The Bonds are not subject to redemption prior to their stated maturities.

Transcription

1 NEW ISSUE - Book-Entry-Only RATING: See Rating herein In the opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel to the Authority (as defined herein), pursuant to Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code ), interest on the Bonds (as defined herein) is not included in gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the alternative minimum tax imposed on individuals and corporations. It is also the opinion of Bond Counsel that interest on the Bonds held by corporate taxpayers is included in adjusted current earnings in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. In addition, in the opinion of Bond Counsel, interest on and any gain from the sale of the Bonds are not includable as gross income under the New Jersey Gross Income Tax Act. Bond Counsel s opinions described herein are given in reliance on representations, certifications of fact and statements of reasonable expectation made by the Authority in its Tax Certificate (as defined herein), assume continuing compliance by the Authority with certain covenants set forth in its Tax Certificate, and are based on existing statutes, regulations, administrative pronouncements and judicial decisions. See TAX MATTERS herein. THE BERGEN COUNTY IMPROVEMENT AUTHORITY (County of Bergen, New Jersey) $32,680,000 COUNTY OF BERGEN GUARANTEED GOVERNMENTAL LOAN REVENUE BONDS, SERIES 2017C Dated: Date of Delivery Due: February 15, as shown on inside cover hereof The $32,680,000 County of Bergen Guaranteed Governmental Loan Revenue Bonds, Series 2017C (the Bonds ) will be issued by The Bergen County Improvement Authority (the Authority ) as fully registered bonds. One bond certificate for each stated maturity of the Bonds will be issued in the principal amount of each such maturity. The Bonds, when issued, will be registered in the name of and held by Cede & Co. ( Cede ), as nominee for The Depository Trust Company ( DTC ), an automated depository for securities and clearing house transactions, which will act as securities depository for the Bonds. The principal of and interest on the Bonds is payable to DTC, which will remit such principal and interest to the Participants described herein for subsequent distribution to the beneficial owners of the Bonds. The Bank of New York Mellon is the Trustee with respect to the Bonds. The Bonds are being issued as fully registered Bonds without coupons. The Bonds are being issued in denominations of $5,000 each or any integral multiple thereof. Interest on the Bonds is payable on February 15 and August 15 in each year until maturity beginning February 15, Interest on the Bonds will be credited to the Participants of DTC as listed on the records of DTC as of each preceding February 1 and August 1 (the Record Dates for the payment of interest on the Bonds). The Bonds are not subject to redemption prior to their stated maturities. The Bonds are being issued pursuant to a bond resolution of the Authority duly adopted on October 5, 2017, entitled 2017 County Guaranteed Governmental Loan Revenue Bond Resolution (the General Bond Resolution ), and by a certificate of the Executive Director of the Authority dated the date of this Official Statement, exercising powers delegated by the General Bond Resolution (the Award Certificate and together with the General Bond Resolution, the Bond Resolution ) and in accordance with the County Improvement Authorities Law, constituting Chapter 183 of the Pamphlet Laws of 1960 of the State of New Jersey, as amended and supplemented (the Act ). The Bonds will be special obligations of the Authority and will be payable solely from the Revenues (as defined in the Bond Resolution) under the Bond Resolution. The Bonds are being issued to provide funds to make loans to the Township of Lyndhurst, New Jersey ( Lyndhurst ), the Borough of Oradell, New Jersey ( Oradell, and together with Lyndhurst, the Municipal Borrowers ), and the Bergen County Utilities Authority, County of Bergen, New Jersey (the BCUA, and together with the Municipal Borrowers, the Borrowers ) to (i) refund certain outstanding bonds of the Borrowers; and (ii) pay certain costs of issuance of the Bonds and the Borrower Bonds (as hereinafter defined). The Bonds constitute special obligations of the Authority and are secured only by those revenues of the Authority which are derived by the Authority from the loan repayments (the Loan Repayments ) made by the Borrowers pursuant to the general obligation bond of each Municipal Borrower purchased by the Authority (collectively, the Municipal Bonds ) and a revenue bond of the BCUA purchased by the Authority (the BCUA Bonds, and together with the Municipal Bonds, the Borrower Bonds ) pursuant to each Bond Purchase Agreement between the Authority and each Borrower (collectively, the Bond Purchase Agreements ), to evidence each respective loan from the Authority to such Borrower. The Loan Repayments made pursuant to the Borrower Bonds are pledged by the Authority for the payment of the principal of, redemption premium, if any, and interest on the Bonds. The Bonds are further secured by a full, irrevocable and unconditional guaranty (the County Guaranty ) from the County of Bergen, New Jersey (the County ), to pay, when due, the principal of and interest on the Bonds. The County has the power and the obligation, if necessary, to cause the levy of ad valorem taxes upon all taxable property within the County without limitation as to rate or amount for the payment of the principal of and interest on the Bonds. THE BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY; OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OR ANY SUCH POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY; AND NEITHER THE STATE NOR ANY SUCH POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY, IS OBLIGATED TO PAY THE PRINCIPAL OF OR INTEREST ON THE BONDS, AND NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. This cover page includes certain information for reference only and is not a summary of matters set forth herein. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued by the Authority and delivered to the Underwriter, subject to the approval of legality by McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, Bond Counsel to the Authority, and other conditions described herein. Certain legal matters will be passed upon for the County by Julien X. Neals, Esq., the County Counsel, and by its County Bond Counsel, Waters, McPherson, McNeill, P.C., Secaucus, New Jersey. Certain legal matters will be passed upon for the Authority by its General Counsel, Florio, Perucci, Steinhardt and Fader, LLC, Rochelle Park, New Jersey. Certain legal matters will be passed upon for the Underwriter by its Counsel, Mariniello & Mariniello, P.C., Fort Lee, New Jersey. Acacia Financial Group, Inc., Mt. Laurel, New Jersey, has acted as municipal advisor to the Authority in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery on or about December 21, The Bonds are to be delivered through the facilities of DTC in Jersey City, New Jersey. Dated: December 6, 2017

2 THE BERGEN COUNTY IMPROVEMENT AUTHORITY (County of Bergen, New Jersey) $32,680,000 COUNTY OF BERGEN GUARANTEED GOVERNMENTAL LOAN REVENUE BONDS, SERIES 2017C MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS Principal Interest CUSIP* Year Amount Rate Yield Number $7,555,000 7,280,000 7,650,000 8,445, , , , , , , , ,000 85, % % LC LD LE LF LG LH LJ LK LL LM LN LP LQ0 *A registered trademark of the American Bankers Association. CUSIP numbers are provided by CUSIP Service Bureau, a Standard & Poor s Financial Services LLC business. The CUSIP numbers listed above are being provided solely for the convenience of holders of the Bonds only at the time of issuance of the Bonds and the Authority and the Underwriter do not make any representations with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

3 THE BERGEN COUNTY IMPROVEMENT AUTHORITY MEMBERS AND PROFESSIONALS COMMISSIONERS Cesar Gamio, Chairperson Jeffrey Alan Bader, Vice Chairperson John H. Bang, Esq. Elizabeth Randall, Esq. Philip E. Wilson, LCSW EXECUTIVE DIRECTOR Mauro Raguseo CHIEF FINANCIAL OFFICER Joseph Luppino GENERAL COUNSEL Florio, Perrucci, Steinhardt & Fader Rochelle Park, New Jersey INDEPENDENT AUDITOR Ferraioli, Wielkotz, Cerullo & Cuva, P.A. Pompton Lakes, New Jersey MUNICIPAL ADVISOR Acacia Financial Group, Inc. Mount Laurel, New Jersey BOND COUNSEL McManimon, Scotland & Baumann, LLC Roseland, New Jersey

4 COUNTY OF BERGEN STATE OF NEW JERSEY MEMBERS AND PROFESSIONALS BOARD OF CHOSEN FREEHOLDERS Tracy Silna Zur, Chairwoman Thomas J. Sullivan, Jr., Vice-Chairman Dr. Joan M. Voss, Chair Pro-Tempore Mary J. Amoroso-Freeholder David L. Ganz, Freeholder Germaine M. Ortiz, Freeholder Steve Tanelli, Freeholder COUNTY OFFICIALS James J. Tedesco III, County Executive Joseph Luppino, County Treasurer/Chief Financial Officer Lisa Sciancalepore, Clerk of the Board of Chosen Freeholders COUNTY COUNSEL/ACTING COUNTY ADMINISTRATOR Julien X. Neals, Esq. Hackensack, New Jersey INDEPENDENT AUDITOR Ferraioli,Wielkotz, Cerullo & Cuva, P.A. Pompton Lakes, New Jersey COUNTY BOND COUNSEL Waters, McPherson, McNeill, P.C. Secaucus, New Jersey

5 The information which is set forth herein has been provided by The Bergen County Improvement Authority (the Authority ) and by other sources which are believed to be reliable by the Authority and by the Underwriter, including the Township of Lyndhurst, New Jersey ("Lyndhurst") and the Borough of Oradell, New Jersey, ("Oradell", and together with Lyndhurst, the "Municipal Borrowers"), and the Bergen County Utilities Authority, County of Bergen, New Jersey (the BCUA, and together with the Municipal Borrowers, the Borrowers ), and The Depository Trust Company ( DTC ). However, such information provided by such other sources is not guaranteed as to accuracy or completeness by the Authority or by the Underwriter, and is not intended to be and is not to be construed as a representation by the Authority or the Underwriter. Certain financial, economic and demographic information concerning the County is contained in Appendices A and B to this Official Statement. Such information has been furnished by the County. Certain financial, economic and demographic information concerning the BCUA is contained in Appendix C to this Official Statement. Such information has been furnished by the BCUA. The information under the heading DESCRIPTION OF THE BONDS - The DTC Book-Entry-Only System has been furnished by DTC. Neither the Authority, the Underwriter nor their counsel has confirmed the accuracy or completeness of the information relating to the County, the Borrowers or DTC, and the Authority, the Underwriter and their counsel disclaim any responsibility for the accuracy or completeness thereof. Where the Constitution or statutes of the State of New Jersey are referred to, reference should be made to such Constitution or statutes for a complete statement of the matters referred to. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. No dealer, broker, salesman or any other person has been authorized by the Authority, the Borrowers, the County or the Underwriter to give any information or to make any representations other than those contained in this Official Statement in connection with the offering of the Bonds, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the Borrowers, the County or DTC since the date hereof or any earlier date as of which any information contained herein is given. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be used, in whole or in part, for any other purpose. Upon issuance, the Bonds will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange, and neither the Securities Exchange Commission nor any other federal, state, municipal or other governmental entity, other than the Authority (subject to the limitations set forth above), will have passed upon the accuracy or adequacy of this Official Statement.

6 IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the Appendices, must be considered in its entirety.

7 TABLE OF CONTENTS INTRODUCTION... 1 THE LOAN PROGRAM...3 REVIEW BY LOCAL FINANCE BOARD...3 ESTIMATED SOURCES AND USES OF FUNDS...4 SECURITY FOR THE BONDS...4 General... 4 The Bond Purchase Agreements 5 Obligation of the Borrowers... 5 The County Guaranty... 5 The Guaranty Agreement... 6 Additional Bonds... 6 DESCRIPTION OF THE BONDS...6 General... 6 The DTC Book-Entry-Only System... 7 Redemption Prior to Maturity... 9 DEBT SERVICE REQUIREMENTS...9 THE AUTHORITY...9 SUMMARY OF CERTAIN PROVISIONS RELATING TO MUNICIPAL AND COUNTY DEBT AND FINANCIAL REGULATIONS...10 Municipalities Local Bond Law (N.J.S.A. 40A:2-1 et seq.) Debt Limits...10 Exceptions to Debt Limits - Extensions of Credit...10 Short-term Financing...11 Local Budget Law (N.J.S.A. 40A:4-1 et seq.).11 Limitations on Expenditures ("Cap Law") (N.J.S.A. 40A: et seq.)...11 Miscellaneous Revenues.12 Deferral of Current Expenses..12 Budget Transfers.12 Capital Budget.13 Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.).. 13 MUNICIPAL BANKRUPTCY...13 PLEDGE OF THE STATE NOT TO LIMIT POWER OF AUTHORITY OR RIGHTS OF BONDHOLDERS LEGALITY FOR INVESTMENT...14 NEGOTIABILITY OF THE BONDS...14 LITIGATION...14 The Authority The Borrowers The County TAX MATTERS General 15 Certain Federal Tax Consequences Relating to the Bonds.16 Bank Qualification..16 New Jersey Gross Income..16 Future Events..16 APPROVAL OF LEGALITY... 16

8 UNDERWRITING...17 RATING...17 MUNICIPAL ADVISOR...17 SECONDARY MARKET DISCLOSURE The County The Authority The Obligated Participants VERIFICATION AGENT.20 INDEPENDENT AUDITORS APPENDICES MISCELLANEOUS APPENDICES: APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E CERTAIN DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE COUNTY AUDITED FINANCIAL STATEMENTS OF THE COUNTY CERTAIN INFORMATION CONCERNING THE BCUA FORMS OF THE BOND RESOLUTION, THE BOND PURCHASE AGREEMENT, THE CONTINUING DISCLOSURE AGREEMENTS AND THE GUARANTY AGREEMENT FORM OF OPINION OF BOND COUNSEL

9 OFFICIAL STATEMENT of THE BERGEN COUNTY IMPROVEMENT AUTHORITY (County of Bergen, New Jersey) $32,680,000 COUNTY OF BERGEN GUARANTEED GOVERNMENTAL LOAN REVENUE BONDS, SERIES 2017C INTRODUCTION This Official Statement, including the cover pages, footnotes, Appendices and material included herein by reference, is provided to furnish certain information in connection with the issuance and sale of $32,680,000 County of Bergen Guaranteed Governmental Loan Revenue Bonds, Series 2017C (the Bonds ) of The Bergen County Improvement Authority (the Authority ), a public body corporate and politic existing under and by virtue of the laws of the State of New Jersey (the State ), and in particular the County Improvement Authorities Law (N.J.S.A. 40:37A-44 et seq.), as amended and supplemented (the Act ). This Official Statement should be read in its entirety. The Bonds are being issued pursuant to (i) a bond resolution of the Authority duly adopted on October 5, 2017, entitled 2017 County Guaranteed Governmental Loan Revenue Bond Resolution (the General Bond Resolution ), and by a certificate of the Executive Director of the Authority dated the date of this Official Statement, exercising powers delegated by the General Bond Resolution (the Award Certificate and together with the General Bond Resolution, the Bond Resolution ); (ii) the Act; and (iii) all other applicable law. The Bank of New York Mellon will act as trustee, registrar and paying agent for the Bonds pursuant to the Bond Resolution (the Trustee, the Registrar and the Paying Agent ). The Bonds are being issued to provide funds to make loans to the Township of Lyndhurst, New Jersey ("Lyndhurst"), the Borough of Oradell, New Jersey ("Oradell, and together with Lyndhurst, the "Municipal Borrowers"), and the Bergen County Utilities Authority, County of Bergen, New Jersey (the BCUA, and together with the Municipal Borrowers, the Borrowers ) to (i) refund certain outstanding bonds of the Borrowers; and (ii) pay certain costs of issuance of the Bonds and the Borrower Bonds (as hereinafter defined). The Bonds constitute special obligations of the Authority and are secured only by those revenues of the Authority which are derived by the Authority from the loan repayments (the Loan Repayments ) made by the Borrowers pursuant to the general obligation bond of each Municipal Borrower purchased by the Authority (collectively, the Municipal Bonds ) and a revenue bond of the BCUA purchased by the Authority (the BCUA Bonds, and together with the Municipal Bonds, the Borrower Bonds ) pursuant to each Bond Purchase Agreement between the Authority and each Borrower (collectively, the Bond Purchase Agreements ), to evidence each respective loan from the Authority to such Borrower. The Loan Repayments made pursuant to the Borrower Bonds are pledged by the Authority for the payment of the principal of, redemption premium, if any, and interest on the Bonds. In the opinion of Bond Counsel to each of the Municipal Borrowers, the respective Municipal Bonds are valid and legally binding obligations of the respective Municipal Borrowers and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable real property within the jurisdiction of each such Municipal Borrower, without limitation as to rate or amount. In the opinion of Bond Counsel to the BCUA, the BCUA Bonds are valid and legally binding obligations of the BCUA and, unless paid from other sources, are payable from the revenues of the BCUA which are derived principally from payments to the BCUA ("Annual Charges") from forty-seven (47) municipalities (the Participants ) pursuant to service contracts (the Service Contracts ) and payments from twenty (20) private users and two (2) sewerage authorities. In the 1

10 further opinion of Bond Counsel to the BCUA, the obligation of each Participant to pay Annual Charges pursuant to its Service Contract is a valid, binding, direct and general obligation of each Participant payable from the levy of ad valorem taxes without limitation as to rate or amount, in an amount sufficient to pay the BCUA's portion of debt service on the Bonds. See APPENDIX C - CERTAIN INFORMATION CONCERNING THE BCUA. The Bonds are secured by a full, irrevocable and unconditional guaranty of the County of Bergen, State of New Jersey (the County ), pursuant to a Guaranty Ordinance of the County finally adopted on October 3, 2017 (the County Guaranty ) to pay, when due, the principal of and interest on the Bonds. The County has the power and the obligation, if necessary, to cause the levy of ad valorem taxes upon all taxable property within the County without limitation as to rate or amount for the payment of the principal of and interest on the Bonds. THE BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY; OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OR ANY SUCH POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY; AND NEITHER THE STATE NOR ANY SUCH POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY, IS OBLIGATED TO PAY THE PRINCIPAL OF OR INTEREST ON THE BONDS, AND NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT THE AUTHORITY, BUT SOLELY TO THE EXTENT OF THE REVENUES, AND THE COUNTY, BUT SOLELY TO THE EXTENT OF THE COUNTY GUARANTY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. A copy of the Bond Resolution, the Bond Purchase Agreements, the County Guaranty and the Guaranty Agreement to be executed by and among the County, the Authority, and the Trustee (as defined herein) dated as of December 1, 2017 (the Guaranty Agreement ), are on file in the offices of the Authority in Hackensack, New Jersey, and at the principal corporate trust office of the Trustee, and reference is made to such documents, for the provisions relating to, among other things, the terms of and the security for the Bonds, the custody and application of the proceeds of the Bonds, the rights and remedies of the holders of the Bonds, and the rights, duties and obligations of the Authority, the County, the Borrowers and the Trustee. Words and terms used but not defined herein are defined in the General Bond Resolution, the form of which is contained in Appendix D hereto. The descriptions and summaries of various documents set forth in this Official Statement do not purport to be comprehensive or definitive, and reference is made to the full text of each document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each document. 2

11 THE LOAN PROGRAM The Bonds are being issued to provide funds to make loans to the Borrowers (each a Borrower Loan ). The Borrowers will apply the proceeds of each of the Borrower Loans to (i) refund certain outstanding bonds of the Borrowers; and (ii) pay certain costs of issuance of the Bonds and the Borrower Bonds. The Borrower Loans will be made pursuant to the Bond Purchase Agreements. Pursuant to the Bond Purchase Agreements, and in accordance with applicable law, each of the Borrowers will issue and sell its Borrower Bond to the Authority in the principal amounts shown below. The Borrower Bonds will be purchased by the Authority and the Loan Repayments will be pledged by the Authority to secure the Bonds. A default by a Borrower under its Borrower Bond will not cause a default under the Borrower Bonds of non-defaulting Borrowers. See, APPENDIX D FORMS OF THE BOND RESOLUTION, THE BOND PURCHASE AGREEMENTS, THE CONTINUING DISCLOSURE AGREEMENTS AND THE GUARANTY AGREEMENT herein. Borrower BCUA Lyndhurst Oradell Borrower Bond Amount $30,040,000 $ 1,395,000 $ 1,245,000 REVIEW BY LOCAL FINANCE BOARD The Authority applied to the Local Finance Board of the Division of Local Government Services in the New Jersey Department of Community Affairs (the Local Finance Board ) for positive findings pursuant to the Local Authorities Fiscal Control Law (N.J.S.A. 40A:5A-1 et seq.) (the Local Fiscal Control Law ), for the issuance of the Bonds and the security for the Bonds in the form of the County Guaranty. After the Local Finance Board hearing on such application on October 11, 2017, the Local Finance Board adopted a resolution reporting its favorable findings and approval to the Authority in connection with the issuance of the Bonds. [Remainder of page intentionally left blank] 3

12 ESTIMATED SOURCES AND USES OF FUNDS Bergen County Improvement Authority County Guaranteed Governmental Loan Revenue Bonds, Series 2017C Sources of Funds: Principal Amount of $32,680, Bonds Original Issue Premium 1,970, Additional Funds 1 715, Total Sources: $35,366, Uses of Funds: Deposit to Loan Fund $34,831, Cost of Issuance 2 534, Total Uses: $35,366, Additional funds from BCUA. 2 Includes Underwriters discount, verification report, legal, accounting, printing, Municipal, financial advisory, Authority fees and fiduciary expenses incurred in connection with the issuance of the Bonds. SECURITY FOR THE BONDS General The Bonds constitute special obligations of the Authority. The Bonds are solely secured by the pledge of the Revenues, as that term is defined in the Bond Resolution, which includes (a) all amounts, including loan payments, received from the Borrowers; (b) any and all payments received under the County Guaranty; (c) any investment income which is derived from the investment of any funds which are held by the Trustee; and (d) any other amounts received from any other source by the Authority and pledged by the Authority as security for the payment of the Bonds, all in accordance with the terms and provisions of the Bond Resolution. See APPENDIX D FORMS OF THE BOND RESOLUTION, THE BOND PURCHASE AGREEMENTS, THE CONTINUING DISCLOSURE AGREEMENTS AND THE GUARANTY AGREEMENT herein. 4

13 The Authority has no power to levy or collect taxes. The Bonds are neither a debt nor a liability of the State, the County, the Borrowers or any other political subdivision of the State, except the Authority, solely to the extent of the Revenues pledged under the Bond Resolution, and the County, subject to the terms and conditions of the Guaranty Agreement. The provisions of the Bonds and the Bond Resolution are deemed to be and do constitute contracts by and among the Authority, the Trustee and the registered owners, from time to time, of the Bonds and the security interest which is granted and the pledge which is made in the Bond Resolution and the covenants and agreements which are set forth in the Bond Resolution to be performed on behalf of the Authority shall be for the equal benefit, protection and security of the registered owners of any and all of the Bonds, all of which, regardless of the time or times of their issue or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or pursuant to the terms of the Bond Resolution. The Bond Purchase Agreements The Authority has entered into the Bond Purchase Agreements to secure the Borrowers Loans. Pursuant to the Bond Purchase Agreements, the Authority will purchase a Borrower Bond in the principal aggregate amount equal to the Borrower Loan that the Authority makes to each Borrower. Each Borrower will be required to make the loan repayments to the Authority pursuant to its Borrower Bond. The aggregate of the Loan Repayments made by the Borrowers will be sufficient to enable the Authority to pay the principal or redemption price, if any, of and interest on the Bonds. See APPENDIX D FORMS OF THE BOND RESOLUTION, THE BOND PURCHASE AGREEMENTS, THE CONTINUING DISCLOSURE AGREEMENTS AND THE GUARANTY AGREEMENT herein. Obligation of the Borrowers The obligation of each of the Borrowers to repay their Borrower Loans is a direct and general obligation of each of the Borrowers payable from their general revenues. In the opinion of Bond Counsel to each of the Municipal Borrowers, the respective Municipal Bonds are valid and legally binding general obligations of the respective Municipal Borrowers and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable property within the jurisdiction of such Municipal Borrowers, without limitation as to rate or amount. In the opinion of Bond Counsel to the BCUA, the BCUA Bonds are valid and legally binding obligations of the BCUA and, unless paid from other sources, are payable from the revenues of the BCUA which are derived principally from the Annual Charges paid by the Participants pursuant to Service Contracts and payments from twenty (20) private users and two (2) sewerage authorities. In the further opinion of Bond Counsel to the BCUA, the obligation of each Participant to pay Annual Charges pursuant to its Service Contract is a valid, binding, direct and general obligation of each Participant payable from the levy of ad valorem taxes without limitation as to rate or amount, in an amount sufficient to pay the BCUA's portion of debt service on the Bonds. The County Guaranty The payment of the principal of (including sinking fund installments, if any) and interest on the Bonds is further secured by the County Guaranty authorized pursuant to N.J.S.A. 40:37A-80 and Guaranty Ordinance No finally adopted by the County on October 3, 2017, and entitled Guaranty Ordinance Securing the Bergen County Improvement Authority s County Guaranteed Pooled Loan Revenue Bonds, Series 2017 In An Aggregate Principal Amount Not To Exceed $47,000,000, in all respects duly approved and published as required by law. 5

14 The County Guaranty is a full, irrevocable and unconditional obligation of the County pursuant to which the County has the power and the obligation, if necessary, to cause the levy of ad valorem taxes upon all the taxable property within the County without limitation as to rate or amount for the payment of the principal of and interest on the Bonds. The Guaranty Agreement In order to establish the terms and conditions pursuant to which the County will make a payment, if necessary, under the terms of the County Guaranty, the Authority, the County and the Trustee will enter into the Guaranty Agreement on the delivery date of the Bonds. Among other things, the Guaranty Agreement will provide that in the event on the 30th day prior to a date on which the Authority is obligated to pay the principal of or interest on the Bonds (collectively, the Payment Date ) and the amount on deposit in the Borrower's account within the Bond Service Fund is insufficient to pay such Borrower's allocable share of debt service on the Bonds when due under the Bond Resolution, then, pursuant to the County Guaranty and the Guaranty Agreement, the Trustee shall immediately notify the Authority and the County of the amount of such deficiency and the County shall be obligated to pay such deficiency into the Borrower's account within the Bond Service Fund in accordance with the Bond Resolution no later than the day prior to such Payment Date. So long as the County makes such payment, the Bonds will not be in default under the Bond Resolution. The Bonds shall remain outstanding to their respective stated maturity dates and the obligations of the County under the Guaranty Agreement shall remain in full force and effect until the Bonds have been paid in full in accordance with their terms. When notice has been provided, as described above, the County shall immediately take all necessary action to pay such principal of and/or interest on the Bonds. Such actions shall include the adoption of an emergency appropriation or an emergency temporary appropriation and the funding of such appropriation in accordance with the requirements of the Local Budget Law, the levy of ad valorem taxes upon all the taxable property within the County without limitation as to rate or amount, or any other actions that are legally permitted to be taken to meet the requirements of the County Guaranty. Reference is made to APPENDIX D FORMS OF THE BOND RESOLUTION, THE BOND PURCHASE AGREEMENTS, THE CONTINUING DISCLOSURE AGREEMENTS AND THE GUARANTY AGREEMENT for certain provisions of the Guaranty Agreement, and Appendices A and B attached hereto for certain information regarding the County. Additional Bonds Pursuant to the Bond Resolution, after the original issuance of the Bonds, the Authority is authorized to issue additional bonds only for the purpose of refunding the outstanding Bonds. General DESCRIPTION OF THE BONDS The Bonds are to be issued in the aggregate principal amount of $32,680,000. The Bonds shall mature on the dates and in the amounts set forth on the inside cover page of this Official Statement. The Bonds will be issued as fully registered book-entry bonds, and when issued will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ), 6

15 which will act as securities depository for the Bonds under its book-entry-only system (the DTC Book- Entry-Only System ). Provided DTC or its nominee is the registered owner of the Bonds, the principal of, redemption premium, if any, and interest on the Bonds will be paid to DTC or its nominee. See The DTC Book-Entry-Only System below. In the event the Bonds are no longer subject to the DTC Book-Entry- Only System, the principal of and redemption premium, if any, on the Bonds will be payable upon surrender of the Bonds at the designated corporate trust office of the Paying Agent, or at any other place which may be provided for such payment by the appointment of any other Paying Agent or Paying Agents as permitted by the Bond Resolution. The Bonds are being issued in denominations of $5,000 each or any integral multiple thereof, with interest payable on February 15, 2018 and each August 15 and February 15 thereafter until maturity. The Bonds will be dated, mature on the dates and bear interest as shown on the inside cover page of this Official Statement. The DTC Book-Entry-Only System DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each year of maturity of the Bonds, in the aggregate principal amount of each maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks and trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. 7

16 Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Authority or Trustee, on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Authority or Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered. The information in this section concerning DTC and DTC s book-entry only system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof. 8

17 Redemption Prior to Maturity The Bonds are not subject to redemption prior to their stated maturities. DEBT SERVICE REQUIREMENTS The following table shows the annual principal and interest requirements on the Bonds. Year Ending (December 31) Principal Interest Total Debt Service 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/2030 $7,555,000 7,280,000 7,650,000 8,445, , , , , , , , ,000 85,000 $ 834, ,067, , , , , , , , , , , , $ 8,389, ,347, ,343, ,736, , , , , , , , , , Total: $32,680,000 $3,089, $35,769, THE AUTHORITY The Authority is a public body corporate and politic organized and existing under the Act and created pursuant to a resolution of the Board of Chosen Freeholders of the County adopted on June 4, The Authority has, among other powers, the authority to extend credit or make loans to any governmental unit for the planning, design, acquisition, construction, equipping and furnishing of public facilities, the payments with respect to which will be sufficient to pay the principal of and interest on the bonds or notes issued for that purpose by the Authority. The names and dates of expiration of the terms of the members of the Authority are as follows: Expiration of Member Current Term Philip E. Wilson, Member February 1, 2015* Cesar Gamio, Chairperson February 1, 2018 Jeffrey Alan Bader, Member February 2, 2021 Elizabeth Randall, Member February 1, 2017* John H. Bang, Esq., Member February 1, 2019 *Holdover 9

18 McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, has served as Bond Counsel to the Authority with respect to the issuance of the Bonds. The Municipal Advisor to the Authority is Acacia Financial Group, Inc, Mount Laurel, New Jersey, with respect to the issuance of the Bonds. Florio, Perrucci Steinhardt & Fader, Rochelle Park, New Jersey, is General Counsel to the Authority. Municipalities SUMMARY OF CERTAIN PROVISIONS RELATING TO MUNICIPAL AND COUNTY DEBT AND FINANCIAL REGULATIONS The following is a summary of certain provisions of New Jersey law relevant to the Municipal Borrowers debt and financial regulation and budget process. This summary does not purport to be a full and complete statement of all of the provisions referred to herein, and the cited statutes should be read in full for a complete understanding of all of said provisions. Local Bond Law (N.J.S.A. 40A:2-1 et seq.) The Local Bond Law generally governs the issuance of bonds and notes by local units to finance certain capital expenditures. Among its provisions are requirements that bonds must mature within the statutory period of usefulness of the projects bonded and that bonds be retired in serial installments. A 5% cash down payment is generally required toward the financing of capital expenditures. Generally, all bonds and notes issued by a local unit are general full faith and credit obligations. Debt Limits The net authorized debt of all local units which are municipalities in the State of New Jersey is generally limited by statute to an amount equal to three and one-half (3.5%) of its equalized valuation basis. The net authorized debt of all local units that are counties is generally limited to an amount equal to two percent (2.0%) of its equalized valuation basis. The equalized valuation basis of the local unit is set by statute as the average for the last three (3) years of the sum of the equalized value of all taxable real property and improvements and certain Class II railroad property within its boundaries, as annually determined by the State Department of the Treasury, Division of Taxation. Certain categories of debt are permitted by statute to be deducted for purposes of computing the statutory debt limit. Exceptions to Debt Limits Extensions of Credit The debt limit of a local unit may be exceeded with the approval of the Local Finance Board, a State regulatory agency, and as permitted by other statutory exceptions. If all or any part of a proposed debt authorization would exceed its debt limit, the local unit must apply to the Local Finance Board for an extension of credit. If the Local Finance Board determines that a proposed debt authorization would not materially impair the ability of the local unit to meet its obligations or to provide essential services, or makes other statutory determinations, approval is granted. In addition, debt in excess of the debt limit may be issued by the local unit under N.J.S.A. 40A:2-7(g) for purposes permitted under the Local Bond Law if the amount of such obligations (exclusive of utility and assessment obligations) and all others authorized pursuant to such a provision during the then current fiscal year do not exceed an amount equal to 2/3 of the amount budgeted for the retirement of outstanding obligations. 10

19 Short-term Financing A local unit may sell short-term bond anticipation notes to temporarily finance a capital improvement or project in anticipation of the issuance of bonds if the bond ordinance or a subsequent resolution so provides. Bond anticipation notes for capital improvements may be issued in an aggregate amount not exceeding the amount specified in the bond ordinance creating such capital expenditure, as it may be amended and supplemented. Bond anticipation notes may be issued for a period not greater than one year and may be renewed from time to time for a period not exceeding 1 year. Such notes shall mature and be paid not later than the 1st day of the 5th month following the close of the 10th fiscal year following the date of the original note. Beginning in the 3rd year, the amount of such notes that may be issued is decreased by the minimum amount required for the 1st year s principal payment for a bond issue. Local Budget Law (N.J.S.A. 40A: 4-1 et seq.) The foundation of the New Jersey local finance system is the annual budget. Every local unit must adopt an operating budget in the form required by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Items of revenue and appropriation are regulated by law and must be certified by the Director of the Division (the Director ) prior to final adoption of the budget. The budget law requires each local unit to appropriate sufficient funds for payment of current debt service, and the Director is required to review the adequacy of such appropriations. The Director has no authority over individual operating appropriations unless a specific amount is required by law, but the review function, focusing on anticipated revenue, serves to protect the solvency of all local units. The budgets of local units must be in balance; i.e., the total of anticipated revenues must equal the total of appropriations (N.J.S.A. 40A:4-22). If in any year a local unit s expenditures exceed its realized revenues for that year, then such excess (deficit) must be raised in the succeeding year's budget. Limitations on Expenditures ( Cap Law ) (N.J.S.A. 40A: et seq.) N.J.S.A. 40A: places limits on local unit tax levies and expenditures. This law is commonly known as the Cap Law (the Cap Law ). The Cap Law provides that the local unit shall limit any increase in its budget to 2.5% or the Cost-of-Living Adjustment, whichever is less, of the previous year's local unit tax levy, subject to certain exceptions. The Cost-of-Living Adjustment is defined as the rate of annual percentage increase, rounded to the nearest half percent, in the Implicit Price Deflator for State and Local Government Purchases of Goods and Services produced by the United States Department of Commerce for the year preceding the current year as announced by the Director. However, in each year in which the Costof-Living Adjustment is equal to or less than 2.5%, the local unit may, by resolution approved by a majority vote of the full membership of the governing body, provide that the tax rate of the local unit for such year be increased by a percentage rate that is greater than the Cost-of-Living Adjustment, but not more than 3.5% over the previous year's county tax levy. See N.J.SA. 40A: In addition, pursuant to Chapter 100 of the Laws of New Jersey of 1994 N.J.S.A. 40A: a,-45.15b) and Chapter 74 of the Laws of New Jersey of 2004, local units may Cap bank under the Local Budget Law. Local units are permitted to appropriate available Cap Bank in either of the next two (2) succeeding years' final appropriations if its actual appropriations in a fiscal year are below the allowable Cost-of-Living Adjustment. Additionally, legislation constituting P.L. 2010, c. 44, approved July 13, 2010 and applicable to the next local budget year following enactment, limits tax levy increases for those local units to 2% with exceptions only for capital expenditures including debt service, increases in pension contributions and accrued liability for pension contributions in excess of 2%, certain healthcare increases, extraordinary costs 11

20 directly related to a declared emergency and amounts approved by a simple majority of voters voting at a special election. Neither the tax levy limitation nor the Cap Law limits the obligation of the local unit to levy ad valorem taxes upon all taxable real property within the local unit to pay debt service on its bonds, including the Bonds, or bond anticipation notes. Miscellaneous Revenues N.J.S.A. 40A:4-26 provides that: no miscellaneous revenues from any source shall be included as an anticipated revenue in the budget in an amount in excess of the amount actually realized in cash from the same source during the next preceding fiscal year, unless the Director shall determine upon application by the governing body that the facts clearly warrant the expectation that such excess amount will actually be realized in cash during the fiscal year and shall certify such determination in writing to the local unit. No budget or amendment thereof shall be adopted unless the Director shall have previously certified his approval thereof with the exception of the inclusion of categorical grants-in-aid contracts for their face amounts with an offsetting appropriation. Deferral of Current Expenses Emergency appropriations made under N.J.S.A. 40A:4-46, after the adoption of the budget and the determination of the tax rate, may be authorized by a local unit. However, with minor exceptions set forth below, such appropriations must be included in full in the following year's budget. Under the amended CAP law, emergency appropriations aggregating less than 3% of the previous year's final current operating appropriations may be raised in that portion of the budget outside the CAP if approved by at least two-thirds of the members of the governing body of the local unit and the Director. Emergency appropriations that aggregate more than 3% of the previous year's final current operating appropriations must be raised within the CAP. Emergency appropriations for debt service, capital improvements, the local unit s share of federal or State grants and other statutorily permitted items are outside the CAP. The exceptions are certain enumerated quasi-capital projects such as ice, snow and flood damage to streets, roads and bridges, which may be amortized over three years, and tax map preparation, revision of ordinances and master plan preparations, which may be amortized over five years. Budget Transfers Budget transfers provide a degree of flexibility and afford a control mechanism. Transfers between major appropriation accounts are prohibited until the last two months of the year and, although subaccounts (line items) within an appropriation are not subject to the same year-end transfer restriction, they are subject to internal review and approval. The governing body of the local unit may by resolution, adopted by 2/3 vote of the full membership, transfer appropriations from accounts with an excess of funds to those with insufficient funds. However, the statute prohibits the use of appropriations for contingent expenses, deferred charges, cash deficit of 12

21 preceding year, reserve for uncollected taxes, down payments, capital improvement fund or interest and redemption charges. Capital Budget In accordance with the Local Budget Law, each local unit must adopt and annually revise a capital program budget for a period not greater than the next ensuing six years. The capital budget, when adopted, does not constitute the approval or appropriation of funds, but sets forth a plan of the possible capital expenditures which the local unit may contemplate over the six years. Expenditures for capital purposes may be made either by ordinances adopted by the local unit setting forth the items and the method of financing or from the annual operating budget if the items were detailed. Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.) This law regulates the non-budgetary financial activities of local governments. The chief financial officer of every local unit must file annually with the Director a verified statement of the financial condition of the local unit. An independent examination of the local unit s financial statements must be performed annually by a registered municipal accountant of New Jersey. The audit, conforming to the Division of Local Government Services Requirements of Audit, includes recommendations for improvement of the local unit's financial procedures and must be filed with the Director prior to June 30 of each year. A synopsis of the audit report, together with all recommendations made, must be published in a local newspaper within 30 days of its completion. MUNICIPAL BANKRUPTCY The undertakings of the Authority and the County should be considered with reference to Chapter 9 of the United States Bankruptcy Code (the Bankruptcy Code ), 11 U.S.C. Section 901 to 946. Under Chapter 9 of the Bankruptcy Code, a municipality, a political subdivision or a public agency or instrumentality of the State that is insolvent or unable to meet its debts may file a petition in a United States Bankruptcy Court (the Bankruptcy Court ) to adjust its debts. Chapter 9 of the Bankruptcy Code does not permit such entity to liquidate its assets and distribute the proceeds of its assets to its creditors. Chapter 9 of the Bankruptcy Code permits a financially distressed public entity to seek protection from its creditors by staying the commencement or continuation of certain actions against such public entity while it formulates and negotiates a plan of adjustment of its debts which can be binding on a dissenting minority of creditors if it is acceptable to the majority of creditors. Should the Authority or the County file a petition in the Bankruptcy Court under Chapter 9 of the Bankruptcy Code prior to the payment in full of the principal of and interest on the Bonds, the holders of the Bonds would be considered creditors and would be bound by the public entity s plan of adjustment of its debt. Reference should also be made to N.J.S.A. 52:27-40 et seq., which provides that any political subdivision of the State as defined therein has the power to file a petition with the Bankruptcy Court under Chapter 9 of the Bankruptcy Code provided the political subdivision has obtained approval of the Local Finance Board. Section 903 of the Bankruptcy Code, 11 U.S.C. Section 903, specifically provides that Chapter 9 of the Bankruptcy Code does not limit or impair the power of a state to control, by legislation or otherwise, a municipality of or in such state in the exercise of the political or governmental powers of such municipality; provided, however, that a state law prescribing a method of composition of indebtedness of the municipality may not bind any creditor that does not consent to such composition and that a judgment entered under such state law may not bind a creditor that does not consent to such composition. 13

22 THE ABOVE REFERENCES TO THE BANKRUPTCY CODE ARE NOT TO BE CONSTRUED AS AN INDICATION THAT THE AUTHORITY OR THE COUNTY EXPECTS TO RESORT TO THE PROVISIONS OF SUCH BANKRUPTCY CODE OR THAT, IF IT DID, SUCH ACTION WOULD BE APPROVED BY THE LOCAL FINANCE BOARD, OR THAT ANY PROPOSED PLAN WOULD INCLUDE A DILUTION OF THE SOURCES OF PAYMENT OF AND SECURITY FOR THE BONDS. PLEDGE OF THE STATE NOT TO LIMIT POWER OF AUTHORITY OR RIGHTS OF BONDHOLDERS The Act sets forth the pledge and agreement of the State that it will not limit or alter the rights vested by the Act in the Authority to fix, establish, charge and collect its facility charges and to perform and fulfill the terms of any agreements which have been made with holders of bonds or other obligations of the Authority so as to in any way impair the rights and remedies of such holders, and will not modify in any way the exemption from taxation provided for in the Act, until such bonds or other obligations, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of such holders, are fully met and discharged. LEGALITY FOR INVESTMENT Under the Act, the Bonds are securities in which the State and all public officers, municipalities, counties, political subdivisions and public bodies and agencies thereof, all banks, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any sinking funds, moneys, or other funds belonging to them or within their control, and the Bonds are authorized as security for any and all public deposits. NEGOTIABILITY OF THE BONDS Section 24 of the Act, N.J.S.A. 40:37A-67, provides that any bond or obligation issued pursuant to the Act shall be fully negotiable within the meaning and for all purposes of the negotiable instruments law of the State and each holder or owner of such bond or other obligation, or of any coupon appurtenant thereto, by accepting such bond or coupon shall be conclusively deemed to have agreed that such bond, obligation or coupon is and shall be fully negotiable within the meaning and for all purposes of said negotiable instruments law. The Authority LITIGATION There is no controversy or litigation of any nature now pending or threatened against the Authority restraining or enjoining the authorization, issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds, or any proceedings of the Authority taken with respect to the authorization, issuance, sale, execution or delivery thereof, or the pledge or application of any moneys or security provided for the payment of the Bonds, or the existence or powers of the Authority related to the authorization, issuance, sale, execution or delivery of the Bonds. There is no litigation pending or, to the knowledge of the Authority, threatened in any court wherein an adverse decision would have a material adverse impact on the financial position of the Authority or its ability to pay, or to provide for the payment of, the Bonds. 14

23 The Borrowers There is no controversy or litigation of any nature now pending or threatened against the Borrowers restraining or enjoining the authorization, issuance, sale, execution or delivery of the Borrower Bonds or the Bond Purchase Agreements, or in any way contesting or affecting the validity of the Borrower Bonds or the Bond Purchase Agreements, or any proceedings of the Borrowers taken with respect to the authorization, issuance, sale, execution or delivery of the Borrower Bonds or the Bond Purchase Agreements, or the pledge or application of any moneys or security provided for the payment of the Borrower Bonds or the Bond Purchase Agreements, or the existence or powers of the Borrowers related to the authorization, issuance, sale, execution or delivery of the Borrower Bonds or the Bond Purchase Agreements. There is no litigation pending or, to the knowledge of the Borrowers, threatened in any court wherein an adverse decision would have a material adverse impact on the financial position of the Borrowers or their ability to pay, or to provide for the payment of, the Borrower Bonds. The County There is no controversy or litigation of any nature now pending or threatened against the County restraining or enjoining the adoption, execution or delivery of the County Guaranty or the Guaranty Agreement, or in any way contesting or affecting the validity of the County Guaranty or the Guaranty Agreement, or any proceedings of the County taken with respect to the adoption, execution or delivery thereof or existence or powers of the County related to the adoption, execution and delivery of the County Guaranty or the Guaranty Agreement, which if adversely decided, would have a material adverse effect on the financial condition of the County which is not otherwise adequately covered by insurance, or effect the County s ability to pay or to provide for payment under the County Guaranty or the Guaranty Agreement. General TAX MATTERS Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code ), provides that interest on the Bonds is not included in gross income for federal income tax purposes if various requirements set forth in the Code are met. The Authority has covenanted in its Arbitrage and Tax Certificate (the Tax Certificate ), delivered in connection with the issuance of the Bonds, to comply with these continuing requirements and has made certain representations, certifications of fact and statements of reasonable expectation in connection with the issuance of the Bonds to assure this exclusion. Pursuant to Section 103(a) of the Code, failure to comply with these requirements could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. In the opinion of Bond Counsel to the Authority, pursuant to Section 103(a) of Code, interest on the Bonds is not included in gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the alternative minimum tax imposed on individuals and corporations. Bond Counsel is also of the opinion that interest on the Bonds held by corporate taxpayers is included in adjusted current earnings in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. Bond Counsel s opinions described herein are given in reliance on the representations, certifications of fact and statements of reasonable expectation made by the Authority in its Tax Certificate, assume continuing compliance by the Authority with certain covenants set forth in its Tax Certificate, and are based on existing statutes, regulations, administrative pronouncements and judicial decisions. 15

24 Certain Federal Tax Consequences Relating to the Bonds Although, pursuant to Section 103(a) of the Code, interest on the Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The nature and extent of these other tax consequences will depend upon the recipient s particular tax status or other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions and certain recipients of Social Security benefits, are advised to consult their own tax advisors as to the tax consequences of purchasing or holding the Bonds. Bank Qualification The Bonds will not be designated as qualified under Section 265 of the Code by the Authority. New Jersey Gross Income In the opinion of Bond Counsel to the Authority, the interest on the Bonds and any gain realized on the sale of the Bonds are not includable as gross income under the New Jersey Gross Income Tax Act. Future Events Future federal, state or local legislation, administrative pronouncements or court decisions may affect, perhaps significantly, the tax-exempt status of interest on the Bonds, in whole or in part, on a federal and/or State level, the market value of the Bonds or the marketability of the Bonds, may cause the recognition of gain from the sale or other disposition of the Bonds, or otherwise may prevent the owners of the Bonds from realizing the full current benefit of the exclusion from gross income of the interest thereon. For example, the recent federal tax reform proposals in the United States House of Representatives and the United States Senate would reduce corporate tax rates, modify individual tax rates, eliminate many deductions, repeal the alternative minimum tax, eliminate advance refundings and, in the case of the current version of the House proposal, eliminate private activity bonds, among other things. These proposals, if passed and signed by the President of the United States, may increase, reduce or otherwise change the financial benefits currently provided to certain owners of state and local government bonds, including the Bonds. Additionally, investors in the Bonds should be aware that future legislative actions (including federal income tax reform) may retroactively affect such investors' federal, state or local tax liability. In all such events, the market value of the Bonds may be impacted and the ability of holders to sell the Bonds in the secondary market may be reduced. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE POTENTIAL IMPACT OF ANY PENDING OR PROPOSED FEDERAL OR STATE TAX LEGISLATION, REGULATIONS OR LITIGATION, AS TO WHICH BOND COUNSEL WILL NOT EXPRESS AN OPINION. APPROVAL OF LEGALITY All legal matters incident to the authorization, issuance and delivery of the Bonds are subject to the approval of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, Bond Counsel to the Authority, whose approving legal opinion substantially in the form included as Appendix E hereto will be delivered with the Bonds. Certain legal matters will be passed upon for the Authority by its General Counsel, Florio Perrucci Steinhardt & Fader, Rochelle Park, New Jersey. Certain legal matters will be passed upon for the Underwriter by its Counsel, Mariniello & Mariniello, P.C., Fort Lee, New Jersey; and 16

25 for the County by its County Counsel, Julien X. Neals, Esq., Hackensack, New Jersey, and by its County Bond Counsel, Waters, McPherson, McNeill, P.C., Secaucus, New Jersey. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or the future performance of parties to the transaction. The rendering of an opinion does not guarantee the outcome of any legal dispute that may arise out of the transaction. UNDERWRITING NW Capital Markets Inc., (the Underwriter ) has agreed to purchase the Bonds from the Authority, subject to the terms of a Bond Purchase Contract dated the date of this Official Statement among the Authority, the County and the Underwriter, at a price of $34,487, for the Bonds (the Purchase Price ). The Purchase Price reflects the par amount plus original issue premium of $1,970,468.70, less Underwriter s discount of $163, The Underwriter intends to make a bona fide public offering of the Bonds at the initial offering yields set forth on the inside cover page of this Official Statement. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts) at yields higher than the initial offering yields set forth on the inside front cover page hereof, and such initial offering yields may be changed from time to time by the Underwriter without notice. RATING Moody s Investors Service, Inc. ( Moody s ) has assigned the Bonds the rating of Aaa. Such rating reflects only the view of Moody's as of the date of issuance of the Bonds and an explanation of the significance of such rating may be obtained from Moody s at 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, (212) There is no assurance that the rating will continue for any period of time or that it will not be revised or withdrawn entirely by Moody s if, in the judgment of Moody s, circumstances so warrant. Any revision or withdrawal of the ratings may have an adverse effect on the market price or marketability of the Bonds. MUNICIPAL ADVISOR Acacia Financial Group, Inc., Mount Laurel, New Jersey, has served as municipal advisor to the Authority with respect to this transaction (the Municipal Advisor ). The Municipal Advisor is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement or in the appendices hereto. SECONDARY MARKET DISCLOSURE In accordance with the provisions of Rule 15c2-12, as amended ("Rule 15c2-12"), promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, the County, as an Obligated Participant (as hereinafter defined) and for purposes of the County Guaranty, and the Authority will, prior to the issuance of the Bonds, enter into an agreement (the "County Disclosure Agreement") with The Bank of New York Mellon, as dissemination agent (the "Dissemination Agent"). 17

26 The County The County has agreed pursuant to the provisions of the County Disclosure Agreement to provide certain financial information and operating data relating to the County (collectively, the "County Annual Information") by no later than October 1 of each year, commencing October 1, 2018, to the Municipal Security Rulemaking Board's (the "MSRB") Electronic Municipal Market Access System ("EMMA") and as described in the County Disclosure Agreement. The County Annual Information shall include: (i) a copy of the annual financial statements of the County prepared in accordance with generally accepted accounting principles applicable to governmental units and prepared in accordance with the standards of the Governmental Accounting Standards Boards and requirements of the Division of Local Governmental Services in the State Department of Community Affairs as such principles, standards and requirements exist at the time of the filing of the particular annual audited financial statements, and audited by a certified public accountant, or unaudited financial statements, if audited financial statements are not available (audited financial statements will subsequently be submitted when available); and (ii) certain annual financial information and operating data generally consistent with certain information contained in Appendices A and B hereto. The County previously failed to timely file certain annual financial information and operating data for the years ending December 31, 2012 and 2013 pursuant to prior undertakings executed in connection with bonds issued by the County. Such annual financial information and operating data of the County has since been filed on EMMA. Further, although the County timely filed its annual financial information and operating data for the years ending December 31, 2014 and 2015 pursuant to prior undertakings executed in connection with bonds issued by the County, it failed to connect such filings to certain CUSIP numbers associated with bonds issued by the Authority that are guaranteed by the County. Such filings have since been connected on EMMA to the bonds of the Authority that are guaranteed by the County. As of this date, the County has taken all necessary steps to ensure future compliance with the rule. The Authority The Authority has also covenanted in the County Disclosure Agreement to, in a timely manner not in excess of ten (10) business days, deliver to the MSRB through EMMA notice of any of the following events (the "Listed Events") with respect to the Bonds: (i) (ii) (iii) (iv) (v) (vi) (vii) Principal or interest payment delinquencies. Non-payment related defaults, if material. Unscheduled draws on debt service reserves reflecting financial difficulties. Unscheduled draws on credit enhancements reflecting financial difficulties. Substitution of credit or liquidity providers or their failure to perform. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices of determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds. Modifications to the rights of Bondholders, if material. 18

27 (viii) (ix) (x) (xi) (xii) (xiii) (xiv) Bond calls, if material, and tender offers. Defeasances. Release, substitution or sale of property securing repayment of the Bonds, if material. Rating changes. Bankruptcy, insolvency, receivership or similar event of the County. The consummation of a merger, consolidation or acquisition involving the County or the sale of all or substantially all of the assets of the County, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. Appointment of a successor or additional trustee or the change of name of a trustee, if material. If the Authority shall fail to comply with any provision of the County Continuing Disclosure Agreement, then the Dissemination Agent or any Bondholder may enforce, for the equal benefit and protection of all Bondholders similarly situated, by mandamus or the suit or proceeding at law or in equity, the provisions of the County Continuing Disclosure Agreement against the Authority and any of the officers, agents and employees of the Authority and may compel the Authority or any such officers, agents or employees to perform and carry out their duties under the County Continuing Disclosure Agreement; provided that the sole and exclusive remedy for breach of the County Continuing Disclosure Agreement shall be an action to compel specific performance of the obligations of the Authority under the County Disclosure Agreement and no person or entity shall be entitled to recover monetary damages under the County Continuing Disclosure Agreement under any circumstances. Failure to comply with any provision of the County Continuing Disclosure Agreement shall not in any manner constitute an Event of Default under the Bond Resolution. Without the consent of the Bondholders, the Authority, the County and the Dissemination Agent at any time and from time to time may enter into any amendments or modifications to the County Continuing Disclosure Agreement for any of the following purposes: (i) to comply with or conform to any changes in Rule 15c2-12 adopted by the Securities and Exchange Commission (whether required or optional) which are applicable to the Bonds; (ii) to add a dissemination agent of the information required to be provided by the Authority under the County Continuing Disclosure Agreement and to make any necessary or desirable amendments or modifications in connection therewith; (iii) to evidence the succession of another person or entity to the Authority and the assumption by any such successor of the covenants and agreement of the Authority under the County Continuing Disclosure Agreement; or (iv) to add to the covenants and agreements of the Authority under the County Continuing Disclosure Agreement for the benefit of the Bondholders, or to surrender any right or power conferred upon the Authority by the County Continuing Disclosure Agreement. The Authority is a conduit issuer and, with exception of the Authority s County-Guaranteed Taxable Revenue Bonds (Overpeck Project), Series 2005 (the Series 2005 Bonds ), is only required to provide event notices under its various continuing disclosure agreements. Under the continuing disclosure agreement in connection with the Series 2005 Bonds, the Authority was required to provide annual financial information relating to the Overpeck Project, which information is contained in the Authority s audited 19

28 financial statements. For the years ending December 31, 2014, 2013 and 2012, the Authority failed to timely file its audited financial statements with the Municipal Securities Rulemaking Board. Such filings were made on December 2, 2014 and February 11, 2016 along with notices of failure to timely rile. The Authority has engaged Digital Assurance Certification, LLC, in connection with its continuing disclosure obligations. The Obligated Participants In addition to the County, pursuant to the provisions of separate agreements in a similar form as the County Disclosure Agreement (the "Obligated Participant Continuing Disclosure Agreement") between the Dissemination Agent and each of Lyndhurst, Oradell and the BCUA (the "Obligated Participants"), each Obligated Participant who meets the criteria described in the following paragraph shall undertake to furnish the Dissemination Agent with Annual Information relating to such Obligated Participant substantially similar in scope to, and in the same manner as, that required in the County Disclosure Agreement. The Obligated Participants are those scheduled to make payment of debt service with respect to their Borrower Bonds in any one calendar year that equal or exceed ten percent (10%) of the debt service scheduled to be paid with respect to the Bonds in such calendar year (the "Obligated Payments Threshold"). Lyndhurst, Oradell and the BCUA are each Obligated Participants for the Bonds in certain years and each have agreed pursuant to the provisions of the Obligated Participant Continuing Disclosure Agreements to provide to the MSRB, in electronic format, so long as any of their Borrower Bonds are outstanding, their Annual Information, as applicable, by no later than August 1 for Lyndhurst and October 1for Oradell and the BCUA, after the end of their respective fiscal years for the years in which the Obligated Payments Threshold is applicable. Certain annual financial information and operating data for the BCUA is contained in Appendix C. Lyndhurst and Oradell are not Obligated Participants at this time. The County shall remain an Obligated Participant for as long as the Bonds are outstanding by virtue of the County Guaranty relating to the payment of the Bonds The BCUA previously failed to file certain secondary market disclosure pursuant to Rule 15c2-12 in connection with previous undertakings related to certain prior bond issues of the BCUA. Specifically, the BCUA failed to file its 2012 and 2013 annual audits in a timely manner. The BCUA also failed to file certain annual operating data in the years 2012, 2013 and 2015 for its outstanding bond issues. Additionally, the yearly audits and annual operating data were not attached to all the outstanding CUSIPs of the BCUA, and the BCUA failed to file notice of certain material events in connection with (i) certain bond insurer downgrades and (ii) certain rating changes by the ratings agencies, along with failure to file notices for such downgrades. The agreements hereinafter referenced are being entered into in order to assist the Underwriter in complying with Rule 15c2-12. See Appendix D hereto for the forms of the County Disclosure Agreement and the Obligated Participant Continuing Disclosure Agreements by and among the Authority, each Obligated Participant and the Dissemination Agent. VERIFICATION AGENT The (i) mathematical accuracy of the computation of the adequacy of the maturing principal of and interest earned on the direct non-callable obligations which are unconditionally guaranteed by the United States of America to be purchased to provide for the refunding of the outstanding bonds of the Borrowers at their respective redemption prices on the respective redemption dates and (ii) mathematical computations supporting Bond Counsel s conclusion that the Bonds will not be arbitrage bonds under the Code will be verified by Ferraioli, Wielkotz, Cerullo & Cuva, P.A., Pompton Lakes, New Jersey. 20

29 INDEPENDENT AUDITORS The financial statements of the County as of December 31, 2016 and 2015 included in Appendix B to this Official Statement have been audited by Ferraioli, Wielkotz, Cerullo & Cuva, P.A., independent certified public accountants, as stated in their report appearing in Appendix B to this Official Statement. APPENDICES Appendix A to this Official Statement consists of certain general information concerning the County, which has been provided by the County from public documents of the County and from other public or official documents or publications which are referred to therein. Neither the Authority nor the Underwriter has confirmed the accuracy or completeness of said information, and the Authority and the Underwriter disclaim any responsibility for the accuracy and completeness thereof. Appendix B to this Official Statement contains certain financial information concerning the County. Neither the Authority nor the Underwriter has confirmed the accuracy or completeness of said information, and the Authority and the Underwriter disclaim any responsibility for the accuracy and completeness thereof. Appendix C to this Official Statement contains certain general information and financial information concerning the BCUA. Neither the Authority nor the Underwriter has confirmed the accuracy or completeness of said information, and the Authority and the Underwriter disclaim any responsibility for the accuracy and completeness thereof. Appendix D to this Official Statement contains a summary of the Bond Resolution, the Bond Purchase Agreements, the Continuing Disclosure Agreements and the Guaranty Agreement. Appendix E of this Official Statement consists of the form of approving legal opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel to the Authority. Copies of such opinion will be available at the time of delivery of the Bonds. MISCELLANEOUS Certain portions of the information herein are summaries of certain provisions of the Act, the Bond Resolution, the Bond Purchase Agreements, the County Guaranty, the Guaranty Agreement and the Continuing Disclosure Agreements. Such summaries not purporting to be quoted in full are descriptions of certain provisions and are in all respects subject to and qualified in their entirety by express reference to the provisions of the complete documents in their final form, copies of which will be on file and available for examination at the offices of the Authority or the Trustee. Any statements which are contained in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. All estimates and assumptions herein have been made on the best information available and are believed to be reliable, but no representations whatsoever are made that such estimates or assumptions are correct or will be realized. This Official Statement is not to be construed as a contract or agreement among the Authority, the Underwriter or the holders of the Bonds. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs (financial or otherwise) of the Authority, the County or the Borrowers since the date hereof. 21

30 The execution and delivery of this Official Statement have been duly authorized by the Authority. THE BERGEN COUNTY IMPROVEMENT AUTHORITY Dated: December 6, 2017 By: /s/ Cesar Gamio Cesar Gamio Chairperson 22

31 APPENDIX A CERTAIN DEMOGRAPHIC AND ECONOMIC INFORMATION CONCERNING THE COUNTY

32 General Description of Bergen County DEMOGRAPHIC AND ECONOMIC FACTORS Although the County comprises only 3% of the State s total land area, the County leads all other counties in the State in having the largest number of workers, private-sector jobs, and highest per capita income. The County has the largest population in the State. Situated in the northeastern tip of the State, its location offers all the advantages of being near the hub of the New York City metropolitan region. Over 38% of the area s employed residents work elsewhere, many in New York City. Since income is high in the County, many fine stores, restaurants, and hotels are located in the County, or very close to it. The County is also the home of the Meadowlands Sports Complex and the professional football teams that play there. Although suburban, the area has clearly taken on an ambiance reminiscent of Manhattan: luxury high-rises on the Hudson River (dividing New Jersey from New York City) overlook the city and many modern office buildings are scattered throughout the area. The total net equalized valuations of Land and Improvements for constituent municipalities for 2017 was $172,030,836,227. Equalized ratables in the County have increased over $65 billion since For years the County has had one of the lowest county real estate tax rates in New Jersey. The County is classified as a first-class county in the State and is divided into 70 municipalities, which include 56 boroughs, 9 townships, 3 cities (Englewood, Hackensack and Garfield) and 2 villages (Ridgewood and Ridgefield Park). Early History The City of Hackensack is the county seat of the County. The County was organized under an act of the New Jersey Assembly on March 1, 1682 at which time the first four counties in the State were formed - Bergen, Essex, Monmouth and Middlesex. The first settlers in the County area were chiefly of Dutch descent, although there were also some French Huguenots who settled there. The early boundaries of the County went through many changes, expanding and contracting through the years. In 1837, Passaic County was formed from the western part of the County, and in 1840 Hudson County was formed from the southern part of the County. It was not until 1874 that the State Assembly passed an act to permanently define the boundary lines between these counties. The County is replete with legends, history, and heroes of the Revolutionary Age. The County s geographical location on the strategic Hudson River near New York City placed it close to action that took place during the American Revolutionary War. Fort Lee s fortifications were manned by American forces under General Nathaniel Greene. The Mansion House, which served as a temporary headquarters for General George Washington, no longer in existence, formerly stood across the Green from the Bergen County Courthouse. The Baylor Massacre of 1778 took place in River Vale. There were many different encampments of Washington s troops throughout the County. The famous Washington Spring, now in Van Saun County Park, in Paramus Borough, was used by the soldiers as well as Washington himself, according to legend, and received its name from this fact. In 1790, the census taken in the County showed that there were 12,601 persons in the County. The languages spoken included Dutch, English and even a smattering of Native American Dialect, although the last Native Americans had left the County before Farming was the chief occupation in the County but soon gave way to industry, since the County has high land values. Although once not as important as agriculture, industries today are of great significance to the County s economy. Governmental Structure The County operates under an elected Board of Chosen Freeholders and elected County Executive form of county government (known as the County Executive Plan ) and is governed by such Board of Chosen Freeholders, County Executive and such other officers and employees as may be duly appointed pursuant to the provision of the Optional County Charter Act or ordinance of the County. Under the County Executive Plan form of government, which was adopted by referendum in November, 1985, the County Executive is the executive branch of government responsible for the exercise of all administrative and executive functions of the County, and the Board of Chosen Freeholders is the legislative branch of government responsible for the exercise of all legislative powers of the County and such investigative powers as are germane to the legislative powers of the County. All freeholders of the County are elected at large. A-1

33 Veto Over Authorities Legislation concerning the powers of county executives over certain authorities and amending various parts of the statutory law was signed into law on April 21, P.L. 1995, c.91, and gives the County Executive the authority to veto the minutes of the Bergen County Utilities Authority, Northwest Bergen County Utilities Authority and The Bergen County Improvement Authority. Geographical Location The County is located in northern New Jersey and comprises part of the New York-New Jersey metropolitan area. The County borders New York State on the north and east, and is surrounded by Passaic, Essex and Hudson Counties. Through its proximity to New York City, the County has the advantages of a large city but also an atmosphere conducive to good living and working. Its strategic position across the Hudson River from the country s largest city gives its residents and industry close contact with the financial center of the world and the advantages of a great shipping center. It is located in the northeastern part of the State along the Hudson River, is connected with New York City by the George Washington Bridge, and adjoins Rockland County, New York. The County affords ample parking facilities, horizontal expansion for corporate offices, a pool of skilled workers, and nationally known industrial neighbors. From the tableland along the summit of the Palisades, above the Hudson River, the land slopes sharply to the broad valley of the Hackensack River, rises and descends again across the Saddle River and Ramapo River valleys and then rolls up the steep sides of the wooded Ramapo Mountains above the northwest border. South of these, the Passaic River forms the boundary between Bergen and Passaic Counties. Industries and Air Services Many nationally and internationally known industries and corporations have major or branch plants in the County, providing an unusual diversification of industry and steady employment opportunities. The County is the headquarters for many of the foreign automobile manufacturers who bring their cars into the United States. Teterboro Airport, a modern general aviation reliever airport, is located in the County. A major public purpose is to attract general aviation aircraft away from the large passenger airports in the New York metropolitan area. To this end, Teterboro offers the following advantages: 1. Its 827 acres of land makes it larger in area than New York s LaGuardia Airport. 2. It is a customs clearance airport. 3. It is the closest general airport to midtown Manhattan, New York. 4. Landing fees are substantially lower than Newark Liberty International and LaGuardia Airports. Teterboro Airport has more airplane movements than Newark Liberty International Airport. Teterboro ranked in the top 35 aircraft movements in the country. It is the 4 th busiest airport in the country as far as general aviation activity. Hospitals In addition to New Bridge Medical Center ( NWMC or Hospital ) (formerly Bergen Regional Medical Center and formerly Bergen Pines County Hospital), the Englewood, Hackensack, South Bergen, Holy Name and Valley Hospitals, as well as Kessler Institute for Rehabilitation, serve the County. NWMC provides a wide range of services in acute medicine and surgery, long-term care, and psychiatry, as well as in physical medicine and rehabilitation. NWMC services patients of all ages from throughout the County. On July 14, 2017, the County Executive, along with the Freeholder Board and the Authority Commissioners, signed an agreement with Care Plus Bergen to take over operations of Bergen County Medical Center on October 1, Care Plus Bergen is comprised of Care Plus New Jersey, Integrity House and Rutgers Bio-Medical. A-2

34 County Law Enforcement The Bergen County Sheriff's Department and the Bureau of Police Services (formerly the Bergen County Police Department) are integral parts of law enforcement in the County and each has an outstanding record of law enforcement. The Police and Fire Academy in Mahwah, an educational facility for policemen and firemen, and the County Jail Annex in Hackensack are two of the County s newest institutions. Recreation The Bergen County Department of Parks now owns over 7,804 acres of park lands which were acquired at a cost approximating $21 million. Included in this amount are 843 acres of park land donated by various municipalities and individuals. The County now has 26 park areas strategically located throughout the County. The facilities include provisions for swimming, boating, fishing and camping, ice skating, picnic groves, tennis, horseback riding and pony rides, model railroads, a bird sanctuary, a 27-hole golf course in Rockleigh, an 18-hole golf course in Teaneck, an 18-hole golf course in River Vale, a 9-hole golf course in Paramus, an 18-hole golf course in Mahwah and Ramsey, playgrounds at 17 park areas, an environmental center in Wyckoff, and a skiing facility at Campgaw Mountain County Reservation. Over 1,000,000 patrons used fee-charged activities and paid $2,385,696 in The County expended $11,310,968 of its 2016 appropriation of $11,900,517 for recreation in The County appropriated $12,728,420 for this purpose in Department of Public Works This Department had an operating budget in 2016 of $19,702,583 with expenditures of $16,641,696. For the year 2017, the budget has increased to $21,487,465. It has approximately 153 employees who maintain miles of roadway in the County. Open Space, Recreation, and Farmland and Historic Preservation Trust Through State Law, New Jersey counties are permitted to establish a dedicated trust fund to acquire land for conservation/open space purposes, enhance recreational facilities, and for farmland and historic preservation. Counties are given great latitude in crafting their own trust funds to meet their particular priorities and objectives. Under State Law, the Board of Chosen Freeholders needs voter approval to create and fund such a Trust. The County of Bergen recognized the merits of a trust and on November 3, 1998, placed a public question on the ballot to determine whether the County should establish such a trust fund. The ballot question was approved by a two to one majority of those who voted in The referendum was approved again in 2003, by an overwhelming majority of the voters, raising the tax from cents to 0.01 cent per 100 of total County equalized property valuation. The Referendum is advisory to the Freeholder Board, not binding upon them. follow: The following Program Statement is intended to outline the objectives of the program and the governance process the trust will The Bergen County Open Space, Recreation, and Farmland and Historic Preservation Trust, created by Freeholder resolution on November 24, 1998, is divided into 2 separate programs each having its own distinct goals and objectives. First, the County Program will use trust fund dollars on a county-wide basis to preserve land, maximize recreational opportunities, and preserve historic areas and farmland. The second component, the Municipal Program, will help the 70 municipalities of Bergen County improve their municipal recreational facilities. The Municipal program would supplement municipal efforts and will not serve as a full funding resource. The County raised $4,269,657 for the trust fund in Banking Institutions There are more than 16 commercial banks, savings and loan associations and savings banks that maintain offices within the County. A-3

35 Institutions for Learning The County has 63 high schools, 42 of which are public and 21 private or parochial, and 31 junior high schools, 30 public and 1 private. There are 5 institutions of higher learning located in the County: Fairleigh Dickinson University (Teaneck) Ramapo College of New Jersey (Mahwah) Felician College (Lodi) Bergen Community College (Paramus) St. Peter s College (Englewood Cliffs) Bergen Community College operates on a $90 million campus, which was completed in September 1972 in Paramus, New Jersey. It has two satellite campuses; Bergen at the Meadowlands and the Philip Ciarco Learning Center. The student population as of June 30, 2015 was approximately 17,000 enrolled in Associates Programs and an additional 10,000 enrolled in the Division of Continuing Education. The campus complex consists of a mega-structure building comprising seven distinct areas: 1. Administration Building Area 2. Library Learning Resources Area 3. College Center Area 4. Science and Allied Health Area 5. Business and Classroom Area 6. Physical and Health Education and Swimming Pool Area 7. Performing Arts Laboratory and Theater. The County Vocational High Schools have the following programs: 1. At the Academies in Hackensack, approximately 1,044 session students are enrolled. 2. There is one shared-time technical education center at Paramus. The Paramus facility offers training to 499 students. 3. The Teterboro campus has an enrollment of 665 students. 4. There is one school to meet the needs of students with special requirements. The full-time vocational high schools at Paramus and Teterboro provide customized services to 653 students. 5. The adult division provides both full-time day services as well as evening and weekend program offerings. In April, 1995, the County and the Private Industry Council entered into an agreement to designate the Board of Vocational and Technical Schools of Bergen County as the Job Training Partnership Act (JTPA) grant recipient and administrative entity for all JTPA programs operated within the Service Delivery Area for the County effective July 1, Investment of County Funds Funds invested by the County during 2016 earned $491,455 in interest. These were funds held temporarily by the County Treasurer pending disbursement. The County Treasurer is authorized to invest moneys from the Capital, Trust and General Account for limited periods. A-4

36 Population The County is the most populous in the State. The following shows the population from the Federal Census Bureau: , , , , , , , ,116 DWELLING UNITS AND POPULATION FOR BERGEN COUNTY Pension Fund Dwelling Units Population 2000 Census 2010 Census 2000 Census 2010 Census 339, , , ,116 Source: Bergen County Department of Planning and Economic Development Substantially all County employees participate in the State of New Jersey Pension System and the Social Security System. The State pension funds were established by act of the legislature. Benefits, contributions, means of funding and the manner of administration are determined by the legislature. The two State-administered pension funds are: the Public Employees Retirement System (PERS) and the Police and Firemen s Retirement System of New Jersey (PFRS). The Division of Pensions within the Treasury Department of the State of New Jersey is the administrator of the funds. The County s total payroll for the year ended December 31, 2016 was approximately $154,581,174 and approximately 75% of all County employees participated in the above mentioned funds. Covered employees are required by State statute to contribute a certain percentage of their salary to the funds. Each member s percentage is based on age determined at the effective date of enrollment. In addition, the PERS and PFRS bill the County annually for its required contribution. The County s 2016 and 2015 contributions to these funds were $28,642,280 and $25,318,181, respectively. In addition to PERS and PFRS, there is also a County-administered pension fund that covers specific employees whose enrollment preceded the creation of the State-administered funds. The County also contributes to the State-administered Judicial Retirement System which covers the pensions of certain widows of judges. Potential Liability for Accrued Sick Time and Accrued Vacation Time Employees accrue sick time at the rate of 15 days per year. The time remains accrued until used. At time of retirement, the accrued unused sick time is used as a basis for calculating terminal leave as follows: present hourly rate times unused one-half accrued sick leave, to a maximum of $15,000 or $25,000 depending on the employee s title. The potential terminal leave liability for persons eligible, who are 60 years of age or older, or 10 or more years of service, as of December 31, 2016 and 2015 was $15,643,149 and $15,808,061, respectively. Employees accrue vacation time at the rate of 15 days per year for the first 5 years of service and 30 days per year thereafter. The time remains accrued for 2 years; it must be used or it is lost. Terminated employees are paid for accrued time at the current rate. The value of accrued vacation time as of December 2016 and 2015 was $7,416,233 and $7,362,457, respectively. No provision is made in the financial statements for the accrued value of terminal leave and vacation time. Other Post-Employment Benefits The County provides lifetime medical benefits to County employees who retire after 25 years of state pension membership or upon a disability retirement. For retirees with 25 years of service, Part B premiums are reimbursed by the County. Dependents of retirees are covered until the death of the retiree except for Parks Department spouses that maintain coverage at no cost. A-5

37 The last effective date of the biannual OPEB valuation was December 31, There were 1,303 retired employees receiving benefits with 734 receiving dependent or spousal coverage. Actuarial Valuation Results The actuarial accrued liability for current retirees and active employees for a total accrued liability (unfunded) of $1,094,413,603 at December 31, The County accounts for post-retirement benefits on a pay-as-you-go basis which is in compliance with the NJ regulatory basis of accounting. Actuarial valuation, annual required contribution assumptions and methods are disclosed in footnote 19 of the enclosed financial statements. Overlapping Government Units COUNTY AND OVERLAPPING INDEBTEDNESS In addition to the various municipalities and school districts within the County, the following exist within the County to provide certain governmental services: the Bergen County Utilities Authority, the Northwest Bergen Utilities Authority and The Bergen County Improvement Authority. Purposes of County Debt The following table breaks down by purpose all direct general obligation bond and loan indebtedness of the County, for the payment of the principal and interest on which the County has pledged its full faith and credit as of December 31, Schedule of Bond and Loan Indebtedness as of December 31, 2016 Notes $200,000,000 County Hospital Bonds 10,528,000 Loans 3,202,605 General County Purposes 379,434,000 Community College 19,843,000 Vocational and Special Needs School 78,762,000 $691,769,605 Gross Bond and Loan Debt Issued and Outstanding Debt Incurring Capacity as of December 31, 2016 Equalized Valuation Basis (last 3 years average) $166,824,155,024 3,336,483,104 2% Borrowing Margin (1) Net Debt Issued, Outstanding and Authorized 710,400,848 Remaining Borrowing Capacity $2,626,082,256 (1) Limited by Local Bond Law, N.J.S.A. 40A:2-1 et seq. to 2% of average equalized valuation. A-6

38 Debt History The following table shows certain ratios relating to the County's gross and net direct general obligation indebtedness including $403,291,739 par amount of bonds issued and authorized but not including bonds issued as guaranteed by the County. History of Bonded Debt Ratios as of December 31, Ratio of Ratio of Gross Debt Gross Net Debt Average (Issued and Gross Debt to Net Debt to Equalized Authorized Debt Per Equalized Per Equalized Year Valuation(1) But Not Issued) Capita Valuation Net Debt Capita Valuation 2016 $166,824,155,204 $1,162,360,348 $1, $710,400,848 $ % ,894,415,971 1,614,581,537 1, ,740, ,332,190,759 1,471,796,641 1, ,422,641 1, ,344,818,875 1,343,787,738 1, ,429, ,600,390,461 1,276,830,919 1, ,791, Source: Annual Debt Statements filed with the Division of Local Government Services, New Jersey Department of Community Affairs. (1) Represents average equalized valuation for the three fiscal years ending in the corresponding year set forth in this table. The following table shows the principal of all direct general obligation bond indebtedness and bond anticipation note indebtedness of the County for the last five fiscal years. Schedule of Comparative Net Debt as of December 31, Bonds and Notes Issued and Outstanding: Notes $200,000,000 $123,000,000 $53,000,000 Bonds 488,567, ,090, ,246,000 $535,381,999 $509,252,000 Loans 3,202,605 3,877,436 4,692,254 5,490,064 6,270,554 Total Issued 691,769, ,967, ,938, ,872, ,522,554 Bonds and Notes Authorized But Not Issued 207,976, ,048, ,484, ,041, ,320,365 Gross Direct Obligations 899,746, ,015, ,422, ,913, ,842,919 Less: Statutory Deductions 189,345,500 11,275,000 41,470,000 52,484,000 42,051,000 Net Direct Obligations Issued and Not Issued $710,400,848 $865,740,851 $861,952,641 $849,429,738 $786,791,919 Source: Bergen County Financial Statements A-7

39 Statement of Indebtedness as of December 31, 2016 GROSS DEBT Bonds, Notes and Other Loans Issued and Outstanding Bonds and Notes $688,567,000 Loans 3,202, ,769,605 Bonds and Notes Authorized But Not Issued 207,976,743 TOTAL GROSS DEBT 899,746,348 Statutory Deductions(1) 189,345,500 TOTAL NET DEBT $710,400,848 GROSS DEBT Per Capita (2010 Census - 905,116) $994 Percent of Average Equalized Valuation ($166,824,155,204).539% NET DEBT Per Capita (2010 Census - 905,116) $785 Percent of Average Equalized Valuation ($166,824,155,204).426% Source: County Records (1) Statutory deductions are used to determine the legal borrowing capacity of the County. The County, however, is obligated under law to repay the full amount of its gross debt. [INTENTIONALLY LEFT BLANK] A-8

40 THE COUNTY BUDGET Status of County Budget Pursuant to the Local Budget Law (N.J.S.A. 40A:4-1 et seq.), every county in the State is required to adopt a balanced budget. See "Budget Requirements" and "Budget Process" herein. The County s budget for calendar year 2016 was adopted on June 15, Budget Requirements No County budget may be adopted without the approval of the Director (the "Director") of the Division of Local Government Services ("the Division"). The Director approves the budget once he has determined that the budget meets all the requirements of the Local Budget Law (N.J.S.A. 40A:4-1 et seq.), and all regulations of the Board. The Local Budget Law imposes various restrictions on the formulation of the County budget, the more important of which pertain to anticipation of revenues and review of adequacy of appropriation. Among other restrictions, the Local Budget Law requires that the budget be balanced and that the Director examine the Budget with reference to all estimates of revenue and the following appropriations: (a) administration, operation and maintenance of each office, department, institution or other agency of the County, (b) contingent expenses in an amount not more than 3% of the total referred to in clause (a) of this paragraph, (c) payment of interest and debt redemption charges, (d) deferred charges and statutory expenditures, (e) cash deficit of preceding year, (f) reserve for uncollected taxes and other reserves and nondisbursement items deemed advisable by the Board of Chosen Freeholders, and (g) the payment of all judgements not for capital purposes and for which bonds or notes cannot be lawfully issued. Anticipated tax revenues are limited to the same proportions as actual cash collections bore to the total levy in the previous year and a reserve amount must be factored into the budget to make up for the expected shortfall in amounts actually realized the previous year unless the Director certifies a higher figure. The Local Budget Law, and the acts amendatory thereof and supplemental thereto, prohibits counties from measuring their final appropriations by more than the lesser of five percent or the index rate determined annually by the Director over that appropriated for the previous year. Not subject to the five percent limit are increases funded by sources other than an increase in the general property tax rate or necessitated by specified emergencies (as approved by the local governing body and the Board), for debt service, funding previous deficits, uncollected taxes, expenses mandated by state or federal law, and amounts received by new or increased fees or sales of assets. A further statute limits the amount of increases in the State budget exclusive of state aid which may be appropriated to counties, municipalities and school districts. The maximum expenditure of the State cannot exceed the amount determined by multiplying the annual percentage increase in State per capita personal income by the appropriations of the State in the year prior to the current fiscal year. Adjustments are made should a transfer of functions or services occur between the state and counties or municipalities. Statewide referenda are required to authorize additional expenditures. Anticipated non-tax revenues of the County are limited to the amount actually realized the previous year unless the Director authorizes a higher figure. Tax anticipation notes are limited in amount by law and must be paid off not later than June 30 of the succeeding fiscal year. The Director has no authority over individual operating appropriations, unless a specific amount is required by law, but the review functions which focus on anticipated revenues serve to protect the solvency of the County. The County budget, by law and regulation of the Division, must be in balance and is a "cash basis" budget. Pursuant to the Local Budget Law, miscellaneous revenues shall include such amounts as may reasonably be expected to be realized in cash during the fiscal year from known and regular sources or sources reasonably capable of anticipation and lawfully applicable to the appropriations made in the budget. The County's miscellaneous revenues generally consist of surplus, operating surplus from prior years, County purpose tax, State and Federal Aid, interest on investments, user fees, license fees and permits. The Local Budget Law further provides that no miscellaneous revenues from any source shall be included as an anticipated revenue in the budget in an amount in excess of the amount actually realized in cash from the same source during the next preceding fiscal year, unless the Director shall determine upon application by the Freeholders that the facts clearly warrant the expectation that such excess amount will actually be realized in cash during the fiscal year and shall certify such determination, in writing, to the County. The exception to this is the inclusion of categorical grants-in-aid contracts for their face amount with an offsetting appropriation. The fiscal years for such grants rarely coincide with the municipality's calendar fiscal year. A-9

41 Budget Process Primary responsibility for the County's budget process lies with the Administrator. As prescribed by the Local Budget Law, adoption should occur by the end of February, however, an extension may be granted by the Division to any local governmental unit. In the first quarter in which the Budget formulation is taking place, the County operates under a temporary budget which may not exceed 26.25% of the previous fiscal year's modified budget. Upon adoption of an annual operating budget by the Freeholders, the Board of Taxation computes a tax rate for County purposes and apportions County Purpose Tax requirements to be paid by each municipality. The tax rate for each municipality includes County tax requirements. Deferral of Current Expenses Supplemental appropriations made after the adoption of the County budget and determination of the tax rate may be authorized by the Freeholders with the approval of the Director. However, with minor exceptions, such appropriations must be included in full in the following year's budget. Budget Transfers Budget transfers provide a degree of flexibility and afford a control mechanism. Transfers between major appropriation accounts are prohibited until the last two months of the year and, although subaccounts within an appropriation are not subject to the same year-end transfer restrictions, they are subject to internal review and approval. Annual Financial Statement (N.J.S.A. 40A:5-12 et seq.) A verified statement of the financial condition of the County ("Annual Financial Statement") for the fiscal year must be filed with the Division on or before January 26, of the succeeding year. This financial statement is filed by the Chief Financial Officer of the County, it reflects the results of operations for the year of the Current Fund. If there is a cash deficit in the fund, it must be included in full in the succeeding year's budget. While the Annual Financial Statement is not audited, the variance, if any, between the Annual Financial Statement fund balance and audited fund balance is usually immaterial. Annual Audit The Local Fiscal Affairs Law, Chapter 5 of Title 40A of the New Jersey Statutes, regulates the nonbudgetary financial activities of the County. An annual audit of the County's books, accounts and financial transactions for the previous year must be performed by a licensed Registered Municipal Accountant or by qualified employees of the Bureau of Financial Regulations and Assistance in the State Department of Treasury. The audit, conforming to the Division's "Requirements of Audit," includes recommendations for improvement of the County's financial procedures and must be filed with the Director of the Division within 6 months after the close of each fiscal year. A synopsis of the audit report, together with all recommendations made, must be published in a local newspaper within 30 days after receipt thereof by the Clerk of the Board of Chosen Freeholders of the County. [INTENTIONALLY LEFT BLANK] A-10

42 Comparative Summary of 2017, 2016, 2015, 2014 and 2013 County of Bergen County Budgets Anticipated Revenues: Surplus Anticipated $19,350,000 $18,350,000 $18,350,000 $17,900,000 $18,000,000 State and Federal Grant Programs 12,269,600 13,204,332 15,436,492 15,752,201 12,286,792 State Assumption of Costs of County Social and Welfare Services 1,425,157 43,406,471 43,642,380 40,483,575 40,203,467 Miscellaneous Revenues-Local 39,889,849 37,341,780 36,258,204 36,415,805 35,112,248 State Aid 2,471,930 2,385,523 2,385,523 2,094,637 1,944,106 Other Special Items 33,833,115 22,475,868 27,245,902 24,063,115 19,830,430 Amount to be Raised by Taxation - County Purpose Tax 411,689, ,044, ,966, ,968, ,021,714 $520,929,297 $542,208,380 $530,285,209 $507,678,140 $498,398,757 Appropriations: Legislative Branch $1,373,230 $1,353,730 $1,392,614 $1,376,289 $1,406,767 Executive Branch 185,486, ,691, ,687, ,890, ,824,317 Educational Agencies 60,913,580 59,348,175 58,623,683 56,657,808 54,000,283 Constitutional Officers 115,789, ,011, ,443,628 96,310,026 94,761,538 Other Boards & Agencies 12,787,969 13,480,218 15,268,832 15,607,804 15,333,767 Other Public and Private Programs 12,269,600 13,204,332 15,466,492 15,759,201 12,291,792 Capital Improvement Fund 3,112,500 2,900,000 1,600,000 1,476,068 1,450,000 Debt Service 85,989,349 82,914,236 74,593,732 67,566,670 66,315,032 Deferred Charges and Statutory Expenditures 43,207,149 40,304,597 39,208,573 37,034,173 39,015,261 $520,929,297 $542,208,380 $530,285,209 $507,678,140 $498,398,757 Capital Improvement Program The capital budget and improvement program of the County is designed to function as a planning tool for legislators, County officials and administrators. It allows County officials to evaluate alternatives and determine priorities for projects and programs in relation to available and projected financial resources. A carefully organized program and project schedule can avoid costly improper decisions or ill-timed action in a project involving the allocation of scarce capital resources. A capital budget is the first proposal of the financial allocation described in the six year capital improvement program. The main purpose of the capital budget is to initiate planning for ultimate authorization of capital projects for the first year of the six year plan/program. The anticipated Capital Budget (2017) and Capital Improvement Program ( ) do not represent actual authorization of projects, but rather conceptual recognition of the needs of specific capital improvements. With restrictions on current spending and new financial resources becoming limited, it is imperative that capital planning and budgeting become more responsive to public needs, both present and long range. In addition to the cost of the selection process, the impact of each project on future operating budgets must be considered. In prioritizing capital projects, a major element for recommendation of investment is the degree to which a facility will either generate revenues or significantly reduce costs. A-11

43 The following schedule depicts the County Capital Plan for This plan does not provide an appropriation for the purposes outlined, nor does it commit the Governing Body to the project or amounts listed. The Governing Body will make determinations, on a priority basis, as each program is proposed, as to the need for and method of financing. Six Year Capital Program ( ) Anticipated Project Schedule and Funding Requirements Project Total Cost County Open Space Improvements $1,375,000 Information Technology Improvements 2,775,342 Emergency Temporary Appropriation for Justice Center 1,000,000 Health Care Center Improvements 1,703,000 Public Health & Environmental Improvements 1,627,000 Animal Shelter Improvements 3,978,500 Spring House Renovations 1,084,000 Human Services Improvements 2,130,000 Medical Examiner Improvements 1,144,500 Law & Public Safety Improvements 6,431,036 Emergency Management Improvements 1,569,000 Public Safety Operations 911 Improvements 6,623,000 Weight & Measures Improvements 331,000 Public Works Improvements 78,462,358 Park & Golf Division Improvements 68,735,000 Planning & Engineering Improvements 73,318,000 Bergen County Community College Improvements 28,765,000 Special Schools Improvements 31,247,000 Vocational School Improvements 128,457,000 County Clerk Improvements 475,000 Prosecutor Improvements 10,740,000 Sheriff Improvements 35,543,387 Jail Improvements 15,140,099 BRMC Improvements 510,000 Surrogate Improvements 2,165,425 Superintendent of Schools and Elections Improvements 4,562,000 $509,891,647 Source: 2017 Capital Budget of the County adopted on May 17, Year Amount 2016 $61,518, ,529, ,274, ,175, ,576, ,817,451 $509,891,647 A-12

44 TAX INFORMATION ON THE COUNTY County Tax Rates County taxes are apportioned based on equalized valuations in the County. The following table sets forth the valuations on which County taxes are apportioned. Valuation of Real Property, Personal Property Net Valuation Taxable and County Tax Rate Base Assessed Valuation of Real Property Assessed Valuation of Personal Property County Tax Rate Base Valuation of Real and Personal Property General Tax Rate Per $100 Net Valuation Year Taxable 2017 $156,692,615,521 $90,385,516 $156,783,001,037 $172,030,836, ,291,592,456 90,073, ,381,666, ,963,794, ,828,462,316 96,580, ,925,042, ,459,857, ,594,781,884 97,873, ,692,655, ,301,130, ,120,620, ,981, ,250,602, ,008,934, Source: Bergen County Board of Taxation, Abstract of Ratables [INTENTIONALLY LEFT BLANK] A-13

45 Comparative Statement of Equalized Valuations and General Tax Rate for Constituent Municipalities Net Equalized Valuations of Land and Improvements Municipality General Tax Rate Per $100 Allendale $1,755,071,494 $1,701,093,830 $1,682,120, Alpine 2,458,697,077 2,314,924,451 2,443,215, Bergenfield 2,766,941,136 2,714,961,138 2,684,336, Bogota 729,342, ,635, ,932, Carlstadt 2,290,376,074 2,187,721,816 2,058,775, Cliffside Park 3,096,731,675 2,987,769,028 2,901,874, Closter 2,140,987,596 2,129,915,670 2,099,516, Cresskill 2,221,860,499 2,145,106,430 2,075,667, Demarest 1,589,584,628 1,516,882,756 1,501,723, Dumont 1,971,858,768 1,890,027,952 1,822,663, Elmwood Park 2,117,435,483 2,105,355,467 2,097,262, East Rutherford 2,502,356,056 2,449,372,901 2,174,418, Edgewater 3,621,299,388 3,352,389,394 3,141,467, Emerson 1,267,448,581 1,259,476,713 1,233,850, Englewood 4,893,708,466 4,790,712,545 4,729,270, Englewood Cliffs 3,287,713,364 3,254,751,471 3,224,844, Fair Lawn 4,768,965,051 4,641,094,795 4,526,605, Fairview 1,325,530,353 1,185,504,045 1,120,529, Fort Lee 6,613,138,685 6,809,624,613 6,723,511, Franklin Lakes 4,454,241,736 4,482,738,039 4,358,772, Garfield 2,264,643,055 2,172,246,166 2,127,518, Glen Rock 2,537,912,370 2,532,591,324 2,477,507, Hackensack 5,442,684,075 5,547,236,820 5,508,010, Harrington Park 995,996, ,108, ,430, Hasbrouck Heights 1,769,705,630 1,788,301,616 1,764,238, Haworth 918,832, ,535, ,007, Hillsdale 1,819,081,316 1,797,317,792 1,778,154, Ho-Ho-Kus 1,325,114,227 1,304,349,231 1,257,658, Leonia 1,378,384,722 1,352,790,640 1,292,746, Little Ferry 1,017,766,396 1,009,849,035 1,030,408, Lodi 2,074,659,370 2,131,950,153 2,071,774, Lyndhurst 3,164,601,688 2,806,717,871 2,646,660, Mahwah 6,050,679,269 5,923,219,890 6,030,663, Maywood 1,345,999,022 1,300,816,824 1,287,462, Midland Park 1,244,623,991 1,198,693,915 1,164,944, Montvale 2,299,520,242 2,174,786,652 2,261,833, Moonachie 791,454, ,902, ,020, New Milford 1,831,663,912 1,835,425,401 1,780,136, North Arlington 1,591,242,864, 1,547,776,978 1,479,682, Northvale 937,826, ,649, ,012, Norwood 1,298,979,351 1,291,038,163 1,240,810, Oakland 2,407,875,178 2,368,709,018 2,342,247, Old Tappan 1,765,955,122 1,721,634,054 1,733,909, Oradell 1,686,217,246 1,717,435,009 1,645,169, Palisades Park 2,825,511,884 2,602,994,707 2,467,031, Paramus 9,751,063,409 8,810,817,359 8,758,087, Park Ridge 1,852,729,013 1,848,227,389 1,773,035, Ramsey 3,536,685,671 3,454,523,605 3,328,998, Ridgefield 1,865,603,149 1,715,664,315 1,749,024, A-14

46 Comparative Statement of Equalized Valuations and General Tax Rate for Constituent Municipalities, Continued Net Equalized Valuations of Land and Improvements General Tax Rate Per $100 Municipality Ridgefield Park $1,310,515,497 $1,224,582,795 $1,274,098, Ridgewood 6,461,282,869 6,404,608,448 6,224,840, River Edge 1,706,636,057 1,687,677,142 1,652,674, River Vale 2,052,142,618 2,013,198,179 1,956,461, Rochelle Park 937,707, ,253, ,928, Rockleigh 188,026, ,183, ,932, Rutherford 2,880,350,692 2,773,864,109 2,597,742, Saddle Brook 2,246,927,349 2,383,260,542 2,215,506, Saddle River 2,510,353,016 2,557,770,266 2,526,275, South Hackensack 663,275, ,881, ,468, Teaneck 5,498,094,904 5,298,002,372 5,082,712, Tenafly 4,553,684,580 4,442,439,710 4,253,872, Teterboro 480,961, ,880, ,731, Upper Saddle River 2,776,753,610 2,767,210,718 2,757,653, Waldwick 1,579,923,809 1,543,242,913 1,539,999, Wallington 993,172, ,158, ,087, Washington 1,746,668,795 1,741,972,286 1,705,837, Westwood 1,915,516,833 1,959,278,249 1,890,191, Woodcliff Lake 1,964,330,869 1,974,665,205 1,965,379, Wood-Ridge 1,270,429,581 1,196,009,774 1,206,398, Wyckoff 4,627,781,006 4,524,284,465 4,515,521, Source: Bergen County Board of Taxation , 2016 and 2015 Abstract of Ratables Ten Largest Assessed Valuations in the County Assessment Taxpayer Type of Business Location $739,346,600 Westland GSP Shopping Mall Paramus 313,740,000 Fed Res Bank Bank Facility East Rutherford 278,000, Apt Corp Co-op Apartments Fort Lee 247,730,300 Vornado Bergen Mall LLC Shopping Mall Paramus 168,478, Owners Corp Co-op Apartments Fort Lee 156,547,900 Becton Dickinson & Co. Manufacturer Franklin Lakes 146,048,800 Riverside Square Limited Shopping Mall River Edge 142,000,000 ALX of Paramus, LLC Shopping Mall Paramus 126,774,000 Hackensack Hospital Assn Medical Hackensack 125,003,400 Edgewater Ret. Ptnrs. Apartments Edgewater Source: Bergen County Board of Taxation A-15

47 Ten Largest Employers in the County Employer Location Activity Hackensack University Medical Center Hackensack Private Hospital Valley Health Systems, Inc. Ridgewood Private Hospital Bio-Reference Laboratories Elmwood Park Clinical Testing Express Scripts Franklin Lakes Managed Health Care Quest Diagnostics Teterboro/Lyndhurst Medical Testing KPMG LLP Montvale Professional Services Englewood Hospital and Medical Englewood Private Hospital Center Englewood Hospital Home Health Care Englewood Health Care Unilever Best Foods Englewood Cliffs Manufacturing Stryker Allendale/Mahwah Manufacturing Source: Bergen County Department of Planning and Economic Development (1) - Based on number of employees Tax Collection Record The following table is the current real property tax collection record of the County for the years 2012 through 2016: Source: County Records County Taxes Cash Percent of Year Tax Levy Collections Collections 2016 $405,044,406 $405,044, % ,966, ,966, % ,968, ,968, % ,021, ,021, % ,524, ,524, % County taxes are collected by the municipalities and paid to the County Treasurer. The municipal levy includes all county, school and municipal taxes. Each municipality is required to pay to the County Treasurer its share of the County Purpose tax on the fifteenth day of February, May, August and November of each year. The County gets its share of the taxes collected from the first taxes collected by each municipality. Tax Appeals The Bergen County Board of Taxation ("Taxation Board") processes all appeals of county tax assessments. The appeal process is described below: The taxpayer remits the full assessment (including any disputed amount) to the municipal tax collector. The municipality then remits the amount of county tax assessed against the municipality to the County Treasurer. The taxpayer files an appeal with the Taxation Board, which conducts a hearing. If the appeal is granted, the municipality remits payments to the taxpayer. The county tax assessed to the municipality for the succeeding year is then reduced by the total amount of appeals granted. Therefore, the County does not remit payment to the taxpayer or the municipality for appeals granted. If the Taxation Board does not grant the appeal or if the taxpayer is not satisfied with the amount granted, the taxpayer has a right to a hearing by the New Jersey Tax Court. A-16

48 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE COUNTY

49 APPENDIX B EXCERPTS FROM AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEM BER 31, 2016 AND SELECTED FINANCIAL INFORM ATION FOR YEARS ENDED DECEM BER 31,

50 Charles J. Ferraioli, Jr., MBA, CPA, RMA Steven D. Wielkotz, CPA, AMA James J. Cerullo, CPA, AMA Paul J. Cuva, CPA, AMA Thomas M. Feny, CPA, RMA Ferraioli, Wielkotz, Cerullo & Cuva, P.A. Certified Public Accountants 401 Wanaque Avenue Pompton Lakes, New Jersey Fax Newton Office 1 OOB Main Street Newton,N.J ~212 Fax INDEPENDENT AUDITOR'S REPORT The Honorable Board of Chosen Freeholders County of Bergen, New Jersey Report on the Financial Statements We have audited the accompanying balance sheets-regulatory basis of the various funds and account group of the County of Bergen in the State New Jersey as of December 31, 2016 and 2015, the related statement of operations and changes in fund balance - regulatory basis for the years then ended, and the related statement of revenues - regulatory basis and statement of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the County'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 conformity with the accounting practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. 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 misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion 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 audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal B-1 (Fwc9

51 The Honorable Board of Chosen Freeholders County of Bergen Page 2. 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. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 1 of the financial statements, the financial statements are prepared by the County of Bergen on the basis of the financial reporting provisions prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of New Jersey. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 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 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 County of Bergen as of December 31, 2016 and 2015, or changes in financial position for the years then ended. Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to above, present fairly, in all material respects, the regulatory basis balance sheets and account group as of December 31, 2016 and 2015, the regulatory basis statements of operations for the years then ended and the regulatory basis statements of revenues and expenditures for the year ended December 31, 2016 in accordance with the basis of financial reporting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1. Other Matters Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Bergen's basic financial statements. The supplementary information listed in the table of contents and schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal B-2 (Fwc9

52 The Honorable Board of Chosen Freeholders County of Bergen Page 3. Regulation Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the schedule of expenditures of state financial assistance as required by NJ OMB and the letter of comments and recommendations section are presented for purposes of additional and are not a required part of the basic financial statements. The supplemental information listed in the table of contents and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and the schedule of expenditures of state financial assistance as required by NJ OMB are the responsibility of management and were 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 basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental information listed in the table of contents, schedule of expenditures offederal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and the schedule of expenditures of state financial assistance as required by NJ OMB are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 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 County of Bergen's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County of Bergen's internal contro 1 over financial reporting and compliance. si!n~q, CPA Registered Municipal Accountant No. CR00413 April 25, 2017 FERRAIOLI, WIELKOTZ, CERULLO & CUVA, P.A. Certified Public Accountants Pompton Lakes, New Jersey B-3 ~wee)

53 EXHIBIT A COUNTY OF BERGEN COMPARATIVE BALANCE SHEET- REGULATORY BASIS CURRENT FUND AS OF DECEMBER 31, 2016 and 2015 ASSETS Ref Cash and Cash Equivalents A-4 $ 78,841,396 $ 56,153,845 Imprest and Change Funds A-5 88,570 74,570 78,929,966 56,228,415 Receivables with Full Reserves: Miscellaneous Receivables A ,098 Bergen Pines Accounts Receivable A-8 27,135,126 27,135,126 Interfunds A-9 114,169 Deferred Charges A ,339 27,249,535 27,174,224 Total Current Fund Assets 106,455,840 83,402,639 Federal and State Grant Fund: Interfunds Receivable A-20 1,667, ,792 Federal and State Grants Receivable A-21 12,083,376 11,047,536 Total Federal and State Grant Fund Assets 13,750,392 15,487,903 Total Assets $ 120,206,232 $ 98,890,542 B-4

54 EXHIBIT A COUNTY OF BERGEN COMPARATIVE BALANCE SHEET - REGULATORY BASIS CURRENT FUND AS OF DECEMBER 31, 2016 and 2015 LIABILITIES. RESERVES AND FUND BALANCE Liabilities: Appropriation Reserves A-3, A-13 $ 11,373,186 $ 10,037,864 Contracts Payable A-14 7,512,668 2,821,181 Encumbrances Payable A-15 8,356,840 6,543,158 Accounts Payable A ,291 48,321 Other Reserves A-17 2,056,823 2,051,959 Reserve for Sale of Asset A-18 9,550,000 Deferred Revenue A , ,143 Interfunds A-9 1,659, ,792 Total Liabilities 40,864,959 22,450,418 Reserve for Receivables Contra 27,249,535 27,174,224 Fund Balance A-I 38,341,346 33,777,997 Total Current Fund Liabilities, Reserves and Fund Balance l 06,455,840 83,402,639 Federal and State Grant Fund: Encumbrances Payable A-22 2,993,273 1,386,970 Reserve for Federal and State Grants A-23 9,420,376 10,085,228 Unappropriated Grants A-24 1,336, ,130 Total Federal and State Grant Fund Liabilities and Reserves 13,750,392 11,853,328 Total Liabilities, Reserves and Fund Balance s 120,206,232 $ 95,255,967 See accompanying notes to the financial statements. B-5

55 EXHIBIT A-1 COUNTY OF BERGEN COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS CURRENT FUND FOR THE YEARS ENDED DECEMBER 31, 2016 and Revenue and Other Income Realized: Fund Balance Utilized Miscellaneous Revenues Anticipated Receipts from Current Taxes Miscellaneous Revenues not Anticipated Other Credits to Income: Unexpended Balance of Appropriation Reserves Accounts Payable Canceled Interfund Returned Contracts Payable Canceled Expenditures: Budget Appropriations Original Budget Added by N.J.S.A. 40A:4-89 Other Charges to Income: Miscellaneous Receivables Interfunds Advanced Accounts Payable Barne Service Charges Total Expenditures Excess in Operations s 18,350,000 $ 140,567, ,044,406 8,301,935 1,426,134 2,704 30,731, , ,590, ,392,630 12,782,950 30,723,865 15,563 38, ,953,390 22,637,010 18,350, ,685, ,966,708 9,191,308 4,971,232 98,925 30,739,866 2,019, ,022, ,872,400 11,948,707 5,940 30,728, ,555,180 19,467,277 Adjustments to Income before Surplus: Expenditures Included above which are by Statute Deferred Charges to Budget of Succeeding Year: Overexpenditure of Appropriations 276,339 Statutory Excess to Surplus Fund Balance, January 1 22,913,349 19,467,277 33,777,997 32,660,720 56,691,346 52,127,997 Utilized as Anticipated Revenue Fund Balance, December 31 18,350,000 18,350,000 s 38, $ 33, See accompanying notes to the financial statements. B-6

56 EXHIBIT A-2 COUNTY OF BERGEN STATEMENT OF REVENUES - REGULA TORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Budget Realized Excess or (Deficit) Surplus Anticipated 18,350,000 18,350,000 Miscellaneous Revenues: Local Revenues: Register of Deeds Surrogate Sheriff Interest on Investments and Deposits Park Fees and Revenue Golf Fees and Revenues Realty Transfer Fees State of NJ - Court Lease Central Municipal Court Election Ballot Printing Reimbursement from State of NJ for State Prisoners held in County Jails Bergen Regional Medical Center Police and Fire Academy Fees Reimbursement for In-Kind Grants Animal Shelter Contracts Animal Center - Other Fees Shared Services Health Agreements Bergen County Health Care Center Shared Services Health Agreements - Kearney Shared Services Health Agreements - 40 Passaic Street lnterlocal - Prosecutor's Office MOU lnterlocal - lnterboro Regional Communication Network State Aid: County College Bonds - (NJ.SA J 8A:64A-22.6) Stale Assumptions of Costs: Social and Welfare Services (c.66, P.L. 1990): Division of Youth and Family Services Supplemental Social Security Income Psychiatric Facilities (c. 73, P.L. 1990): Maintenance of Patients in State Institutions for: Mental Diseases Mentally Retarded Board of County Patients in State and Other Institutions Current Year Prior Years DDD Assessment Program 1,800,000 1,929, , , ,497 39,497 2,800,000 4,759,522 1,959, , , ,455 2,200,000 2,385, ,696 7,400,000 7,198,124 (201,876) 7,200,000 7,532, , , ,174 1,000,000 1,120, , , , ,992 25,000 19,312 (5,688) 240, , , ,232 (18, 722) 1,600,000 1,775, , , ,593 62, , ,266 3,266 1,250,000 1,378, ,611 8,300,000 8,997, ,307 75,577 64,000 (11,577) 450, ,576 (75,424) 36,075 36, , ,000 5,000 37,341,780 41,124,209 3,782,429 2,385,523 2,524, ,830 3,297,620 3,297,620 1,471,295 l,207,088 (264,207) 6,160,479 7,385,816 1,225,337 32,2ll,841 32,211,841 1,541 3,997 2,456 20,102 (20,102) 243, , ,139 43,406, ,639,094 1,232,623 B-7

57 EXHIBIT A-2 COUNTY OF BERGEN STATEMENT OF REVENUES - REGULA TORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Excess or Bud~et Realized (Deficit) Public and Private Programs: Area Plan Grant 6,711,070 6,711,070 Vision/Detention Alternatives 101, ,001 IOL TA Fund Grant 16,280 16,280 Victims of Crime Act Program Grant (VOCA) 210, ,427 Urban Areas Security Initiative (UASl) 482, ,288 Human Services Advisory Council (HSAC) 66,073 66,073 County Comprehensive Alcohol and Drug Program 1,120,483 1,120,483 Comprehensive Community Project 50,000 50,000 Subregional Transportation Planning 198, ,164 US Marshall Regional Fugitive Task Force 15,000 15,000 Senior Citizen & Disabled Residents Transportation Program 1,404,961 l,404,961 State Health Insurance Program (SHIP) 31,000 31,000 Bergen County HIV /CTS Program 106, ,863 Municipal Alliance on Alcoholism & Drug Abuse 757, ,888 Clean Communities Program 174, ,015 Spring House for Women 77,404 77,404 Veterans Transportation Grant 26,000 26,000 Respite Care Program 565, ,480 Personal Assistance Service (P ASP) 93,054 93,054 Medicaid Peer Grouping 1,430,417 1,430,417 Work First NJ Administration 114, ,461 Cancer Education & Early Detection Program (CEED) 763, ,409 Job Access and Reverse Commute (JARC) 80,000 80,000 Early Intervention Program 1,480,493 1,480,493 Historical Commission Grant 3,500 3,500 Historical Commission Grant (7/0l114-6/30/15) 22,885 22,885 Unified Child Care (9/17) 1,690,271 1,690,271 Unified Child Care (9/16) 24,986 24,986 Megan's Law Grant 11,818 11,818 Personal Assistance Service (P ASP) Hudson County 24,163 24,163 Victims Assistance Grant (VAG) 90,177 90,177 Aggressive Driving 50,000 50,000 NJ's Comprehensive Cancer Control Plan 130, ,800 Juvenile Justice Innovations Program 68,669 68,669 Sheriff IV-D Reimbursement 572, ,725 Bergen County Right to Know Program 21,869 21,869 Senior Farmers Market Grant 3,500 3,500 Venture Program 635, ,173 HUD-Veteran's Supportive Housing 88,415 88,415 Work First New Jersey Administration DOL 40,000 40,000 Special Child Health Case Management , ,367 Mental Health Law Project 246, ,898 Gang, Gun & Narcotics Task Force 143, ,353 Bioterrorism Preparedness Program - LINCS Agencies Grant 313, ,396 Stop Violence Against Women Grant (VA WA) 31,930 31,930 State/Community Partnership Program 830, ,965 Children's Interagency Coordination Council 36,874 36,874 HUD - Homeless Management Information System 82,893 82,893 B-8

58 EXlllBIT A-2 COUNTY OF BERGEN STATEMENT OF REVENUES - REGULA TORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Bud~et Realized Excess or (Deficit) Domestic Violence Intervention Services 503, ,857 Prosecutor Body Armor Replacement 8,520 8,520 Local Arts Program 96,777 96,777 County Environmental Health Act Grant (CEHA) 271, ,170 Subregional Support & Intern Grant 15,000 15,000 CD-Homeless Management Information 20,000 20,000 State Homeland Security Grant Program 348, ,570 TB Control in Bergen County 287, ,472 Sheriff Body Armor Replacement 40,599 40,599 Drug Recognition Expert Grant 25,000 25,000 Basic Center Program Grant 150, ,886 Youth Complex Education Program 305, ,000 HUD - Housing Counseling Program 16,258 16,258 Drunk Driving Enforcement Fund 8,465 8,465 Medicare Improvement for Patients & Providers Act (MIPPA) 40,000 40,000 Medicare Special Benefits Outreach & Enrollment Assistance 40,000 40,000 Special Project of Nation Significance 16,000 16,000 Homeless Program (06/16) 301, ,600 Homeless Program (06/17) 1,275,366 1,275, Historical Commission Special Project Grant 12,750 12,750 FFYl 6 Urban Areas Security Initiative 357, ,500 FFY16 State Homeland Security Grant Program 463, ,634 25,987,282 25,987,282 Other Special items: Added and Omitted Taxes 1,410,131 1,410,131 Capital Surplus 3,800,000 3,800,000 Justice Center Parking 132, ,000 Motor Vehicle Surplus - Trust Fund 1,800,000 1,800,000 Bergen County Improvement Authority 1,307,000 1,307,000 Shared Services Pension Agreement 372, ,305 INS Inmates 4,136,548 6,782,794 Public Health Priority Funding 3,062,000 3,185,455 Shared Services Agreements 62,424 63,673 Register of Deeds - P.L. 200 I C3 70 2,660,000 2,822,003 Surrogate - P.L C ,000 1,086,425 Sheriff - P.L C , ,000 Shared Services Police Services 309, ,784 Medicare Part D Reimbursement 842, ,494 Interlocal Agreement- Ridgefield 204, ,000 Housing Authority Lease 185, ,180 Interlocal 9 J J Agreement - Midland Park 135, ,000 lnterlocal Agreement - Wyckoff 180, ,000 Interlocal Agreement - Lodi 251, ,000 Interlocal Agreement - Leonia 116, ,548 Reserve for Payment of Interest and Principal 771, ,966 22,475,868 26,292,758 67,500 17,412 2,646, ,455 1, , ,425 32,000 33, , ,000 40,299 3,816,890 B-9

59 EXHIBIT A-2 COUNTY OF BERGEN STATEMENT OF REVENUES - REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 Budget Realized Excess or (Deficit) Total Miscellaneous Revenues Anticipated Subtotal General Revenues Amount to be Raised by Taxation Budget Totals Miscellaneous Revenues not Anticipated (Nonbudget) See accompanying notes to the financial statements. 131,596, ,567, ,946, ,917, ,044, ,044,406 $ 554,991, ,962, I 02 8,301,935 s 572,264,037 8,970,772 8,970,772 8,970,772 B-10

60 EXHIBIT A-2 COUNTY OF BERGEN STATEMENT OF REVENUES - REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER Jl, 2016 Miscellaneous Revenue Not Anticipated: Bail Bond Forfeitures PILOT Program Miscellaneous County Cieri: - Court Division Reimbursement - [ndirect Costs Title IV-D BC Probation Reimbursement Employee Jury Duty Reimbursement Economic Development Job Fair Sponsorship Sale of Computer Time - Dllta Processing Open Public Records Fees Insurance Claims Insurance Reimbursement Performance Bonds - Inspection Fees Drain Connection Site Plan Sale of Plans & Specifications Subdivision Fees Cash Conttibutions-ln Lieu of Construction Filing Fees. Construction Board NJ-Insurance Franchise Tax Police Miscellaneous Miscellaneous Police Services Safety & Security - Special Event Police - Sale of Photographs Medical Examiner - Autopsy Protocol Division of Consumer Affairs FEMA Reimbursements 9- J - l Dispatch Service Sheriffs Miscellaneous Revenue Sheriff Work Release Program Prosecutor's Miscellaneous General Services Reimbursements Scrap Metal Vending Machine Commissions Recycling Revenue Lost Placards Cafeteria - Concession Heavy Hauling Energy Savings Rebate - PSE&G Sale of County Assets Various Rental Income lntcrlocal Mechanic Service Comm Trans - Advertising State Aid -Office on Aging Human Services - lnterlocal Agreement me - lnterlocal Agneement ADV - Client Fees Prior Year Credit Phone Reimbursement General Court fees Payment In Leiu of Taxes 224, ,522 37, , , , , ,935 1,929,761 71,173 6,400 2, , ,723 3,100 44,264 l, , ,012 1,157 3, , ,983 62, ,255 81,459 23, ,659 4,921 20,371 1, ,263 1, ,563!38,187 43,642 4,225 17,012 58,000 l, ,687 14, , ,336 8,902 s 8,301,935 B-11

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73 EXHIBITB COUNTY OF BERGEN COMPARATIVEBALANCESHEET-REGULATORYBASIS REGULAR TRUST FUNDS AS OF DECEMBER 31, 2016 and 2015 ASSETS Ref Regular Trust Fund: Cash and Cash Equivalents B-1 s 66,693,230 s 68,249,138 Accounts Receivable B-3 14,444 12,201 Interfunds B-2 23,564 22,500 66,731,238 68,283,839 Self-Insurance Trust Fund Cash and Cash Equivalents B-1 7,341,466 6,280,059 Jnterfunds B-2 151,361 7,492,827 6,280,059 Community Development Trust Fund Cash and Cash Equivalents B-1 1,451,052 1,243,195 Interfunds B Due from U.S. Department of Housing & Urban Development - Letters of Credit B-4 28,021,222 27,389,282 HOME Improvement Program Mortgages Receivable Contra 8,248,509 8,677,891 Small Business Loans Contra 141, ,024 HOME Investment Mortgages Contra 9,218,254 9,218,254 American Dream Mortgages Contra 17,522,558 17,265,459 Principal on American Dream Mortgages Contra 113,500 I 13,500 Accounts Receivable - Recovery Fees - Court Order B-S 9,850 9,850 64,726,654 64,069,455 Total Assets s 138,950, 719 $ 138,633,3 53 LIABILITIES. RESERVES AND FUND BALANCE Regular Trust Fund: Reserve for Dedicated Revenue: Motor Vehicle Fines and Road Openings B-6 s 1,979,444 s 1,816,185 Weights and Measures B-7 41,124 43,532 Miscellaneous Trust Accounts B-8 13,918,329 14,159,738 Reserve for Encumbrances B-9 17,849,109 27,073,647 Contracts Payable B-10 1,520,015 2,142,821 Road Permit Deposits B , ,498 Open Space Trust Fund B-12 15,016,896 8,681,374 Prosecutor's Trust Fund B-13 15,797,673 13,817,044 Interfunds B-2 10,218 66,731,238 68,283,839 B-24

74 EXIIIBITB COUNTY OF BERGEN COMPARATIVE BALANCE SHEET - REGULA TORY BASIS REGULAR TRUST FUNDS AS OF DECEMBER 31, 2016 and 2015 LIABILITIES RESERVES AND FUND BALANCE (continued) Ref Self-Insurance Trust Fund: Reserve for Self-Insurance Trust Fund B-14 s 7,492,827 s 6,252,730 Contracts Payable B-14 27,329 7,492,827 6,280,059 Community Development Trust Fund: Interfunds B-2 22,500 22,500 Reserve for Expenditures B-15 24,349,340 23,437,711 HOME Improvement Mortgages - Principal B , ,758 HOME Improvement Mortgages - Interest B-17 2,590,899 2,667,657 Reserve for: HOME Improvement Program Mortgages Receivable Contra 8,248,509 8,677,891 Small Business Loans Contra 141, ,024 HOME Investment Mortgages Contra 9,218,254 9,218,254 American Dream Mortgages Contra 17,522,558 17,265,459 Principal on American Dream Mortgages Contra 113, ,500 Program Income B , ,197 Small Business Loans - Application Fees B Small Business Loans - Principal B , ,774 Small Business Loans - Interest B-21 64,568 61,353 Interest on HOME Improvement Mortgage Investments B-22 38,476 38,476 First Time Heme Buyer Down Payment Act B , ,301 First Time Home Buyer Mortgages B-24 28,500 22,500 64,726,654 64,069,455 Total Liabilities, Reserves and Fund Balance s 138,950,719 s 138,633,353 See accompanying notes to financial statements. B-25

75 EXHIBITC COUNTY OF BERGEN COMP ARATNE BALANCE SHEET - REGULATORY BASIS GENERAL CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31, 2016 and 2015 ASSETS Ref Cash and Cash Equivalents C-2, C-3 $ 63, 122,700 $ 67,306,762 Infrastructure Trust Loan Receivable C-4 170, ,639 NJ DOT Receivable C-5 2,921,199 5,680,333 FEMA Hazard Grant Program Receivable C-6 3,500,000 3,500,000 School District Receivable C-7 72,250 72,250 Deferred Charges to Future Taxation: Funded C-8 491,769, ,967,437 Unfunded C-9 407,976, ,048,415 Total Assets $ 969,533,136 $ 953,745,836 LIABILITIES, RESERVES AND FUND BALANCE General Serial Bonds C-10 $ 488,567,000 $ 542,090,000 Environmental Infrastructure Trust Loan Payable C-11 3,199,896 3,716,559 Green Trust Loan C-12 2, ,878 Bond Anticipation Notes Payable C ,000, ,000,000 Capital Improvement Fund C-14 5,131 87,562 Improvement Authorizations: Funded C-15 24,944,144 32,566,344 Unfunded C ,403, ,581,030 Encumbrances Payable C-16 50,195,349 75,895,839 lnterfund.s C ,169 Reserve for Arbitrage Rebate C-18 49,477 42,350 Reserve for Interest C-19 19,681 19,717 Reserve for Preliminary Expenses C-20 1,434 1,434 Reserve for Payment of Notes C , ,966 Total Liabilities and Reserves 965,899, ,933,679 Fund Balance C-1 3,633,656 5,812,157 Total Liabilities, Reserves and Fund Balance $ 969,533, 136 $ 953, 745,836 There were Bonds and Notes Authorized But Not Issued at December 31, 2016 and 2015 of $207,976,743 and $208,048,415 respectively. (C-23) See accompanying notes to the financial statements. B-26

76 EXHIBITC-1 COUNTY OF BERGEN STATEMENT OF FUND BALANCE - REGULATORY BASIS GENERAL CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31, 2016 and Balance - January 1, $ 5,812,157 $ 7,708,795 Increased by: Cash Reciepts: Premiums on BANs 1,613,187 1,838,152 Outside Funding for Bonded Projects 8,312 15,210 1,621,499 1,853,362 7,433,656 9,562,157 Decreased by: Appropriation to Current Year Budget 3,800,000 3,750,000 Balance - December 31, $ 3,633,656 $ 5,812, 157 See accompanying notes to financial statements. B-27

77 EXHIBITD COUNTY OF BERGEN FIXED ASSETS AS OF DECEMBER 31, 2016 and 2015 COMPARATIVE BALANCE SHEET- REGULATORY BASIS 2016 Restated 2015 Land Improvements Equipment $ 968,221, ,132,810 56,754,955 $ 968,221, ,506,527 54,650,394 $ 1,398, 109,565 $ 1,396,3 78, 721 Investment in Fixed Assets $ 1,398,109,565 $ 1,396,378,721 B-28

78 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB Codification 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 accounting principles generally accepted in the United States of America (GAAP). The financial statements of the County of Bergen have been prepared in conformity with accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division") which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means ofreporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the County accounts for its financial transactions through the following separate funds which differ from the fund structure required by GAAP. A. REPORTING ENTITY The County of Bergen (the "County") was organized under an act of the New Jersey Legislative on November 30, 1675 and operates under an elected Freeholder form of County government. The County's major operations include the County judiciary system; law enforcement, recreation, road and bridge maintenance and construction, the County correctional and penal system, health and welfare, education and general administrative services. 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 be by the primary government, orb) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. However, the counties 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 NJS 40A:5-5. Accordingly, the County does not include the operations of the autonomous agencies including the Bergen County Community College, Bergen County Vocational Schools, Bergen County Special Services School and the Bergen County Housing Authority. B-29

79 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A. REPORTING ENTITY, (continued) In April 1995, the State adopted a law that gives the County Executive the authority to veto the minutes of a Utility Authority, Sewerage Authority and Improvement Authority. Based on this law and the criteria set forth in GASB Statement 14, this change would require the financial statements of the Bergen County Utilities Authority, the Northwest Bergen County Utilities Authority and the Bergen County Improvement Authority to be blended into the County Financial Statements as opposed to being shown discretely. The audit reports of the above entities are available at each individual entities location. B. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION The accounting policies of the County of Bergen conform to the accounting principles applicable to municipalities that have been prescribed by the Division oflocal Government Services, Department of Community Affairs, State of New Jersey. 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 financial transactions and accounts of the County of Bergen are organized on the basis of funds, which is different from the fund structure required by GAAP. A fund is an accounting entity with a separate set of self-balancing accounts established to record the financial position and results of operation of a specific government activity. As required by the Division of Local Government Services) the County accounts for its financial transactions through the following individual funds: Current Fund - This fund is used to account for the resources and expenditures for government operations of a general nature, including Federal and State grant funds. Trust Fund - Trust funds are used to account for assets held by the government in a trustee capacity. Funds held by the County as an agent for individual, private organizations or other governments are recorded in the Trust Funds. Other Trust Fund - This fund is established to account for the assets and resources which are also held by the County as a trustee or agent for individuals, private organizations, other governments and/or other funds. These funds include dedicated fees/proceeds collected, developer deposits and deposited funds with the County as collateral. Self Insurance Trust Fund - This fund is used to account for expenditures for Worker's Compensation, General Liability, Unemployment, Disability, Health Benefits and Dental insurance claims and premiums. B-30

80 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) Community Development Trust Fund - This fund is used to account for grant proceeds and related expenditures for Housing and Urban Development Grant Entitlements. General Capital Fund - This fund is used to account for the receipts and disbursements of funds used for the acquisition or improvement of general capital facilities, other than those acquired in the Current Fund. General Fixed Assets Accounting Group - To account for all fixed assets of the County. The County's infrastructure is not reported in the group. A modified accrual basis of accounting is followed with minor exceptions. The accounting principles and practices prescribed for municipalities by the State of New Jersey differ in certain respects from GAAP applicable to local governments units. The more significant differences are explained in the following paragraphs. Property Tax Revenues - Real property taxes are assessed to each municipality within the County, based upon a County wide assessment at true equalized value. Taxes are payable in four quarterly installments on February 15, May 15, August 15 and November 15. The amounts of the first and second installments are determined as one-quarter of the total tax levied against the municipality for the preceding year. The installment due the third and fourth quarters is determined by taking the full tax as levied for the current year against the municipality, less the amount previously charged as the first and second installments, the remainder being divided equally. If unpaid on these dates, the amount due becomes delinquent and subject to interest at 6% per annum. In accordance with the accounting principles prescribed by the State of New Jersey, taxes receivable are realized as revenue when collected. Since delinquent taxes are fully reserved, no provision has been made to estimate that portion of the taxes receivable that are uncollectible. GAAP requires property tax revenues to be recognized in the accounting period when they become subsequent to accrual, reduced by an allowance for doubtful accounts. Miscellaneous Revenues - Miscellaneous revenues are recognized on a cash basis. Receivables for the miscellaneous items that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the County's Current Fund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual. Grant Revenues - Federal and State grants, entitlements or shared revenues received for purposes normally financed through the Current Fund are recognized when anticipated in the County's budget. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual. B-31

81 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. :MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) 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 County and approved by the State Division of Local Government Services, in accordance with N.J.S.A. 40A:4 et seq. The County is not required to adopt budgets for the following funds: Trust Funds General Capital Fund The governing body shall introduce and approve the annual budget not later than January 26, of the fiscal year. The budget shall be adopted not later than February 25, and prior to adoption must be certified by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. The Director of the Division of Local Government Services, with the approval of the Local Finance Board may extend the introduction and approval and adoption dates of the County 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. Emergency appropriations, those made after the adoption of the budget and determination of the tax rate, may be authorized by the governing body of the County. 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 Government Body. Expenditures may not legally exceed budgeted appropriations at the line item level. During the years ended December 31, 2016 and 2015, the Governing Body approved additional revenues and appropriations of $12,782,950 and $11,948,707, respectively, in accordance with N.J. S.A. 40A :4-87. In addition, several budget transfers were approved by the governing body in 2016 and Expenditures - unexpended or uncommitted appropriations, at December 31, are reported as expenditures through the establishment of appropriation reserves unless canceled by the governing body. GAAP requires expenditures in the current fund, to be recognized in the accounting period in which the fund liability is incurred, if measurable, except for un-matured interest on general long-term debt, which should be recognized when due. B-32

82 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) Encumbrances - contractual orders at December 31, are reported as expenditures through establishment of a reserve for encumbrances. Encumbrances do not constitute expenditures or liabilities under GAAP. Appropriation Reserves - are available until lapsed at the close of the succeeding year, to meet specific claims, commitments or contacts incurred during the preceding year. Lapsed appropriations reserves are recorded as additions to income. Appropriation reserves are not established under GAAP. Compensated Absences - expenditures relating to obligations for unused vested accumulated vacation and 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. Inter/unds - advances from the Current Fund are reported as interfunds receivable with offsetting reserves, which are created by charges to operations. Income is recognized in the year the receivables are liquidated. Interfunds receivable in the other funds are not offset by reserves. Under GAAP, interfunds receivable are not recorded through operations. Deferred Charges to Future Taxation - Funded and Unfunded - Upon the authorization of capital projects, the County establishes deferred charges for the costs of the capital projects to be raised by future taxation. Funded deferred charges relate to permanent debt issued, whereas unfunded deferred charges relate to temporary or non-funding of the authorized cost of capital projects. According to the N.J.S.A. 40A:2-4, the County may levy taxes on all taxable property within the local unit, to repay the debt. Annually, the County raises the debt requirements for that particular year in the current budget. As the funds are raised by taxation, the deferred charges are reduced. GAAP does not require the establishment of deferred charges to future taxation and records proceeds of debt issued as revenue. Improvement authorizations - in the General Capital Fund represent the unexpended balance of an ordinance appropriation and is similar to the unexpended portion of the budget in the Current Fund. GAAP does not recognize these amounts as liabilities. General Fixed Assets - N.J.A.C. 5: codifies Technical Accounting Directive No. 86-2, Accounting for Governmental Fixed Assets, as promulgated by the Division of Local Govenunent Services, which differs in certain respects from GAAP, requires the inclusion of a statement of general fixed assets of the County as part ofits basic financial statements. It also requires the County to place B-33

83 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) a value on all fixed assets put into service, to maintain a subsidiary ledger of detailed records of fixed assets and to provide property management standards to control fixed assets. General Fixed Assets are defined as non-expendable personal property having a physical existence, a useful life of more than five years and an acquisition cost of $5,000 or more per unit. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks, and drainage systems, are not capitalized. All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. No depreciation has been provided for in the financial statements. Expenditures for construction in progress are recorded in the Capital Fund until such time as the construction is completed and put into operation. Fixed assets acquired through grants in aid or contributed capital have not been accounted for separately. GAAP requires that fixed assets be capitalized at historical or estimated historical cost if actual historical cost is not available. Use of Estimates - The preparation of financial statements requires management of the County to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Recent Accounting Pronouncements In February 2015, the Government Accounting Standards Board issued GASB Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement also provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. This Statement is effective for periods beginning after June 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. B-34

84 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREl\1ENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) In June 2015, the Government Accounting Standards Board issued GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement 68 and Amendments to Certain Provisions of GASB Statements 67 and 68. This Statement is effective for periods beginning after June 15, except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68, which are effective for financial statements for periods beginning after June 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In June 2015, the Government Accounting Standards Board issued GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement applies to OPEB plans and basically parallels GASB Statement 67 and replaces GASB Statement 43 and is effective for periods beginning after June 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In June 2015, the Government Accounting Standards Board issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This Statement applies to government employers who provided OPEB plans to their employees and basically parallels GASB Statement 68 and replaces GASB Statement 45. This Statement is effective for periods beginning after June 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In June 2015, the Government Accounting Standards Board issued GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, which reduces the GAAP hierarchy to two categories of authoritative GAAP from the four categories under GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The first category of authoritative GAAP consists of GASB Statements of Governmental Accounting Standards. The second category comprises GASB Technical Bulletins and Implementation Guides, as well as guidance from the American Institute of Certified Public Accountants that is cleared by the GASB. This Statement is effective for periods beginning after June 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In August 2015, the Government Accounting Standards Board issued GASB Statement No. 77, Tax Abatement Disclosures, which improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. B-35

85 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREMENT FOCUS. BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) Disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to financial statement users. As a result, users will be better equipped to understand ( 1) how tax abatements affect a government's future ability to raise resources and meet its' financial obligations, and (2) the impact those abatements have on a government's financial position and economic condition. The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In December 2015, the Government Accounting Standards Board issued GASB Statement No. 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. This Statement is effective for reporting periods beginning after December 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In December 2015, the Government Accounting Standards Board issued GASB Statement No. 79, Certain External Investment Pools and Pool Participants. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. Specifically, it established criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. This Statement is effective for periods beginning after June 15, 2015, and for certain provisions, periods beginning after December 15, The County is currently reviewing what effect, if any, this Statement might have on future financial statements. In January 2016, the Government Accounting Standards Board issued GASB Statement No. 80, Blending Requirements for Certain Component Units, which provides clarity about how certain component units incorporated as not-for-profit corporations should be presented in the financial statements of the primary state or local government. The County does not believe this Statement will have any effect on future financial statements. In March 2016, the Government Accounting Standards Board issued GASB Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The County does not believe this Statement will have any effect on future financial statements. B-36

86 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) In March 2016, the Government Accounting Standards Board issued GASB Statement No. 82, Pension Issues - an Amendment of GASE Statements No. 67, No. 68 and No. 73. The objective of this Statement is to address certain issues that have been raised with respect to Statement No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting/or Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASE Statement 68, and Amendments to Certain Provisions of GASE Statements 67 and 68. This Statement is effective for reporting periods beginning after June 15, Specifically, this Statement addresses issues regarding ( 1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice. In November 2016, the Government Accounting Standards Board issued GASB Statement No. 83, Certain Asset Retirement Obligations. This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflows of resources for asset retirement obligations (AROs). The County does not believe this Statement will have any effect on future financial statements. C. BASIC FINANCIAL STATEMENTS The GASB Codification also requires the financial statements of a governmental unit to be presented in the financial statements in accordance with GAAP. The County presents the financial statements listed in the table of contents which are required by the Division of Local Government Services 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. NOTE 2. CASH, CASH EQUIVALENTS AND INVESTMENTS Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of bank failure, the government's deposits may not be returned to it. The County's policy is based on New Jersey Statutes requiring cash be deposited only in New Jersey based banking institutions that participate in New Jersey Governmental Depository Protection Act (GUDPA) or in qualified investments established in New Jersey Statutes 40A:5-15. l(a) that are treated as cash equivalents. As of December 31, 2016 and 2015, $3,963,417 and $10,146,403 of the County's bank balance of$222,235,182 and $189,191,936, respectively, was exposed to custodial credit risk. B-37

87 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 2. CASH, CASH EQUIVALENTS AND INVESTMENTS (continued) Investments Investment Rate Risk The County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. However, New Jersey Statutes 40A:5-15.l(a) limits the length oftime for most investments to 397 days. Credit Risk New Jersey Statutes 40A:5- l 5. l (a) limits municipal investments to those specified in the Statutes. The type of allowance investments are Bonds of the United States of America, bonds or other obligations of the towns or bonds or other obligations of the local unit or units within which the town is located: obligations of federal agencies not exceeding 397 days; government money market mutual funds; the State ofnew Jersey Cash Management Plan; local government investment pools; or repurchase of fully collateralized securities. Concentration of Credit Risk The County places no limit on the amount the County may invest in any one issuer. NOTE 3. COUNTY DEBT Long-term debt as of December 31, 2016 consisted of the following: Balance Dec Additions Amount Due Balance Within Reductions Dec One Year Bonds Payable - General Obligation Debt Other Liabilities: Compensated Absences New Jersey: DEP Loans Green Trust Loans $542,090,000 23,170,518 3,716, ,878 $47,315,000 1,972,079 $100,838,000 $488,567,000 $53,745,000 2,083,215 23,059, ,663 3,199, , $569, $49.287,012 $ Q11 $514,828,281 $~4,Z8Q,8QQ B-38

88 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) Amount Due Balance Balance Within Dec Additions Reductions Dec One Year Bonds Payable - General Obligation Debt $591,246,000 $86,520,000 $135,676,000 $542,090,000 $52,288,000 Other Liabilities: Compensated Absences 23,666,493 1,558,017 2,053,992 23,170,518 New Jersey: DEP Loans 4,225, ,447 3,716, ,662 Green Trust Loans , , $612,604,'.1:4'.Z $88,Q78,Q 11 $138,54:1,802 $562, 132,255 $52, The Local Bond Law governs the issuance of bonds and notes to fmance general capital expenditures. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the County are general obligation bonds, backed by the full faith and credit of the County. Bond anticipation notes, which are issued to temporarily finance capital projects, must be paid off within ten years and five months or retired by the issuance of bonds. The County's debt is summarized as follows: Issued General Bonds, Notes and Loans Less: Additional Borrowing for County College Guaranteed by County $954,383,605 9,345, $1,157,846,437 11,275, ,879,000 Total Subtractions 451,959, ,154,500 Net Debt Issued Authorized But Not Issued General Bonds, Notes and Loans Net Bonds and Notes Issued and Authorized But Not Issued 502,424, ,976,743 $ ,691, ,048,415 $ B-39

89 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) The summarized statement of debt condition which follows is extracted from the County's Annual Debt Statement, indicates a statutory net debt of.43% and.53% at December 31, 2016 and 2015, respectively General Debt Gross Debt $ Deductions $ Net Debt $ Net debt of $710,400,848 divided by equalized valuation basis per N.J.S.A. 40A:2-2, as amended, of $166,824,155,204 equals.43%. Gross Debt Deductions Net Debt 2015 General Debt $1.365, $ $ Net debt of $865, 740,352 divided by equalized valuation basis per N.J.S.A. $163,894,415,971 equals.53%. 40A:2-2, as amended, of BORROWING POWER UNDER N.J.S.A. 40A:2-6 AS AMENDED The County's remaining borrowing power under N.J.S.A. 40A:2-6, as amended, at December 31, was as follows: Paid by Current Fund: 2% of Equalized Valuation Basis Net Debt Excess Borrowing Power 2016 $3,336,483, ,400,848 $ $3,277,888, ,352 $ General Obligation Bonds $5,744,500, 2004 County College Bonds, due in annual installments of$354,500 to $385,000 through October 15, 2019, interest at various rates from 3.75% to 4.00% $5,744,500, 2004 State Aid County College Bonds, due in annual installments of $354,500 to $385,000 through October 15, 2019, interest at various rates from 3.75% to4.00% $1,124,500 1,124,500 $1,509,500 1,509,500 B-40

90 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) $40,295,000, 2006 General Improvement Bonds, due in annual installments of $2,500,000 to $4,949,000 through October 15, 2021, interest at various rates from 3.750% to 4.125% $9,086,000, 2006 Special Services/Vocational School Bonds, due in annual installments of$600,000 to $851,000 through October 15, 2021, interest at various rates from 3.750% to 4.125% s $3,000, ,000 $46,905,000, 2007 General Improvement Bonds, due in annual installments of $2,750,000 to $3,805,000 through October 15, 2023, interest at the rate of 4.00% $10,095,000, 2007 Special ServicesNocational School Bonds, due in annual installments of$635,000 to $960,000 through October 15, 2022, interest at the rate of 4.00% $6,000,000, 2007 County College Bonds, due in annual installments of $500,000 to $700,000 through October 15, 2019, interest at the rate of 4.00% $6,000,000, 2007 State Aid County College Bonds, due in annual installments of $500,000 to $700,000 through October 15, 2019, interest at the rate of 4.00% $650,000, 2007 Mini Bonds, due in annual installments of$650,00 in December 2017, with interest at 4.350% $44,583,000, 2008 General Improvement Bonds, due in annual installments of $3,000,000 to $4,533,000 through November 1, 2023, interest at various rates from 4.25% to 4.75% $17,512,000, 2008 School Bonds, due in annual installments of $1,200,000 to $1,537,000 through November 1, 2023, interest at various rates from 4.25% to 4. 75% $3,000,000, 2008 County College Bonds, due in annual installments of $250,000 to $305,000 through November 1, 2020, interest at various rates from 4.25% to 4.50% $3,000,000, 2007 State Aid County College Bonds, due in annual installments of $250,000 to $305,000 through November 1, 2020, interest at various rates from 4.25% to 4.50% $11,276,000, 2008 Hospital Bonds, due in annual installments of $825,000 to $1,076,000 through November 1, 2023, interest at various rates from6.00% to 6.75% $610,000, 2008 Mini Bonds, due in annual installments of $610,000 in December 2018, with interest at 5.00% $77,852,000, 2009 General Improvement Bonds, due in annual installments of $3,575,000 to $7,027,000 through November l, 2026, interest at various rates from 3.25% to 4.00% 3,100, , , , ,000 6,900,000 2,625, , ,000 1,825, ,000 12,650,000 6,050,000 1,405,000 1,125,000 1,125, ,000 10,200,000 3,900, , ,000 2,700, ,000 62,727,000 B-41

91 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) $6,348,000, 2009 Special Services/Vocational School Bonds, due in annual installments of$350,000 to $573,000 through November I, 2024, interest at various rates from 3.25% to 3.875% $4,313,000, 2009 County Hospital Bonds, due in annual installments of$245,000 to $388,000 through November I, 2024, interest at various rates from 3.75% to 5.30% $1,350,000 2,668,000 $4,473,000 2,933,000 $47,465,000, 2010 General Improvement Bonds, due in annual installments of $1,900,000 to $3,765,000 through November 1,2027, interest at various rates from 2.500% to 3.375% $5,147,000, 2010 Special Services/Vocational School Bonds, due in annual installments of $320,000 to $427,000 through November 1, 2024, interest at various rates from 2.50% to 3.25% $1, 177,000, 2010 County College Bonds, due in annual installments of$115,000 to $142,000 through November 1, 2020, interest at various rates from 2.50% to 3.00% 35,865,000 3,237, ,000 37,765,000 3,592, ,000 $ l, J 76,000, 20 l 0 State Aid County College Bonds, due in annual installments of $115,000 to $141,000 through November 1, 2020, interest at various rates from 2.50% to 3.00% $14,217,000, 2010Series B,Tax.able Bonds, due in annual installments of$1,470,000 to $2,117,000 through November 1, 2019, interest at various rates from 2.50% to 3.40$ $43,048,000, 2011 General Improvement Refunding Bonds, due in annual instalhnents of$ l,800,000 to $3,048,000 through December 1, 2028, interest at various rates from 2.00% to 3.25% $3,025,000, 2011 Special Services/Vocational School Bonds, due in annual installments of $150, 000 to $3 00,000 through December 1, 2024, interest at various rates from 2.00% to 3.00% $2,332,000, 2011 County Taxable Bonds, due in annual installments of$300,000 to $432,000 through December 1, 2018, interest at various rates from 2.00% to 2.375$ 531,000 5,767,000 34,048,000 2,175, , ,000 7,437,000 36,248,000 2,375,000 1,132,000 $15,830,000, 2012 General improvement Refunding Bonds, due in annual installments of $3,135,000 to $3,190,000 through June 1, 2018, interest at various rates from 3.00% to 4.00% $2,330,000, 2012 Special ServicesNocational School Bonds, due in annual installments of $465,000 to $490,000 through June 1, 2018, interest at various rates from 3.00% to 4.00% $10,000,000, 2012 Special Services/Vocational School Bonds, due in annual installments of$600,000 to $1,200,000 through December 1, 2023, interest at various rates from 1.00% to 2.00% 6,365, ,000 7,200,000 9,530,000 1,395,000 8,000,000 B-42

92 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) $3 5,800,000, 2012 General Improvement Refunding Bonds, due in annual installments of$ I, 500,000 to $3, 000,000 through December l, 2027, interest at various rates from 1.00% to 2.25% $5,600,000, 2012 County Taxable Bonds, due in annual installments of$400,000 to $650,000 through December 1, 2022, interest at various rates from 1.00% to 2.20% $4,250,000, 2012 County College Bonds, due in annual installments of$350,00 to $400,000 through June 15, 2024, interest at various rates from 2.00% to 2.25% $4,250,000, 2012 State Aid County College Bonds, due in annual installments of $350,000 to $400,000 through June 15, 2024, interest at various rates from 2.00% to 2.25% $9,744,000, 2012 BCIA Governmental Loan Revenue Bonds, due in annual installments of$860,000 to $1,610,000 through May 1, 2021, interest at various rates from.838% to 2.959% $876,000, 2012 BCIA Governmental Loan Revenue Bonds, due in annual installments of$281,000 to $286,000 through May 1, 2016, interest at various rates from.838% to 1.237% $941,000, 2012 BCIA Governmental Loan Revenue Bonds, due in annual installments of $65,000 to $ 131,000 through May l, 2023, interest at various rates from.83 8% to 3.259% $33,03 5,000, 2013 General hnprovement Refunding Bonds, due in annual installments of $2,335,000 to $8,340,000 through April 15, 2019, interest at various rates from 1.50% to 4.00% $6,250,000, 2013 Special Services/Vocational School Refunding Bonds, due in annual installments of$1,080,000 to $1,435,000 through April 15, 2019, interest at various rates from 1.50% to 4.00% $750,000, 2013 County College Bonds, due in annual installments of $150,000 through June 1, 2018, interest at various rates from 1.00% to 2.00% $750,000, 2013 State Aid County College Bonds, due in annual installments of $150,000 through June 1, 2018, interest at various rates from 1.00% to 2.00% $57,855,000, 2013 General Improvement Bonds, due in annual installments of $1,875,000 to $3,750,000 through December l, 2031, interest at various rates from 3.00% to 4.00% $7, 14 5,000, 2013 Special Services/V ocational School Refunding Bonds, due in annual installments of $250,000 to $500,000 through December 1, 2029, interest at various rates from 3.00% to 4.00% $28,800,000 3,700,000 2,850,000 2,850,000 6,749, ,000 23,395,000 4,015, , ,000 50,230,000 6, 145,000 $30,800,000 4,250,000 3,200,000 3,200,000 7,769, , ,000 30,325,000 5,170, , ,000 53,230,000 6,645,000 B-43

93 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) $54,830,000, 2014 General Improvement Bonds, due in annual installments of $1,605,000 to $3,060,000 through April 15, 2039, interest at various rates from 2.00% to 5.00% $40,000,000, 2014 Special Services/Vocational School Bonds, due in annual installments of$2,000,000 through June 30, 2034, interest at various rates from 2.00% to 3.50% $4,250,000, 2014 County College Bonds, due in annual installments of $425,000 through June 30, 2024, interest at various rates from 2.00% to 3.00% $1,600,000, 2015 County College Bonds, due in annual installments of$105,000 to $200,000 through June 30, 2025, interest at various rates from 2.00% to 3.00%, Series A $1,600,000, 2015 County College Bonds, due in annual installments of $105,000 to $200,000 through June 30, 2025, interest at various rates from 2.00% to 3.00%, Series B $58,690,000, 2015 General Obligation Refunding Bonds, due in annual installments of $2,895,000 to $11,960,000 through October 15, 2023, interest at various rates from 3.00% to 5.00% $14,540,000, 2015 Special ServicesNocational School Refunding Bonds, due in annual installments of$2,895,000 to $11,960,000 through October 15, 2023, interest at various rates from 3.00% to 5.00% $1,935,000, 2015 County College Refunding Bonds, due in annual installments of $295,000 to $995,000 through October 15, 2020, interest at various rates from 3.00% to 5.00% $1,935,000, 2015 State Aid County College Refunding Bonds, due in annual installments of $295,000 to $995,000 through October 15, 2020, interest at various rates from 3.00% to 5.00% $6,220,000, 2015 County Hospital Refunding Bonds, due in annual installments of $55,000 to $1,145,000 through October 15, 2023, interest at various rates from.926% to 2.708% $4 7,3 15, 000, 2016 General Improvement Refunding Bonds, due in annual installments of $185,000 to $7,215,000 through August 15, 2016, interest at various rates from 2.00% to 5.00% $51,550,000 36,000,000 3,400,000 1,495,000 l,495,000 58,005,000 14,360,000 1,900,000 1,900,000 6,035,000 47, $ ,225,000 38,000,000 3,825,000 1,600,000 1,600,000 58,005,000 14,360,000 1,900,000 1,900,000 6,090,000 $ B-44

94 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 3. COUNTY DEBT (continued) Green Trust Loan Payable The County has entered into Green Trust Loan agreements with the New Jersey Department of Environmental Protection for the financing of Borg's Wood, Norwood Construction Area and Belmont Park projects: $1,386, 120, 1989 Borg's Wood Loan, due in semi-annual installments of$37,867 to $42,670 through April 26, 2016 at 2.0% $3,578,550, 1989 Norwood Construction Area Loan, due in semi-annual installments of$97,762 to $110,161 through February 2, 2016 at 2.0% $88,000, 1983 Belmont Park Loan due in semi-annual installments of $2,357 to $2,709 through March 6, 2017, interest at 2.0% Environmental Infrastructure Trust Loan Payable s $42, , $ The County has entered into a loan agreement with the New Jersey Environmental Infrastructure Trust for the financing related to the Construction of the Overpeck Landfill Park, including the construction of a landfill leachate system, stabilization of banks, storm water management and preparation of the site for redevelopment: $3,675,000, 2007 Trust Loan due in annual installments of $250,000 to $345,000 through August 1, 2022, interest at 3.40% to 5.00% $3,708,149, 2007 Trust Loan due in semi-annual installments of$43,077 to $243,956 through August l, 2022, with no interest $1,855,000 ),344,896 $ $2,l 15,000 1, $ The County's principal and interest for long-term debt issued and outstanding at December 31, 2016 is as follows: NJEIT Green Trust Bonds Loans Loans Year Principal Interest Princjpat ~ Principal Interest ~ 2017 $53,745,000 $16,423,578 $533,091 $86,550 $2,709 $27 $70, 790, ,620,000 15,157, ,982 72,800 71,398, ,779,000 13,389, ,339 58,300 68,791, ,083,000 11,564, ,769 46,100 55,266, ,886,000 10,054, ,913 33,500 55,555, ,546,000 30,248, ,802 17, ,211, ,098,000 10,714,983 64,812, ,970,000 3,968,725 22,938, , $:181! 562 QQQ si12m1011 SJ iss s2 ~ ~ $ HQ B-45

95 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 4. BOND ANTICIPATION NOTES The County issues bond anticipation notes to temporarily fund various capital projects prior to the issuance of serial bonds. The term of the notes cannot exceed one year but the notes may be renewed from time to time for a period not exceeding one year. Generally, such notes must be paid no later than the first day of the fifth month following the close of the tenth fiscal year following the date of the original notes. The State of New Jersey also prescribes that on or before the third anniversary date of the original note a payment of an amount at least equal to the first legally payable installment of the bonds in anticipation of which such notes are to be renewed beyond the fourth and fifth anniversary date of the original issuance. On December 31, 2016 and 2015, the County had $200,000,000 and $123,000,000, respectively, in outstanding General Capital bond anticipation notes. The following activity related to bond anticipation notes occurred during the calendar year ended December 31, 2016 and 2015: Beginning Balance Additions Reductions Ending Balance Cede & Co. Jefferies LLC Oppenheimer & Co., Inc. J.P. Morgan Securities LLC $123,000,000 $ $ 163,420,000 8,400, $ $123,000,000 $ $ 163,420,000 8,400, ,000 $ Beginning Balance Additions Reductions Ending Balance Cede & Co. Jefferies LLC PNC Capital Markets, LLC $ 6,400,000 46,600,000 $ $123,000,000 $ $ 6,400, ,000 $ $123,000,000 $ NOTE 5. PENSION PLANS (continued) Description of Plans County employees participate in one of the two contributory, defined benefit public employee retirement systems: the State of New Jersey Public Employees' Retirement System (PERS) or the State of New Jersey Police and Firemen's Retirement System (PFRS); or the Defined Contribution Retirement Program (DCRP), a tax-qualified defined contribution money purchase pension plan under Internal Revenue Code (IRC) 40l(a). B-46

96 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Public Employees' Retirement System (PERS) Plan Description The State ofnew Jersey Public Employees1 Retirement System (PERS) is a cost-sharing multiple-employer defined benefit pension plan administered by the State ofnew Jersey, Division of Pensions and Benefits (the "Division"), For additional information about the PERS, please refer to the Division's Comprehensive Annual Financial Report (CAFR) which can be found at Benefits Provided The vesting and benefit provisions are set by N.J.S.A. 43:15A. 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 Members who were enrolled prior to July 1, 2007 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 Members who were eligible to enroll on or after June 28, 2011 Service retirement benefits of 1155th of final average salary for each year of service credit is available to Tiers 1 and 2 members upon reaching age 60 and to Tier 3 members upon reaching age 62. Service retirement benefits of 1/60a of final average salary for each year of service credit is available to Tier 4 members upon reaching age 62 and to Tier 5 members upon reaching age 65. Early retirement benefits are available to Tiers 1 and 2 members before reaching age 60, to Tiers 3 and 4 before age 62 with 25 or more years of service credit and Tier 5 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 age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 50 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier. B-47

97 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Police and Firemens' Retirement System (PFRS) Plan Description The State ofnew Jersey Police and Firemen's Retirement System (PFRS), is a cost-sharing multiple-employer defined benefit pension plan administered by the State of New Jersey Division of Pensions and Benefits (the "Division"). For additional information about the PFRS, please refer to the Division's Comprehensive Annual Financial Report (CAFR) which can be found at Benefits Provided 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. The following represents the membership tiers for PFRS: Tier Definition Members who were enrolled prior to May 22, 2010 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 Members who were eligible to enroll 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 of30 years. Members may seek special retirement after achieving 25 years of creditable service, in which benefits would equal 65% (Tiers 1and2 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. Defined Contribution Retirement Program Prudential Financial jointly administers the DCRP investments with the NJ Division of Pensions and Benefits. If an employee is ineligible to enroll in the PERS or PFRS, the employee may be eligible to enroll in the DCRP. DCRP provides eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Vesting is immediate upon enrollment for members of the DCRP. B-48

98 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTES. PENSION PLANS (continued) Defined Contribution Retirement Program (continued) The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly available financial reports that include the financial statements and required supplementary information of the DCRP. The financial reports may be obtained by writing to the State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, Employers are required to contribute at an actuarially determined rate. Employee contributions are based on percentages of 5.50% for DCRP of employees' annual compensation, as defined. The DCRP was established July 1, 2007, under the provisions of Chapter 92, P.L and expanded under the provisions of Chapter 89, P.L Employee contributions for DCRP are matched by a 3% employer contribution. Contribution Requirements The contribution policy is set by laws of the State of New Jersey and, in most retirement systems, contributions are required by active members and contributing employers. Plan member and employer contributions may be amended by State ofnew Jersey legislation. The pension funds provide for employee contributions based on 5.5% for PERS. This amount will increase to 6.5% plus an additional I% phased in over 7 years beginning 2012 and 8.5% for PFRS, which increased to 10% in October 2011, of the employee's annual compensation, as defined by law. Employers are required to contribute at an actuarially determined rate in all Funds except the SACT. The actuarially determined employer contribution includes funding for cost-of-living adjustments and noncontributory death benefits in the PERS and PFRS. In the PERS and PFRS, the employer contribution includes funding for post-retirement medical premiums. The County's contribution to the various plans, equal to the required contributions for each year, were as follows: Year PERS PFRS DCRP $10,544,972 9,523,674 8,717,624 $18,061,644 16,356,935 15,608,522 $51,793 72,078 59,539 Statement No's 68 and 71 require a state or local government employer to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end ofits prior fiscal year. However, since the financial statements are prepared on another comprehensive basis of accounting, the net pension liability of the various pension systems is not recorded in the financial statements and is only required to be disclosed in the notes to the financial statements. B-49

99 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Public Employees Retirement System (PERS) At December 31, 2016, the County had a liability of$363,439,320 for its proportionate share of the PERS net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County's proportion of the net pension liability was based on a projection of the County's long-term share of contributions to the pension plan relative to the projected contributions of all participating governmental entities, actuarially determined. At June 30, 2016, the County's proportion was percent, which was an increase/( decrease) of percent from its proportion measured as of June 30, For the year ended December 31, 2016, the County recognized pension expense of $10,544,972. At December 31, 2016, deferred outflows of resources and deferred inflows of resources related to PERS from the following sources: Difference in actual and expected experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between County contributions and proportionate share of contributions County contributions subsequent to the measurement date Deferred Outflows of Resources $6,758,870 75,285,214 13,858,272 9,446,566 10,901,606 Deferred Inflows of Resources $ 177,332 Total $116, $ Amounts reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date (June 30, 2016) will be recognized as a reduction of the net pension liability in the subsequent year, Other amounts reported as deferred outflows of resources and deferred inflows ofresources related to pensions (excluding changes in proportion) will be recognized in pension expense as follows: Year ended June 30: $21,591,546 21,591,546 25,014,530 21,015,863 6,688,871 B-50

100 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Public Employees Retirement System (PERS) (continued) Changes in Proportion The previous amounts do not include employer specific deferred outflows of resources and deferred inflows of resources related to changes in proportion. These amounts should be recognized (amortized) by each employer over the average of the expected remaining service lives of all plan members, which is 5.57, and 6.44 years for 2016, 2015 and 2014 amounts, respectively. Additional Information Local Group Collective balances at June 30, 2016 and June 30, 2015 are as follows: Collective deferred outflows of resources Collective deferred inflows ofresources Collective net pension liability County's Proportion Actuarial Assumptions June $8,685,338, ,133,595 29,617,131, % June 30, 2015 $3,578,755, ,410,455 22,447,996, % The total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which rolled forward to June 30, This actuarial valuation used the following assumptions, applied to all periods in the measurement. Inflation Salary Increases: Through 2016 Thereafter Investment Rate of Return 3.08 Percent Percent (based on age) Percent (based on age) 7.65 Percent B-51

101 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Public Employees Retirement System (PERS) (continued) Actuarial Assumptions (continued) The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2011 to June 30, It is likely that future experience will not exactly conform to these assumptions. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements. Mortality Rates Pre-retirement mortality rates were based on the RP-2000 Employee Pre-retirement Mortality Table for male and female active participants. For State employees, mortality tables are set back 4 years for males and females. For local employees, mortality tables are set back 2 years for males and 7 years for females. In addition, the tables provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plans actuary's modified MP-2014 projection scale. Post-retirement mortality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (setback 1 year for males and females) for service retirements and beneficiaries of former members and a one year static projection based on mortality improvement Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide for future improvements in mortality from the base year of2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Disability retirement rates used to value disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and set forward 1 year for females). Long-Term Rate of Return In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in PERS's target asset allocation as of June 30, 2016 are summarized in the following table: B-52

102 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Public Employees Retirement System (PERS) (continued) Long-Term Rate of Return (continued} Long-Term Target Expected Real Asset Class Allocation Rate of Return Discount Rate Cash 5.00%.87% U.S. Treasuries 1.50% 1.74% Investment Grade Credit 8.00% 1.79% Mortgages 2.00% 1.67% High Yield Bonds 2.00% 4.56% Inflation-Indexed Bonds 1.50% 3.44% Broad U.S. Equities 26.00% 8.53% Developed Foreign Markets 13.25% 6.83% Emerging Market Equities 6.50% 9.95% Private Equity 9.00% 12.40% Hedge Funds/ Absolute Returns 12.50% 4.68% Real Estate (Property) 2.00% 6.91% Commodities.50% 5.45% Global Debt ex US 5.00% 0.25% REIT 5.25% 5.63% The discount rate used to measure the total pension liability was 3.98% and 4.90% as of June 30, 2016 and 2015, respectively. This single blended discount rate was based on the long-term expected rate ofreturn on pension plan investments of7.65%, and a municipal bond rate of2.85% and 3.80%as of June 30, 2016 and 2015, respectively, based on the Bond Buyer GO 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AAJ Aa 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 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 projected benefit payments after that date in determining the total pension liability. B-53

103 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Def erred Inflows of Resources Related to Pensions (continued) Public Employees Retirement System (PERS) (continued) Sensitivity of the Collective Net Pension Liability to Changes in the Discount Rate The following presents the collective net pension liability of the participating employers as of June 30, 2016, respectively, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be ifit was calculated using a discount rate that is I -percentage point lower or 1- percentagepoint higher than the current rate: County's proportionate share of the pension liability June % At Current 1% Decrease Discount Rate Increase 2.98% 3.98% 4.98% $445,352,467 $363,439,320 $295,812,916 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued Financial Report for the State ofnew Jersey Public Employees Retirement System (PERS). The financial report may be accessed at Police and Firemen's Retirement System (PFRS) At December 31, 2016, the County had a liability of $408,185,783 for its proportionate share of the PFRS net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County's proportion of the net pension liability was based on a projection of the County's long-term share of contributions to the pension plan relative to the projected contributions of all participating governmental entities, actuarially determined. At June 30, 2016, the County's proportion was percent, which was an increase/(decrease) of percent from its proportion measured as of June 30, For the year ended December 31, 2016, the County recognized pension expense of $18,061,644. At December 31, 2016, deferred outflows of resources and deferred inflows of resources related to PFRS from the following sources: B-54

104 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Police and Firemen's Retirement System (PFRS) (continued) Difference in actual and expected experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between County contributions and proportionate share of contributions County contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 56,537,085 28,600,756 13,594,045 17,422,297 $ Deferred Inflows of Resources $2,675,718 9,953,197 $ Amounts reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date (June 30, 2016) will be recognized as a reduction of the net pension liability in the subsequent year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions (excluding changes in proportion) will be recognized in pension expense as follows: Year ended June 30: $19,739,444 19,739,944 26,596,753 15,727, ,914 Changes in Proportion The previous amounts do not include employer specific deferred outflows of resources and deferred inflows of resources related to changes in proportion. These amounts should be recognized (amortized) by each employer over the average of the expected remaining service lives of all plan members, which is 5.58, 5.53 and 6.17 years for 2016, 2015 and 2014 amounts respectively. B-55

105 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense. and Deferred Outflows of Resources and Deferred Inflows of Re.sources Related to Pensions (continued) Police and Firemen's Retirement System (PFRS) (continued) Additional Information Local Group Collective balances at June 30, 2016 and June 30, 2015 are as follows: June 30, 2016 June 30, 2015 Collective deferred outflows of resources Collective deferred inflows of resources Collective net pension liability County's Proportion $4,547,316,543 $3,512,729, ,197, ,083,367 20,706,699,056 16,656,514, % % Actuarial Assumptions The total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July I, 2015, which rolled forward to June 30, This actuarial valuation used the following assumptions, applied to all periods in the measurement. Mortality Rates Inflation Salary Increases: Through 2026 Thereafter Investment Rate of Return 3.08 Percent Percent (based on age) Percent (based on age) 7.65 Percent 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 on 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. Post-retirement mortality rates for female service retirements and beneficiaries are based on the RP-2000 Combined Healthy MortalityTables B-56

106 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Def erred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Police and Firemen's Retirement System (PFRS) (continued) Mortality Rates, {continued) 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 rates were based on special mortality tables used for the period after disability. Long-Term Rate of Return In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in PFRS's target asset allocation as of June 30, 2016 are summarized in the following table: Long-Term Target Expected Real Asset Class Allocation Rate of Return Cash 5.00%.87% U.S. Treasuries 1.50% 1.74% Investment Grade Credit 8.00% 1.79% Mortgages 2.00% 1.67% High Yield Bonds 2.00% 4.56% Inflation-Indexed Bonds 1.50% 3.44% Broad U.S. Equities 26.00% 8.53% Developed Foreign Markets 13.25% 6.83% Emerging Market Equities 6.50% 9.95% Private Equity 9.00% ] 2.40% Hedge Funds/ Absolute Returns 12.50% 4.68% Real Estate (Property) 2.00% 6.91% Commodities.50% 5.45% Global Debt ex US 5.00% -0.25% REIT 5.25% 5.63% B-57

107 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 5. PENSION PLANS (continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued) Police and Firemen's Retirement System (PFRS) (continued) Discount Rate The discount rate used to measure the total pension liability was 5.55% and 5.79% as of June 30, 2016 and 2015, respectively. This single blended discount rate was based on the long-term expected rate ofretum on pension plan investments of7.65%, and a municipal bond rate of2.85% and 3.80% as of June 30, 2016 and 2015, respectively, based on the Bond Buyer GO 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa 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 and the non-employer contributing entity 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 2050, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability. Sensitivity of the Collective Net Pension Liability to Changes in the Discount Rate The following presents the collective net pension liability of the participating employers as of June 30, 2016, respectively, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be if it was calculated using a discount rate that is 1 -percentage point lower or 1- percentage-point higher than the current rate: June % At Current 1% Decrease Discount Rate Increase 4.55% 5.55% 6.55% County's proportionate share of the pension liability $536,246,454 $408, 185, 783 $303,760,008 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued Financial Report for the State of New Jersey Police and Firemen's Retirement System (PFRS). The financial report may be accessed at B-58

108 COUNTY OF BERGEN NOTES TO FINANCIAL STATE:MENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 6. FIXED ASSETS The following is a summary of the General Fixed Assets as of December 31, 2016 and 2015: Balance Balance /31/2015 Additions Deletions 12/31/2016 Land $968,221,800 $ $ $968,221,800 Buildings and Improvements 373,506, , , ,132,810 Machinery and Equipment 54,650,394 2,463, ,955 NOTE7. FUNDBALANCESAPPROPRIATED $ $ $ $ Restated Balance Balance /31/2014 Additions Deletions 12/ Land $968,221,800 $ $ $968,221,800 Buildings and Improvements 372,673, , ,506,527 Machinery and Equipment 54,312,017 1, , $], ,222 $21QQ2,512 $821,122 $11326.JZS,nl Fund Balances at December 31, 2016 and 2015, which were appropriated and included in the2017 and2016 County Budgets were $19,350,000 and $18,350,000 respectively. NOTE 8. DEFERRED COMJ>ENSATION PLANS The County has established four deferred compensation plans for its employees under Section 457 of the Internal Revenue Code (IRC). The plans are administered by outside agencies, which pay claims and invest the funds. The County established a Deferred Compensation Plan as an enhancement program for the benefit of its employees to be provided by Nationwide Retirement Solutions. The County then established a second Deferred Compensation Plan as an enhancement program for the benefit of its employees, to be provided by the Equitable Life Assurance Society of the United States. The third and fourth Deferred Compensation Plans were established to be provided by the Hartford Life Insurance Co., and the Variable Annuity Life Insurance Company (OV ALI CO), respectively. The Plans are substantially similar to one upon which a favorable Private Letter Ruling has been previously obtained from the Federal Internal Revenue Service except for provisions added by reason of the Small Business Job Protection Act of 1996 (United States Public Law No ), and such provisions are stated in the Plan in terms substantially similar to the text of those provisions in Federal Internal Revenue Code Section 457. B-59

109 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 8. DEFERRED COMPENSATION PLANS, (continued) The plans are available to all County employees and permit them to defer a portion of their salaries until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are solely property and rights of the individual contributors and are not subject to the claims of the County's general creditors. NOTE 9. POTENTIAL LIABILITY FOR ACCRUED SICK AND VACATION TIME Employees accrue sick time at the rate of 15 days per year. The time remains accrued until used. At time of retirement, the accrued unused sick time is used as a basis for calculating terminal leave as follows: present hourly rate times unused one-half accrued sick leave, to a maximum of $15, 000 to $25, 000 depending on the employee's title within their existing contract. The potential terminal leave liability for persons eligible, who are 60 years of age or older, or 10 or more years of service, as of December 31, 2016 and 2015 was $15,643,149 and $15,808,061, respectively. Employees accrue vacation time at the rate of 15 days per year for the first :five years of service and 3 0 days per year thereafter. The time remains accrued for two years; it must be used or it is lost. Terminated employees are paid for accrued time at the current rate. The value of accrued vacation time as of December 31, 2016 and 2015 was $7,416,233 and $7,362,457, respectively. No provision is made in the financial statements for the accrued value of terminal leave and vacation time. NOTE 10. INTERFUND BALANCES AND ACTIVITY Balance due to/from other funds at December 31, 2016 consist of the following: $1,656,798 10,218 Due to the Federal and State Grant Fund from the Current Fund for receipts not turned over. Due to the Federal and State Grant Fund from the Prosecutor Trust Fund for receipts not turned over. 838 Due to the Regular Trust Fund from the Current Fund for reimbursement of expenditures. 226 Due to the Prosecutor's Trust Fund from the Current Fund for reimbursement of expenditures. 1,361 Due to the Selflnsurance Trust Fund from the Current Fund from the Current Fund for reimbursement of expenditures. B-60

110 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 10. INTERFUND BALANCES AND ACTIVITY, (continued) , Due to the Community Development Trust Fund from the Current Fund from the Current Fund for reimbursement of expenditures. Due to the Current Fund from the General Capital Fund for deposits in error. Due to the Self Insurance Trust Fund from the General Capital Fund for deposits in error. $ Balance due to/from other funds at December 31, 2015 consist of the following: $805,792 22,500 $ Due to the Federal and State Grant Fund from the Current Fund for Receipts not turned over. Due to the Regular Trust from the Community Development Trust Fund for deposits in error. It is anticipated that all interfunds will be liquidated during the fiscal year. NOTE 11. LEASES The County leases various buildings located in Hackensack, Lodi and Garfield. The total rent expense for all leases for 2016 and 2015 was $938,837 and $885,703, respectively. NOTE12. CONTRACTSPAYABLE Current Fund contracts payable balances for 2016 and 2015 in the amount of$12,779,317 and $2,821,181, respectively, does not represent the liability due to vendors and employees for payment of goods or services received by the County. Included in this amount are contracts issued for the purchase of goods and services that have not yet been received. NOTE 13. RESERVE FOR ARBITRAGE The County of Bergen has obtained the services of Public Financial Management, Inc. (PFM) to calculate and monitor the arbitrage requirements for certain bond issues. The applicable arbitrage yield requirement is derived from IRS Form 8038-G prepared by Bond Counsel. Reserves have been established in the Capital Fund in accordance with the calculations. As of December 31, 2016 and 2015 the reserve was $49,4 77 and $42,350, respectively. B-61

111 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 14. BERGEN COUNTY LEASE BANC PROGRAM In September 2003, the Bergen County Improvement Authority (the "Authority") issued Bonds in the amount of $19,395,000, with a final maturity date of May 1, The $19,395,000 principal amount of Revenue Bonds, Series 2003 (the "Bonds"), consist of the $1,480,000 principal amount County Guaranteed Capital Equipment Lease Revenue Bonds, Series 2003A (the "Series 2003A Bonds") and $17,915,000 principal amount County Taxable Project Revenue Bonds, Series 2003B (the "Series 2003B Bonds"). Many Local Governments have requested the Authority's assistance over the years to finance their capital items and equipment needs at the lowest possible cost. A number of these requests are to finance smaller capital items and equipment needs of Local Governments. The costs attendant with the large, standalone leasing deals between the Authority and Local Governments were often prohibitive for these transactions, which tend to have smaller borrowing amounts. The Authority (the "lessor") developed its Program in order to access the greatest number of bidders of governmental leases in the tax-exempt market. Under the Program, no bonds would be involved. The Authority, as lessee, would enter into a lease with the successful bidder to provide financing for the capital equipment, and as lessor (although this master lease would designate the Authority as title holder of the lease) the Authority would in turn enter into a sublease with the Local Government participant (the "sublessee"), whereby the Local Government would make lease payments under the sublease subject to appropriation or a general obligation sublease with a non-profit corporation. The Lease and Sublease would have the same terms, be cross-secured, and upon expiration thereof, the Authority would sell the capital equipment financed thereby to the Participant for $1. The capital equipment would also secure the sublease payments, which Sublease payments and collateral would secure the Lease payments. The Authority acts as a conduit only, and is indemnified by the Sublessee for claims relating to the equipment or the transaction. In addition, the County of Bergen would enter into an agreement with the Authority (the "County Agreement") to provide payments to the Authority if there are insufficient payments under the Sublease, which payments would be subject to appropriation. On April 21, 2004, the County adopted an ordinance approving the Authority's Leasing Banc Program in an amount not to exceed $10,000,000. Subsequently during 2006 and again during 2008, the County adopted ordinances re-approving the Lease Bank Program and additional financing therefore not to exceed $10,000,000 and $8,000,000, respectively. In accordance with the terms of the "Agreement to Effectuate the Bergen County Improvement Authority's Bergen County Lease Bank Program" between the County and the Authority (the "Agreement"), the County intends to appropriate moneys to the Authority to the extent the lease payment made by the Authority to the original lessor are not sufficient. On April 20, 2009, the County adopted two ordinances authorizing additional funding to its Lease Banc Program, by a total of $46,400,000. B-62

112 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 15. COUNTY ADMINISTRATION BUILDING The County entered into a lease agreement with the New Jersey Economic Development Authority (EDA) to finance, design, and construct a County Administration Building and parking garage on land the County owns and has ground-leased to EDA, adjacent to the County Justice Center in Hackensack. Based upon a design and construction budget of $62.2 million, the building contains approximately 263,000 square feet while the parking garage and associated site parking contains approximately 1,400 parking spaces. Bergen County will make annual rent payments of approximately $4.8 million to EDA from 2001 through the end of the term in 2026 and will own the complex for $I at the end of the lease. Although greater than past rent due to the I 03,000 square foot increase in space over the previous leased location, the rent per square foot of $18.22 includes furniture, fixtures, and equipment and is very competitive with current market rents. Further, the rent amount is flat and fixed for the term of the lease with no future rent increases. Also, the County consolidated into the facility, various other divisions that were located at remote sites. The County fully maintains and operates the complex. In November 2003, the County, through its Improvement Authority, issued $27,595,000 in County Guaranteed Revenue Bonds in order to prepay a portion of rental payments under the lease agreement. The Bonds are dated December 10, 2003 and will mature on November 15, The Bonds bear a variable interest rate ranging from 1.50% to 5.00%. Additionally, in August 2005, the County, again through its Improvement Authority, issued $30,075,000 in County-Guaranteed Revenue Bonds for the purpose of advance refunding of a portion of the EDA' s Lease Revenue Bonds maturing November 15, These bonds are dated August 25, 2005 and have a final maturity on November 15, The Bonds bear a variable interest rate ranging from 4.00% to 5.00%. Additionally, in February 2014, the County, again through it Improvement Authority, issued $12,590,000 in County-Guaranteed Revenue Bonds for the purpose of advance refunding of a portion of the EDA's Lease Revenue Bonds maturing May 15, These bonds are dated February 13, 2014 and have a final maturity on May 15, The Bonds bear a variable interest rate ranging from 0.400% to 1.900%. NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center) In 1998, the County of Bergen (the "County") restructured/repositioned the management, administration, operation and maintenance of Bergen Regional Medical Center, formerly known as Bergen Pines County Hospital (the "Hospital"). Such actions on the part of the County are generally collectively referred to as the "Repositioning Plan". As part of the Repositioning Plan for the Hospital, and under and pursuant to a Lease and Agreement dated as of December 17, 1997 (the "County/Authority Agreement"), the County, effective as ofmarch 15, 1998: B-63

113 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 {continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) (i) (ii) (iii) transferred to the Bergen County Improvement Authority (the "Authority" or the t1bcia") (a public body corporate and politic created under and pursuant to the provisions of the County Improvement Authorities Law, N.J.S.A. 40:37 A-44 et seq.) the license issued by the State Department of Health and Senior Services ("DOHSS") for the operation of the Hospital, leased to the Authority the Bergen Pines Real Property and the Bergen Pines Business Assets for a 19 year period, and assigned to the Authority responsibility, during the Lease Term, for the operation of the Hospital. As a further part of the Repositioning Plan for the Hospital, and under and pursuant to a Lease and Operating Agreement dated as of December 17, 1997 (the "Authority Lease and Operating Agreement"), the Authority in turn (effective as of March 15, 1998): (i) (ii) leased the Bergen Pines Real Property and the Bergen Pines Business Assets to Solomon Health Group, LLC ("Solomon"), a private for-profit limited liability company, for a coterminus 19 year period (the "Lease Term") and assigned to Solomon as the "Manager" responsibility, during the Lease Term, for the management, administration, operation and maintenance of the Hospital. By an undated Assignment and Guarantor Agreement, effective as of March 15, 1998 between Solomon and Bergen Regional Medical Center, L.P. (the "Manager"), (i) Solomon assigned to the Manager (as "an affiliated entity" formed for profit) all of Solomon's rights and obligations under the Authority Lease and Operating Agreement, as well as under all related agreements, (ii) the Manager assumed such rights and obligations, and (iii) Solomon ~eed to serve as guarantor of the performance by the Manager of its obligations under the Authority Lease and Operating Agreement. Under the license held by the Authority, the Hospital, as a County owned facility, is presently licensed for 1,068 beds, including 321 psychiatric beds, 574 long-term care beds and 173 acute care beds. Under the terms of the County/BCIA Agreement and the Authority Lease and Operating Agreement, the Manager assumed the responsibility (on a for-profit basis and at its sole cost and expense) for the operation by it (as an independent contractor) of the Hospital, including the responsibility for the maintenance and repair of the facilities and equipment constituting the Bergen Pines Real Property and the Bergen Pines Business Assets, this in exchange for its deriving on account thereof the right to retain all profits from its B-64

114 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) operation of the Hospital (after paying all expenses, including the payment to the Authority of rent and a reimbursement for certain administrative costs), with the concomitant obligation on the part of the Manager to bear all losses therefrom (except for losses arising out of certain very limited situations involving such things as Manager-proposed reductions in clinical or direct care programs and Manager-proposed reductions in staffing). Having as lessors (landlords) ultimately leased the Bergen Pines Real Property and the Bergen Pines Business Assets to the Manager, the County (under the County/ Authority Agreement) and the Authority (under the Authority Lease and Operating Agreement) have (as is generally and usually the case for lessors/landlords) retained ultimate financial responsibility for Capital Improvements at the Hospital, defined in Section 1.1 of the BCIA Lease and Operating Agreement as: Any addition, major repair or replacement, extension, construction or reconstruction of or to a permanent structure facility within the Bergen Pines Real Property of a type not recurring annually or at shorter intervals that (a) is non-consumable in nature; (b) has a useful life of greater than five (5) years; (c) constitutes a permanent part of the Medical Center, (d) is a cost that is properly chargeable to a capital account under general Federal income tax principles, and ( e) does not constitute a Maintenance, Repair or Replacement Item, the responsibility for which latter Items was assumed by the Manager. Under Sections 2.9(d) and 2.9(e) of the Authority Lease and Operating Agreement, in the event that it is determined that a Capital Improvement will be undertaken, the Authority shall at its option determine either that the Manager (as the Authority's agent) shall undertake and complete the Capital Improvement on behalf of (and at the cost and expense of) the Authority or, alternatively, that the Authority (the lessor) shall itself undertake and complete such Capital Improvements. Under Section 2.9 of the County/BCIA Agreement, the County is ultimately responsible to bear the cost and expense of all Capital Improvements undertaken by the Authority or by the Manager on behalf of (and at the expense of) the Authority. Prior to the implementation of the Repositioning Plan, the County bore all risks, financial and operational, associated with the Hospital. Studies undertaken by consultants to the County advised that future reimbursement-related risks, together with other operational issues associated with a County-owned and operated healthcare institution, warranted (i) a transfer of the Hospital to the Authority and (ii) a contract between the Authority and a private firm for the management and operation of the Hospital by the latter for profit. The Repositioning Plan for the Hospital called for a re-allocation of not only the financial risks, but also the potential benefits, associated with the operation of the institution, with the Manager assuming virtually all operational risks in exchange for the ability to earn all profits from the operation of the Hospital. Former County responsibilities that were (under the Repositioning Plan) affirmatively delegated by the Authority to Solomon (and Bergen Regional Medical Center, L.P. as its successor and as the Manager) (under the Authority Lease and Operating Agreement) include, but are not limited to: B-65

115 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL Medical Center), (continued) PROJECT (Now Known as Bergen Regional (1) the "absolute obligation and the unconditional authority to manage and control all phases of the operation, maintenance and administration of Bergen Pines in accordance with all Applicable Laws and at the Manager's expense, except with respect to Capital Improvements (Section 3.3, 3ro Paragraph); (2) the responsibility (at its sole cost and expense) for hiring, compensating, supervising, disciplining and terminating all employees required to operate the Hospital in accordance with the terms and conditions of the Authority Lease and Operating Agreement (Section 3.3(d)); (3) the obligation to purchase and control all equipment, supplies and services necessary for the operation by it of the Hospital (Section 3.3(g)); ( 4) the obligation to "operate, maintain, repair and replace the facilities and equipment comprising the Bergen Pines Real Property and the Bergen Pines Business Assets (at the sole cost and expense of the Manager, except to the extent of Capital Improvements) in such manner and in such condition so that Bergen Pines complies with all Applicable Laws (Section 3.3(t)); (5) the responsibility for paying "all operating expenses of the Hospital (Section 3.3(m)); and (6) the responsibility to "prepare and submit (on behalf of the BCIA) all invoices and other documentation necessary to collect all revenues that are due to the BCIA for services provided at Bergen Pines, from the Medicaid and Medicare programs (or any successor programs thereof), the Social Security Administration, private insurance companies and from all other payers", which "moneys shall be deposited into the BCIA's account (Section 3.3(v)). The Authority (BCIA) issued Taxable Project Notes totaling $27,000,000 to finance the acquisition by the Authority of a leasehold interest in the Hospital pursuant to the County/ Authority Agreement, and related costs. Upon issuance of the Notes, a portion of the proceeds of the Notes was: (1) paid over by the Authority, partially to the County and partially to an escrow fund for the payment of debt service on certain tax-exempt general obligation bonds of the County which were issued to finance costs associated with the Hospital, in each case as partial consideration for the acquisition of such leasehold interest (the remaining consideration to be paid periodically over the term of the County/ Authority Agreement); (2) used by the Authority for payment of operating expenses relating to the Hospital; and (3) used to pay costs ofissuing the Notes. B-66

116 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) At maturity of the Taxable Project Bonds, anew Project Note for $27,000,000 was issued at 5.33% interest and matured March 7, On March 7, 2000, the Authority issued County Guaranteed Taxable Project Bonds in the amount of $28,000,000 with a maturity date of March 17, 2017, with interest rates ranging from 7.17% to 7.77%. The proceeds of said Bonds were used (1) to retire the Project Note, (2) to permanently finance the acquisition by the Authority of the leasehold interest in the Bergen Pines Real Property and the Bergen Pines Business Assets, (3) to generate new funds of $1,000,000 to finance the cost of the acquisition and construction of various Capital Improvements to the Hospital, ( 4) to provide working capital for the Authority (including amounts in respect to certain reductions in Medicaid payments attributable to previous Medicaid overpayments), and ( 5) for the costs of issuance. The outstanding $16,270,000 Series 2000 taxable bonds were refunded in 2010 with interest rates ranging from 1.414% TO 3.532% and having a final maturity on March 15, Although the Authority, as the holder of the license for the operation of the Hospital is (under Section 3.9 of the Authority Lease and Operating Agreement) entitled to receive all revenues (from all revenue sources) derived from the operation by the Manager (at its sole cost and expense) of the Hospital, the Authority is in turn obligated (under the terms of Section 5.1 and Section 5.2 of the Authority Lease and Operating Agreement) to pay over unto the Manager (as the for-profit independent contractor Manager) all moneys received by the Authority (as the license holder) as the result of the operation by the Manager of the Hospital, such moneys to be paid in the form of ( 1) a Management Fee in the amount of $9, 000, 000 per month and (2) all Additional Revenues (defined as "any Cash Receipts received by [the Authority] during a given month that exceed the Management fee for such month"). Using all such moneys received by it from the Authority, the Manager is (under the terms of Section 3.3 (3rd Paragraph) and Section 3.3(m) of the Authority Lease and Operating Agreement) required to pay all operating expenses in connection with the management, administration, operation and maintenance by it of the Hospital. As the ultimate recipient from the Authority of all cash receipts (in the form of the Management Fee and all Additional Revenues) derived from the operation by the Manager of the Hospital, the Manager (as the lessee of the Bergen Pines Real Property and the Bergen Pines Business Assets and as the successor to Solomon) is in turn required under Section 2.3 and Section 9.29 (as amended), respectively, of the Authority Lease and Operating Agreement ( 1) to pay rent to the Authority in the form of Fixed Annual Rent (the original annual amount was $5,200,000 and the same is escalating annually at 50% of the annual percentage increases in the CPI) and (2) to make an annual reimbursement payment on account of the cost to the Authority of administering and implementing the Authority Lease and Operating Agreement (the "Manager's Annual Administrative reimbursement"). This payment was revised in 2001 to $300,000, escalating annually by 50% increases in the CPL (Section 9.29, as amended). B-67

117 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) The moneys to which the Authority is entitled on account of Fixed Annual Rent are, together with repayments by the Manager under the hereinafter defined Working Capital Loan, paid over by the Manager to a revenue agent which is required to allocate the first portion of said moneys to the trustee on account of debt service on the BRMC Bonds, with all residual moneys (after provision for payment to the Authority of such of the Authority's operating expenses as are not covered by the Manager's Annual Administrative Reimbursement) transferred by the revenue agent to the County on account of the lease payment required to be made by the Authority to the County under the County Lease. The Authority has also entered into an interlocal services arrangement with the County to provide administrative and fiscal services to the Authority. There is in existence (under a Promissory Note dated March 1998 from Solomon to the Authority) an accounts receivable loan by the Authority to the Manager under which there is due from the Manager to the Authority the sum of $27,124,445 ("Accounts Receivable Loan"). That amount is the actual amount of revenues which were earned by the County as the result of its operation of the Hospital prior to March 15, 1998, but which were collected by the Manager on behalf of the Authority from and after March 15, 1998 and paid over to the Manager as a portion of Additional Revenues. The Accounts Receivable Loan matures on March 14, 2020, which is three (3) years after the Lease Term Closing Date (March 14, 2017) under the Authority Lease and Operating Agreement. The Accounts Receivable Loan is non-interest bearing through March 14, From and after March 15, 2014to maturity, interest shall accrue at 50% of the increase in the CPI for the prior Loan Year and such interest shall be paid on March 15 of each subsequent Loan Year for interest accrued with respect to the prior Loan Year. By way of a separate agreement, the accounts receivable loan repayment date of March 14, 2020 has been accelerated to December 31, 2017, with a corresponding reduction on the loan balance to $22,500,000. Certain types of Capital Improvement projects at the Hospital are the responsibility of the County or the Authority under the terms of Section 2.9 of the Authority Lease and Operating Agreement. The Authority, on behalf of the County, issued $2,800,000 of County Guaranteed Bonds in calendar year 2003 for various capital projects at the Hospital. Under Section 2.12, as amended, of the Authority Lease and Operating Agreement the Manager is required to pay for at least $200,000 of Discretionary Improvements at the Hospital each full calendar year, Discretionary Improvements being improvements which are provided by the manager at the Manager's sole cost and expense under Section 2.7 of the Authority Lease and Operating Agreement and do not constitute Maintenance, Repair or Replacement Items and /or Capital Improvements. Again on November 1, 2008, the County issued taxable bonds in the amount of $11,726,000, to finance various improvements at the Hospital. In September 2001, the Manager filed litigation against the Authority in the Superior Court of New Jersey, Law Division, Bergen County, by which the Manger asserted its "Prisoner Care Claims." B-68

118 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) The Manager was claiming that the Authority was liable to the Manager on account of costs which had been incurred by the Manager in providing treatment and/or services to inmates of the County Jail and had not been reimbursed by the County to the Manager. The Authority named the County as a Third Party Defendant in connection with the Manager's Prisoner Care Claims. The Manager's Prisoner Care Claims against the Authority and the Authority's third-party claims against the County arising therefrom were settled and dismissed pursuant to the Global Settlement Agreement under which the County agreed to pay (and did pay) the Manager fees certain and the Manager agreed to amend Section 3.10 of the Authority Lease and Operating Agreement so as: (a) To cause the County to be responsible to compensate the Manager (within 60 days after the receipt by the County of the Manager's invoices) in accordance with the applicable N.J. Medicaid Guidelines and DRG, as published in N.J.A.C. Title 10, Chapter 10 (the "Medicaid Rules"), for the "actual costs" of the Manager's providing at Bergen Pines services to: (i) (ii) "Inmates" of the Bergen County Jail; "State" inmates; (iii) Patients brought to the Hospital by municipal police officers (or other local law enforcement units) rather than Sheriff's officers; (iv) Inmates for whose services another reimbursement source or third party payer made a partial payment for services; and (v) Patients for whom a court ordered either a psychiatric evaluation or a commitment or any other medical treatment or diagnostic service; such compensation by the county to be considered an outside source of revenue and not to be deposited into the Authority's operating account; provided, however, that the Manager shall be required to seek all available reimbursement for the cost of its care to inmates, provided that the County takes all necessary actions, including (a) any necessary pre-certifications or other preadmission approvals (including pre-certification of State prisoners/inmates), (b) full cooperation with the Manager and ( c) provision of all necessary information to the Manager on a timely basis, and (b) To cause the Manager (as a regional provider of Psychiatric Services and at the request of the BCIA) to provide psychiatric treatment and/or services for inmate residents at other counties' jails. and at New Jersey State Correctional Facilities, provided, however, that (notwithstanding the other provisions of Section 3.10 pursuant to which the County is required to pay for the Manager's B-69

119 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 16. BERGEN PINES COUNTY HOSPITAL PROJECT (Now Known as Bergen Regional Medical Center), (continued) ( c) rendering of services to inmates) the costs of providing such psychiatric treatment to such out-ofcounty inmates (including the costs associated with security) shall be the sole responsibility of the Manager and all revenues deriving from such services shall be paid to and retained by the Manager; and provided further that the Manager need not provide such services if the Manager's cost of providing same (including the costs of security) exceeds the revenues received for such services. NOTE 17. INMATE MEDICAL SERVICES Billings for inmate medical services rendered to a prisoner in the Bergen County Jail is ultimately the responsibility of the County. The hospital is responsible to use its best efforts to collect amounts due from any source at the earliest possible date and to the greatest extent practicable (as permitted under applicable law). Additionally, a review of each bill is managed through an outside consultant in order to determine the reasonability of service. Due to this extensive process, the County cannot determine its liability until the process is complete, thus the County treats these billings on a pay-as-you-go basis, charging its current year appropriations. NOTE 18. RISK MANAGEMENT The County is exposed to various risks of loss related to general liability, automobile coverage, damage and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The County established a self-insurance program in accordance with the New Jersey Statute Chapter 40A: 10. The Chapter enables the governing body of any local unit to create a fund to provide insurance coverage for its exposure to a wide variety of property casualty risks, including: Property damage caused to any of the unit's property, motor vehicles, equipment or apparatus. Liability resulting from the use or operation of such motor vehicles, equipment, or apparatus. Liability for the unit's negligence, including that of its officers, employees, and servants. Workers' compensation obligations. Health benefits, dental and prescription The County self-insures for its automobile, general liability, and workers' compensation exposures. The County has purchased excess health benefit coverage for losses in excess of $150,000. Additionally, the County maintains insurance policies covering property, fire, water utility, boiler and machinery, and employee fidelity. Various deductibles, limits, and coinsurance provisions apply to these policies. B-70

120 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 18. RISK MANAGEMENT (continued) For the years ended December 31, 2016 and 2015, the County has expended a total of $71,347,000 and $68,254,358 for the above programs. Post-employment health benefits are also included for eligible retirees. During the year ended December 31, 2001, the County authorized $15,115,000 in debt to help fund this reserve in accordance with an actuarial study. In 2002, the County issued a Note to fund this insurance reserve. On September 30, 2003, the County, through the Improvement Authority, issued $17,915,000 Taxable Project Revenue Bonds, Series Of this amount, $15,115,000 was used to permanently finance this reserve for the County. New Jersey Unemployment Compensation Insurance - The County has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the County is required to reimburse the New Jersey Unemployment Trust Fund for benefits pad to its former employees and charged to its account with the State. The County is billed quarterly for amounts due to the State. The following is a summary of County contributions, employee contributions, reimbursements to the State for benefits paid and the ending balance of the County's trust fund for the current and previous two years: December 31, Interest Earnings/County or Employee Contributions $802,207 1,551, ,323 Amount Reimbursed $447, , ,319 Ending Balance $2,245,216 1,890, ,712 NOTE 19. POST RETIREMENT BENEFITS PLAN DESCRIPTION The County of Bergen provides lifetime medical benefits to County employees who retire under the following conditions: After twenty-five years of State pension membership; or Upon a disability retirement Employees who do not meet the above requirements and retire after age 60 may purchase coverage for themselves and their dependents through direct billing. Eligible retirees are provided several medical benefit plans to select from. Their selections can be changed during open enrollment periods. Members who become Medicare eligible must enroll in both Part A and Part B in order to maintain eligibility in the County plan. For retirees with 25 years of services, Part B premiums are reimbursed by the County. B-71

121 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 19. POST RETIREMENT BENEFITS (continued) PLAN DESCRIPTION, (continued) Dependents ofretirees are covered until the death of the retiree, however, dependent spouses may continue coverage through direct billing of the retiree. Parks Department spouses maintain coverage at no cost. The number of retirees receiving retiree benefits as of December 31, 2016, the effective date of the biannual Other Post-Employment Benefit, herein referred to as "OPEB", valuation is l,327. Of these, 734 retirees retain dependent or spousal coverage. Active employees number 2, 120 of whom 323 are eligible to retire as of the valuation date. There have been no significant changes in the number of covered retirees or type of coverage since the valuation date. The average age of the active population is 48 and the average age of the retiree population is 68. FUNDING POLICY The County currently accounts for these post retirement benefits on a pay-as-you-go basis. ACTUARIAL VALUATION RESULTS The Actuarial Accrued Liability for current retirees and for current active employees for a total accrued liability (unfunded) of$1,094,413,603 as of December 31, Summary of Valuation Results - December 31, Per Actuarial Valuation (in thousands) Actuarial Accrued Liability* Normal Cost Discount Rate $1,094,414 12, % *This amount is calculated by subtracting the Assets and Normal Cost and adding Benefit Payments with interest to Actuarial Accrued Liability to account for the end of the year valuation date. The following table utilizes the actuarially determined contribution for the year ended December 31, 2016 as opposed to actual payments. Differences between the actual expenditures and the actuarial contributions include discounts, deductibles, co-payments, and actuarial factors identified under 'actuarial assumptions and methods' below. B-72

122 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 19. POST RETIRE1\1ENT BENEFITS (continued) ACTUARIAL VALUATION RESULTS (continued) Annual Required Contribution and OPEB Cost (in Thousands) Normal Cost with Interest Amortization of Unfunded Actuarial Accrued Liability over 30 Years Annual Required Contribution Interest on Net OPEB Obligation Annual OPEB Cost Less: Actuarial Contribution Determination (as updated) Net Change in OPEB Obligation Net OPEB Obligation, Beginning of Year Net OPEB Obligation, End of Year $12,774 $12,774 67,188 67,188 79,962 79,962 12,434 12,434 92,396 92,396 20,086 26,004 72,310 66, , ,311 $11~.Q13 ~J12,ZQl Under GASB Statement 45 the County would recognize the cost of other post-employment benefits in the year when the employee services are received, report the accumulated liability from prior years, and provide information useful in assessing potential demands on the County's future cash flows. The unfunded actuarial accrued liability is amortized as a level dollar amount using an open period of 30 years. However, since the County is using the modified accrual basis of accounting as prescribed by the State ofnew Jersey, Department of Community Affairs, Division of Local Government Services, the County is not required to show any accrued liability on the face of its financial statements, only to the notes to those financial statements. The actuarial assumptions used to value the County's post-employment economic, medical benefit and demographic. benefits are of three types, Health care economic assumptions were selected based on those used by the State Health Benefits Program in calculating SHBP member OPEB requirements taken from its June 22, 2016 actuarial report prepared by its outside consultant. ACTUARIAL ASSUMPTIONS AND METHODS Demographic assumptions were selected based upon those used by the State Division of Pensions and Benefits in calculating pension benefits taken from its June 22, 2016 actuarial report prepared by its outside consultant. B-73

123 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 19. POST RETIREMENT BENEFITS (continued) ACTUARIAL VALUATION RESULTS (continued) The actuarial cost method utilized for the County's actuarial valuation is the Projected Unit Credit method. It is an acceptable method under GASB Statement 45 and is a method whereas an actuarial accrued 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. The normal cost amount is expected to increase annually at the discount rate, currently 4.50%. In addition, the asset valuation method is not applicable, as the plan is currently unfunded. NOTE 20. OPEN SPACE, RECREATION, FARMLAND, AND IDSTORIC PRESERVATION TRUST FUND The County has established a Trust Fund in which the County will retain 70% of the fund to acquire land, improve recreation facilities, and preserve farmland and historic areas throughout Bergen County, with the remaining 30% to assist municipalities to acquire and improve outdoor recreation facilities. The County will raise up to one cent per $100 of total County equalized real property valuation during each of the next five years to fund this Trust. During 1999 the County established a Trust Fund for the above. As of December 31, 2016 and 2015, the fund had a balance of $31,326, 752 and $34,043,656, respectively. Included in the balance as of December 31, 2016 and 2015, is $16,309,856 and $25,362,282 in contracts payable set aside for various municipalities in the County. NOTE 21. OVERPECK PARK The County of Bergen owns Overpeck County Park, which had been a municipal sanitary landfill from 1952 to Four hundred acres of the site remain undeveloped. The site was conveyed to the County by the Village of Ridgefield Park, Township of Teaneck, Borough of Leonia, Borough of Palisades Park and City of Englewood for the purpose of development as a public park. The site to be developed includes land in Ridgefield Park, Teaneck, Leonia and Palisades Park. The County entered into an amended final judgment on October 1, 2002 that requires the redevelopment of portions of the site by September 30, The natural forces of erosion have caused the site to deteriorate. It is necessary to close the landfill under present D.E.P. requirements to develop the park facilities in the future. B-74

124 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 21. OVERPECK PARK {continued) The County, through a grant agreement with the Bergen County Improvement Authority (the "BCIA") has transferred the responsibility for the closure and redevelopment of the landfill to the BCIA. As part of this agreement, the BCIA issued Notes in the amount of $12,000,000. Such debt is cross collateralized by the County with its full faith and credit pursuant to N.J.S.A. 40:37 A-80. Pursuant to the Agreement, within 45 days of the issuance of the $12,000,000 Bond or Note, the BCIA paid $8,500,000 to the County as a first licensing fee payment (which has been included as a revenue in the County's 2003 Budget). On September 8, 2005 the BCIA permanently financed these notes and issued a $12,000,000 Taxable Revenue Bond, Guaranteed by the County. Under the terms of the Agreement, the balance of the funds was used for alj expenses relating to the project. Included in these costs is a $2,500,000 payment to the municipalities (part of the court order). The remaining $1,000,000 is made up of capitalized interest for two years (Note interest) engineering and licensing costs (NJDEP) and usual costs of issuance. An analysis of the cost estimates for the closure and post closure of the landfill was performed. The report, which was received in April, 2008, estimated the total costs of closure to be $10,800,000 and the estimated post closure cost for 30 years to be $9,800,000. As of December 31, 2010 and 2009, the BCIA has accrued costs of $15,661,508 and $15,074,005, respectively, based on a percentage of the capacity of the landfill filled as of that date. The County, as the party ultimately responsible for funding these costs, is liable to the BCIA for the full amount of these accrued costs and has recognized this obligation on the books of its General Capital Fund. The County has adopted Ordinances 06-35, and and 10-16, to which the closure and post-closure costs were charged in full amount of the liability to the BCIA. As of December 31, 2011, the County has no liability to the BCIA for Overpeck Park Closure and post-closure costs. In addition, refer to Note 2 of these notes to financial statements for a description of the $7,383,149 New Jersey Environmental Infrastructure Trust Loan awarded to the County for expenses related to the landfill. The loan finances, in part, Ordinance NOTE 22. PENDING LITIGATION The County is a defendant in various lawsuits, none of which is unusual for a County of its size and should be covered by the County's insurance program or by the County directly and which may be settled in a manner satisfactory to the financial stability of the County. Some of the more significant lawsuits are described briefly as follows: B-75

125 COUNTY OF BERGEN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 (continued) NOTE 22. PENDING LITIGATION (continued) A. Piserchia v. County of Bergen (Police Officer Baksh) This matter is venued in the United States District Court, District of New Jersey in Newark and was allegedly served on May 9, This is a claim by an individual alleging civil rights violations arising out of a police chase and shooting. All discovery has been completed. A Motion to Amend Plaintiffs Complaint seeking to add the Bergen County Prosecutor and Defendants intend to file motions for summary judgment. This case has been settled and the charges against the officers involved have been dismissed. B. Peisch, et als. v. Thomas Mason, Esq., et als Plaintiffs are indigent divorced males who are the subjects of child support obligations being enforced by the Probation Department during "Ability to Pay/Comply" Hearings in various courts in the County's Family Division. Plaintiff are suing Defendants, who were assigned by the County to Plaintiffs as pro bono counsel to defend Plaintiffs during said Hearings for negligence and professional malpractice, claiming that these County Defendants had committed professional negligence and legal malpractice in their defense of Plaintiffs. Plaintiffs have never made any settlement demands in this matter. All discovery has been completed. Plaintiffs have served an "expert" report by counsel for defendants, arguing that the representation provided in the matters at bar did not merit specified standards for indigent child support obligors. Defendants have also served an expert report. The range for potential loss is between $100,000 and $150,000. C. Carroll v. County of Bergen This matter arises out of claims brought by current and former County employees, alleging federal and state civil rights violations arising from purported retaliatory layoffs conducted against employees who were non-supporters of the newly elected Bergen County Executive. Plaintiffs bring their claims individually, and on behalf of a proposed class of individuals similarly situated. A motion for class certification has not yet been filed. Plaintiffs' Complaint alleges monetary damages in an amount not less than $5,000,000. D. Rivera v. Bergen County Police Department This case involves a claim in Federal District Court for Excessive Force and Wrongful Death in violation of federal civil rights statutes, common law assault, common law battery, intentional infliction of emotional distress, negligent hiring and training, and common law wrongful death. All written discovery has been completed; depositions have been completed; Plaintiffs have served B-76