CITY OF PAPILLION, NEBRASKA

Transcription

1 CITY OF PAPILLION, NEBRASKA COMPREHENSIVE ANNUAL FINANCIAL REPORT for the fiscal year ended September 30, 2016 Prepared by: The Finance Department

2 TABLE OF CONTENTS September 30, 2016 Page(s) INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting. 7-8 Organization Chart... 9 Listing of Officials.. 10 FINANCIAL SECTION Independent Auditors Report Management s Discussion and Analysis BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Position 26 Statement of Activities 27 FUND FINANCIAL STATEMENTS Governmental Funds Financial Statements Balance Sheet.. 28 Reconciliation of the Balance Sheet to the Statement of Net Position. 29 Statement of Revenues, Expenditures and Changes in Fund Balances 30 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities. 31 Proprietary Funds Financial Statements Statement of Net Position 32 Statement of Revenues, Expenditures and Changes in Net Position.. 33 Statement of Cash Flows.. 34 Fiduciary Funds Financial Statements Statement of Net Position. 35 Statement of Changes in Net Position Notes to Financial Statements REQUIRED SUPPLIEMENTARY INFORMATION Schedule of Revenues and Expenditures Budget and Actual Budgetary Basis General Fund 59 Schedule of Revenues and Expenditures Budget and Actual Budgetary Basis All Special Revenue Funds 60 Note to Required Supplementary Information Budgetary Comparison Schedules 61

3 TABLE OF CONTENTS September 30, 2016 Page(s) OTHER SUPPLEMENTARY INFORMATION Schedule of Revenues and Expenditures Budget and Actual Budgetary Basis Capital Improvement Fund 62 Debt Service Fund.. 63 Schedules of General Fund Cash Expenditures Budget and Actual Budgetary Basis General and Administrative 64 Building Permits and Inspections.. 65 Planning. 66 Library 67 Parks Department Police Department 69 Fire Department 70 Street Department 71 Recreation Department.. 72 Senior Center 73 Information Systems Department.. 74 Amphitheater. 75 Schedules of Bond Principal and Interest Requirements by Fiscal Year of Maturity Governmental Funds 76 Proprietary Funds. 77 Fiduciary Fund Combining Schedules Schedule of Net Position 78 Schedule of Changes in Net Position.. 79

4 TABLE OF CONTENTS September 30, 2016 Page(s) STATISTICAL SECTION Table # Net Position by Components 1 80 Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Total City Taxable Sales 5 86 Sales Tax Rates Net Taxable Sales by Business Classification Assessed and Estimated Actual Value of Taxable Property Property Tax Rates-Direct and Overlapping Governments 9 90 Principal Property Taxpayers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers Full-Time Equivalent City Governmental Employees by Function Operating Indicators by Function Capital Asset Statistics by Function INTERNAL CONTROL AND COMPLIANCE AUDIT SECTION Schedule of Expenditures of Federal Awards 102 Note to Schedule of Expenditures of Federal Awards. 103 Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance Schedule of Findings and Questions Costs

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7 September 30, 2016, are fairly presented in conformity with generally accepted accounting principles ( GAAP ). The independent auditor s report is presented as the first component of the financial section of this report. Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis ( MD&A ). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City s MD&A can be found in the Financial Section immediately following the independent auditors report. CITY PROFILE The City of Papillion, incorporated on May 9, 1883, is the county seat of Sarpy County and is located approximately ten miles south of the City of Omaha. It occupies a land area of approximately 8.6 square miles with opportunities to grow in all direction except to the north. The City has legal control over the development (planning, zoning and building permit issuance) within approximately 2 miles of city limits in the directions where growth exists. Papillion is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. The City of Papillion utilizes the mayor and council form of government. The Council is elected on a nonpartisan basis. Council members serve four year staggered terms with four Council members elected every two years. The Mayor serves a four-year term. The City is divided into four wards and each ward is represented by two Council members with staggered terms. The City of Papillion provides a full range of services, including public safety (police and fire); the construction and maintenance of highways, streets, and other infrastructure; planning and zoning; a public library; two 18 hole golf courses; an aquatic facility; parks and recreation; water and sewer utilities. Many of these services are also used by those within the extra territorial jurisdiction ( ETJ ), including but not limited to the fact the City provides water and sewer utilities to those in sanitary and improvement districts within the City s ETJ. The Council is required to adopt a final budget by no later than September 20 of the prior fiscal year. This annual budget serves as the foundation for the City s financial planning and control. The budget is prepared by fund and department. The budget includes all funds of the City except fiduciary funds (Pension Trust Funds). Department directors may transfer resources within a department as they see fit. Transfers between departments or additional appropriations need special approval from the City Council. LOCAL ECONOMY The City continues its transformation from a residential suburb to a major retail and commercial area within the metropolitan area. This transformation is helping to diversify the tax base of the City and at the same time increase the sales tax revenue for the City. Shadow Lake Towne Center, located in Papillion, is one of the largest retail shopping areas in the Omaha metro area. Additionally, the federal government has a significant economic presence thanks to STRATCOM (Offutt AFB) located approximately seven miles to the east

8 Additional retail and commercial development is occurring elsewhere in Papillion. Three national retailers (Walgreens, Hobby Lobby and Sam s Club) are now open at Settlers Creek located at 72 nd and Cornhusker Road, one mile north of Shadow Lake Towne Center. A multi-tenant building that includes four national restaurants (Chipotle, Jersey Mike s, Pie Five Pizza Co., and Smoothie King) opened in A second multi-tenant building that includes a national retailer (AT&T) opened in Metro Credit Union also opened in West Cornhusker Plaza, located at 72 nd Street and Cornhusker Road is the home of Brakes Plus, Dunkin Donuts, Fantasy s Food and Fuel, Jimmy John s, and Tires Plus. West Cornhusker Plaza South, located south of 72 nd Street and Cornhusker Road, is the home of Veridian Credit Union and Your Family Dentist. Midlands Place, located at Highway 370 and 84 th Street, a half mile east of Shadow Lake Towne Center, is complete with the necessary infrastructure. Seven buildings are constructed within this development including a national hotel. The tenants consist of a mix of national, regional, and local businesses. Demand for retail and commercial development continues as evidenced by recent platting activity. A 14 acre mixed use district within the Prairie Hills subdivision completed the platting and zoning process in October A mixed-use district, known as Granite Falls Commercial, at 114 th Street and Highway 370, will create 263,500 square feet of commercial/retail/office completed the platting and zoning process in Three mixed use districts are currently proceeding through the platting and zoning process. 370 North, located on the northwest corner of Highway 370 and Highway 50 will include a mix of civic, commercial, industrial, and office uses. North Shore Commercial, located to the west of Werner Park at 126 th and Highway 370 will include a mix of civic, commercial, office, and residential uses. Prairie Queen will include small scale civic, commercial, and office development in conjunction with residential uses. The City is the site location for a large national company data center, Fidelity Investments. An expansion of the Fidelity Investments data center was completed in LightEdge Commercial Park, has submitted an application to create a lot for a data center for Edge Business Continuity Center, which is proceeding through the platting and zoning process. Industrial development is now occurring in Papillion due to recent expansions of the City s extraterritorial jurisdiction. Construction of a new facility for Oxbow Animal Health is underway at 150 th Street and Schram Road. In 2016, Prairie Corners Five was approved. It included five industrial lots. Two of those lots are being developed into a corporate headquarters, training facility, and dealership for Truck Center Companies, one of the nation s largest Freightliner dealerships. Other notable industrial uses that have recently been added to the City include Drywall Supply Inc. and Palco Industrial Marking and Labeling. Furthermore, an industrial development that will create approximately 1,100,000 square feet of enclosed warehousing space is proceeding through the platting and zoning process. During the last five years, there has been continual platting and construction of single-family homes within the City s zoning jurisdiction. In 2013, two large residential developments completed the zoning and platting process. Together, these developments platted an additional 410 single-family residential lots, an elementary school lot, and 11 mixed used lots on approximately 264 areas. Permits have been issued for 290 of the 410 single-family lots. The elementary school opened in August In the 2014/2015 fiscal year, 422 new single-family residential lots and 345 multi-family units were platted. A middle school and a mixed use lot intended to be developed as multi-family were also platted. The middle school opened in August In the 2015/2016, fiscal year, 119 single-family residential lots were platted. In the first quarter of the 2016/2107 fiscal year, 80 single-family residential lots were platted

9 Currently, four residential developments and one mixed use development with a single-family residential component are proceeding through the zoning and platting process. Together these developments will plat an additional 865 single-family residential lots. Two mixed use districts with residential components are also proceeding through the zoning and platting process. Together these mixed use districts propose to create residential units that will be primarily townhome or multi-family units. The City continues to receive national recognition. Papillion has been recognized several times by national rankings and publications over the course of the last decade. In August 2015, Money Magazine ranked Papillion #2 on its list of America s Best Small Towns to live in. This is the sixth consecutive award from Money Magazine. In January 2013 Bloomberg BusinessWeek released its 2013 list of best communities in which to raise kids. For the state of Nebraska, Papillion was at the top of the list. During 2012, Papillion was named the Best Small Town in America by Liviability.com, a service that focuses on ranking the best places to live and visit. In 2010, Bloomberg BusinessWeek named Papillion the Best Affordable Suburb in Nebraska, as well as the #2 Best Affordable Suburb in the United States. These national recognitions have helped promote the City at a national level sparking additional business and residential interest in the City and surrounding area. In the fall of 2015, Moody s rated the City of Papillion s general obligation bonds at Aa2. This positive rating helped provide the City with low interest rates on refunding of various purpose bonds. Moody s also gave an A1 rating to the City of Papillion Water System s Revenue Bonds Series LONG-TERM FINANCIAL PLANNING On September 7, 2010, the City Council approved a General Fund Cash Reserve Policy. The purpose of the policy is to ensure that the General Fund Cash Reserve balance is accumulated and maintained to protect the stability of tax rates, fiscal solvency and creditworthiness of the City. The policy establishes a minimum limit of 28% of general fund expenditures and a maximum of 40%. Based on the fiscal 2017 budget and the unrestricted cash balance in the General Fund at September 30, 2016, the City was at 40%. The policy requires an annual review during the budget process. The City has recently adopted a Capital Improvement Plan Policy to establish a proactive approach to assessing existing and future capital needs. The Plan covers a period of five years and is updated annually in conjunction with the budget process. The plan establishes priorities and funding of capital project requirements, which the City of Papillion should make to assure its continued economic viability and to protect public health and safety. MAJOR INITIATIVES City of Papillion wastewater is transferred to the City of Omaha for treatment. The federal government issued a mandate to control combined sewer overflows, which will result in increased costs to the City of Papillion. This is going to have a major impact on the sewer fund and Papillion s utility customers. The City has already implemented a change in user fees due to this program. The City completed a rate study during fiscal 2015 and approved the new rates on September 1, The approved resolution contains annual rate increase for four years effective each October 1 st based on the rate study

10 The City is required by state statute to approve a one and six year road plan annually by March 1st. The next major improvement approved in the 2016 annual road plan was Schram Road between 84 th Street and 90th Street. The paving is complete and the road open to traffic. The finalization of the project will be in the spring of Based on a City Council retreat, the five following goals were established including strategies and objectives: 1. Preserve Mid-Town Papillion 2. Expand/Improve Recreational Facilities 3. Maintain a Strong Financial Position 4. Improve and Maintain the Road System to Foster Efficient Movement of Traffic 5. Protect the Small-Town Feel and Sense of Community Construction of a new public works facility is complete. This facility is an investment in the City s future, both as it relates to the City s ability to service the community and removal of the public works maintenance facility from Mid-town Papillion. The City purchased an existing building and land to be used for a park maintenance facility adjacent to the City s largest park. The building had an existing operating lease by a construction company through September During October 2016, the City relocated all park maintenance operations to this facility, which thereby removed the park maintenance facility from the Mid-town Papillion. The City took major steps towards the expansion and improvement of recreational facilities during 2016, starting with an election in May. The election resulted in an affirmative vote to impose an additional one half of one percent sales and use tax to pay the costs of constructing, acquiring, improving, furnishing and equipping public infrastructure and improvements consisting of a Community Center and related improvements and recreational parks and facilities and related improvements. The City issued the first in a series of bond issues on August 30, 2016 for the purposes outlined above. Land acquisition and infrastructure design occurred in Lincoln Street needs to be improved to accommodate the anticipated additional traffic which will be created by the development of the Community Center. The City is into the design phase for the Community Center. On April 7, 2015 the City Council approved the Arterial Street Improvement Program ( ASIP ). This program was adopted to provide adequate, safe, and modern street infrastructure to serve the ongoing growth and economic development of the City of Papillion. The program also helps fund the design and construction of street improvements and appurtenances within the City of Papillion s zoning jurisdiction. The ASIP fees are used within certain geographic areas from which the fees are collected. The fees are placed on new construction, which in part is driving the need for the infrastructure improvements. The program became effective on July 1,

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12 The Government Finance Officers Association ( GFOA ) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Papillion for its comprehensive annual financial report (CAFR ) for the fiscal year ended September 30, In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR will meet the Certificate of Achievement Programs requirements and we are submitting it to the GFOA to determine its eligibility for a certificate

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14 Citizens City of Papillion City Council Eight (8) Members Mayor David P. Black Assistant City Administrator Christine Myers City Administrator Dan Hoins Executive Assistant Nicole Brown City Clerk Eliza Butler Chief Building Official Brian Craig City Attorney Karla Rupiper Communications Manager Trenton Albers City Engineer Jeff Thompson Finance Director Nancy Hypse Recreation Director Lori Hansen Fire Chief Bill Bowes Parks & Facilities Director Tony Gowan Planning Director Mark Stursma Human Resources Manager Carrie Svendsen Library Director Rebecca Sims Chief of Police Scott Lyons Public Works Director Marty Leming - 9 -

15 City of Papillion, Nebraska List of Elected and Appointed Officials September 30, 2016 Mayor Council Members Ward I Council Members Ward II Council Members Ward III Council Members Ward IV City Administrator Assistant City Administrator City Attorney City Clerk City Engineer City Physician Finance Director Fire Chief Library Director Police Chief Planning Director Public Works Director Recreation Director Elected Officials Appointed Officials David P. Black Gene Jaworski James Glover Steve Engberg Jason Gaines Troy Florance Lu Ann Kluch Bob Stubbe Tom Mumgaard Dan Hoins Christine Myers Karla Rupiper Eliza Butler Jeff Thompson Dr. Jeff Strohmyer Nancy Hypse Bill Bowes Rebecca Sims Scott Lyons Mark Stursma Marty Leming Lori Hansen

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20 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2016 (UNAUDITED) This section of the City of Papillion, Nebraska s (the City or City of Papillion ) annual financial report presents our discussion and analysis of the City s financial performance during the fiscal year that ended on September 30, Please consider this discussion in conjunction with the additional information provided in the Letter of Transmittal and the conditions reflected in the City s financial statements. Financial Highlights At the end of the current fiscal year, unassigned fund balance for the general fund was increased to $9,741,423. The City of Papillion continued to experience growth in retail development which can be confirmed by the increase in sales tax revenue which the City received. The residential growth and the economy of the area kept local and national retailers interested in development both within the City and the City s zoning jurisdiction. The City s total debt increased by $4,075,000 during the current fiscal year, as the result of new debt being issued that was greater than the principal payments being made during the year. The City made all scheduled payments. The City issued $8,545,000 of General Obligation Refunding Bonds which were used to refund $2,450,000 General Obligation Refunding Bonds, Series and $6,010,000 of General Obligation Various Purpose Bonds, Series 2010B. The City issued $5,780,000 of Water System Revenue Refunding Bonds, Series 2016 which were used to refund $3,260,000 of Water Revenue Bonds, Series 2011 and $2,520,000 of Water Revenue Refunding Bonds, Series 2011B. The City issued $5,080,000 of Tax Supported Recreational Facilities Bonds, Series 2016 for the purpose of paying costs related to the development of a community center. The City issued $2,385,000 of Highway Allocation Bonds, Series The City s certified valuation for fiscal year 2015 was $1,375,367,968 compared to $1,466,682,966 for fiscal year This equates to a 6.6% increase in overall valuation. The certified growth for 2016 was $67,406,172 which includes $14,516,731 growth from annexation and the balance reflects growth in new construction during the year. The valuation for 2017 certified by the County Assessor in August 2016 was $1,523,193,667. The certified growth for 2017 was $10,726,107 which reflects growth in new construction during the year. Overview of the Financial Statements The City s financial statements are prepared in accordance with accounting principles established by the Governmental Accounting Standards Board ( GASB ). This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The two kinds of statements in the basic financial statements present different views of the City:

21 The first two statements are government-wide financial statements that provide both long-term and short-term information about the City s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City s operations in more detail than the governmentwide statements. The governmental fund statements indicate how general governmental services like public safety were financed in the short-term as well as what remains for future spending. Proprietary fund statements offer short and long-term financial information about the activities the government operates like businesses, such as the golf courses, water system, and sewer system. Fiduciary fund statements provide information about the financial relationships like the retirement plan for the City s employees in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of the annual report are arranged and relate to one another. Figure A-1 Required Components of City of Papillion s Annual Financial Report Management s Discussion And Analysis Basic Financial Statements Required Supplementary Information Governmentwide Financial Statements Fund Financial Statements Notes To the Financial Statements Summary Detail

22 Figure A-2 summarizes the major features of the City s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis explains the structure and contents of each of the statements. Figure A-2 Major Features of the City of Papillion s Government-wide and Fund Financial Statements Fund Statements Government-wide Statements Governmental Funds Proprietary Funds Fiduciary Funds Scope Entire City government (except fiduciary funds) and the City s component units. The activities of the City which are not proprietary or fiduciary, such as police, fire, and parks. Activities the City operates similar to private businesses such as the water system, sewer system and golf courses. Instances in which the City is the trustee or agent for someone else s resources, such as the retirement plan for City employees. Required Financial Statements Statement of Net Position; Statement of Activities. Balance Sheet; Statement of Revenues, Expenditures and Changes in Fund Balances. Statement of Net Position; Statement of Revenues, Expenses, and Changes in Net position; Statement of Cash Flows. Statement of Fiduciary Net Position; Statement of Changes in Fiduciary Net Position. Accounting Basis and Measurement Focus Accrual accounting and economic resources focus. Modified accrual accounting and current financial resources focus. Accrual accounting and economic resources focus. Accrual accounting and economic resources focus. Type of Asset/ Liability Information All assets and liabilities, both financial and capital, and short-term and long-term. Only assets expected to be used and liabilities that come due during the year or soon thereafter, no capital assets included. All assets and liabilities both financial and capital, and short-term and long-term. All assets and liabilities, both shortterm and long-term, the City s funds do not currently contain capital assets, although they can. Type of inflow/ outflow information All revenues and expenses during year, regardless of when cash is received or paid. Revenues for which cash is received during or soon after the end of the year, expenditures when goods or services have been received and payment is due. All revenues and expenses during the year, regardless of when cash is received or paid. All additions and deductions during year, regardless of when cash is received or paid

23 Government-wide Statements The government-wide statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the City s net position and how they have changed. Net position the difference between the City s assets and liabilities is one way to measure the City s financial health, or position. Over time, increases or decreases in the City s net position are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the City you need to consider additional non-financial factors such as changes in the City s property tax base and the condition of the City s capital assets. Over the last year, the City s net position increased by $8,883,647 and the City s property tax base increased by $56,510,701 during the fiscal year. The government-wide financial statements of the City are divided into two categories: Governmental activities Most of the City s basic services are included here, such as the police, streets, fire, library, planning, building inspection, parks, recreation departments and general administration. Property and sales taxes, charges for services, and state and federal grants finance most of these activities. Business-type activities The City charges fees to customers to help it cover the costs of certain services it provides. The City s golf courses, water system and sewer system are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City s funds not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and bond covenants. The City Council establishes other funds to control and manage money for particular purposes. The City has three kinds of funds: Governmental Funds Most of the City s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether or not there are greater or fewer financial resources that can be spent in the near future to finance the City s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information on the subsequent page that explains the relationship (or differences) between them

24 Proprietary Funds Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. In fact, the City s enterprise funds (one type of proprietary fund) are the same as its business-type activities, but provide more detail and additional information, such as cash flows. Fiduciary Funds The City is the trustee, or fiduciary, for its employees pension plans. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the City s government-wide financial statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Position. As noted earlier, net position over time may serve as a useful indicator of a government s financial position. In the case of the City of Papillion, assets exceed liabilities by $91,255,318 at the close of the most recent fiscal year. The largest portion of the City of Papillion s net position (59%) reflects its investment in capital assets (e.g. land, infra-structure, buildings, machinery, and equipment) less any related outstanding debt to acquire those assets. The City of Papillion uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Papillion s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Unrestricted net position may be used to meet the government s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Papillion is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Government Activities Business-type Activities Total Current and other assets $ 28,190,828 $ 19,648,703 $ 15,356,031 $ 13,188,448 $ 43,546,859 $ 32,837,151 Capital assets 80,114,154 76,462,746 40,223,352 40,775, ,337, ,238,054 Total assets 108,304,982 96,111,449 55,579,383 53,963, ,884, ,075,205 Deferred outflows of resources 32, ,976 0 Long-term liabilities 44,954,116 39,858,936 18,375,536 19,423,076 63,329,652 59,282,012 Other liabilities 6,951,537 6,198,318 2,220,237 2,115,219 9,171,774 8,313,537 Total liabilities 51,905,653 46,057,254 20,595,773 21,538,295 72,501,426 67,595,549 Deferred Inflows of resources 55,064 1, , , , ,985 Net position: Net invested in capital assets 32,091,047 34,294,643 22,300,594 21,215,361 54,391,641 55,510,004 Restricted 14,010,983 6,662,407 6,529,052 6,614,575 20,540,035 13,276,982 Unrestricted 10,275,211 9,095,619 6,048,431 4,489,076 16,323,642 13,584,685 Total net position $ 56,377,241 $ 50,052,659 $ 34,878,077 $ 32,319,012 $ 91,255,318 $ 82,371,

25 Changes in Net Position Governmental Activities: Governmental activities increased the City of Papillion s net position before transfers and net position assumed from annexation by $6,324,582. The key elements of this increase relates to the collection of property taxes and city sales tax exceeding the activities losses. The fire department expenditure increases account for more than 54% of the increase to expenditures. While at the same time, the fire department increased their program revenues thereby offsetting the increase. The increased program revenues were both from the other parties participating in the MFO agreement and increased federal grant proceeds. See Note L. For the most part, other departments with increases in expenses closely paralleled inflation and growth in the demand for services. The City s sales tax revenue grew at 8.0% over the prior year which was greater than anticipated at budget time and therefore not used to fund current expenditures. Business-type Activities: Business-type activities increased the City of Papillion s net position before transfers and net position assumed from annexation $2,559,065. The City had scheduled rate increases in both the Water Fund and the Sewer Fund to help revenues increase at a rate similar to the expected increases in operating expenditures. The Water Fund rates are also set at a level to meet the bond convents as required by the outstanding revenue bonds. The City has continued to improve its business model at the golf courses to insure operating income is available to off-set debt payments including principal

26 Government Activities Business-type Activities Total Revenues: Program Revenues: Charges for services $ 4,996,040 $ 4,260,039 $ 13,012,926 $ 11,199,412 $ 18,008,966 $ 15,459,451 Operating grants and contributions 7,484,536 6,941,013 7,484,536 6,941,013 Capital grants and contributions 5,047,489 3,989,116 1,306,250 3,679,294 6,353,739 7,668,410 General Revenues: Property taxes 7,386,165 6,958,033 7,386,165 6,958,033 Special assessments 77,587 77,587 City sales tax 9,325,644 8,633,612 9,325,644 8,633,612 Other taxes 1,035,327 1,038,455 1,035,327 1,038,455 Interest income 22,549 14,432 16,004 12,020 38,553 26,452 Total Revenues 35,297,750 31,912,287 14,335,180 14,890,726 49,632,930 46,803,013 Expenses: General government 1,084, ,160 1,084, ,160 Building permits and 581, , , ,355 Planning 446, , , ,405 Library 929, , , ,199 Park department 1,787,590 1,562,103 1,787,590 1,562,103 Police department 6,071,018 5,876,662 6,071,018 5,876,662 Fire department 8,181,057 7,678,403 8,181,057 7,678,403 Street department 6,300,669 6,990,256 6,300,669 6,990,256 Recreation department 640, , , ,983 Senior center 155, , , ,079 Information services 506, , , ,999 Amphitheatre 553, , , ,704 Water park 446, , , ,685 Community betterment 263, , , ,977 Interest expense 1,024, ,393 1,024, ,393 Water 5,067,577 4,710,729 5,067,577 4,710,729 Sewer 4,003,192 3,837,196 4,003,192 3,837,196 Golf courses 2,653,833 2,462,304 2,653,833 2,462,304 Business park ,513 51,514 51,513 51,514 Total Expenses 28,973,168 27,932,363 11,776,115 11,061,743 40,749,283 38,994,106 Changes in net position 6,324,582 3,979,924 2,559,065 3,828,983 8,883,647 7,808,907 Net position, October 1 50,052,659 46,072,735 32,319,012 28,490,029 82,371,671 74,562,764 Net position, September 30 $ 56,377,241 $ 50,052,659 $ 34,878,077 $ 32,319,012 $ 91,255,318 $ 82,371,

27 Financial Analysis of the City s Funds As noted earlier, the City of Papillion uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City of Papillion s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Papillion s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As the City completed the year, its governmental funds reported a combined fund balance of $27,379,344. Of that fund balance, $9,741,423 constitutes unassigned fund balance. The general fund is the main operating fund of the City of Papillion. At the end of the current fiscal year, the unassigned fund balance of the general fund was $9,741,423. As a measure of the general fund s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 42% of total 2016 general fund expenditures, while total fund balance represents 45% of that same amount. The debt service fund provides for the servicing of all bonded debt issued for governmental activities. At the end of the current fiscal year, the restricted fund balance was $4,458,608 which represents 99% of the scheduled principal and interest payments of currently issued governmental bonded debt due in the next twelve months. The capital project fund accounts for the large governmental projects. This current fiscal year, 69% of the expenditures were spent on infrastructure. The fund balance of $9,365,601 is assigned to other capital projects or nonspendable. The keno lottery fund is restricted for community betterment as defined by Nebraska State Statutes. At the end of the current fiscal year, the restricted fund balance was $234,283 which is a $46,010 increase from one year ago. The majority of current year revenue was used for park improvement projects; Veteran s Park, Halleck Park shelter and the final payment on the second splash pad. These funds will be used in the future for community betterment as allowed by statute. The water park fund accounts for the activity of Papio Bay Aquatic Center. At the end of the current fiscal year, the assigned fund balance was $10,106 which represents 2% of the total 2016 water park expenditures. During the fiscal year the City had to close the pool to have the surface cleaned because of water clarity issues. This issue was resolved and the pool reopened for the balance of the season. However, this did have a negative impact on the financial results of the Fund for the fiscal year. General Fund Budgetary Highlights 30,000,000 20,000,000 10,000, Expenditures Revenues Unassigned Balance Total Balance

28 2016 GENERAL FUND EXPENDITURES Amphitheater Recreation 2% 3% Administrative Street 4% % 9% Senior center 1% Police 26% Fire 37% Parks IS 8% 2% Library 4% Planning 2% Building 2% 2016 GENERAL FUND REVENUES Rurall Fire Ditrict & City of LaVista 20% All other sources 2% Property 16% Tax Permits & Fees 16% City Sales Tax 32% Federal Grants 5% Funding from the State 5% Occupational Taxes 4%

29 Over the course of the year, the City Council revised the City budget twice. The changes were all the result of unforeseen circumstances: The First Amendment included: Various carryover projects previously funded but not completed during the prior fiscal year. Allow for the expenditure of various grants approved after the budget was adopted. Refunding of bonds to reduce future interest payments. The Second Amendment included: Various grants approved during the year, to allow for the related expenditures. To allow for the use of donations received based on their specified purpose. The purchase of real estate adjacent to City Park. To remove a potential sale of City real estate and reduce expenditures for the lost revenue. An increase to rescue billing and allow for an additional office staff member at the fire department. Refunding of bonds to reduce future interest payments. The payment to a sanitary improvement district for restricted outfall sewer connection fees which were collected. An increase to bond proceeds for the issuance of the first bond issue related the community center and related infrastructure and to allow for the expenditure of the proceeds. Adjustments to various infrastructure projects based on new engineering estimates as well as bids. An increase to golf revenues to allow for additional merchandise to be purchased and the funding of additional full time golf position. Increase in Keno revenue and increase to the related State 2% tax with the balance being made available for community betterment

30 Proprietary Funds Expenses Compared to Revenues 8,000,000 6,000,000 4,000,000 2,000,000 Water Sewer Golf Business Park Expenses Revenues The City of Papillion s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The total of the proprietary funds unrestricted net position at the end of the year was $6,048,431. Capital Asset and Debt Administration Capital Assets. The City of Papillion s capital assets for its governmental and business-type activities as of September 30, 2016 equals $120,337,506 (net of accumulated depreciation). This investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, intangibles, roads, highways, and bridges. The total increase in the City of Papillion s capital assets for the current fiscal year was $3,099,452. This is a 2.6% increase over the year resulting from new asset purchases being greater than the depreciation of assets. There were continued major improvements to 84 th Street and other road construction and trail projects including the half mile of Schram Road between 84 th and 90 th Streets. The City also did a major renovation to the library. The City acquired fire radios and three dump trucks during the fiscal years both under capital leases. See Note D for additional information. Governmental Business-type Activities Activities Total Land $ 5,573,218 $ 6,195,665 $ 11,768,883 Intangible 369, ,305 Construction-in-Progress 9,877, ,918 10,877,692 Land Improvements 7,937,458 7,937,458 Buildings and Equipment 29,661,099 6,877,178 36,538,277 Infrastructure 79,271,557 79,271,557 Distribution and collection systems 52,879,168 52,879,168 Total 132,321,106 67,321, ,642,340 Less accumulated depreciation (52,206,952) (27,097,882) (79,304,834) $ 80,114,154 $ 40,223,352 $ 120,337,506 Long-term Debt. At the end of the current fiscal year, the City of Papillion had total bonded debt outstanding of $64,690,000, all backed by the full faith and credit of the government and/or secured by specific revenue sources of the Water and Golf Funds. The City made all scheduled payments. See Note E for additional information

31 Economic Factors and Next Year s Budgets and Rates The following factors were considered in preparing the City of Papillion s budget for the 2017 fiscal year. While establishing next year s budget the City was focused on the long-term future of the City not just a one year outlook. Based on the budgetary planning done in prior years, the City was able to prepare the fiscal 2017 budget without an increase to the levy. The City anticipated continued build out of various commercial areas within the City and the City s extra territorial jurisdiction. The City did not include any anticipated building permit revenue in the budget for the annexed area for which the annexation is being challenged in court. Rates studies were completed in 2015 for both water and sewer with multiple year rate increases. The rates going into effect on October 1, 2016 were used in projecting revenues for both Funds and expenditure totals were matched to the rate studies projections. The City has passed an increase to the local option sales tax by an additional one half percent of taxable sales. This additional revenue has been included in the budget for the purpose of paying bonds associated with the development and construction of a community center and related recreational and park improvements. Also included in the budget was the issuance of bonds for this purpose and the related construction costs. Requests for Information This financial report is designed to provide a general overview of the City of Papillion s finances for all those with an interest in the government s finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Finance Director/Treasurer, 122 East Third Street, Papillion, Nebraska

32 STATEMENT OF NET POSITION SEPTEMBER 30, 2016 Primary Government Business- Governmental type Activities Activities Total ASSETS Cash and cash equivalents $ 8,589,398 $ 4,107,756 $ 12,697,154 Investments 7,848,278 2,732,226 10,580,504 Prepaid expenses 47,509 47,509 Receivables 3,481,888 1,902,664 5,384,552 Inventory 84,333 84,333 Restricted and designated assets: Cash 8,223,755 3,050,997 11,274,752 Investments 3,478,055 3,478,055 Land 5,573,218 6,195,665 11,768,883 Construction-in-progress 9,877, ,918 10,877,692 Depreciable capital assets (net of accumulated depreciation) 64,663,162 32,658,464 97,321,626 Intangible asset 369, ,305 Total assets 108,304,982 55,579, ,884,365 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding bonds 32,976 32,976 Total deferred outflows of resources 32,976 32,976 LIABILITIES Accounts payable 936, ,733 1,693,808 Accrued payroll and withholding 496, , ,626 Accrued interest payable 281, , ,802 Other accrued liabilities 185,414 21, ,364 Noncurrent liabilities: Due within one year: Note payable 244,000 18, ,797 Bonds payable 3,540, ,000 4,345,000 Leases payable 280, , ,229 Accrued compensated absences 986, ,576 1,237,148 Due in more than one year: Note payable 248,000 19, ,389 Bonds payable 43,255,354 17,079,572 60,334,926 Leases payable 434, , ,414 Outfall sewer liability 712, ,497 Accrued compensated absences 1,016, ,043 1,307,426 Total liabilities 51,905,653 20,595,773 72,501,426 DEFERRED INFLOWS OF RESOURCES Deferred gain on refunding bonds 53,646 53,646 Unearned revenue - gift certificates 1, , ,951 Total deferred inflows of resources 55, , ,597 NET POSITION Net investment in capital assets 32,091,047 22,300,594 54,391,641 Restricted for: Capital projects 9,318,092 6,529,052 15,847,144 Debt service 4,458,608 4,458,608 Community betterment 234, ,283 Unrestricted 10,275,211 6,048,431 16,323,642 Total net position $ 56,377,241 $ 34,878,077 $ 91,255,318 See notes to basic financial statements

33 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2016 Program Revenues Operating Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary government: Governmental activities: General government $ 1,084,119 $ 235,063 $ (849,056) $ (849,056) Building permits and inspections 581,312 2,015,513 1,434,201 1,434,201 Planning 446,276 21,740 (424,536) (424,536) Library 929,828 49,339 $ 32,426 (848,063) (848,063) Parks department 1,787, ,407 $ 70,175 (1,500,008) (1,500,008) Police department 6,071,018 53,957 (6,017,061) (6,017,061) Fire department 8,181, ,207 6,158,647 (1,094,203) (1,094,203) Street department 6,300,669 1,208,288 4,934,984 (157,397) (157,397) Recreation department 640, ,655 (367,326) (367,326) Senior center 155,417 9,597 31,218 42,330 (72,272) (72,272) Water park 506, ,490 (161,262) (161,262) Information services 553,795 (553,795) (553,795) Amphitheatre 446, ,953 (97,532) (97,532) Community betterment 263, , , ,880 Interest expense 1,024,673 (1,024,673) (1,024,673) Total governmental activities 28,973,168 4,996,040 7,484,536 5,047,489 (11,445,103) (11,445,103) Business-type activities: Water 5,067,577 5,395,225 1,306,250 $ 1,633,898 1,633,898 Sewer 4,003,192 4,823, , ,384 Golf courses 2,653,833 2,794, , ,292 Business park 51,513 (51,513) (51,513) Total business-type activities 11,776,115 13,012,926 1,306,250 2,543,061 2,543,061 Total primary government $ 40,749,283 $ 18,008,966 $ 7,484,536 $ 6,353,739 (11,445,103) 2,543,061 (8,902,042) General revenues: Taxes: Property 7,386,165 7,386,165 City sales 9,325,644 9,325,644 Other taxes 1,035,327 1,035,327 Interest income 22,549 16,004 38,553 Total general revenues and transfers 17,769,685 16,004 17,785,689 Capital Net (Expense) Revenue and Changes in Net Position Primary Government CHANGE IN NET POSITION 6,324,582 2,559,065 8,883,647 NET POSITION, beginning of year 50,052,659 32,319,012 82,371,671 NET POSITION, end of year $ 56,377,241 $ 34,878,077 $ 91,255,318 See notes to basic financial statements