$50,250,000 * CITY OF MANASSAS, VIRGINIA General Obligation Public Improvement Bonds, Series 2019

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1 This Preliminary Official Statement and the information contained herein are subject to change, completion and amendment without notice. The Bonds may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. NEW ISSUE BOOK-ENTRY ONLY PRELIMINARY OFFICIAL STATEMENT DATED APRIL 9, 2019 RATINGS: Moody s: Aa1 Standard & Poor s: AAA (See RATINGS ) In the opinion of Bond Counsel, under current law and subject to conditions described in the section Tax Matters, interest on the Bonds (a) is not included in gross income for federal income tax purposes, (b) is not an item of tax preference for purposes of the federal alternative minimum income tax, and (c) is exempt from income taxation by the Commonwealth of Virginia. A holder may be subject to other federal tax consequences as described in the section Tax Matters. $50,250,000 * General Obligation Public Improvement Bonds, Series 2019 Dated: Date of Delivery Due: July 1, as shown on the inside cover This Official Statement has been prepared by the City of Manassas, Virginia (the City ), to provide information on its $50,250,000 * General Obligation Public Improvement Bonds, Series 2019 (the Bonds ), the security therefor, the City and other relevant information. Selected information is presented on this cover page for the convenience of the user. To make an informed decision regarding the Bonds, a prospective investor should read this Official Statement in its entirety. Security Redemption Purpose Interest Rates/Yields The Bonds are general obligations of the City and the full faith and credit of the City will be irrevocably pledged to the punctual payment of the principal of, premium, if any, and interest on the Bonds as they become due. In each year while the Bonds, or any of them, are outstanding and unpaid, the City Council of the City is authorized and required to levy and collect annually, at the same time and manner as other taxes of the City are assessed, levied and collected, a tax upon all taxable property within the City, over and above all other taxes, authorized or limited by law and without limitation as to rate or amount, sufficient to pay when due the principal of, premium, if any, and interest on the Bonds to the extent other funds of the City are not lawfully available and appropriated to such purpose. The Bonds are subject to redemption as set forth herein. The proceeds of the Bonds will be used to (a) finance the costs of certain capital improvement projects for the City and (b) pay the costs of issuing the Bonds. See inside cover. Interest Payment Dates January 1 and July 1, commencing January 1, Record Date Paying Agent Denominations The December 15 and June 15 immediately preceding each interest payment date. City Treasurer. $5,000 or integral multiples thereof. Closing/Delivery Date On or about, Registration Bond Counsel Financial Advisor Conditions Affecting Issuance Official Statement dated, * Preliminary, subject to change. Full book-entry only; through the facilities of The Depository Trust Company, New York, New York. Hunton Andrews Kurth LLP. Davenport & Company LLC. The Bonds are offered for delivery when, as and if issued, subject to the approving opinion of Hunton Andrews Kurth LLP, Bond Counsel, and to certain other conditions referred to herein.

2 $50,250,000 * GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS SERIES 2019 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS Year * (July 1) Principal * Amount 2020 $2,070, ,100, ,140, ,180, ,225, ,275, ,320, ,370, ,425, ,480, ,540, ,605, ,660, ,705, ,745, ,790, ,835, ,880, ,930, ,975,000 Interest Rate Yield CUSIP No. ** * Preliminary, subject to change. ** CUSIP numbers have been assigned by an organization not affiliated with the City and are included solely for the convenience of the holders of the Bonds. The City is not responsible for the selection or uses of these CUSIP numbers, nor is any representation made as to their correctness on the Bonds or as indicated above.

3 CITY COUNCIL Harry J. Parrish II, Mayor Ken D. Elston, Vice Mayor Michelle Davis-Younger Theresa Coates Ellis Ian T. Lovejoy Pamela J. Sebesky Mark D. Wolfe CITY STAFF W. Patrick Pate, City Manager Bryan D. Foster, Deputy City Manager S. Craig Brown, City Attorney Douglas Waldron, Commissioner of the Revenue Patricia Richie-Folks, Treasurer Diane Bergeron, Director of Finance Rose V. B. Spring, Interim City Clerk CERTIFIED PUBLIC ACCOUNTANTS Brown, Edwards & Company, L.L.P. Harrisonburg, Virginia BOND COUNSEL Hunton Andrews Kurth LLP Richmond, Virginia FINANCIAL ADVISOR Davenport & Company LLC Richmond, Virginia

4 The Bonds are exempt from registration under the Securities Act of 1933, as amended. The Bonds also are exempt from registration under the securities laws of the Commonwealth of Virginia. No dealer, broker, salesman, or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations should not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the 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. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Bonds. Any CUSIP numbers for the Bonds included in the Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds have been assigned by an organization unaffiliated with the City. The City is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth on the Official Statement. No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds. All quotations from and summaries and explanations of provisions of law and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinion and not as representations of fact. This Official Statement speaks as of its date except where specifically noted otherwise and is subject to change without notice. Neither the delivery of this Official Statement, any sale made hereunder, nor any filing of this Official Statement shall under any circumstances create an implication that there has been no change in the affairs of the City since the date of this Official Statement or imply that any information herein is accurate or complete as of any later date. Certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the Bonds, including transactions to (a) overallot in arranging the sales of the Bonds and (b) make purchases and sales of Bonds, for long or short account, on a when-issued basis or otherwise, at such prices, in such amounts and in such manner as the underwriter may determine.

5 TABLE OF CONTENTS Page INTRODUCTION... 1 DESCRIPTION OF THE BONDS... 1 Authorization... 1 General... 1 Plan of Finance... 2 Sources and Uses of Funds... 2 Form and Denomination... 2 Book-Entry Only System... 2 Redemption *... 3 Security for the Bonds... 3 Bondholders Remedies in the Event of Default... 3 CITY ORGANIZATION AND SERVICES... 4 Overview... 4 Governmental Organization... 5 Elected Officials... 5 City Staff... 6 City Organizational Chart... 8 Local Government Services... 9 Other Services CITY ECONOMIC AND DEMOGRAPHIC FACTORS Population Per Capita Income Median Household Income Largest Employers Unemployment Rates Taxable Sales Building Permits Recent Economic Development Highlights Planned Economic Development Projects CITY FINANCIAL INFORMATION Description of Funds Annual Audit Budgetary Procedure General Fund Operating Budget Five-Year Summary of Government Revenues, Expenditures and Fund Balances Commonwealth Aid OPERATING DATA CITY INDEBTEDNESS Legal Debt Margin Debt Statement Debt Retirement Debt Ratios General Obligation Debt Service Requirements Joint Ventures Jointly Governed Organization Capital Improvement Program Pension System Post-Employment Benefits Other than Pensions Restatement of Beginning Net Position LITIGATION AND CLAIMS LEGAL MATTERS TAX MATTERS RATINGS... 33

6 SALE AT COMPETITIVE BIDDING FINANCIAL ADVISOR CONTINUING DISCLOSURE General Prior Instances of Non-Compliance MISCELLANEOUS Appendix A - City of Manassas Basic Financial Statements for the Fiscal Year Ended June 30, A-1 Appendix B - Form of Bond Counsel Opinion... B-1 Appendix C - Form of Continuing Disclosure Agreement... C-1 Appendix D - Book-Entry Only System... D-1 Appendix E - Notice of Sale... E-1

7 OFFICIAL STATEMENT $50,250,000 * General Obligation Public Improvement Bonds, Series 2019 INTRODUCTION The purpose of this Official Statement, including the cover page and Appendices attached hereto, is to set forth certain information in connection with the issuance of $50,250,000 * General Obligation Public Improvement Bonds, Series 2019 (the Bonds ), by the City of Manassas, Virginia (the City ). This information is qualified in its entirety by information found elsewhere in this Official Statement. This Official Statement speaks only as of its date, and the information contained herein is subject to change. The Bonds will be issued in authorized denominations of $5,000 and integral multiples thereof and will be held through the facilities of The Depository Trust Company, New York, New York ( DTC ), or its nominee, as securities depository with respect to the Bonds. See the section DESCRIPTION OF THE BONDS - Book-Entry Only System and Appendix D. The Bonds are general obligations of the City for the payment of which the full faith and credit and unlimited taxing power of the City are irrevocably pledged. The security of the Bonds is more fully described in the section DESCRIPTION OF THE BONDS - Security for the Bonds. Financial and other information contained in this Official Statement has been prepared by the City from its records (except where other sources are noted). The information is not intended to indicate future or continuing trends in the financial or economic position of the City. The Bonds will be offered for sale through competitive bidding on April 17, The Notice of Sale relating to the Bonds and describing the competitive bidding process is attached hereto as Appendix E. Authorization DESCRIPTION OF THE BONDS The Bonds are being issued under a resolution adopted by the City Council of the City (the City Council ) on April 8, 2019 (the Bond Resolution ), and pursuant to the Constitution and statutes of the Commonwealth of Virginia, including the Public Finance Act of 1991 of the Code of Virginia of 1950, as amended (the Act ), and without reference to the City Charter. General The Bonds will be dated the date of their delivery and will bear interest from their date payable semiannually on each January 1 and July 1, commencing January 1, The Bonds will mature on July 1 in each of the years as set forth on the inside cover page of this Official Statement. The City Treasurer has been appointed registrar and paying agent for the Bonds (the Registrar or Paying Agent ). The City Manager may at his discretion appoint a qualified bank or trust company as successor paying agent and registrar for the Bonds. Interest on the Bonds shall be payable by check or draft to the holders of the Bonds as of December 15 and June 15 immediately preceding each interest payment date at their addresses as they appear on the registration books kept by the Registrar. If such interest payment date is not a business day, such payment shall be made on the next succeeding business day with the same effect as if made on the interest payment date, and no additional interest shall accrue. * Preliminary, subject to change.

8 Plan of Finance The City plans to use proceeds of the Bonds to (a) finance the costs of certain capital improvement projects for the City, including (but not limited to) the acquisition, construction, extension, replacement, renovation and equipping of public safety, parks, culture & recreation, transportation, utility and general governmental improvements (collectively, the Project ), and (b) pay the costs of issuing the Bonds. Sources and Uses of Funds The proceeds of the Bonds and other available funds of the City are to be used as follows: Sources of Funds: Par Amount of Bonds [Net] Original Issue [Premium/Discount] Total Sources of Funds Uses of Funds Deposit to Project Fund Costs of Issuance (including underwriter s compensation) Total Use of Funds Form and Denomination The Bonds will be issued by means of a book-entry system with no physical distribution of Bond certificates made to the public. Prior to closing on the Bonds, there shall be deposited with DTC one bond certificate registered in the name of DTC s nominee, Cede & Co., for each stated maturity of the Bonds. The bookentry system will evidence beneficial ownership of the Bonds in principal amounts of $5,000 or multiples thereof, with transfers of beneficial ownership effective on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Transfer of principal, premium, if any, and interest payments to Beneficial Owners (as hereinafter defined) by participants of DTC will be the responsibility of such participants and other nominees of Beneficial Owners. The City will not be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. In the event that (1) DTC determines to discontinue providing its services as securities depository for the Bonds, (2) the chief financial officer of the City determines that DTC is incapable of discharging its duties or that continuation with DTC as securities depository with respect to the Bonds is not in the best interest of the City, or (3) the chief financial officer of the City determines that continuation of the book-entry system of evidence and transfer of ownership of the Bonds is not in the best interest of the City or the Beneficial Owners, the City will discontinue the book-entry system with DTC. If the City fails to identify another qualified securities depository to replace DTC, the City will authenticate and deliver replacement Bonds in the form of fully registered certificates to the Beneficial Owners or their nominees. Book-Entry Only System DTC will act as securities depository for the Bonds pursuant to a book-entry system. Information regarding DTC and its book-entry system appears as Appendix D. Such information has been provided by DTC, and the City assumes no responsibility for the accuracy or completeness of such information. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event Bond certificates will be printed and delivered. 2

9 Redemption * Optional Redemption. The Bonds maturing on or before July 1, 2029, are not subject to optional redemption prior to maturity. The Bonds maturing on or after July 1, 2030, are subject to redemption prior to maturity at the option of the City on or after July 1, 2029, in whole or in part (in integral multiples of $5,000) at any time, upon payment of 100% of the principal amount of Bonds to be redeemed plus interest accrued and unpaid to the date fixed for redemption. Manner of Redemption. If less than all of the Bonds are called for redemption, the Bonds to be redeemed shall be selected by the chief financial officer of the City in such manner as such officer may determine to be in the best interest of the City. If less than all the Bonds of any maturity are called for redemption, the Bonds to be redeemed shall be selected by DTC or any successor securities depository pursuant to its rules and procedures or, if the book-entry system is discontinued, by the Registrar by lot in such manner as the Registrar in his discretion may determine. Notice of Redemption. The City shall cause notice of the call of redemption identifying the Bonds or portions thereof to be redeemed to be sent by facsimile or electronic transmission, registered or certified mail or overnight express delivery, not less than 30 nor more than 60 days prior to the redemption date to the registered owner of the Bonds. The City will not be responsible for giving notices of redemption to anyone other than DTC or another securities depository or its nominee unless no qualified securities depository is the registered owner of the Bonds. If no qualified securities depository is the registered owner of the Bonds, notice of redemption shall be mailed to the registered owners of the Bonds. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion thereof will be issued to the registered owner upon the surrender thereof. The City may give or cause to be given notice of redemption prior to a deposit of redemption moneys if such notice states that the redemption is to be funded with the proceeds of a refunding bond issue and is conditioned on the deposit of such proceeds. Provided that moneys are deposited on or before the redemption date, such notice shall be effective when given. If such proceeds are not available on the redemption date, such Bonds will continue to bear interest until paid at the same rate they would have borne had they not been called for redemption, and principal will continue to be payable as scheduled. On presentation and surrender of the Bonds called for redemption at the place or places of payment, such Bonds shall be paid and redeemed. Security for the Bonds The Bonds are general obligations of the City and the full faith and credit of the City will be irrevocably pledged to the punctual payment of the principal of, premium, if any, and interest on the Bonds as they become due. In each year while the Bonds, or any of them, are outstanding and unpaid, the City Council is authorized and required to levy and collect annually, at the same time and manner as other taxes of the City are assessed, levied and collected, a tax upon all taxable property within the City, over and above all other taxes, authorized or limited by law and without limitation as to rate or amount, sufficient to pay when due the principal of, premium, if any, and interest on the Bonds to the extent other funds of the City are not lawfully available and appropriated to such purpose. The City has never defaulted in the payment of either principal or interest on any indebtedness. Bondholders Remedies in the Event of Default Section of the Code of Virginia of 1950, as amended, provides that upon affidavit filed with the Governor of the Commonwealth of Virginia by any holder of or paying agent for a general obligation bond in default as to payment of principal, premium, if any, or interest, the Governor shall conduct a summary investigation and, if satisfied that such default has occurred, the Governor shall order the State Comptroller to withhold all funds * Preliminary, subject to change. 3

10 appropriated and payable by the Commonwealth of Virginia (the Commonwealth ) to the political subdivision so in default and apply the amount so withheld to payment of the defaulted principal, premium and interest. Section also provides for notice to the registered owners of such bonds of the default and the availability of withheld funds. The State Comptroller advises that to date, no order to withhold funds pursuant to Section or Section , the predecessor provisions of , has ever been issued. Although Section has not been approved by a Virginia court, the Attorney General of Virginia has ruled that appropriated funds may be withheld by the Commonwealth pursuant to its predecessor section. In the fiscal year ended June 30, 2018, the Commonwealth appropriated $64,795,125 to the City (including $50,033,930 in Commonwealth appropriations for school purposes), of which approximately $12,158,934 was deposited in the City s General Fund. Neither the Bonds nor the proceedings with respect thereto specifically provide any remedies to bondholders if the City defaults in the payment of principal of, premium, if any, or interest on the Bonds, nor do they contain any provision for the appointment of a trustee to protect and enforce the interests of the bondholders upon the occurrence of such a default. Upon any default in the payment of principal, premium or interest, a bondholder may, among other things, seek a writ of mandamus from an appropriate court requiring the City Council to levy and collect taxes as described in the section Security for the Bonds. The mandamus remedy, however, may be impracticable and difficult to enforce. Furthermore, the right to levy and collect taxes to enforce payment of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and similar laws, and by equitable principles, which may limit the specific enforcement of certain remedies. Chapter 9 of the United States Bankruptcy Code (the Bankruptcy Code ) permits a municipality such as the City, if insolvent or otherwise unable to pay its debts as they become due, to file a voluntary petition for the adjustment of debts provided that such municipality is specifically authorized, in its capacity as a municipality or by name, to be a debtor.... Bankruptcy Code, 109(c)(2). Current Virginia statutes do not expressly authorize the City or municipalities generally to file for bankruptcy under Chapter 9. Chapter 9 does not authorize the filing of involuntary petitions against municipalities such as the City. Bankruptcy proceedings by the City could have an adverse effect on bondholders including (1) delay in the enforcement of their remedies, (2) subordination of their claims to claims of those supplying goods and services to the City after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings and (3) imposition without their consent of a reorganization plan reducing or delaying payment of the Bonds. The Bankruptcy Code contains provisions intended to ensure that, in any reorganization plan not accepted by at least a majority of class of creditors such as the holders of general obligation bonds, such creditors will have the benefit of their original claim or the indubitable equivalent. The effect of these and other provisions of the Bankruptcy Code cannot be predicted and may be affected significantly by judicial interpretations. Overview The City has never defaulted in the payment of either principal or interest on any debt obligation. CITY ORGANIZATION AND SERVICES The City of Manassas, a community of approximately 41,379 residents, is located in Northern Virginia within the Washington, D.C. Metropolitan Statistical Area. Surrounded by Prince William County, the City is thirty miles southwest of the nation s capital and encompasses ten square miles. The City is a regional employment and activity center with a strong employment base in advanced manufacturing, defense contracting, and healthcare. Manassas is a transportation, economic, and cultural hub built around a thriving historic downtown established near a strategic railroad junction. The Town of Manassas received its charter in 1873 and operated as an incorporated town in Prince William County until May 1, 1975, when it became a City of the Commonwealth. 4

11 Governmental Organization The City government is organized under a charter, adopted by the General Assembly of Virginia, and amended from time-to-time, which authorizes a council-manager form of government. The governing body, the Mayor and a six-member City Council, is elected at-large for staggered four-year terms and makes policies for administration of the City. The City Council appoints a City Manager to act as Chief Administrative Officer of the City. The City Manager serves at the pleasure of the City Council, carries out its policies, directs business procedures and appoints and may remove all employees, including the heads of the departments as provided by the City Charter. The seven City School Board members are also elected at-large for staggered four-year terms. The City Council must, to the extent required by applicable law and is otherwise appropriate, appropriate all funds of the School Board and issue debt to finance school capital projects. The Auditor of Public Accounts for the Commonwealth of Virginia has determined that School Board financial statements must be displayed as discretely presented component units in the comprehensive annual financial reports of the primary governments in the Commonwealth which have responsibility for school systems. The Manassas City School Board does not issue its own financial statements. The City Treasurer and the Commissioner of the Revenue are constitutional officers elected at-large by the voters. The General Registrar is appointed by the three-member Electoral Board. The Commonwealth s Attorney, Clerk of the Court and Sheriff are all elected officials shared with Prince William County and the City of Manassas Park. The Judges of the Circuit Court, General District Court, and Juvenile and Domestic Relations Court are appointed by the Virginia General Assembly. Elected Officials City Council Mayor Harry J. Hal Parrish II is serving his third term as Mayor. He is a lifelong resident of the City and had served on the City Council for fifteen years prior to being elected Mayor in 2008 to the present. Mayor Parrish has a Bachelor s degree in Aerospace Engineering and Physics from the University of Virginia and a Master s degree in Business Management from Central Michigan University. He served in the United States Air Force from 1973 to Mayor Parrish is the President of Manassas Ice & Fuel Co., Inc. in the City. Mayor Parrish currently serves on the Northern Virginia Transportation Authority ( NVTA ) on behalf of the City, and serves as Finance Committee Chairman for NVTA. Vice-Mayor Ken D. Elston is serving his second term on City Council and his first term as Vice-Mayor. He has a Bachelor s degree from Temple University and a Master s degree from Ohio State University. He is currently the Director of the School of Theatre at George Mason University where he teaches Acting, Directing, and has a specialty in Movement for the Stage. Mr. Elston currently serves on the following boards and committees on behalf of the City: Finance Committee, Fire and Rescue Committee, Northern Virginia Regional Commission Liaison, and Appointments Committee Alternate. Michelle Davis-Younger is serving her first term on City Council. She is a lifelong resident of the City and owns and operates The1ForHR, LLC - a human resources consulting firm located in in the City. Mrs. Davis- Younger has Bachelor s and Master s degrees in Business Administration from Strayer University. Mrs. Davis- Younger currently serves on the following boards and committees on behalf of the City: Appointments Committee, Finance Committee Alternate, Manassas Historic Resources Board, Social Services Advisory Board, Parks & Recreation Committee, and COG Air Quality Committee. Theresa Coates Ellis is serving her first term on City Council. She has lived in the City for 30 years and owns and operates Tackle Management, PR and Marketing, a small business in the City. Mrs. Ellis has a Bachelor s degree in Business Communication from George Mason University. She currently serves on the following boards and committees on behalf of the City: Land Use Committee, Appointments Committee, Economic Development Authority Liaison, Solid Waste Committee Liaison, and COG Human Services and Public Safety Policy Committee. 5

12 Ian T. Lovejoy is serving his second term on City Council. He has a Bachelor s degree in Sociology and Psychology from Concord University and a Master s degree in Sociology from Virginia Tech. He is currently the owner of Reliant Hiring Solutions a recruitment and hiring event company. Mr. Lovejoy currently serves on the following boards and committees on behalf of the City: Finance Committee Chair, Land Use Committee Alternate, Manassas Regional Airport Commission, Community Policy Management Team, and the COG Climate Energy and Environmental Policy Committee Pamela J. Sebesky is serving her first term on City Council. She earned her Licensed Practical Nursing license from Prince William County School of Practical Nursing and her Bachelor s degree in Nursing from Virginia Commonwealth University. Mrs. Sebesky currently serves on the following boards and committees on behalf of the City: Land Use Committee, Appointments Committee Chair, OmniRide Liaison, Virginia Railway Express Liaison, and COG Transportation Planning Board. Mark D. Wolfe is serving his third term on City Council. He holds a Bachelor s degree from the University of Iowa and attended graduate school at Southern Methodist University. Mr. Wolfe is Chief Operating Officer of MovieComm and serves as the Executive Director of Manassas Ballet Theatre. Mr. Wolfe currently serves on the following boards and committees on behalf of the City: Finance Committee, Land Use Committee Chair, Utility Commission Liaison, and Washington Metropolitan Council of Governments Board of Directors. Patricia Richie-Folks, City Treasurer, is serving her first term as City Treasurer. Ms. Richie-Folks has a diverse professional experience ranging from managing her own construction company, general manager for Sodexho Corporation for the Laundry division, and business development director for Asian Fortune Magazine. She worked for Manassas Ballet Company as the production manager and previous to being elected as Treasurer, was a substitute teacher for Manassas City Public Schools. She has an Associate s degree in Business Administration from Miami-Dade Community College Douglas Waldron, Commissioner of the Revenue, is serving his second term as Commissioner of the Revenue. He previously served the City as a member of the School Board and the City Council and as Mayor from 2004 to He has a Bachelor s degree in Economics from Yale University. City Staff W. Patrick Pate, City Manager. Mr. Pate was appointed City Manager effective October Mr. Pate has 33 years of municipal leadership and management experience in Virginia and North Carolina, including service in High Point, Greensboro and Winston-Salem, North Carolina. Mr. Pate holds a Bachelor s degree in Political Science and Religion and a Master s degree in Public Administration, both from the University of North Carolina at Chapel Hill. He has also completed senior executive training in the Executive Leadership Program at the JFK School at Harvard University, the Weldon Cooper Center for Public Service at the University of Virginia and the Center for Creative Leadership in Greensboro, North Carolina. He is active in a variety of community and professional organizations and served as President of the Government Finance Officers Association of the U.S. and Canada. Bryan D. Foster, Deputy City Manager. Mr. Foster was appointed Deputy City Manager in September Mr. Foster has 24 years of Virginia local government management experience in all three forms of government counties, cities, and towns. He holds a Bachelor s degree in Public Policy and Economics from the College of William and Mary and a Master s degree in Public Administration from the University of North Carolina. He has completed the Senior Executive Institute at the University of Virginia and is a Credentialed Manager by the International City/County Management Association. S. Craig Brown, City Attorney. Mr. Brown was appointed as City Attorney in February He has more than 38 years of experience as an attorney. He previously served as City Attorney for the City of Charlottesville, Virginia. Mr. Brown received a Bachelor s degree (with distinction) in History from the University of Virginia in 1976 and graduated from Wake Forest University School of Law in

13 Diane Bergeron, Finance Director. Ms. Bergeron was appointed Finance Director in February Prior to her appointment, she was the Budget Manager for the City for 10 years. She has 15 years of local government finance experience in Virginia and Florida. She holds a Bachelor s degree in Political Science and a Master s degree in Public Administration, both from the University of Connecticut. She has been an Executive Board Member of the Virginia Government Finance Officers Association for six years and served as President of the organization from October 2017 to October She was recently appointed to serve a three-year term on the Committee on Governmental Budgeting and Fiscal Policy for the Government Finance Officers Association of the U.S. and Canada. City Employees. The City has approximately 489 employees who provide City services. In addition, the School Board employs approximately 1,050 employees, including approximately 600 teachers, guidance counselors and librarians, approximately 400 support staff, and approximately 50 administrators. The City has no labor unions or organizations and by Virginia law does not engage in collective bargaining. [Remainder of page intentionally left blank.] 7

14 City Organizational Chart Citizens of Manassas Interim City Clerk Rose Spring Board of Elections General Registrar Susan Reed Mayor & City Council City Treasurer Patricia Richie- Folks Clerk of the Court Jacqueline Smith Commissioner of the Revenue Doug Waldron Commonwealth Attorney Paul Ebert County Sheriff Glendell Hill Manassas City School Board Manassas City Public Schools City Manager Pat Pate City Attorney Craig Brown Utilitieas Tony Dawood Engineering Michelle Brickner Human Resources Darla Hicks Finance Diane Bergeron Police Doug Keen Fire & Rescue Rob Clemons Social Services Ron King Economic Development Patrick Small Community Development Liz Via-Gossman Deputy City Manager Bryan Foster Airport Juan Rivera General Fund Budget Accounting Purchasing Information Technology Fund General Fund Parks, Culture, Recreation Planning/Zoning Development Services Property Code Enforcement Public Works Vacant Electric Fund Sewer Fund Water Fund Stormwater Fund Solid Waste Fund Vehicle Maintenance Fund Building Maintenance Fund General Fund Streets Traffic Controls Grounds Beautification 8

15 Local Government Services In Virginia, cities and counties are not overlapping units of government. Each city or county is a distinct political entity providing services for the population within its respective jurisdiction. There are no combined citycounty governmental services unless provided for by contractual agreement. The City is, therefore, responsible for providing all local government services to its residents. Public Safety. The Police Department has 134 employees (96 sworn) and consists of three divisions: Patrol Services Division Uniform patrol and traffic section including motor squad and bike patrol. Investigative Services Division Major crimes investigations, vice and narcotics, crime prevention, school resource officers, gang investigator and internet crimes against children investigator. Administrative Services Division Office of the Chief of Police, Office of Professional Responsibility, communications, records management, animal control, training and recruiting, and related support functions. All officers are state certified through the Virginia Department of Criminal Justice Services and are required to receive a minimum of 40 hours of in-service training every 24 months. The City s Fire and Rescue Department has 66 employees (59 operational) who work with the Manassas Volunteer Fire Department and the Greater Manassas Volunteer Rescue Squad to provide fire and rescue services. The Department consists of three divisions: Operations Division Emergency response to/mitigation of fire incidents and hazardous material incidents, emergency medical treatment and transportation for patients. Prevention and Preparedness Office of the Fire Marshall, fire inspections, plans review, and fire and environmental crimes investigation. Administrative Division Emergency Management/Emergency Operations Center, policy development, strategic planning, training and recruiting, records management system-wide administration, and related support functions. Prior to hiring, operational staff is required to have over 500 hours of Virginia Department of Fire Programs Certifications and must also complete annual Federal and OSHA training. Courts. The City has agreements with Prince William County to share the services of the Judiciary System. The System consists of three courts: Circuit Court, General District Court and Juvenile and Domestic Relations Court, the judges of which are elected by the General Assembly of Virginia. Each court has a Clerk of Court whose duties pertain to that specific court and includes court dockets. Utilities. The City owns and maintains a water treatment and distribution system utilizing surface water supply from the Broad Run watershed in western Prince William County. Lake Manassas, owned by the City and located off Route 215 in western Prince William County, has a present usable storage of 5.8 billion gallons and an annual safe yield of 18.3 million gallons per day. The City, which serves approximately 13,500 residential and commercial water accounts, owns a modern water treatment plant with a capacity of 15 million gallons per day ( MGD ), and approximately 170 miles of water mains. The City is in the process of expanding its water treatment plant capacity to 18 MGD, with estimated completion scheduled for The City has a wholesale water operating agreement with Prince William County Service Authority that provides the City with a second source of water in case of emergencies. Under this agreement, the City is entitled to receive water from Fairfax Water through the Prince William County Service Authority system. Through this agreement, the City also provides up to six MGD of water to the Prince William County Service Authority and the City of Manassas Park. 9

16 The City maintains over 142 miles of sewer collection lines that discharge into the regional advanced wastewater treatment collection system for treatment by the Upper Occoquan Sewage Authority ( UOSA ). The City currently has sewer treatment capacity of 8.7 MGD at the UOSA facilities, and is in the process of expanding this capacity to 9.2 MGD. Pursuant to service contracts between the City and UOSA, the City pledges to establish rates sufficient to cover the payment of charges to UOSA for its percentage of the capital and operation and maintenance cost of the plant and its transmission system. The City also has a 100-million-gallon storage facility so it can average the flow for treatment to UOSA by managing the industrial wastewater flow from Micron Technology during extreme peak periods. The City operates an electric utility with 16,400 residential, commercial and industrial accounts having a total peak demand of approximately 88,000 kw. All accounts are within the corporate limits of the City. One hundred percent of the City s energy and demand is purchased from Virginia Municipal Electric Association ( VMEA ) through a full requirements contract VMEA has with Dominion Energy. In addition, the City operates 30 generators (18 owned outright by the City and 12 owned jointly with VMEA) that provide capacity credits when called by Dominion Energy. The City has installed advanced metering infrastructure and also operates a load management system in approximately 3,000 residential customers homes that cycle the water heaters and air conditioners during peak periods. The City is strategically investing in technology such as automated outage management and LED street lighting in order to provide better and more efficient service to customers. Gas service is provided to the City by Columbia Gas of Virginia. Bottled and bulk liquefied petroleum gas is available from nine area suppliers. Transportation. Virginia Highways 28 and 234 Business bisect the City. VA 28 has a northeast-southwest orientation providing connecting access to other main north-south and east-west highways including Interstate 66 and U.S. 29. VA 234 has a northwest-southeast orientation providing connecting access to Interstate 66 to the north and Interstate 95 to the south. Interstate 66 provides access to most major points in Northern Virginia while both Interstates 66 and 95 provide access to the metropolitan Washington, D.C. area. Rail freight service is provided to the City by the Norfolk Southern Railway. Norfolk Southern covers 14 states and southern Canada. Long-distance passenger rail is provided by Amtrak. Additionally, the Virginia Railway Express provides commuter service between Manassas and Washington, D.C. Washington Dulles International Airport is located to the north along VA 28. Ronald Reagan Washington National Airport is located to the east along Interstate 95. Both airports are within approximately 30 minutes driving time from the City. The City owns Manassas Regional Airport, Harry P. Davis Field, which is located near the intersection of Routes 28 and 234. The Airport began operating in its present location in 1964 after being relocated from its original site along Sudley Road. Since 1964 the Airport has played an important role in the growth of the City, Prince William County and the Washington, D.C. metropolitan area. As the largest executive regional airport in Virginia, the Airport encompasses 899 acres and is designated by the FAA as a Reliever Airport to Washington Dulles International Airport and Ronald Reagan Washington National Airport. The Airport s FAA Air Traffic Control Tower was commissioned in 1992 in order to accommodate the increased air traffic. Presently, Manassas Regional Airport is the busiest general aviation airport (no commercial airline traffic) and the sixth busiest airport overall in the Commonwealth with more than 79,550 aircraft operations last year. In 2012, Manassas Regional Airport was identified as one of 84 National General Aviation (GA) airports by the FAA. In 2013, the Airport extended the main runway by 500 feet to a total of 6,200 feet. In 2017, an economic impact study was conducted by the Virginia Department of Aviation that determined that the Airport contributed more than $375 million to the local economy. The Airport has 24 aviation service related businesses, employing more than 400 individuals. The Airport has been the home for over 400 leased aircraft for over ten years. Manassas Public School System. The Manassas City Public Schools ( MCPS ) are operated by a sevenmember elected School Board. The School Board operates ten sites within the City, including five elementary schools, two intermediate schools, one middle school, one high school, and a central office. The instructional programs offered are designed to meet the needs of all students and the expectations of parents, the Commonwealth of Virginia, and the local community. Despite the changing demographics and economic challenges of recent years, 10

17 MCPS continues to focus its resources on providing high quality instructional services division-wide. These efforts include aligning and enhancing curriculum, focused teacher professional development and collaboration, implementing systematic formative assessments, and continually improving instructional services for all students. Below is a summary of student enrollment and staffing for the last ten years: Number of School Buildings Number of Teachers Manassas City Public Schools Student Enrollment (As of September 30) Student Enrollment Elementary (Grades Pre-K 4) Intermediate (Grades 5 6) Middle (Grades 7 8) High (Grades 9 12) ,684 2,783 1, , ,936 2,913 1,011 1,010 2, ,104 3,022 1,015 1,032 2, ,220 3,057 1, , ,218 3,081 1, , ,442 3,217 1,056 1,014 2, ,575 3,284 1,110 1,022 2, ,678 3,258 1,176 1,052 2, ,771 3,262 1,212 1,096 2, ,695 3,177 1,190 1,142 2,186 Source: City of Manassas School Board. Public Works. The Public Works Department employs a work force of 55 employees and is supervised by the Director of Public Works. Areas of operational responsibility include the construction and maintenance of 254 lane miles of City streets, 89 miles of storm sewer, 23 stormwater management ponds, 13 City parks, and grounds maintenance at eight schools. The Department administers a private solid waste collection contract for approximately 10,160 residential and 120 commercial accounts. The Department also maintains the City s buildings, which encompass approximately 210,000 square feet of floor space, and the City s fleet of 365 licensed vehicles and 91 pieces of equipment. Parks, Culture and Recreation. The City currently maintains 21 public amenity areas to meet the parks, recreation, and cultural needs of citizens. The City operates 270 acres of parks and open space, including walking trails, a public swimming pool, six historic sites, and recreational facilities at eight City schools. The City also helps support the GMU Freedom Aquatic and Fitness Center and the Boys & Girls Club. The City also owns and operates the Manassas Museum, a 7,000 square foot facility containing two permanent galleries with audio-visual programs focusing on the Northern Virginia Piedmont region and Manassas during the Civil War and one changing exhibition gallery. The McBryde Library and Archive, a multi-purpose room used primarily for educational programming, and Echoes, the museum store, are also located in the building. Public Library. The Prince William Public Library System provides direct and remote services to the citizens and residents of the Cities of Manassas and Manassas Park and Prince William County through a linked system of regional, community and neighborhood libraries. The City is primarily served through the Central Community Library, located adjacent to the City, and library cards are free to individuals who live, work, own property, or are students within any of the three jurisdictions served by the library system. Membership also entitles cardholders to borrow materials from most library systems in the Washington, D.C. metropolitan area. The City of Manassas, the City of Manassas Park, and Prince William County share the costs of operating the library system under a shared services agreement. The Library Board of Trustees, which is appointed by the City Councils of the Cities of Manassas and Manassas Park and the Board of County Supervisors of Prince William County, oversees all library services, policies and operations of the library system. 11

18 Other Services Medical Services. Novant Health UVA Prince William Medical Center is an acute care community hospital offering a wide range of services in emergency, heart and vascular, orthopedics and spine, imaging, women s and children s health, cancer, fitness and wellness, rehabilitation, behavioral health, comprehensive outpatient care and assisted living. Higher Education. Northern Virginia Community College has a campus located three miles from the corporate limits of the City. Strayer University has facilities three miles from the corporate limits of the City. George Mason University s Science and Technology campus is adjacent to the City in Prince William County. Population CITY ECONOMIC AND DEMOGRAPHIC FACTORS The following tables set forth estimated population and population distribution by age for select years for the City, Prince William County and the United States. Population City of Manassas 27,957 35,135 37,821 41,379 Prince William County 215, , , ,763 Commonwealth of Virginia 6,189,317 7,079,030 8,001,024 8,365,952 Source: United States Census Bureau: American Community Survey 5-Year Estimates. Population Distribution by Age Median Age % Under 18 % 65 or over Persons/ Household City of Manassas % 8.8% 3.29 Prince William County Commonwealth of Virginia Source: United States Census Bureau: American Community Survey 5-Year Estimates. [Remainder of page intentionally left blank.] 12

19 Per Capita Income The following table provides comparative total per capita income figures (in dollars) for the City, the Commonwealth of Virginia and the United States for selected years: Year City of Manassas (1) of Virginia Commonwealth United States 2008 $46,386 $45,501 $40, ,011 44,026 39, ,788 45,405 40, ,231 47,647 42, ,522 49,431 44, ,665 48,666 44, ,949 50,528 47, ,278 52,687 48, ,313 53,323 49, ,929 55,105 51,640 Source: Bureau of Economic Analysis. (1) Includes Prince William County, City of Manassas and City of Manassas Park. [Remainder of page intentionally left blank.] 13

20 Median Household Income The following table provides comparative total median household income figures (in dollars) for the City, the Commonwealth of Virginia and the United States for selected years: Year City of Manassas Commonwealth of Virginia United States 2008 $76,149 $61,044 $52, ,150 60,316 51, ,173 61,406 51, ,091 63,302 52, ,634 63,636 53, ,036 63,907 53, ,215 64,792 53, ,890 65,015 53, ,371 66,149 55, ,551 68,766 57,652 Source: United States Census Bureau: American Community Survey 5-Year Estimates. Largest Employers The estimate of the largest employers located in the City as of December 31, 2017, is listed below: Largest Employers Type of Operation Estimated Number of Employees Micron Technology Memory Chip Manufacturing 1,500 Novant Health UVA Health System Hospital/Health Care 1,142 Manassas City Public Schools K-12 School System 1,050 Lockheed Martin Electronic Design & Manufacturing 972 City of Manassas Local Government 489 American Disposal Service Trash & Refuse Removal 465 BAE Systems Electronic Design & Manufacturing 280 S.W.I.F.T. Financial Messaging Service 265 Aurora Flight Sciences Remote Control Aircraft Design & Manufacturing 257 ARS (American Residential Services) Plumbing and HVAC Service 193 Source: City of Manassas Comprehensive Annual Financial Report for the fiscal year ended June 30, [Remainder of page intentionally left blank.] 14

21 Unemployment Rates The table below provides comparative average annual unemployment rates for the City, the Commonwealth of Virginia and the United States. Calendar Year City of Manassas Commonwealth of Virginia United States % 3.9% 5.8% Source: Virginia Employment Commission, Labor Market Information; Bureau of Labor Statistics. Taxable Sales The table below provides the dollar value of all sales tax receipts received by the Department of Taxation and the number of retailers making such sales. Source: Commonwealth of Virginia, Department of Taxation. Calendar Year Taxable Sales Number of Retailers 2008 $457,481, ,952, ,343, ,699, ,637, ,591, ,932, ,309, ,109, ,406, ,862, [Remainder of page intentionally left blank.] 15

22 Building Permits Building permits issued by the City and the corresponding value of such permits are presented below: Fiscal Year Ended June 30 Source: City of Manassas. Commercial Number of Permits Residential Number of Permits Estimated Total Value $ 3,518, ,632, ,786, ,721, ,113, ,711, ,511, ,073, ,879, ,510,468 Recent Economic Development Highlights Micron Technologies announced the largest capital investment in modern Virginia history in The $3 billion capital investment will include roughly $700 million for the construction of two new clean rooms and associated physical plants as well as $2.3 billion in new equipment at the company s semiconductor manufacturing plant in the City. Micron is expected to create at least 1,100 new high wage jobs and to increase exports from the Commonwealth by more than $1 billion annually. Micron is the City s largest employer, tax payer and utility customer and the Commonwealth s largest exporter. The company currently employs approximately 1,500 people and contributes to the City having the 4 th highest weekly wage in the Commonwealth for professional and technical services. Construction on Phase I began in 2018 and is expected to be completed in 2020 and to result in new tax revenues of $2 million annually on real estate and machinery. The expansion helps to solidify the company s future in the City and will make the City a worldwide center for memory and storage solutions primarily focused on the automotive, industrial and networking markets. Aurora Flight Sciences is headquartered in the City and was acquired by the Boeing Companies in Operated as an independent wholly owned subsidiary, Aurora is a worldwide leader in autonomous vehicle systems and garnered international news when it recently tested the world s first autonomous air taxi at the Manassas Regional Airport. Shortly after the company s acquisition, Virginia Governor Ralph Northam announced Boeing would be investing $13.75 million to build an advanced robotics laboratory and would create 135 new jobs with an average salary of $105,000 in the City, well in excess of the City s prevailing annual wage rate of $61,000. Aurora currently employs 450 people worldwide and more than 250 in the City. Novant Health UVA Health System completed a $38 million master facility project in 2018 at its Prince William Medical Center in the City to improve the patient experience and access to care. The project is the largest of numerous capital investments in buildings and equipment made or planned by the hospital group across its three hospitals and many business units. The hospital is the City s second largest employer with approximately 1,142 employees and contributes to the City having one of the 10 highest weekly wages in Virginia for healthcare professionals. The Landing at Cannon Branch (formerly Manassas Gateway). The City-owned 40-acre mixed use development will include 274 luxury townhomes, 250,000 square feet of Class-A office space, retail space along a large water feature and a hotel. The anticipated capital investment is $250 million and the City expects to realize an estimated $30 million in land sales and $3.5 million in annual local tax revenues. Since 2016 Buchanan Partners, the City s Master Development partner for the project, has paid the City $8.8 million in land purchase proceeds and interest and invested $9.1 million in site improvements. 16

23 Office and Retail. Buchanan Partners is in plan review for a 20,000 square foot office over retail project at the Landing. The estimated $6 million construction cost includes new site improvements and infrastructure to establish interior roadways, pedestrian improvements, public spaces and landscaping to establish the sense of place for the overall project. Construction is expected to begin in the spring of Buchanan has also begun design of the first 80,000 square foot Class-A office building at the Landing to comply with the development agreement. Once designed and permitted the building will enable Buchanan and the City to more easily and quickly attract new office tenants by speeding the time to market for new construction. Luxury Townhomes. Stanley Martin Custom Homes, a subsidiary of Daiwa House Group, is a premier homebuilder and is the residential developer chosen for the Landing. Since 2016 the company has purchased 134 lots from the developer and has sold 96 units with an additional 44 under contract to be sold. Home prices range between $330,000 and $440,000, well in excess of the City s published median home price of $307,000. All site construction is complete. Tru by Hilton. Holladay Properties is expected to begin construction on a $15 million hotel at the Landing in the spring of The proposed hotel is a 98 room Tru by Hilton property and will correct a deficiency in the local lodging market by providing an upper mid-scale hotel option. The City anticipates receiving $350,000 annually in new property and lodging taxes after stabilization and the land sale will result in $1 million being paid to the City at closing. Gateway Business Center. The Pruitt Corporation began construction on a two building 80,000 square foot speculative flex industrial development in The project was completed in 2017 and is fully occupied. It is assessed for $6.5 million. The City s current vacancy rate for industrial space is 2% and rental rates average just over $11 per square foot, exceeding regional averages. APP Jet Center is a Connecticut based real estate investment trust specializing in airport properties. The company issued an $11.8 million industrial revenue bond through the Economic Development Authority of the City of Manassas in 2018 to finance the acquisition, renovation, improvement, furnishing and equipping of three aircraft storage hangars and associated office space totaling approximately 65,500 square feet at the Manassas Regional Airport. APP Jet Center is a first-class aviation company with fixed-base operator facilities and hangars in major markets across the country. For the past two years APP Jet Center was voted the number one fixed-base operator in the Washington, D.C. metro area by Aviation International News. Local tenants include defense industries giant Leidos and the company s own fixed base operations. Chantilly Air is an aviation services company providing aircraft maintenance, charter, management, storage, ground support, and aircraft sales and acquisitions. In 2018 the company received a franchise and ground lease from the City to construct a new fixed-base operation at the Manassas Regional Airport. The $13 million stateof-the art facility will consist of over 60,000 square feet of hangar space and approximately 30,000 square feet of office space as well as tank additions at the fueling station. Chantilly Air is one of the largest and most established jet operators based in the Washington, D.C. metro area. Hastings Marketplace is a mixed-use residential and retail community anchored by Harris Teeter. Golden Eagle Group has begun construction on eight live/work units, which are expected to be available for occupancy in The final phase of the development project consists of 26 apartments over ground floor retail. Manassas Station. The Christopher Companies recently completed the first of two multi-family redevelopment projects announced in 2016 for the City s Historic Downtown. Opened in 2018, the 105 upscale one- and twobedroom units lease for $1,300 to $1,700 per month. Assessed for $12.6 million, the project is fully stabilized with a 95% occupancy rate. Messenger Place. Weber Rector Commercial Real Estate Services began planning a 94-unit luxury apartment building in the heart of Historic Downtown in The project is currently preleasing and will be open for occupancy in the spring of These upscale one- and two-bedroom units are expected to command premium rents ranging from $1,550 to $1,700 per month. The $17 million redevelopment project contributes to 17

24 the ongoing revitalization of the City s Historic Downtown and will include 3,500 square feet of ground floor retail. Grant Corner. Evergreen Homes completed this 14-unit luxury townhome development in 2017 and it is sold out. The starting price for the new units was $340,000. The Gatherings at Wellington. Beazer Homes is developing this 55+ community featuring 135 mid-sized condominiums in five buildings. The first units were available for purchase in 2013 and the last building was completed in Fall The median sales price for all units at The Gatherings is $308,000. Planned Economic Development Projects Jefferson Square. K Hovanian Homes will develop one of the largest remaining under-developed parcels in the City. Located on the edge of Historic Downtown, the 10-acre project was granted legislative approval in 2019 and includes 85 executive townhomes and 20 luxury single family homes priced from $400,000 to the mid-$500,000s, well above the City s median home price. Units will be available for sale in the fall of CITY FINANCIAL INFORMATION Description of Funds The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Funds are divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds. Governmental Funds account for the expendable financial resources, other than those accounted for in Proprietary and Fiduciary Funds. The Governmental Funds use the modified accrual basis of accounting where the measurement focus is upon determination of financial position and changes in financial position, rather than on net income determination as would apply to a commercial enterprise. The City reports the following Governmental Funds: The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Fund is considered a major fund for financial reporting purposes. The Special Revenue Funds account for the proceeds of specific revenue sources (other than major capital projects) that legally are restricted to expenditures for specified purposes. Special Revenue Funds consist of the Social Services Fund, PEG Fund, Owens Brooke District Fund, Fire Rescue Fund, Merchant Museum Fund and Speiden Carper House Fund. The Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities, other than those financed by proprietary funds. Capital Project Funds consist of the General Capital Projects Fund, Gateway Capital Projects Fund, Transportation Capital Projects Fund, and the NVTA Capital Projects Fund. The Debt Service Fund is used to account for and report the resources accumulated and payments made for principal and interest on governmental long-term general obligation debt. The Cemetery Maintenance Fund is the government s only permanent fund. It accounts for and reports resources that are restricted such that only earnings may be used for the intended purposes. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its electric, water, sewer and stormwater utilities, solid waste collection and 18

25 regional airport. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for its fleet of vehicles, information technology systems and maintenance of buildings. Annual Audit Fiduciary Funds. The City does not have any fiduciary funds. The City has an annual audit made of the books of accounts, financial records and transactions of administrative departments of the City by a certified public accountant selected by the City Council. The most recently completed accountants report was for the fiscal year ended June 30, 2018, and was submitted by Brown, Edwards & Company, L.L.P., Harrisonburg, Virginia. Brown, Edwards & Company, L.L.P., will not be reviewing any matters in connection with the Bonds. The City s basic financial statements for such fiscal year are included herein in Appendix A. The City s audited financial statements are available for inspection at the office of the Director of Finance, City Hall, City of Manassas, Virginia Budgetary Procedure Pursuant to Virginia State Code Section , the City Manager and the School Board submit to the City Council on or before April 1 of each year a budget for the fiscal year beginning July 1. The budget is advertised, and copies are made available to the general public. After public hearings the budget is adopted on or before July 1 of each year. The City Council acts upon each section of the budget on a fund basis with the exception of the school budget, which is acted upon in total. The real property tax year for the City runs from July 1 to June 30, with taxes due semiannually on June 5 and December 5. The personal property tax year for the City runs from January 1 to December 31, with taxes due on October 5. [Remainder of page intentionally left blank.] 19

26 General Fund Budget Summary FY2018 Amended Budget FY2019 Adopted Budget Revenue: General Property Taxes $ 73,952,000 $ 75,328,000 Other Local Taxes 18,858,000 20,018,000 Permits, Licenses & Fees 783, ,500 Fines & Forfeitures 717, ,500 Use of Money & Property 354, ,980 Charges for Service 596, ,500 Other Revenues 4,246,402 4,190,420 State 12,113,430 12,169,430 Federal 197, ,000 Payment in Lieu of Taxes 1,820,810 1,858,500 Transfers from Other Funds 30,000 32,800 Use of Unassigned Fund Balance 600, ,000 Use of Other Fund Balance (1) 3,769,580 2,791,000 Total $118,038,903 $120,028,630 Expenditures: General Government $ 9,690,692 $ 9,956,960 Public Safety & Judicial 23,070,279 22,968,110 Public Works 9,060,238 8,749,350 Health & Welfare 5,269,690 5,319,930 Community Enhancement and Development 7,556,333 7,140,490 Debt Service 4,675,630 4,675,630 Capital & Other 3,098,831 4,141,000 Public Education 55,617,210 57,077,160 Total $118,038,903 $120,028,630 Source: City of Manassas Finance Department. (1) Use of Other Fund Balance includes all Restricted, Committed and Assigned Fund Balances. General Fund Operating Budget City staff projects that for the fiscal year ended June 30, 2019, actual total revenues will be slightly greater than budgeted total revenues and actual total expenditures will be slightly less than budgeted total expenditures. Projections indicate that meals tax revenue will increase approximately 5%. All other revenue sources are projected to be consistent with the budget. Expenditures are expected to be less than budget primarily due to the projected savings in wages and benefits due to standard vacancies, turnover, etc. The adopted budget for fiscal year 2019 anticipates using $600,000 in fund balance and $2,791,000 in other reserve funds primarily for one time capital projects. Such projections are preliminary. Actual results for the end of the fiscal year may vary, and such variances could be material. [Remainder of page intentionally left blank.] 20

27 Five-Year Summary of Government Revenues, Expenditures and Fund Balances The financial data shown in the following table provides a summary for fiscal years ended June 30, 2014, through June 30, 2018, of the City s Statement of Revenues, Expenditures and Changes in Fund Balances. The data below includes only the City s governmental funds and not the discretely presented component unit, School Board. The information was taken from the City s Comprehensive Annual Financial Reports and should be read in conjunction with such statements and the notes thereto, included as Appendix A to this Official Statement Revenues: General property taxes $ 69,152,354 $ 73,313,910 $ 76,770,693 $ 78,422,645 $ 83,648,432 Other local taxes 17,703,001 17,944,186 19,123,123 20,162,055 18,878,986 Permits, fees and licenses 796, , ,822 1,154, ,351 Fines and forfeitures 637, , , , ,993 Use of money and property 286, , , ,021 1,098,388 Charges for services 1,221,953 1,194,458 1,267,011 1,193,427 1,394,714 Payment in lieu of debt service 4,792,911 5,000,876 7,341,400 7,255,184 7,357,675 Recovered costs 1,951,150 2,101,870 2,230,720 2,451,271 3,419,610 Miscellaneous 2,304,867 1,601,879 1,534,506 1,212,603 2,203,690 Contribution from component unit ,256,077 1,447,500 Intergovernmental 18,019,681 18,052,021 19,162,831 18,460,027 18,662,441 Total Revenues $116,867,088 $121,130,565 $129,241,621 $134,943,300 $139,702,780 Expenditures: General government administration $ 8,668,542 $ 9,041,926 $ 9,039,441 $ 8,924,147 $ 8,964,728 Public safety 28,617,782 28,398,747 29,109,653 28,891,462 30,322,441 Public works 4,787,857 4,328,697 4,423,503 6,241,717 7,316,492 Health and welfare 7,834,030 8,277,227 7,937,132 8,108,642 8,582,141 Culture, recreation, development 5,109,182 5,558,630 6,098,669 7,222,524 7,015,552 Education 51,334,432 90,297,919 53,559,758 57,870,687 56,477,145 Capital outlay 7,355,398 5,042,455 7,014,122 6,869,322 7,907,676 Debt service: Principal retirement 4,972,167 5,123,293 6,073,653 6,286,702 6,827,540 Interest and fiscal charges 2,105,879 2,049,473 3,287,943 3,017,724 3,245,467 Bond Issuance Costs - 472, ,281 - Total expenditures $120,785,269 $158,590,740 $126,543,874 $133,826,208 $136,659,182 Excess (deficiency) of revenues over (under) expenditures ($ 3,918,181) ($37,460,175) $ 2,697,747 $ 1,117,092 $ 3,043,598 Other financing sources(uses) Transfers In $ 8,370,750 $ 6,776,635 $ 11,361,929 $ 9,936,264 $ 13,703,998 Transfers out (3,812,053) (6,469,955) (6,416,211) (6,833,878) (9,688,045) Issuance of Debt 3,814,050 46,101,800-23,400,000 - Premium on bonds 178,380 4,401,863-2,977,002 - Payment to refunded bond escrow agent - (12,794,921) - (9,518,194) - Other 51,518 33, ,608 36,961 - Total other financing sources (uses) $ 8,602,645 $ 38,048,618 $ 5,273,326 $ 19,998,155 $ 4,015,953 Net change in fund balances $ 4,684,464 $ 588,443 $ 7,971,073 $ 21,115,247 $ 7,059,551 Fund balance beginning $ 29,879,948 $ 34,564,412 $ 35,152,914 $ 43,123,987 $ 64,239,234 Fund balance ending (1) $ 34,564,412 $ 35,152,855 $ 43,123,987 $ 64,239,234 $ 71,298,785 Source: City of Manassas Comprehensive Annual Financial Reports for the fiscal years ended June 30, 2014 through (1) Fund balance ending for Fiscal Year 2015 has been restated to correct debt, bond premiums and accrued interest to $35,152,

28 Commonwealth Aid The City receives revenues from the Commonwealth of Virginia in the major categories shown below with the following amounts received in the fiscal year ended June 30, 2018: 1) Commonwealth School Aid - $50,033,930 2) Social Services Programs - $1,695,680 3) Street Maintenance Funds - $3,828,004 4) Programs in support of Public Safety - $1,219,800 5) Personal Property Relief Act - $3,786,634 6) Communications Tax Proceeds - $2,639,319 7) Manassas Regional Airport Support - $461,760 8) Other Programs - $1,129,998 In addition to the above programs, the City received Sales Tax in the amount of $7,136,019 in the fiscal year ended June 30, This is reported as Other Local Taxes on the basic financial statements. The Commonwealth imposes a 6.0% tax on sales of which 1% is the local portion and is remitted to the City. OPERATING DATA Real estate is assessed every year at 100% of fair market value. The fiscal year 2019 reassessment was effective January 1, New construction is assessed on a supplemental basis and is billed annually. Personal property includes automobiles, trucks, motorcycles, trailers, boats, mobile homes, furniture and fixtures and all other business tangible property and machinery and tools used in manufacturing. January 1 is the effective date of assessment or the tax day, except for vehicles, which are assessed as of the month they acquire situs within the City. Public service real estate and personal property includes property owned and used by railroads, gas, electrical and telephone companies. Assessed value is determined by the State Corporation Commission and the State Department of Taxation. Tax Year General Property Tax Rates Fire Rescue Levy Total Direct Real Property Personal Property Machinery and Tools 2009 $1.350 $0.143 $1.493 $3.250 $ Source: Notes: City of Manassas Commissioner of the Revenue. Tax rates are per $100 of assessed value. Effective January 1, 2011, the City changed the real property tax year to the fiscal year ending June 30. The tax year for personal property is the calendar year ending December 31. Owens Brooke is a special taxing district in addition to the real property tax noted above. Business personal property and computer equipment is taxed at different rates than the personal property rate noted above. Semiconductor manufacturing machinery & tools is taxed at a different rate than that noted above. 22

29 Assessed Value of Taxable Property Last Ten Fiscal Years Real Property Tax Year Residential Commercial Tax-Exempt Total Direct Tax Rate Public Service Real & Personal Property Personal property Tangible Personal Property Machinery & Tools Total Assessed & Actual Value Total Taxable Assessed & Actual Value 2009 $2,046,404,000 $1,712,622,700 $852,224,300 $1.493 $ 76,628,275 $324,807,030 $736,201,970 $5,748,888,275 $4,896,663, ,083,619,700 1,508,162, ,507, ,741, ,309, ,112,580 5,504,452,962 4,732,945, ,249,477,700 1,547,273, ,895, ,741, ,268, ,460,300 5,791,116,972 4,995,221, ,328,941,100 1,583,564, ,169, ,551, ,608, ,817,165 5,746,652,352 4,982,483, ,491,207,000 1,613,906, ,874, ,399, ,472, ,309,575 5,923,169,183 5,244,294, ,653,025,300 1,533,191, ,361, ,142, ,210, ,133,720 6,019,063,333 5,338,702, ,774,454,700 1,653,210, ,811, ,146, ,700, ,440,390 6,325,763,509 5,617,952, ,915,314,100 1,698,553, ,641, ,485, ,870, ,057,065 6,521,921,556 5,771,280, ,000,312,000 1,714,687, ,803, ,124, ,664, ,304,770 6,653,897,240 5,901,093, ,074,547,700 1,733,207, ,341, ,530, ,010, ,224,590 6,809,862,000 6,008,520,500 Sources: City of Manassas Commissioner of the Revenue; Virginia Department of Taxation Annual Reports. Notes: Property is assessed at actual value; therefore, the assessed values are equal to actual values. Property in the City is reassessed each year. Tax rates are per $100 of assessed value. Real property is assessed on January 1 preceding the fiscal year which begins July 1, except for tax year 2011 as noted below. Effective January 1, 2011, the City changed the real property tax year to the fiscal year ending June 30. For the transition, real property tax year 2011 is a six-month tax year and the tax rate is one half of the 2010 rate real property values were used for the 2011 short tax year (plus supplements, minus abatements, etc.). The tax year for personal property is the calendar year ending December 31. [Remainder of page intentionally left blank.] 23

30 Fiscal Year Taxes Levied for the Fiscal Year Collected within the Fiscal Year of the Levy Percentage of Original Amount Levy Real Property Tax Levies and Collections Last Ten Fiscal Years Collections in Subsequent Years Total Collections to Date Percentage of Adjusted Amount Levy Delinquent Taxes Amount Percentage of Levy 2009 $55,297,716 $53,399, % $1,893,483 $55,293, % $1,898, % ,907,095 51,987, ,917,515 53,904, ,919, ,139,297 50,353, ,785,596 52,139, ,785, ,254,647 50,861, ,393,471 52,254, ,393, ,668,751 51,440, ,225,740 52,666, ,228, ,428,143 55,060, ,842 56,056, ,367, ,630,272 58,540, ,466 59,529, ,089, ,924,270 61,837, ,366 62,776, ,087, ,894,082 63,227, ,361,668 64,589, ,666, ,576,985 68,393, ,183, Source: City of Manassas Comprehensive Annual Financial Report for the fiscal year ended June 30, Note: Tax levy reported is based on the original assessed value attained on fiscal year end of each year. Delinquent taxes reflect the amount delinquent as of fiscal year end for the initial year levied. Name of Business Principal Real Property Taxpayers As of June 30, 2018 Type of Business Taxable Real Property Assessed Value % of Total Taxable Real Property Assessed Value Lockheed Martin Electronic Design & Manufacturing $100,543, % Micron Technology Memory Chip Manufacturing 98,066, UDR Wellington Place Shopping Center 60,013, Battery Heights Associates Apartment Complex 52,990, Davis Ford Crossing, LLC Shopping Center 37,261, Wellington Station Owner LLC Shopping Center 32,508, Hastings Marketplace Owner LLC Shopping Center 31,865, Prince William Hospital Corp. Hospital/Health Care 31,744, WT/CAP Manassas Courts Apt. Apartment Complex 26,634, Fairfield Village Square Apartment Complex 25,350, $496,977, % Source: City of Manassas Commissioner of the Revenue. Note: Fairfield Village Square is formerly known as Village Square Associates. [Remainder of page intentionally left blank.] 24

31 CITY INDEBTEDNESS Legal Debt Margin Article VII, Section 10(a) of the Constitution of Virginia, 1971, and Section of the Act, contain a limitation on outstanding indebtedness that may be incurred by cities. Such limitation is expressed as 10% of the assessed value of the real estate within the City, which is subject to local taxation. As of June 30, 2018, the legal debt margin of the City was as follows: Total Assessed Value of Taxable Real Estate as of January 1, 2017 $4,807,755,000 Legal Debt Limit - (10%) 480,775,500 Amount of Debt Applicable to Debt Limit (1) 103,824,208 Legal Margin for Creation of Additional Debt $ 376,951,292 (1) Does not include capital leases, which are subject to appropriation. Debt Statement (1) As of June 30, 2018, the City had the following long-term indebtedness outstanding: General Obligation Bonds for Government Activities $ 76,674,475 General Obligation Bonds for Business Activities (1) 27,149,733 Total $103,824,208 Consists of general obligation indebtedness issued for enterprise-related activities and expected to be repaid from the revenues generated therefrom. Debt Retirement The following table provides a summarized debt retirement schedule for the City: Retirement of Long-Term Indebtedness As of June 30, 2018 (1) Maturing Within Amount Maturing Percent of Total 5 Years $ 36,862, % 10 Years 70,566, Years 93,194, Years 103,824, Source: City of Manassas, Finance Department. (1) Includes general obligation debt, capital lease agreements and general obligation indebtedness issued for enterprise related activities and expected to be repaid from the revenues generated therefrom. Does not reflect the issuance of the Bonds. Does not include capital leases, which are subject to annual appropriation. [Remainder of page intentionally left blank.] 25

32 Debt Ratios Fiscal Year The key debt ratios of the net general obligation debt of the City are presented in the following table: Outstanding General Obligation Bonds (1) Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Outstanding State Literary Loans Total Outstanding Bonds Percentage of Outstanding Bonds to Total Taxable Assessed and Actual Value of Real Property Outstanding Bonds Per Capita 2009 $ 88,496,400 $814,275 $ 89,310, % $2, ,316, ,275 87,828, , ,003, ,000 87,228, , ,142,378-80,142, , ,999,685-75,999, , ,326,018-80,326, , ,243, ,243, , ,648, ,648, , ,907, ,907, , ,941, ,941, NA Source: City of Manassas Comprehensive Annual Financial Report for the fiscal year ended June 30, Notes: Details of the City s outstanding debt can be found in the notes to the financial statements. Taxable Assessed and Actual Value of Property is found in Table 7 of the City s Comprehensive Annual Financial Report for the fiscal year ended June 30, Calculation excludes tax-exempt, public service and personal property. Population data is found in Table 14 of the City s Comprehensive Annual Financial Report for the fiscal year ended June 30, (1) Totals include unamortized premium on bonds. As of June 30, 2018, unamortized premium totaled $10,117,433. [Remainder of page intentionally left blank.] 26

33 General Obligation Debt Service Requirements The City s total long-term general obligation debt service requirements are presented below: Annual Long-Term General Obligation Debt Service Requirements as of June 30, 2018 General Fund Bonds Fire Rescue Fund Bonds School Fund Bonds Airport Fund Bonds Utility Funds Bonds Total Long-Term General Obligations Year Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Total 2019 $ 1,182,570 $ 601,855 $ 290,000 $ 229,050 $ 3,609,585 $ 2,143,256 $ 375,589 $ 77,821 $ 1,617,845 $ 942,689 $ 7,075,589 $ 3,994,671 $ 11,070, ,217, , , ,200 3,676,360 2,003, ,907 70,103 1,670, ,458 7,239,907 3,743,767 10,983, ,234, , , ,200 3,732,980 1,860, ,324 62,017 1,717, ,866 7,379,324 3,493,911 10,873, ,263, , , ,275 3,810,600 1,693, ,843 53,279 1,781, ,196 7,568,843 3,185,524 10,754, ,309, , , ,150 3,910,530 1,501, ,466 43,978 1,640, ,293 7,598,466 2,820,795 10,419, ,359, , , ,275 4,024,615 1,303, ,967 34,062 1,711, ,357 7,845,967 2,449,056 10,295, ,404, , , ,525 4,139,545 1,099, ,955 25,248 1,790, ,091 8,027,955 2,061,137 10,089, ,453, , , ,775 2,699, , ,926 17,202 1,871, ,741 6,744,926 1,713,421 8,458, , , , ,150 2,273, , ,928 12,126 1,949, ,527 5,431,928 1,427,422 6,859, , , , ,850 2,372, , ,960 10,093 2,039, ,495 5,653,960 1,178,257 6,832, , , ,000 88,100 2,468, , ,023 8, , ,952 4,621, ,055 5,593, ,160 87, ,000 77,250 2,556, , ,118 5, , ,177 4,753, ,263 5,559, ,720 62, ,000 68,350 2,649, , ,246 3, ,395 89,013 4,525, ,300 5,165, ,520 48, ,000 59,250 2,740, , ,956 1, ,820 71,480 4,372, ,553 4,868, ,980 36, ,000 49,656 2,833, , ,430 55,775 4,355, ,085 4,718, ,440 23, ,000 39,263 2,916, , ,040 39,223 4,470, ,588 4,707, ,000 10, ,000 28,350 2,590,000 46, ,000 21,600 3,645, ,631 3,751, ,000 6, ,000 17, ,000 6, ,000 12,994 1,250,000 42,526 1,292, ,000 2, ,000 5, ,000 2, ,000 4,331 1,265,000 14,231 1,279,231 $15,623,650 $4,173,138 $7,685,000 $2,182,676 $53,365,825 $16,330,323 $3,844,208 $424,798 $23,305,525 $6,635,258 $103,824,208 $29,746,193 $133,570,401 Source: City of Manassas Finance Department. * Totals may not add due to rounding. [Remainder of page intentionally left blank.] 27

34 Net General Obligation Annual Debt Service Requirements (1) Fiscal Year Ending Existing Net G.O. Debt Service Requirements (2) Add: G.O. Debt Service Requirements on Series 2019 Bonds Principal Interest Total Principal Interest Total Principal Interest Total Source: City of Manassas Finance Department. (1) Preliminary, subject to change. Totals may not add due to rounding. (2) As of June 30, [Remainder of page intentionally left blank.] 28

35 Joint Ventures Upper Occoquan Sewage Authority. The Upper Occoquan Sewage Authority ( UOSA ), of which the City is a member jurisdiction, was established to acquire, finance, construct, operate and maintain facilities for the treatment of sewage in its service area. UOSA has issued various regional sewage system revenue bonds to pay the costs of its sewer and sewage disposal system. The City s committed share of UOSA s debt service on such bonds is shown in Note 10 to the Basic Financial Statements in Appendix A. Potomac and Rappahannock Transportation Commission. The City, through its membership in the Potomac and Rappahannock Transportation Commission ( PRTC ), joined with other jurisdictions through a Master Agreement to pay its share of the costs associated with operating and insuring the Virginia Railway Express ( VRE ), a commuter rail service operating between Northern Virginia and Washington, D.C. See Note 10 to the Basic Financial Statements in Appendix A for further information regarding PRTC. Jointly Governed Organization Northern Virginia Transportation Authority. The NVTA was established under the provisions of the Code of Virginia, Title 15.2, Chapter 48.2 with the cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park and the counties of Arlington, Fairfax, Loudoun, and Prince William. The NVTA is responsible for long-range transportation planning for regional transportation projects in Northern Virginia and sets regional transportation policies and priorities for regional transportation projects. While the jurisdictions have representatives as members of the governing body of the NVTA, the jurisdictions do not have an explicit measurable equity interest in NVTA. Beginning in 2014, House Bill 2313 gave the NVTA responsibility over the collection and distribution of certain dedicated taxes for transportation including 1% additional sales tax, 2% additional transient and occupancy tax and 1.5% additional grantor s tax. By law, 30% of these additional revenues are distributed to the jurisdictions provided they implement the commercial and industrial tax of 12.5 cents, or dedicate some other funds towards transportation. The remaining 70% of additional revenues is required to be used towards regional transportation projects approved by the NVTA and implemented by the jurisdictions. In 2018, the City received $1,707,350 of these taxes. Capital Improvement Program In conjunction with an adopted Master Plan, the City Council prepares a five-year Capital Improvement Program (the CIP ). The CIP does not represent a legislative commitment to expend capital funds for the projects indicated. It is a means of identifying short and longer term needs as a guide for future spending and a mechanism for establishing priorities and orderly development. The first year of the CIP has traditionally constituted an approved and funded capital budget, while the remaining four years serve as a planning guide for public facilities for the City. The program is subject to continuing examination and revision. [Remainder of page intentionally left blank.] 29

36 The following are the adopted sources and uses of the Capital Improvement Program funds for fiscal years 2020 through 2024, totaling an estimated $172,157,000 to be funded from anticipated state and federal funds, general obligation bond issues and funds on hand, both appropriated and unappropriated. Capital Improvement Program Summary * (in thousands) FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Total Use of Funds: General Government $ $ 350 Culture & Recreation 385 $ 8, ,385 Public Safety - 22, ,500 Transportation 5,945 6,067 $ 550 $ 1,300 $ ,412 Sewer 1,380 1,395 1, ,920 Water 1,725 13,595 1,415 3, ,435 Electric 1,950 2,125 1,825 2,280 2,100 10,280 Stormwater Airport 7,538 2, ,000-14,188 Schools 3,000 63,848 3,000 3,000 3,000 75,848 Total $22,283 $120,829 $9,215 $13,330 $6,500 $172,157 Sources of Funds: General Fund $ $ 420 Sewer Fund 1,360 $ 1,350 $ 1,200 $ 450 $ 450 4,810 Water Fund 2,840 1,815 1,460 1, ,815 Electric Fund 2,640 2,575 1,825 2,280 2,100 11,420 Stormwater Fund Airport Fund School Fund 3,000 3,000 3,000 3,000 3,000 15,000 Bonds - 103,048-2, ,048 State 1, ,551 Federal 9,333 5, ,300-18,890 NVTA 900 1, ,600 Other Sources 175 1, ,175 Total $22,283 $120,829 $9,215 $13,330 $6,500 $172,157 Source: City of Manassas Finance Department. * The Capital Improvement Program is approved on an annual basis. Pension System All eligible full-time employees of the City are automatically enrolled in the Virginia Retirement System ( VRS ), which provides group term life insurance, retirement, disability and death benefits. VRS maintains separate accounts for each participating locality based on contributions made by the locality and its employees. As of June 30, 2017, the most recent actuarial valuation date, the plan was 85% and 98% funded for the City and the School Board (non-professional employees), respectively. See Note 12 to the Basic Financial Statements and Required Supplementary Information in Appendix A for further information regarding the retirement plan generally and the City s and the City s schools ( MCPS ) unfunded liability for their share of benefit costs. For fiscal year ended June 30, 2018, the City s annual pension cost of $3,374,925 was equal to the City s required and actual contributions. For fiscal year ended June 30, 2018, MCPS s annual pension cost of $225,042 for its non-professional employees was equal to MCPS s required and actual contributions. The required contributions were determined as part of the June 30, 2015, actuarial valuation using the entry-age actuarial cost method. See Note 12 to the Basic Financial Statements and Required Supplementary Information in Appendix A for further 30

37 information regarding the retirement plan generally and the City s and MCPS s unfunded liability for their share of benefit costs. Post-Employment Benefits Other than Pensions For information regarding the City s Other Post-Employment Benefits Liability, see Notes 14, 15 and 16 to the Basic Financial Statements in Appendix A. Restatement of Beginning Net Position In Fiscal Year 2018, the City adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This standard replaces the requirements of GASB Statement No. 45 as it relates to governments that provide postemployment benefits other than pensions. The new Statement requires governments providing defined benefit postemployment benefits to recognize the long-term obligation for those benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of other postemployment benefits. The Statement also enhances accountability and transparency through revised and new note disclosures and required supplementary information, including disclosing descriptive information about the types of benefits provided, how contributions to the plans are determined, and assumptions and methods used to calculate the liability. Comparative prior year information, to the extent presented, has not been restated because the necessary information is not available. See Note 19 to the Basic Financial Statements and Required Supplementary Information in Appendix A for a summary of the restatements to net position. LITIGATION AND CLAIMS The City and its employees have been named from time to time as defendants in various claims, which are being defended by the City Attorney and associated counsel. The City s potential liability is protected partially by sovereign immunity and by indemnification agreements. The City Attorney is of the opinion that any possible losses in connection with such litigation will not have a material adverse effect on the City s financial condition. The City Attorney advises that there is no litigation pending or threatened, to the best of his actual knowledge, against the City that would in any way affect the validity of the Bonds, or the right of the City to levy and collect ad valorem taxes, over and above all other taxes authorized or limited by law and without limitation as to rate or amount, to pay the principal of or premium, if any, or interest on the Bonds. LEGAL MATTERS Certain legal matters relating to the authorization and validity of the Bonds will be subject to the approving opinion of Hunton Andrews Kurth LLP, Richmond, Virginia, Bond Counsel, which will be furnished at the expense of the City upon delivery of the Bonds, in substantially the form set forth as Appendix B (the Bond Opinion ). The Bond Opinion will be limited to matters relating to authorization and validity of the Bonds and to the tax status of interest thereon as described in the section Tax Matters. Bond Counsel has not been engaged to investigate the financial resources of the City or its ability to provide for payment of the Bonds, and the Bond Opinion will make no statement as to such matters or as to the accuracy or completeness of this Official Statement or any other information that may have been relied on by anyone in making the decision to purchase Bonds. Certain matters will be passed on for the City by S. Craig Brown, City Attorney. TAX MATTERS Opinion of Bond Counsel. In the opinion of Bond Counsel and in accordance with customary opinion practice, under current law, interest, including accrued original issue discount ( OID ) on the Bonds, (a) is not included in gross income for federal income tax purposes, (b) is not an item of tax preference for purposes of the federal alternative minimum tax, and (c) is exempt from income taxation by the Commonwealth. Except as discussed below regarding OID, no other opinion will be expressed by Bond Counsel regarding the tax consequences of the ownership of or the receipt or accrual of interest on the Bonds. 31

38 Bond Counsel s opinion is given in reliance upon certifications by representatives of the City as to certain facts relevant to both the opinion and requirements of the Internal Revenue Code of 1986, as amended (the Code ), and is subject to the condition that there is compliance subsequent to the issuance of the Bonds with all requirements of the Code that must be satisfied in order for interest thereon to remain excludable from gross income for federal income tax purposes. The City has covenanted to comply with the current provisions of the Code regarding, among other matters, the use, expenditure and investment of the proceeds of the Bonds and the timely payment to the United States of any arbitrage rebate amounts with respect to the Bonds. Failure by the City to comply with such covenants, among other things, could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to their date of issue. Customary practice in the giving of legal opinions includes not detailing in the opinion all of the assumptions, limitations and exclusions that are a part of the conclusions therein. See Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions, 63 Bus. Law (2008), and Legal Opinion Principles, 53 Bus. Law. 831 (May 1998). Purchasers of the Bonds should seek advice or counsel concerning such matters as they deem prudent in connection with their purchase of Bonds. Bond Counsel s opinion represents its legal judgment based in part upon the representations and covenants referenced therein and its review of current law, but is not a guarantee of result or binding on the Service or the courts. Bond Counsel assumes no duty to update or supplement its opinion to reflect any facts or circumstances that may come to Bond Counsel s attention after the date of its opinion or to reflect any changes in law or the interpretation thereof that may occur or become effective after such date. Original Issue Discount. The initial offering prices of the Bonds maturing in the years (the OID Bonds ), will be less than their stated principal amount. In the opinion of Bond Counsel, under current law, the difference between the stated principal amount and the initial offering price of each maturity of OID Bonds to the public (excluding bond houses and brokers) at which a substantial amount of such maturity of such Bonds is sold will constitute OID. The offering prices set forth on the inside cover of this Official Statement for the OID Bonds are expected to be the initial offering prices to the public at which a substantial amount of each maturity of such Bonds are sold. Under the Code, for purposes of determining the holder s adjusted basis in an OID Bond, OID treated as having accrued while the holder holds the Bond will be added to the holder s basis. OID will accrue on a constant yield-to-maturity method. The adjusted basis will be used to determine taxable gain or loss upon the sale or other disposition (including redemption or payment at maturity) of an OID Bond. Prospective purchasers of the OID Bonds should consult their own tax advisors with respect to the calculation of accrued OID and the state and local tax consequences of owning or disposing of such Bonds. Original Issue Premium. Bonds purchased, whether upon issuance or otherwise, for an amount (excluding any amount attributable to accrued interest) in excess of their principal amount will be treated for federal income tax purposes as having amortizable bond premium. A holder s basis in such Bond must be reduced by the amount of premium that accrues while such Bond is held by the holder. No deduction for such amount will be allowed, but it generally will offset interest on the Bonds while so held. Purchasers of such Bonds should consult their own tax advisors as to the calculation, accrual and treatment of amortizable bond premium and the state and local tax consequences of holding such Bonds. Other Tax Matters. In addition to the matters addressed above, prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including without limitation financial institutions, property and casualty insurance companies, S corporations, foreign corporations subject to the branch profits tax, recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to the applicability and impact of such consequences. Prospective purchasers of the Bonds also should consult their own tax advisors as to the status of interest on the Bonds under the tax laws of any state other than Virginia. 32

39 The Internal Revenue Service (the Service ) has a program to audit state and local government obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the Service does audit the Bonds, under current Service procedures, the Service will treat the City as the taxpayer and the owners of the Bonds will have only limited rights, if any, to participate. There are many events that could affect the value and liquidity or marketability of the Bonds after their issuance, including but not limited to public knowledge of an audit of the Bonds by the Service, a general change in interest rates for comparable securities, a change in federal or state income tax rates, federal or state legislative or regulatory proposals affecting state and local government securities and changes in judicial interpretation of existing law. In addition, certain tax considerations relevant to owners of Bonds who purchase Bonds after their issuance may be different from those relevant to purchasers upon issuance. Neither the opinion of Bond Counsel nor this Official Statement purports to address the likelihood or effect of any such potential events or such other tax considerations, and purchasers of the Bonds should seek advice concerning such matters as they deem prudent in connection with their purchase of Bonds. RATINGS Moody s Investors Service ( Moody s ), 250 Greenwich Street, New York, New York, has assigned a rating of Aa1 to the Bonds and Standard & Poor s Ratings Services ( Standard & Poor s ), 55 Water Street, New York, New York, has assigned a rating of AAA to the Bonds based on the creditworthiness of the City. Reference is made to the rating agencies for an explanation of each rating category. Such ratings reflect only the respective views of such organizations. There is no assurance that the ratings will continue for any given period of time, or that such ratings will not be revised, suspended or withdrawn if, in the judgment of Moody s or Standard & Poor s, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Bonds. Due to the ongoing uncertainty regarding the economy of the United States of America, including, without limitation, matters such as the future political uncertainty regarding the United States debt limit, obligations issued by state and local governments, such as the Bonds, could be subject to a rating downgrade. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States or of any of its agencies or political subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and market value of outstanding debt obligations, including the Bonds. SALE AT COMPETITIVE BIDDING The Bonds will be offered for sale at competitive bidding on April 17, 2019, unless such date is postponed or changed as described in the Notice of Sale, attached hereto as Appendix E. This Preliminary Official Statement has been deemed final as of its date by the City in accordance with the meaning and requirements of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission ( SEC ) under the Securities and Exchange Act of 1934, as amended, except for the omission of certain pricing and other information permitted to be omitted pursuant to Rule. After the Bonds have been awarded, the City will complete the Preliminary Official Statement so as to be a final official statement within the meaning of Rule (the final Official Statement ). The final Official Statement will include, among other matters, the identity of the winning bidders and the managers of the syndicates, if any, submitting the winning bids, the expected selling compensation to the underwriter of the Bonds and other information on the interest rate and offering prices or yields of the Bonds, as supplied by the winning bidders. FINANCIAL ADVISOR Davenport & Company LLC, Richmond, Virginia, serves as financial advisor (the Financial Advisor ) to the City. The Financial Advisor has assisted the City in matters relating to the planning and structuring of the Bonds. 33

40 CONTINUING DISCLOSURE General To permit compliance by the underwriter with the continuing disclosure requirements of the Rule, the City will execute a Continuing Disclosure Agreement (the CDA ) at closing agreeing to provide certain annual financial information and material event notices required by the Rule. Such information will be filed through the Electronic Municipal Market Access system ( EMMA ) maintained by the Municipal Securities Rulemaking Board and may be accessed through the Internet at emma.msrb.org. Prior to July 1, 2009, filings by the City were made through the then-existing national recognized municipal securities information repositories ( NRMSIRs ). As described in Appendix C, the CDA requires the City to provide only limited information at specific times, and the information provided may not be all the information necessary to value the Bonds at any particular time. The City may from time to time disclose certain information and data in addition to that required by the CDA. If the City chooses to provide any additional information, the City shall have no obligation to continue to update such information or to include it in any future disclosure filing. Failure by the City to comply with the CDA is not an event of default under the Bonds or the Bond Resolution. The sole remedy for a default under the CDA is to bring an action for specific performance of the City s covenants under the CDA, and no assurance can be provided as to the outcome of any such proceeding. Prior Instances of Non-Compliance In connection with the issuance of previous bonds, the City has entered into continuing disclosure undertakings similar to the CDA (the Prior CDAs ). The City historically has made the annual filings required by the Prior CDAs in the form of its comprehensive annual financial report ( CAFR ). In November 2014, the City filed notice of the late filing of its CAFR in 2011, and of upgrades to its ratings in Due to technical oversight in linking otherwise available information to certain CUSIP numbers, the City did not file in a timely manner its financial information for the fiscal year ended June 30, 2016, for some of its outstanding bonds. On April 10, 2018, the City realized the oversight, linked the disclosure to the CUSIPs of all of its outstanding bonds, and filed the appropriate notice with EMMA. As a condition to the issuance of various series of revenue bonds issued by the Upper Occoquan Sewage Authority ( UOSA ) for the benefit of the City and other jurisdictions, the City undertook (the UOSA Undertakings ) to provide annual financial information and operating data with respect to the wastewater system within the City. Pursuant to the UOSA Undertakings, the City is required to file the required information with EMMA within 270 days of its fiscal year end. Instead, prior to 2018, the City filed the information with UOSA, and UOSA filed the information with EMMA within UOSA s required timeframe of 365 days. The City entered into continuing disclosure undertakings (the Stafford Undertakings ) in connection with the issuance of various series of revenue bonds (the Stafford Bonds ) issued by the Industrial Development Authority of the County of Stafford and the City of Staunton, Virginia, for the benefit of the City. Pursuant to the Stafford Undertakings, the City is required to disclose certain financial information within 270 days after the end of the City s fiscal year. While the City independently filed its required annual financial information for fiscal years 2013 and 2017, such information was not cross-referenced to the CUSIP numbers for the Stafford Bonds. In July 2016 and April 2019, respectively, the City made the corrective filings needed to incorporate the City s annual financial information for fiscal years 2013 and 2017 into the continuing disclosure archive for the Stafford Bonds. The City also failed to file its operating data for the fiscal year ended 2014, and the notice of a rating change that occurred on March 11, 2014, both of which were required by the undertaking pertaining to the Stafford Bonds issued in 2007 (the 2007 Stafford Bonds ). Following the defeasance of the majority of the City s portion of the 2007 Stafford Bonds on November 13, 2014, the City ceased to be a material participant for purposes of the continuing disclosure undertaking for the 2007 Stafford Bonds. The unrefunded portion of the City s portion of the 2007 Stafford Bonds matured on August 1, The City has procedures in place with respect to its continuing disclosure undertakings. 34

41 MISCELLANEOUS The City has furnished all information in this Official Statement relating to the City. The financial statements of the City for the fiscal year ended June 30, 2018, as set forth in Appendix A, have been audited, to the extent set forth in their report included therein, by Brown, Edwards & Company, L.L.P., independent accountants, Harrisonburg, Virginia, and are included in reliance upon the report of such firm as experts in accounting and auditing. Brown, Edwards & Company, L.L.P., will not be reviewing this Official Statement or any other matters in connection with the issuance of the Bonds. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. The distribution of this Preliminary Official Statement has been duly authorized by the City Council. The City Council has deemed this Preliminary Official Statement final as of its date within the meaning of the Rule, except for the omission of certain pricing and other information permitted to be omitted pursuant to the Rule. By: City Manager 35

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43 APPENDIX A City of Manassas, Virginia, Basic Financial Statements for the Fiscal Year Ended June 30, 2018

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45 INDEPENDENT AUDITOR S REPORT To the Honorable Members of City Council City of Manassas, Virginia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Manassas, Virginia, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements 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; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, and the Specifications for Audits of Authorities, Boards, and Commissions, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. 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 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. Your Success is Our Focus 1909 Financial Drive Harrisonburg, VA Fax: A-1

46 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Restatement of Beginning Net Position As described in Note 19 to the financial statements, in 2018 the City adopted new accounting guidance, GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions, and also recognized previously unrecorded capital asset transactions. Our opinion is not modified with respect to this matter 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 other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The introductory section, other supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and is also not a required part of the basic financial statements. The other supplementary information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied by us in the audit of the financial statements and certain additional procedures including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. A-2

47 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2018 on our consideration of the City s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City s internal control over financial reporting and compliance and should be considered in assessing the results of our audit. Harrisonburg, Virginia November 28, 2018 CERTIFIED PUBLIC ACCOUNTANTS A-3

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49 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 As management of the City of Manassas, Virginia (City), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii-vi of this report. Throughout this section, information is presented about the City, the primary government. We have also included information about the Total Reporting Unit, which is the total of the City and its discretely presented component units, the Manassas City Public Schools (MCPS) and the Manassas Economic Development Authority (EDA). Due to the material relationship between the City, MCPS, and the EDA, we believe that Total Reporting Unit information more accurately reflects the financial condition of the City of Manassas. FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the Total Reporting Unit including Component Units exceeded its liabilities and deferred inflows of resources at June 30, 2018 by $351,705,220 (net position). The Total Reporting Unit s net position invested in capital assets is $352,328,218 and $3,662,210 is restricted in its use. The remaining net position, ($4,285,208), is unrestricted. The deficit in unrestricted net position is primarily due to the MCPS net pension and OPEB liability balances and associated deferred inflows of resources. The assets and deferred outflows of resources for the City (Governmental and Business Activities) exceeded its liabilities and deferred inflows of resources at June 30, 2018 by $367,431,279 (net position). The City s net position invested in capital assets is $330,419,708, with $2,261,407 restricted in its use, and the remaining balance of $34,750,164 is unrestricted. The deficit in unrestricted net position of the Governmental Activities ($21,326,052) is the result of bonds issued by the City for MCPS. This debt is reflected as a liability of the City; however, the schools that are built with the bond proceeds are shown as assets of MCPS. At year-end, the City has $53,365,825 of debt outstanding relating to MCPS. The unassigned fund balance for the City s general fund at June 30, 2018 was $17,211,952. This amount is 15% of total general fund budgeted operating revenues of $114,746,330 for fiscal year The City Council established a policy in June 2017 to maintain the general fund unassigned fund balance at 15% of the greater of actual current year general fund revenues excluding other financing sources, or budgeted next year general fund revenues excluding other financing sources. General fund unassigned fund balance as a percent of general fund revenues is in accordance with the City s Unassigned Fund Balance Policy. The fund balance of the general fund increased $2,862,755 over the prior year, a 9% increase. The increase is primarily due to an increase in property taxes from rate increases, increases in proffers received from development projects, additional investment income due to a rise in interest rates, and an increase in meals taxes due to successful marketing efforts and community events drawing more visitors to Historic Manassas. GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, was implemented in fiscal year This required a restatement of beginning net position for the proprietary funds, governmental activities, and MCPS on the government-wide financial statements. Under previous guidance, other post-employment benefits (OPEB) obligations were recorded incrementally over time, and the total liability was only disclosed; now the total liability is recorded. A detailed description of GASB 75 and its $24.6 million financial impact can be found in Note 19 on page 95 of this report. Because similar information was previously disclosed, the effect of this new standard is not expected to negatively impact how governmental entities are viewed. Prior year comparative information included in this analysis has not been restated because the information to restate prior years is not readily available. A-5

50 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The comprehensive annual financial report (CAFR) also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Statements The government-wide financial statements are designed to provide readers with a broad overview of the City s finances using the economic resources measurement focus and the accrual basis of accounting, in a manner similar to a private-sector business. The statement of net position presents information on all of the City s assets, liabilities and deferred inflows/outflows of resources, with the difference between the four 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 City is improving or deteriorating. Additionally, to assess the overall financial health of the City one must also consider non-financial factors such as changes in the City s property tax base and the condition of the City s infrastructure. The statement of activities presents information showing how the City s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, health and welfare, and culture, recreation, and community development. The business-type activities of the City include electric, water, sewer and stormwater utilities, solid waste collection and a regional airport. The government-wide financial statements include not only the City (known as the primary government), but also a legally separate school district, Manassas City Public Schools (MCPS), for which the City is financially accountable, and a legally separate economic development authority (EDA). Financial information for the two component units (MCPS and EDA) are reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 5-7 of this report. A-6

51 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 OVERVIEW OF THE FINANCIAL STATEMENTS: (CONTINUED) Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Most of the City s basic services are included in governmental funds. These 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 on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term 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. These funds are reported on the modified accrual basis of accounting, which measures cash and other liquid assets that can be readily converted to cash. The City maintains thirteen 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 the major general fund. Data from the other twelve governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with the annual appropriated budget. The City also adopts annual appropriated budgets for five nonmajor governmental funds Social Services, PEG, Owens Brooke district, Fire and Rescue, and Speiden Carper house. Budgetary comparisons for these funds have also been provided. The basic governmental fund financial statements can be found on pages 8-13 of this report. Proprietary Funds - The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its electric, water, sewer and stormwater utilities, solid waste collection and regional airport. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for maintaining its fleet of vehicles, building and grounds maintenance, and its information technology systems. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. A-7

52 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 OVERVIEW OF THE FINANCIAL STATEMENTS: (CONTINUED) Fund Financial Statements (Continued) Proprietary funds provide the same type of information as business-type activities in the government-wide financial statements, only in more detail. Proprietary funds are reported using the full accrual basis of accounting method. The proprietary fund financial statements provide separate information for the electric, water, sewer and stormwater utilities and regional airport which are considered to be major funds of the City. The other enterprise funds are combined into a single, aggregated presentation in the proprietary fund financial statements. As there is currently only one non-major enterprise fund, solid waste collection, the combining statement shown represents its information. The internal service funds are also combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the non-major enterprise funds and the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages of this report. Notes to the Financial Statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Other Information - In addition to the basic financial statements, this report also presents certain required supplementary information concerning the City s progress in funding its obligation to provide pension and other post-employment benefits to its employees. These schedules for the City s defined benefit pension and OPEB plans are provided on pages of this report. The combining statements referred to earlier in connection with non-major governmental and enterprise funds and internal service funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages of this report. MCPS, the City s component unit, does not issue separate financial statements. Therefore you will find fund statements for MCPS on pages of this report. Likewise, you will find fund statements for the EDA on pages of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS An analysis of the City s financial position begins with a review of the Statement of Net Position and the Statement of Activities. These two statements report the City s net position and changes therein. It should be noted that the City s financial position can also be affected by non-financial factors, including economic conditions, population growth and new regulations. A-8

53 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) The City s governmental activities net position increased by $15,520,835 in fiscal year 2018 (from the restated beginning net position of $188,759,549, from $197,184,124). The restatement of $8.4 million is due to the accrual of an additional OPEB liability, for the implementation of GASB 75. Significant changes in net position include an increase of $3.6 million in tax revenue from increased rates and assessments, $1.4 million of other revenue, including investment income and meals tax, and a $1 million increase in charges for services, including proffers and EMS fees. Increases to assessed values provides evidence of continued economic growth in the City, and as noted earlier, increases to meals tax is an indicator of successful economic development efforts resulting in more visitors. Lastly, in FY 2017 governmental activities had net transfers-out of $9.8 million, due to the transfer of infrastructure capital assets to the stormwater enterprise fund; however, in FY 2018 there are net transfers-in of $4.4 million, as the enterprise funds contributed for various capital projects and recurring expenditures noted below. These increases are offset $5.8 million of revenue recognized from the sale of land for development in FY 2017, which did not recur in the current year. The net position of the business-type activities increased $9,920,900 in fiscal year 2018 (from the restated beginning net position of $153,229,995, from $152,022,891). The restatement of $1.2 million was due to GASB 75, offset by capital asset items, further described in note 19 on page 95. Total revenues for the electric, water, sewer, and stormwater utilities, and airport and solid waste funds exceeded expenses by $14.2 million, and the business activities transferred $4.4 million to the governmental activities, to fund utility portions of transportation capital projects, payment in lieu of taxes, and vehicle purchases. Revenues increased $4.7 million over FY 2017 primarily due to Electric PCA rate increase, increased connection fees as development expanded in the City, and additional investment income as rates increased. Business activities also saw a decrease in expenses, as a one-time charge of $3.3 million for a UOSA true-up reconciliation did not recur, depreciation expense decreased, as several 20-year assets were fully depreciated in the prior year, and Engineering personnel were transferred to the general fund. The net position of MCPS has increased a moderate $384,194 in fiscal year 2018 [from the restated beginning net position of ($16,642,158) from ($2,010,846), due to GASB 75]. MCPS saw a $1 million increase in State funding offset by a $1.4 reduction in local funding. The local reduction is due to the prior year transfer of bond proceeds. MCPS also had a decrease in capital outlays as projects completed. A-9

54 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) The following tables summarize the Statement of Net Position for the reporting unit as of June 30, Governmental Business-type Total Activities Activities Primary Government FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 (Restated) (Restated) Current assets $ 86,214,410 $ 80,305,106 $ 73,859,923 $ 71,478,721 $ 160,074,333 $ 151,783,827 Capital assets 242,791, ,447, ,949, ,560, ,741, ,007,470 Total assets $ 329,005,720 $ 321,752,252 $ 205,809,640 $ 204,039,045 $ 534,815,360 $ 525,791,297 Deferred outflows of resources $ 4,117,833 $ 6,193,998 $ 1,681,885 $ 2,328,603 $ 5,799,718 $ 8,522,601 Current liabilities $ 8,423,666 $ 7,804,958 $ 5,422,715 $ 10,652,887 $ 13,846,381 $ 18,457,845 Long-term liabilities 114,739, ,856,528 37,373,386 40,279, ,112, ,135,929 Total liabilities $ 123,162,674 $ 128,661,486 $ 42,796,101 $ 50,932,288 $ 165,958,775 $ 179,593,774 Deferred inflows of resources $ 5,680,495 $ 2,100,640 $ 1,544,529 $ 645,052 $ 7,225,024 $ 2,745,692 Net position: Net Investment in capital assets $ 225,362,179 $ 224,620,939 $ 105,057,529 $ 103,269,214 $ 330,419,708 $ 327,890,153 Restricted 244, ,104 2,017,150 2,138,217 2,261,407 2,391,321 Unrestricted (deficit) (21,326,052) (27,689,919) 56,076,216 49,382,877 34,750,164 21,692,958 Total net position $ 204,280,384 $ 197,184,124 $ 163,150,895 $ 154,790,308 $ 367,431,279 $ 351,974,432 Note: Because information to restate prior years is not readily available, the prior year comparative information included in this discussion and analysis related to OPEB has not been restated; however, other restatement items are included. A-10

55 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) Total MCPS EDA Reporting Unit FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 (Restated) Current assets $ 24,274,824 $ 27,723,815 $ 1,617,530 $ 3,126,678 $ 185,966,687 $ 182,634,320 Capital assets 79,469,142 79,422, ,210, ,429,474 Total assets $ 103,743,966 $ 107,145,819 $ 1,617,530 $ 3,126,678 $ 640,176,856 $ 636,063,794 Deferred outflows of resources $ 12,907,063 $ 17,318,065 $ - $ - $ 18,706,781 $ 25,840,666 Current liabilities $ 14,374,253 $ 15,646,485 $ 1,085,625 $ 2,534,964 $ 29,306,259 $ 36,639,294 Long-term liabilities 104,470, ,551, ,583, ,687,262 Total liabilities $ 118,845,021 $ 122,197,818 $ 1,085,625 $ 2,534,964 $ 285,889,421 $ 304,326,556 Deferred inflows of resources $ 14,063,972 $ 4,276,912 $ - $ - $ 21,288,996 $ 7,022,604 Net position: Net Investment in capital assets $ 78,653,662 $ 79,206,749 $ - $ - $ 352,328,218 $ 350,200,497 Restricted 1,400,803 4,985, ,662,210 7,376,326 Unrestricted (deficit) (96,312,429) (86,202,600) 531, ,714 (4,285,208) (7,021,523) Total net position $ (16,257,964) $ (2,010,846) $ 531,905 $ 591,714 $ 351,705,220 $ 350,555,300 Note: Because information to restate prior years is not readily available, the prior year comparative information included in this discussion and analysis related to OPEB has not been restated; however, other restatement items are included. The sum of net investment in capital assets of the primary government and the component unit does not equal net investment in capital assets of the total reporting unit, because the debt related to the component unit is reflected in the primary government's general governmental activities reducing unrestricted net position. The assets are reflected in the component unit as net investment in capital assets. The total reporting unit matches the assets with the debt and reports the net amount of the net investment in capital assets. The total adjustment was $56,745,152 in FY 2018 and $56,896,406 in FY A-11

56 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) The following tables summarize the changes in net position for the reporting unit for the year ended June 30, Total Governmental Activities Business-type Activities Primary Government FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 (Restated) (Restated) Revenues: Program revenues: Charges for services $ 4,605,727 $ 3,671,170 $ 77,789,611 $ 73,462,969 $ 82,395,338 $ 77,134,139 Operating grants, contributions 8,797,776 8,003,903 88,789 65,507 8,886,565 8,069,410 Capital grants, contributions 2,159,714 2,636,725 2,774,579 3,591,414 4,934,293 6,228,139 General Revenues: Property Taxes 83,090,745 79,451, ,090,745 79,451,231 Other Taxes 19,038,693 20,636, ,038,693 20,636,558 Unrestricted grants 7,980,187 8,032, ,980,187 8,032,305 City appropriation to component unit Other 12,310,688 10,879, , ,491 12,887,554 11,208,549 Total revenues $ 137,983,530 $ 133,310,950 $ 81,229,845 $ 77,449,381 $ 219,213,375 $ 210,760,331 Expenses: General government $ 9,113,451 $ 9,317,421 $ - $ - $ 9,113,451 $ 9,317,421 Public safety 30,135,534 29,347, ,135,534 29,347,211 Public works 12,362,448 11,242, ,362,448 11,242,030 Health and welfare 8,416,497 8,094, ,416,497 8,094,092 Culture, rec, development 7,507,275 7,909, ,507,275 7,909,986 Interest on long-term debt 2,801,905 2,899, ,801,905 2,899,640 Bond issuance costs - 393, ,281 Electric ,636,140 37,573,386 37,636,140 37,573,386 Water - - 8,031,152 7,870,578 8,031,152 7,870,578 Sewer ,653,486 15,974,768 12,653,486 15,974,768 Airport - - 3,990,689 4,277,596 3,990,689 4,277,596 Stormwater - - 1,766,011 1,178,358 1,766,011 1,178,358 Solid Waste - - 2,879,907 2,769,954 2,879,907 2,769,954 Education 56,477,145 57,870, ,477,145 57,870,687 Economic Development Total expenses $ 126,814,255 $ 127,074,348 $ 66,957,385 $ 69,644,640 $ 193,771,640 $ 196,718,988 Increase (decrease) in net position before transfers $ 11,169,275 $ 6,236,602 $ 14,272,460 $ 7,804,741 $ 25,441,735 $ 14,041,343 Transfers 4,351,560 (9,884,832) (4,351,560) 9,884, Special item - 5,789, ,789,202 Change in net position $ 15,520,835 $ 2,140,972 $ 9,920,900 $ 17,689,573 $ 25,441,735 $ 19,830,545 Net position beginning 197,184, ,243, ,022, ,333, ,207, ,576,995 Restatement - Note 19 (8,424,575) 799,475 1,207,104 - (7,217,471) 799,475 Net position beginning, as restated 188,759, ,043, ,229, ,333, ,989, ,376,470 Net position ending $ 204,280,384 $ 197,184,124 $ 163,150,895 $ 152,022,891 $ 367,431,279 $ 349,207,015 Note: Because information to restate prior years is not readily available, the prior year comparative information included in this discussion and analysis related to OPEB and capital assets has not been restated. A-12

57 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) Total MCPS EDA Reporting Unit FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 (Restated) Program revenues: Charges for services $ 1,261,037 $ 1,326,352 $ 6,624 $ 6,772 $ 83,662,999 $ 78,467,263 Operating grants, contributions 56,195,657 55,159, ,082,222 63,228,945 Capital grants, - - contributions ,540 4,934,293 6,405,679 General Revenues: - - Property Taxes ,090,745 79,451,231 Other Taxes ,038,693 20,636,558 Unrestricted grants ,980,187 8,032,305 City appropriation to component unit 56,477,145 57,870, ,000 56,477,145 58,111,687 Other 171, ,933 7,236 5,619,591 13,066,547 16,974,073 Total revenues $ 114,105,596 $ 114,502,507 $ 13,860 $ 6,044,903 $ 333,332,831 $ 331,307,741 Expenses: General government $ - $ - $ - $ - $ 9,113,451 $ 9,317,421 Public safety ,135,534 29,347,211 Public works ,362,448 11,242,030 Health and welfare ,416,497 8,094,092 Culture, rec, development ,507,275 7,909,986 Interest on long-term debt ,801,905 2,899,640 Bond issuance costs ,281 Electric ,636,140 37,573,386 Water ,031,152 7,870,578 Sewer ,653,486 15,974,768 Airport ,990,689 4,277,596 Stormwater ,766,011 1,178,358 Solid Waste ,879,907 2,769,954 Education 113,721, ,745, ,198, ,616,616 Economic Development ,669 6,089,061 73,669 6,089,061 Total expenses $ 113,721,402 $ 116,745,929 $ 73,669 $ 6,089,061 $ 307,566,711 $ 319,553,978 Increase (decrease) in net position before transfers $ 384,194 $ (2,243,422) $ (59,809) $ (44,158) $ 25,766,120 $ 11,753,763 Transfers Special item - 5,789,202 Change in net position $ 384,194 $ (2,243,422) $ (59,809) $ (44,158) $ 25,766,120 $ 17,542,965 Net position beginning (2,010,846) 232, , , ,787, ,445,443 Restatement - Note 19 (14,631,312) (21,848,783) 799,475 Net position beginning, as restated (16,642,158) 232, , , ,939, ,244,918 Net position ending $ (16,257,964) $ (2,010,846) $ 531,905 $ 591,714 $ 351,705,220 $ 347,787,883 Note: Because information to restate prior years is not readily available, the prior year comparative information included in this discussion and analysis related to OPEB and capital assets has not been restated. A-13

58 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED) Governmental Activities The table below details the governmental activities expenses and program revenues showing the net cost by program/function. The total governmental activities net program/function costs were $111,251,038, a decrease of $1,511,512 over last fiscal year. The decrease is primarily due to a decrease in net education expenses of $1.3 million due to the prior year transfer of bond proceeds, offset by the standard transfer increase of 2.625% per the 2016 joint budget agreement. The balance of the decrease is due to bond issuance costs from the prior year not recurring. There were immaterial changes to the other program areas; Public works had increased net program costs due to the transfer of the Engineering department from utilities, and Public safety had increased net program costs primarily due to increased shared services costs with Prince William County for the Adult Detention Center. Governmental Activities Expenses and Program Revenues Net Net Program Program Program Program Expenses Revenues Cost Cost FY 2018 FY 2018 FY 2018 FY 2017 General government $ 9,113,451 $ 513,881 $ 8,599,570 $ 8,836,450 Public safety 30,135,534 2,440,825 27,694,709 27,216,013 Public works 12,362,448 7,535,871 4,826,577 4,431,336 Health and welfare 8,416,497 3,837,530 4,578,967 4,704,931 Culture, recreation and community development 7,507,275 1,235,110 6,272,165 6,410,212 Education 56,477,145-56,477,145 57,870,687 Interest on long-term debt 2,801,905-2,801,905 2,899,640 Bond issuance costs ,281 Total $ 126,814,255 $ 15,563,217 $ 111,251,038 $ 112,762,550 Governmental Activities Net Program Costs General government Public safety 3% 8% 25% Public works 50% 6% 4% 4% Health and welfare Culture, recreation and community development Education Interest on long-term debt A-14

59 Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2018 GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED) In addition to program revenues of $15,563,217, there are also general revenues in the governmental activities, which are revenues that are not attributed to any specific program/function. The total general revenues in fiscal year 2018 are $122,420,313 for total governmental activities revenues of $137,983,530. Governmental activities revenues in fiscal year 2018 are $4,672,580 more than fiscal year 2017, due mostly to an increase in property taxes, meals taxes, and additional proffer revenue, as previously discussed. The chart below indicates that the property taxes continue to be the largest source of revenue for the governmental activities. Governmental Activities Revenues 14% 6% 9% 11% Program revenues Property taxes Other taxes Unrestricted grants 60% Other Business-type Activities For the City s business-type activities, total net position increased $9.9 million to $163 million for the year. The net (expenses)/revenues for all business type activities were positive with program revenues of $80.6 million exceeding expenses by $13.7 million. The cost of all business-type activities in fiscal year 2018 was $66.9 million. As previously detailed, revenues increased and expenses decreased from the prior year, indicating healthy business activities for the City. As depicted in the chart below, program revenues offset the cost of doing business for all funds except Stormwater, which was established as an enterprise fund in 2015, and will develop positive operating income over time. The Airport Fund received capital grants of $2,090,844 and the Stormwater Fund received capital grants of $80,896 that are reflected as revenues. A-15