VILLAGE OF HUNTLEY. Comprehensive Annual Financial Report Fiscal Year Ended December 31, 2016 Huntley, Illinois

Transcription

1 VILLAGE OF HUNTLEY Comprehensive Annual Financial Report Fiscal Year Ended December 31, 2016 Huntley, Illinois

2 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016 Prepared by the Village of Huntley Finance Department Jennifer R. Chernak Director of Finance and Human Resources Julie Langos, Accounting Supervisor

3 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Principal Officials... Organization Chart... Certificate of Achievement for Excellence in Financial Reporting... Transmittal Letter... i ii iii iv-vii FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS Management s Discussion and Analysis... MD&A 1-12 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Governmental Funds Balance Sheet... 8 Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position... 9 Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities... 11

4 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued) Basic Financial Statements (Continued) Fund Financial Statements (Continued) Proprietary Funds Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows Fiduciary Funds Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund Schedule of Funding Progress Other Postemployment Benefit Plan Schedule of Employer Contributions Illinois Municipal Retirement Fund Police Pension Fund Other Postemployment Benefit Plan Schedule of Changes in the Employer s Net Pension Liability and Related Ratios Illinois Municipal Retirement Fund Police Pension Fund Schedule of Investment Returns Police Pension Fund Notes to Required Supplementary Information... 63

5 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS General Fund Schedule of Revenues - Budget and Actual Schedule of Expenditures - Budget and Actual Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Tax Increment Financing Bonds Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Downtown TIF Fund NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Motor Fuel Tax Fund Drug Enforcement Fund Road and Bridge Fund Cemetery Fund Public Liability Fund Special Service Area No. 5 Fund Municipal Building Fund General Capital Development Fund Equipment Replacement Fund Tollway/Interchange Fund Downtown Improvement Fund Street Improvement Fund... 84

6 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued) ENTERPRISE FUNDS Combining Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Water Department Accounts Sewer Department Accounts INTERNAL SERVICE FUNDS Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Benefits Fund FIDUCIARY FUNDS Agency Funds Combining Statement of Changes in Assets and Liabilities CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS Schedule of General Capital Assets - by Source LONG-TERM DEBT PAYABLE BY GOVERNMENTAL FUNDS Schedule of General Long-Term Debt STATISTICAL SECTION (Unaudited) Financial Trends Net Position by Component Including TIF Activity Net Position by Component Excluding TIF Activity Change in Net Position Including TIF Activity Change in Net Position Excluding TIF Activity Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds

7 TABLE OF CONTENTS (Continued) Page(s) STATISTICAL SECTION (Unaudited) (Continued) Revenue Capacity Equalized Assessed Valuations by Classification of Property Locate Tax Exempt Property for McHenry and Kane Property Tax Rates - Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levies and Collections Debt Capacity Ratios of General Bonded Debt Outstanding Including TIF Activity Ratios of General Bonded Debt Outstanding Excluding TIF Activity Schedule of Direct and Overlapping Bonded Debt Legal Debt Margin Information Ratios of Outstanding Debt by Type Including TIF Activity Ratios of Outstanding Debt by Type Excluding TIF Activity Demographic and Economic Information Demographic and Economic Information Principal Employers Operating Information Full-Time Equivalent Employees Operating Indicators Capital Asset Statistics

8 INTRODUCTORY SECTION

9 PRINCIPAL OFFICIALS VILLAGE PRESIDENT CHARLES H. SASS BOARD OF TRUSTEES RONDA GOLDMAN NIKO KANAKARIS JOHN PIWKO TIMOTHY HOEFT HARRY LEOPOLD JR WESTBERG VILLAGE MANAGER S OFFICE David J. Johnson Lisa Armour Rita McMahon Village Manager Assistant Village Manager Village Clerk DEVELOPMENT SERVICES DEPARTMENT Charles Nordman Director of Development Services FINANCE & HUMAN RESOURCES DEPARTMENT Jennifer Chernak Director of Finance & Human Resources POLICE DEPARTMENT Robert Porter Chief of Police PUBLIC WORKS & ENGINEERING DEPARTMENT Timothy Farrell Director of Public Works and Engineering VILLAGE ATTORNEY John Cowlin Cowlin, Naughton, & Curran - i -

10 . Fiscal Year 2016 VILLAGE OF Annual Budget HUNTLEY Village of Huntley Organizational Chart 74 - ii -

11 - iii -

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13 The Village expended less than $750,000 of federal funds during the fiscal year ended December 31, 2016 and therefore, is not required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and U.S. Office of Management and Budget Circular A-133, Audits of State and Local Governments and Non-Profit Entities. The Reporting Entity and its Services The Village of Huntley was organized in 1851 and incorporated in Approximately 800 people settled here within the first three years. From , Huntley grew steadily. As of January 9, 2016 the U.S. Federal Special Census placed the Village s population at 26,632. The Village operates under the Council/Manager form of government. The Village Board adopted the Manager form of government in February 2001 as a part of continued commitment to find the most efficient and effective manner in which to run the day-to-day operations of the Village. Huntley is a home rule municipality as defined by the Illinois Constitution. Huntley is located along the Interstate 90 Corridor approximately 40 miles northwest of the City of Chicago within the counties of Kane and McHenry with a land area of approximately 14 square miles. The Village provides a full range of services as the needs and resources of the community dictate. This range of service includes public safety (police), streets, water and wastewater, planning and zoning, building inspection, public improvements and general administrative services. For financial reporting purposes, the criteria provided in Government Accounting Standards Board Statement No. 14 have been considered and there are no agencies or entities which should be presented with the Village. Excluded from this report are School District 158, Huntley Fire Protection District, Huntley Area Library, and the Huntley Park District. These entities are separate governments, organized under the laws of the State of Illinois. They are directed by popularly elected boards performing functions, which are not provided by the Village. The Village does not control their fiscal management or operations, nor is the Village legally responsible for the funding of operations or debt. The annual budget serves as the foundation for the Village s financial planning and control. The budget process begins in August when departments submit their requests for the upcoming year to the Finance Department. The Village Manager and staff spend the next two months reviewing these budget requests and adjusting them to match anticipated revenues. The Village Manager then presents the proposed budget to the Mayor and Board of Trustees at meetings scheduled in November. The Village Board is required to hold a public hearing on the proposed budget and to adopt the final Budget no later than December 31 st of each year. The budget is adopted at the fund level. The Director of Finance may make transfers of appropriations within a fund however; the Village Manager and Village Board are required to approve budget transfers between funds. Budget-to-actual comparisons are provided for each individual government fund for which an appropriated annual budget has been adopted. Major Initiatives The fiscal year began January 1, 2016 and ended on December 31, Each year the budget process allows Village officials opportunity to review the Village s current financial position and major accomplishments over the course of the last fiscal year. A few particular accomplishments are noteworthy in this transmittal due to the magnitude of the achievement and the commitment to making the community and organization better. These include: Centegra Hospital-Huntley completed construction and opened a new 128-bed facility v

14 Downtown Square Improvements were completed, including the location of a new Veterans Memorial in partnership with the Huntley Area Veterans Foundation Façade Improvement Assistance Program Grants resulting in renovations to three buildings in the downtown The Annual Street Improvement Program in Heritage of Huntley Subdivision and a section on Main Street was completed Police Department was awarded CALEA re-accreditation on July 30, 2016 Affecting Financial Condition The Village remains cognizant of how global volatility, an uneven national economy, and the fiscal condition of the State of Illinois affect the Village s financial position. These external economic factors and others impact Village revenue sources. The State is now into its second year of operating without an adopted budget. Uncertainty remains as to what measures may be approved by the State that would permanently divert current municipal revenue streams to other sources or would limit the Village s ability to collect revenues that have historically been a major component of the annual budget. Containing health insurance costs is an on-going challenge. Over the past several years, the Village s premiums have exceeded the general rate of inflation, prompting the Village to explore and join the Intergovernmental Personnel Benefit Cooperative (IPBC), a health insurance pool, as a way to contain costs. The Village had previously experienced annual average premium increases of 11% in recent years, while the rates for IPBC members during the same time period averaged 3%. Membership in this pool should stabilize future rates increases. Despite these challenges and the many uncertainties of external factors, the Village continues to move forward with the programs and services our residents expect, and Huntley continues to be a desirable place to live and conduct business. Long-term Financial Planning Unfunded mandates and regulatory issues at the state and national levels continue to present challenges to long-range planning and have significant financial implications. A potential costly mandate that may be implemented in the future is the use of body cameras for police officers. The State of Illinois has already passed legislation that establishes guidelines for the use of body cameras should a municipality choose to utilize them. Costs associated with storing the recorded data could be significant, as the legislation requires all footage to be retained for 90 days. The Village s Police Chief is an active member of the Illinois Chiefs of Police Association and is the co-chair of the group s Legislative Committee monitoring financial impacts on municipalities. Illinois Environmental Protection Agency (IEPA) requirements related to Phosphorus Discharge and Removal, and Capacity, Management, Operations and Maintenance (CMOM) plans must be addressed over the next three to five years. The Wastewater System Regulatory Planning Documents recently completed provide the Village with a comprehensive plan for optimizing the total phosphorus removal at the Wastewater Treatment Facilities and provide a targeted approach for the CMOM plan as required by regulators. Estimated cost of improvements for both plants is $2.45 million with implementation set to begin in FY17. It is anticipated that these improvements may be funded by debt issuance. In addition, to meet future water demand, the vi

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16 FINANCIAL SECTION

17 INDEPENDENT AUDITOR S REPORT The Honorable President Members of the Board of Trustees Village of Huntley, Illinois We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Huntley, Illinois (the Village), as of and for the year ended December 31, 2016, and the related notes to financial statements, which collectively comprise the Village s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 Village 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 Village s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions

18 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Huntley, Illinois, as of December 31, 2016, and the respective changes in financial position, and, where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and the required supplementary information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village s basic financial statements as a whole. The introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 information is fairly stated in all material respects in relation to the basic financial statements as a whole

19 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Naperville, Illinois April 28,

20 GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS

21 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2016 Management of the Village of Huntley presents the Village financial statements for the fiscal year ended December 31, The analysis provides an overview of the Village of Huntley s financial activities for the fiscal year and is designed to: 1. Provide an overview of the Village s financial activity. 2. Assist the reader in focusing on significant financial issues by identifying changes in the Village s financial position and its ability to address subsequent year challenges. 3. Identify material deviations from the approved budget, and individual fund issues or concerns. This report also contains other supplementary information in addition to the basic financial statements themselves. Since the Management's Discussion and Analysis (MD&A) focus is on current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter, beginning on page iv, and the Village's financial statements beginning on page 4. Using the Financial Section of this Comprehensive Annual Report The annual report consists of a series of financial statements focusing on government wide and major individual funds. Both the government wide and major fund perspectives allow the user to address relevant questions, broaden a basis for comparison, and enhance the Village s accountability. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the Village s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the Village s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The statement of activities presents information showing how the Village s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. (See independent auditor s report.) MD&A1

22 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Government-Wide Financial Statements (continued) Both of the government-wide financial statements distinguish functions of the Village that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities reflect the Village's basic services, including general government, public safety, highways and streets, sanitation, health and welfare, economic development, and culture and recreation. The business-type activities include the water and sewer operations. The government-wide financial statements can be found on pages 4 and 5 of this report. Fund Financial Statements Fund groups contain related accounts used to maintain control over resources segregated for specific activities or objectives. The Village, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All Village funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Major Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s nearterm financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Village maintains 15 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for major funds. The General Fund, Debt Service Fund, and Downtown TIF, are reported major governmental funds. Data from the other 12 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. (See independent auditor s report.) MD&A2

23 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) The Village adopts an annual budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. The governmental fund financial statements can be found on pages 8 through 11 of this report. Proprietary Funds The Village maintains two types of Proprietary funds: enterprise and internal service. Enterprise funds are used to report functions presented as business-type activities in the government-wide financial statements. The Village utilizes enterprise funds to account for the water and sewer system. Proprietary funds provide the same type of information as the government-wide financial statements; the Water Fund and Sewer Funds are considered major funds of the Village. Internal service funds are used to account for activities that provide goods and services to other funds, departments, or agencies of the primary government. The proprietary fund financial statements can be found on pages 12 through 14 of this report. Fiduciary Funds Fiduciary funds account for resources held for the benefit of parties outside the government. Fiduciary funds are unavailable for support of Village s programs and are not reflected in the government-wide financial statements. The accounting used for fiduciary funds is similar to that used for proprietary funds. The Village maintains one pension trust fund and two agency funds. One is for monies held in escrow for developer activities and the other is to account for the special service area agency funds in the Village of Huntley. The fiduciary fund financial statements can be found on pages 15 and 16 of this report. Internal Service Fund Additionally the Village reports one internal service fund to account for the cost of specific benefits provided to employees. Notes to the Financial Statements The notes provide information essential in understanding the data provided in the governmentwide and fund financial statements and can be located on pages 17 through 54 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report presents required supplementary information concerning the Village s progress in funding its obligation to provide benefits to its employees. Required supplementary information can be found on pages 55 through 63 of this report. (See independent auditor s report.) MD&A3

24 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) The combining and individual fund financial statements referred to earlier in connection with the major, nonmajor, enterprise, and internal service funds are presented immediately following the required supplementary information on pensions. The fund statements and schedules can be found on pages 64 through 93 of this report. Financial Analysis of the Village as a Whole In accordance with GASB Statement No. 34, the Village presented comparative financial information to better understand the Village s financial position and changes in financial position. Net Position Table #1 displays the statement of Net Position as of December 31, The Village of Huntley s net assets less total liabilities and deferred inflows total $214,122,000. The Village s net assets are invested in an extensive range of capital assets and include; buildings, land, easements, infrastructure, right of way, buildings, machinery, and equipment, less any related outstanding debt used to acquire the assets. Capital assets essential in providing services to citizens; the assets are not available for future spending. Table 1 Statement of Net Position Governmental Activities Business Type Activities Total Primary Government as of December 31, Current and Other Assets 25,119,636 25,000,223 8,476,105 8,688,851 33,595,741 33,689,074 Capital Assets 122,916, ,575,009 75,650,716 74,574, ,566, ,149,673 Total Assets 148,035, ,575,232 84,126,821 83,263, ,162, ,838,747 Deferred Outflow of Resources Pension items - Police 329,244 1,569, ,244 1,569,157 Pension items - IMRF 543, , , , ,288 1,302,837 Total Assets & Deferred Outflows 148,908, ,912,745 84,504,774 83,797, ,413, ,710,741 Long Term Liabilities 38,327,166 12,878, ,636 1,365,762 38,722,802 14,244,717 Other Liabilities 4,085,000 5,154,901 1,624, ,024 5,709,235 5,597,925 Total Liabilities 42,412,166 18,033,856 2,019,871 1,808,786 44,432,037 19,842,642 Deferred Inflows of Resources Pension items - Police 1,219,788 1,016,490 1,219,788 1,016,490 Pension items - IMRF 69,804 69,803 48,556 48, , ,359 Unavailable Property Tax Revenue 3,905,000 4,611,250 3,905,000 4,611,250 Total Liabilities & Deferred Inflows 47,606,758 23,731,399 2,068,427 1,857,342 49,675,185 25,588,741 Net Position, Net of Debt 122,916, ,770,295 74,991,966 74,386, ,908, ,157,116 Restricted 5,834,262 1,689,143 3,495,547 2,939,270 9,329,809 4,628,413 Unrestricted (27,448,805) 5,721,908 3,948,834 4,614,563 (23,499,971) 10,336,471 Total Net Position Dec ,301, ,181,346 82,436,347 81,940, ,737, ,122,000 Total Net Position Jan 1 101,301,503 82,436, ,737,850 Change in accounting principle 686, ,766 1,164,589 Net Position restated Jan 1 101,988,326 82,914, ,902,439 Total Net Position Dec ,181,346 81,940, ,122,000 The Village s combined net position increased $29,219,561 during Governmental Activities Total Net Position increased $30,193,020. Business Type activities Total Net Position decreased $973,459, the net result of contributed assets less depreciation and amortization of said assets. Total Primary Government Unrestricted net position totals $10,336,471. The unrestricted net position may be used to meet the government s ongoing obligations to citizens and creditors. Detailed Restricted and Unrestricted Assigned fund balance information can be located on page 8, the Governmental Funds Balance Sheet. (See independent auditor s report.) MD&A4

25 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Net Position Table #2 compares the revenue and expenses for the current and prior fiscal years Governmental and Business Activities at the end of fiscal year December 31, Table 2 Change in Net Position as of December 31, 2016 Governmental Activities Summary: Governmental Business Type Total Primary Activities Activities Government Revenues Program Revenues: Charges for Services 2,146,184 3,869,163 4,556,059 4,823,708 6,702,243 8,692,871 Operating Grants 673, , , ,576 1,198,925 1,301,694 General Revenues: Property Taxes 6,455,663 6,951,580 6,455,663 6,951,580 Other Taxes 6,783,044 6,855,362 6,783,044 6,855,362 Other Income 78, ,208 (116,254) 33,213 (37,948) 237,421 Total Revenues 16,136,595 18,796,431 4,965,332 5,242,497 21,101,927 24,038,928 Expenses General Government 3,310,012 3,600,628 3,310,012 3,600,628 Public Safety 6,013,453 6,122,648 6,013,453 6,122,648 Highways and Streets 5,380,227 5,632,393 5,380,227 5,632,393 Economic Development 1,901,429 4,781,279 1,901,429 4,781,279 Water and Sewer 7,227,584 8,000,765 7,227,584 8,000,765 Interest on Long Term Debt 1,222, ,760 1,222, ,760 Total Expenses 17,827,644 21,033,708 7,227,584 8,000,765 25,055,228 29,034,473 Change in Net Position before Transfers & Contributions (1,691,049) (2,237,277) (2,262,252) (2,758,268) (3,953,301) (4,995,545) Transfers 368,582 (368,582) Capital Grants & Contributions 1,954,804 8,025,292 1,784,809 1,954,804 9,810,101 Special Item 24,405,005 24,405,005 Changes in Net Position 632,337 30,193,020 (2,630,834) (973,459) (1,998,497) 29,219,561 Net Position, January 1 107,472, ,301,503 85,454,109 82,436, ,926, ,737,850 Change in accounting principle (6,803,537) 686,823 (386,928) 477,766 (7,190,465) 1,164,589 Net Position January 1 restated 100,669, ,988,326 85,067,181 82,914, ,736, ,902,439 Net Position, December ,301, ,181,346 82,436,347 81,940, ,737, ,122,000 Property taxes remain the Village s largest single source of revenue, and amounted to $6,951,580, note; $3,008,146 in property tax revenue was remitted to the TIF that by its terms expired December 31, Property tax revenue supports governmental activities and includes the Village s contribution to the Police Pension Fund. The Special Item listed in Governmental Activities is the Tax Increment Financing District (TIF) that expired December 31, 2016, without funds to pay the amount owed the Tax Increment Financing Bonds, Series 1995C. Therefore the Village recognized a gain on forgiveness of debt in the amount of $24,405,000, resulting in a change in net position of $30,193,320. Additional details can be located on page 53 of this report. Total Governmental Activities expenses before transfers, capital grants, and contributions totals $21,033,708, and notes a $3,206,064 increase between 2015 and 2016 primarily due to the final Tax Increment Financing Bond Series 2009 debt service payment, details can be located on page 27 of this report. Additional expenses totaling $853,257 were incurred in the Village of Huntley Downtown TIF in order to promote development within the older Huntley retail and commercial district in an effort to stimulate new development at the Route 47 and Main Street intersection. (See independent auditor s report.) MD&A5

26 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Governmental Activities Summary (continued): Capital Grants and Contribution revenue increased due to the formal acceptance of Talamore Infrastructure in POD 3 & 4 and Del Webb Right of Way and Easements. With the implementation of GASB statement No. 68, and the change in accounting principle, the Village s January 1, 2016, net position was restated and notes an increase of $686,823, details can be located on page 53 of this report. Business Activities Summary: Revenues total $5,242,497 for the fiscal year ended December 31, Charges for Services increased $267,649, a 5.87% increase. Operating Grants, and tap on fees used for capital, total $385,576. Capital Grants and Contribution revenue totals $1,784,009 and includes the formal acceptance of the Talamore subdivision infrastructure and the downtown water main replacement project. The implementation of GASB Statement No. 68, and the change in accounting principle restated the January 1, 2016 net position $477,766, details can be located on page 53 of this report. Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and changes in Fund Balances to the Governmental Activities in the Statement of Activities are located on page 11 of this report. (This space intentionally left blank.) (See independent auditor s report.) MD&A6

27 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Governmental activities The Village Board has authorized and approved a $3.8 million levy request since At the end of 2015 for collection during 2016 the Village Board approved an ordinance authorizing the levy and collection in the same amount. The 2014 property tax rate, collected during 2015 was.5599; the 2015 rate for collection in 2016 was decreased to Chart #1 highlights 2016 Governmental Activities revenues and expenses. Chart 1 Governmental Activities Program Revenues and Expenses For the Fiscal Year Ended December 31, 2016 Chart #2 highlights Business Type Activities Program revenues and expenses. Chart 2 Business Type Activities Expenses & Program Revenues For the Fiscal Year Ended December 31, 2016 (See independent auditor s report.) MD&A7

28 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Chart #3 highlights Revenues by Source Government Activities for the 2016 fiscal year. Chart 3 Revenues by Source Government Activities For the Fiscal Year Ended December 31, 2016 Chart #4 highlights Revenues by Source Business Activities for the 2016 fiscal year. Chart 4 Revenues by Source Business Activities For the Fiscal Year Ended December 31, 2016 (See independent auditor s report.) MD&A8

29 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Financial Analysis of the Village s Funds The Village of Huntley uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The focus of the Village of Huntley Major Governmental funds is to provide information on inflows, outflows, and balances of spendable resources. Table #3 reports the changes in the Village s major funds; General Fund (primary operating), Debt Service (Tax Increment Financing District), and Downtown TIF. Table 3 Changes in Fund Balance - Major Funds General Fund Debt Service Downtown TIF for fiscal year end December 31, Revenues Taxes 9,195,054 9,266,667 3,058,040 3,499,705 20,258 79,027 Licenses 1,472,630 1,526,600 Development Fees Charges for Service Other 434, , , ,718 Total Revenues 11,102,499 11,297,913 3,058,131 3,499,961 22, ,745 Expenditures General Government 2,473,423 2,595,964 Public Safety 5,355,492 5,540,733 Highways and Streets 1,960,186 2,391,496 Capital Outlay 12,202 Economic Development 28,830 4,260,236 5,702, ,897 Debt Service Principal 2,120,000 2,455, , ,706 Debt Service Interest 1,123, ,335 85,718 98,452 Total Expenditures 9,789,101 10,528,193 3,271,861 7,516,571 5,972, ,257 Transfers In 125,000 25,000 1,990, ,230 Transfers Out (2,324,378) (3,733,680) Insurance Proceeds Proceeds from Capital Lease 213,005 4,000,000 Change in Fund Balance (885,980) (2,725,955) (213,730) (4,016,610) 40, ,718 Fund Balance January 1 7,348,784 6,462,804 4,230,340 4,016,610 (545,542) (505,026) Fund Balance December 31 6,462,804 3,736,849 4,016,610 - (505,026) (229,308) The General Fund is the Village s primary operating fund and Village Board policy states that 25% of General Fund expenses are placed in reserve, the fund balance assignments are listed below. Non spendable in form prepaid items $ 74,149 Assigned for future operations & capital projects $ 1,030,652 Assigned for future operations $ 2,632,048 General Fund Balance Dec 31 $ 3,736,849 The General Fund notes a negative change in fund balance after the 2015 one time revenue transfers funding capital projects and benefits totaling $3,733,680 were recorded. The TIF Debt Service Fund was reduced to zero after final 2009 series debt service and interest payments were disbursed, the 1995C Bonds expired. The Downtown TIF realized a positive change in fund balance due to transfers in from the Tollway Fund, Street improvement, and a budgeted one-time revenue transfer from the General Fund. (See independent auditor s report.) MD&A9

30 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Table #4 displays General Fund Budgetary Highlights. Details can be located on page 55. Table 4 General Fund Budgetary Highlights Original Budget Final Budget Actual for fiscal year end December 31, Revenues Taxes 8,723,500 8,933,500 8,723,500 8,933,500 9,195,054 9,266,667 Intergovernmental ,000 2,811 Licenses & permits 933,500 1,094, ,500 1,094,000 1,472,630 1,526,600 Fines & forfeits 346, , , , , ,268 Other 16,000 33,500 16,000 33,500 55, ,567 Total Revenues 10,019,768 10,420,393 10,019,768 10,420,393 11,102,499 11,297,913 Expenditures Expenditures 10,144,768 10,445,393 10,144,768 10,445,393 9,789,101 10,528,193 Total Expenditures 10,144,768 10,445,393 10,144,768 10,445,393 9,789,101 10,528,193 Insurance Proceeds Transfers In 125,000 25, ,000 25, ,000 25,000 Transfers Out 2,295,284 2,295,284 (2,324,378) (3,733,680) Proceeds from capital lease 213,005 Total Transfers & Other 125,000 2,320, ,000 2,320,284 (2,199,378) (3,495,675) Change in Fund Balance - 2,295,284-2,295,284 (885,980) (2,725,955) The Village of Huntley Village Board approved Fiscal Year End 2016 Budget Amendments. $25,000 increase to the Equipment Replacement Fund Line Item to fund the purchase of a reconditioned grinder from JWC Environmental. $184,917 budget transfer from Street Improvement Fund to Downtown TIF; funds to be used in completing work in the downtown Square. Capital Asset and Debt Administration Capital Assets Table #5 displays a schedule of the Village s capital asset balances as of December 31, The Village s investment in capital assets for governmental and business-type activities as of December 31, 2016 is $203,365,573, net accumulated depreciation. Capital asset investments for both components include land, infrastructure, buildings, machinery, equipment, vehicles, roads, bridges, and storm sewers. The Village s total net capital assets increased $4,798,810, net of accumulated depreciation, additions, and deletions in Table 5 Capital Assets Governmental Activities Business Type Activities Total as of December 31, Land, Right of Way, Easements 57,504,184 63,300, , ,904 57,720,088 63,516,806 Construction in Progress Buildings and Improvements 18,620,088 18,795,917 7,679,528 7,679,528 26,299,616 26,475,445 Machinery, Vehicles, Equipment 2,765,395 3,124,405 4,768,208 4,807,623 7,533,603 7,932,028 Infrastructure 69,758,618 72,186,011 97,407,565 99,535, ,166, ,721,902 Less: Accumulated Depreciation 25,732,239 28,832,230 34,420,488 37,448,378 60,152,727 66,280,608 Total Net Assets 122,916, ,575,005 75,650,717 74,790, ,566, ,365,573 (See independent auditor s report.) MD&A10

31 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Major capital asset events during the fiscal year included the following: Downtown Revitalization; Water main replacement and purchase of Coral Street. Vehicle replacement; Police Department, and Rebuild 6 Wheeler for the Streets Department. Infrastructure acceptance; Water main, storm sewers, pavement improvements, right of way, and easements in the Talamore subdivision. Additional information on the Village s capital assets can be found in note 4 on pages 27 through 29 of this report. Long-Term Debt At the end of fiscal year 2016, the Village had total bonded and similar debt outstanding of $3,804,715, excluding compensated absences, net post-employment benefits, net pension liability, and insurance payable. The Village issued bonds for which the Village pledges incremental tax income and sales tax rebates derived from a tax increment financing district. These bonds are not a Village obligation and are secured solely by the incremental revenues generated by the TIF district. The bonds were paid or cancelled as the TIF responsible for retiring the bonds expired on December 31, The 2008B Debt Certificate for the Municipal Complex was retired August 1, Currently the Village is entered in three debt commitment instruments. 2008A funded the Phase II South Sewer Interceptor project debt certificates, funded to complete Downtown Revitalization project Capital Lease Street Sweeper Table #6 summarizes the Village s bonded and similar indebtedness schedule. Table 6 Bonded and Similar Indebtedness Governmental Activities Business Type Activities Total as of December 31, TIF 1995C & 2009 Bonds 26,860,000 26,860, A Sewer Interceptor Certificate 658, , , , B Debt Certificate 200, , Debt Certificates 3,816,416 3,591,710 3,591,710 Capital Lease Street Sweeper 213, ,005 Total Bonded Indebtedness 30,876,416 3,804, , ,750 27,718,750 4,208,465 In 2016, the Village s net total debt notes a net decrease of $23,510,285. Supplementary information on Long Term Debt can be found in note 5 on pages 29 through 33 of this report. Table #6 reflects the following retirements: TIF Bond Series 2009 $ 2,455,000 TIF Bond Series 1995C $ 24,405, A Debt Certificate $ 255, Debt Certificates $ 183,584 Capital Lease Street Sweeper $ -0- (See independent auditor s report.) MD&A11

32 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) Economic Factors Property taxes in the Village s corporate limits provide a stable revenue source, The Village s property tax base continues to grow and property tax values increased due to the expiration of the south TIF. Revenue from new development consists of building permit fees, development processing fees, and transition fees. Building permit revenues are considered a one-time revenue source and utilized by the Village to fund capital projects and equipment purchases. Redevelopment within the downtown area and around the Town Square continued, and with the assistance of the Façade Improvement program improved the exterior of seven businesses. On May 1, 2016 the water and sewer rates increased 2% for all consumers in the Village. The increase funds future water and sewer system improvements. The rate continues to increase yearly by the stated Consumer Price Index (CPI) as defined by the Counties during the tax levy process or by a minimum of 2%, whichever is greater. The Village conducted a Special Census in early 2016 and documented a 9.6% increase since 2010, with the population increasing from 24,291 to 26,632. The additional population increases the per capita dollars available to the Village from the State. New and expanding businesses have created jobs in healthcare. Centegra Hospital opened August 9, 2016, and employs over 860 employees. Another business creating jobs include Hiwin Corporation a manufacturer of precision machining, expected to bring 40+ jobs to the Village of Huntley. The Village s economic development program and ability to complete capital projects are directly linked to external economic factors. Therefore the Village continues a conservative approach in guarding General Operating Fund financial resources while recognizing the importance of providing the levels of service and capital improvements the residents deserve and expect. Contacting the Village s Financial Management This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the Village's finances and to demonstrate the Village's accountability of the money it receives. Questions regarding this report or requests for additional financial information can be directed to the Director of Finance, Village of Huntley, Main Street, Huntley, IL (See independent auditor s report.) MD&A12

33 STATEMENT OF NET POSITION December 31, 2016 Primary Government Governmental Business-Type Activities Activities Total ASSETS Cash and investments $ 18,602,039 $ 7,499,152 $ 26,101,191 Receivables (net, where applicable, of allowances for uncollectibles) Property taxes 4,611,250-4,611,250 Accounts 45, , ,048 Accrued interest 22,502 3,323 25,825 Other 150, , ,544 Due from other governments 1,495,163-1,495,163 Prepaid expenses 74,149-74,149 Capital assets not being depreciated 63,300, ,904 63,516,808 Capital assets (net of accumulated depreciation) 65,274,105 74,574, ,848,769 Total assets 153,575,232 83,263, ,838,747 DEFERRED OUTFLOWS OF RESOURCES Pension items - Police Pension 1,569,157-1,569,157 Pension items - IMRF 768, ,481 1,302,837 Total deferred outflows of resources 2,337, ,481 2,871,994 Total assets and deferred outflows of resources 155,912,745 83,797, ,710,741 LIABILITIES Accounts and retainage payable 3,157, ,152 3,398,737 Accrued payroll 250,610 68, ,340 Accrued interest payable 15,274 1,321 16,595 Unearned revenue 3,186-3,186 Deposits payable 977, ,821 1,108,984 Due to other governments 751, ,083 Noncurrent liabilities Due within one year 378, , ,578 Due in more than one year 12,500,185 1,088,953 13,589,138 Total liabilities 18,033,855 1,808,786 19,842,641 DEFERRED INFLOWS OF RESOURCES Pension items - Police Pension 1,016,490-1,016,490 Pension items - IMRF 69,804 48, ,360 Deferred property tax revenue 4,611,250-4,611,250 Total deferred inflows of resources 5,697,544 48,556 5,746,100 Total liabilities and deferred inflows of resources 23,731,399 1,857,342 25,588,741 (This statement is continued on the following page.) - 4 -

34 STATEMENT OF NET POSITION (Continued) December 31, 2016 Primary Government Governmental Business-Type Activities Activities Total NET POSITION Net investment in capital assets $ 124,770,295 $ 74,386,818 $ 199,157,113 Restricted for Public safety 70,898-70,898 Specific purposes 15,182-15,182 Insurance purposes 396, ,143 Highways and streets 932, ,223 Cemetery operations 274, ,697 Capital improvements - 2,939,270 2,939,270 Unrestricted 5,721,908 4,614,566 10,336,474 TOTAL NET POSITION $ 132,181,346 $ 81,940,654 $ 214,122,000 See accompanying notes to financial statements

35 STATEMENT OF ACTIVITIES For the Year Ended December 31, 2016 Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General government $ 3,600,628 $ 1,764,310 $ 184,917 $ - Public safety 6,122, ,411-1,601 Highways and streets 5,632,393 1,807, ,201 8,023,691 Economic development 4,781, Interest 896, Total governmental activities 21,033,708 3,869, ,118 8,025,292 Business-Type Activities Water 3,446,586 2,524, , ,120 Sewer 4,554,179 2,298, , ,689 Total business-type activities 8,000,765 4,823, ,576 1,784,809 TOTAL PRIMARY GOVERNMENT $ 29,034,473 $ 8,692,871 $ 1,301,694 $ 9,810,101 (This statement is continued on the following page.) - 6 -