appointment of a qualified purchasing agent. Notwithstanding N.J.S.A. 40A:11-3a, P.L. 2005, Chapter 51 and N.J.S.A. 19:44A-20.5, known as the "Pay to Play Law", provides that a municipality is prohibited from executing any contract in excess of $17,500.00, on or after January 1, 2006, to a business entity that made certain reportable contributions to any municipal committee of a political party if a member of that party is in office as a member of the governing body of the municipality when the contract is awarded, unless proposals or qualifications are solicited through a fair and open process. It is further noted that contracts between $17, and the municipal bidding threshold, known as "window contracts", can be issued by resolution of the governing body without competitive bidding if a non-fair and open process is implemented which prohibits reportable contributions by the business entity. The Township did not participate in this process. The minutes indicate that bids were requested by public advertising for all purchases. The minutes indicate that resolutions were adopted and advertised, authorizing the awarding of contracts or agreements for "Professional Services" per N.J.S.A. 40A: Inasmuch as the system of records did not provide for an accumulation of payments for categories of materials and supplies or related work or labor, the results of such an accumulation could not reasonably be ascertained. Disbursements were reviewed, however, to determine whether any clear-cut violations existed. Purchases. Contracts or Agreements Not Required to be Advertised by N.J.S.A. 40A: N.J.S.A. 40A: states, "Except contracts which require the performance of professional services, all contracts or agreements which do not require public advertising for bids and the estimated cost or price exceeds fifteen percent of the bid threshold or $6,000.00, at least two quotations as to the cost or price, whenever practicable, shall be solicited by the contracting agent, and the contract or agreement shall be made with and awarded to the lowest responsible bidder." Reference is made to the Local Public Contract Guidelines and Local Public Contract Regulations (1977) promulgated by the New Jersey Division of Local Government Services in the Department of Community Affairs. Collection of Interest on Delinquent Taxes The statutes (N.J.S.A. 54:4-67, as amended) provide the method for authorizing interest and the maximum rate to be charged for the nonpayment of taxes and assessments on or before the date when they would become delinquent

126 January 2016 the Governing Body adopted the following resolution authorizing interest to be charged on delinquent taxes: BE IT RESOLVED by the Board of Commissioners of the Township of North Bergen that approval be given to the Tax Collector to charge 8% on the first $1, of the delinquency and 18% on all delinquencies in excess of $1, Trivial differences were noted in our tests. Verification of Delinquent Taxes and Other Charges A test verification of delinquent balances and current payments was made in accordance with the regulations of the Division of Local Government Services. The results of tests did not disclose any material instance of irregularities. Tax Collector In some instances the Tax Collector's records were not in agreement with ledger accounts maintained by the Finance Office. Some non-cash adjustments made by the Tax Collector were not forwarded to the Finance Office for posting in the general ledger. 1.) We recommend that all non-cash adjustments be forwarded to the Finance Office for posting. Purchase Order System and Encumbrance System The Township's budgetary operation is on a full encumbrance system with the exception of payrolls and other direct costs. All purchases are made directly by the purchasing department or subsequently confirmed on an emergency basis. Tests of the system disclosed no exceptions during Blanket orders and other outstanding encumbrances were reviewed at the close of the year, and adjustments and cancellations were made where appropriate to reflect actual commitments outstanding for budgetary control. Payment of Claims The examination did not and could not determine the character of services rendered for which payment had been made or for which reserves had been set up, nor could it determine the character, proper price or quantity of materials supplied for which claims had been passed. Authorization for payment of claims is delegated to the Chief Financial Officer and bill lists are submitted to the Township Council for approval and recorded as a supplement to the official minutes. Claims were examined on a test basis for the year under audit and the following opportunity for improvement was noted. In accordance with N.J.A.C. 5:30-5.3, a certification of availability of funds must be made prior to any commitment of rendered services or purchased goods. 2.) We recommend that all requisitions be submitted prior to any commitment of goods or services. Status of Prior Years' Audit Recommendations In accordance with regulations promulgated by the Single Audit Act and the Division of Local Government Services, all municipalities are required to prepare and submit to the Division of Local Government Services, a Corrective Action Plan with regard to audit deficiencies. This plan must be approved by formal resolution of the Governing Body and submitted within 60 days from the date the audit is received. A plan was prepared for items found in the CY 2015 Report on Examination of Accounts. A review was performed on all prior years' recommendations and corrective action was taken on all