IN GOD WE TRUST. City of Livonia, Michigan. Financial Report with Supplemental Information

Transcription

1 IN GOD WE TRUST Financial Report with Supplemental Information November 30, 2016

2 Financial Report with Supplemental Information November 30, 2016

3 Contents Report Letter 1-3 Management's Discussion and Analysis 4-10 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet 15 Reconciliation of the Balance Sheet to the Statement of Net Position 16 Statement of Revenue, Expenditures, and Changes in Fund Balances 17 Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 18 Proprietary Funds: Statement of Net Position Statement of Revenue, Expenses, and Changes in Net Position 21 Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Net Position 24 Statement of Changes in Fiduciary Net Position - Pension and Other - Employee Benefits Trust Funds 25 Component Units: Statement of Net Position 26 Statement of Activities Notes to Financial Statements 29-65

4 Contents (Continued) Required Supplemental Information 66 Budgetary Comparison Schedule - General Fund Budgetary Comparison Schedule - Refuse Disposal System 70 Pension System - Schedule of Investment Returns 71 Pension System - Schedule of Changes in the City Net Pension Asset and Related Ratios 72 Pension System - Schedule of City Contributions Retiree Health and Disability Benefits Plan - Schedule of Funding Progress 75 Note to Required Supplemental Information 76 Other Supplemental Information 77 Nonmajor Governmental Funds: Combining Balance Sheet Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Fiduciary Funds: Combining Statement of Net Position Combining Statement of Changes in Fiduciary Net Position 86

5 Independent Auditor's Report To the Honorable Mayor and Members of the City Council Report on the Financial Statements 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 (the "City"), as of and for the year ended November 30, 2016, and the related notes to the financial statements, which collectively comprise the '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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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. 1

6 To the Honorable Mayor and Members of the City Council 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 as of November 30, 2016, and the respective changes in its financial position and, where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplemental information, as identified 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, which 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 supplemental 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 's basic financial statements. The other supplemental information, as identified in the table of contents, is presented for the purpose of additional analysis and is not a required part of the basic financial statements. The other supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplemental information is fairly stated in all material respects in relation to the basic financial statements as a whole. 2

7 To the Honorable Mayor and Members of the City Council Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 20, 2017 on our consideration of the 's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the 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 's internal control over financial reporting and compliance. April 20,

8 Management s Discussion and Analysis Overview of the Financial Statements The s (the City ) 2016 annual report consists of four parts: (1) management s discussion and analysis, (2) basic financial statements, (3) required supplemental information, and (4) other supplemental information that presents combining statements for nonmajor governmental funds, proprietary funds, and fiduciary funds. The basic financial statements include two kinds of statements that present different views of the City. The first two statements are government-wide financial statements that are intended to provide longerterm information about the City s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the City s government, reporting the City s operations in more detail than the government-wide financial statements. Government-wide Financial Statements The government-wide financial statements report information about the City as a whole using accounting methods similar to those used by private sector companies. The statement of net position includes all of the City s assets, liabilities, deferred inflows, and deferred outflows. All of the current year s revenue and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the City s net position and how they have changed. Net position, the difference between the City s assets/deferred outflows and liabilities/deferred inflows, is one way to measure the City s financial health or position. The government-wide financial statements of the City are divided into three categories: Government Activities - Most of the City s basic services are included here, such as the police, fire, public works, parks departments, and general administration. Property taxes, state-shared revenue, and charges for services provide most of the funding for these activities. Business-type Activities - The City charges fees to customers to cover the costs of certain services it provides. The City s water and sewer system, golf course operations, and nonfederal senior housing are treated as business-type activities. Component Units - The City includes three other entities in its report, the Plymouth Road Development Authority, the Economic Development Corporation, and the Livonia Brownfield Redevelopment Authority. Although legally separate, these component units are important because the City is financially accountable for them, including debt, which is issued on behalf of the authorities by the City. 4

9 Management s Discussion and Analysis (Continued) Fund Financial Statements The fund financial statements provide more detailed information about the City s most significant funds - not the City as a whole. Funds are accounting tools that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by state law and bond covenants. Other funds are established to control and manage money for particular purposes. The City has three kinds of funds: Governmental Funds - Most of the City s basic services are included in governmental funds, which focus on how cash and other financial assets that can be converted to cash, flow in and out, and the balance left at year end that is available for spending. The governmental fund statements provide a detailed short-term view that helps you determine if there are more or fewer financial resources available to spend in the near future to finance the City s programs. Proprietary Funds - Services that are intended to be entirely self-supporting by customer fees are generally reported in proprietary funds. Proprietary fund statements, like government-wide statements, provide both short- and long-term financial information. Fiduciary Funds - The City is responsible for ensuring that the assets in these funds are used for their intended purposes. We exclude these activities from the government-wide financial statements because the City cannot use these assets to finance its operations. 5

10 Management s Discussion and Analysis (Continued) The City as a Whole In a condensed format, the table below shows a comparison of the net position as of November 30, 2016 to the prior year. Summary Condensed Statement of Net Position (in millions of dollars) Governmental Activities Business-type Activities Total Assets Current and other assets $ 69.0 $ 72.4 $ 33.5 $ 29.1 $ $ Capital assets Total assets Deferred Outflows of Resources Bond refunding loss being amortized Deferred outflows related to pensions Total deferred outflows Liabilities Current liabilities Long-term liabilities Total liabilities Net Position Net investment in capital assets Restricted Unrestricted Total net position $ $ $ $ 96.6 $ $ City of Livonia - Net Position The City s assets/deferred outflows exceed its liabilities at the end of the fiscal year by $317.0 million (net position). However, a major portion (74 percent) of the City s net position represents its investments in capital assets (i.e., land, roads, infrastructure, buildings, and equipment) less any related debt used to acquire or construct these assets. The City uses these physical assets to provide services to its citizens. These assets are illiquid and not available for future spending. Unrestricted net position of the City s governmental activities decreased from $30.4 million at November 30, 2015 to $24.2 million at the end of this year. The amount represents the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements. Furthermore, the City is able to report positive balances in all three categories of net position, both for the City as a whole, as well as for its separate governmental and business-type activities. 6

11 Management s Discussion and Analysis (Continued) The following table shows the changes in net position during the current year and as compared to the prior year: Summary Condensed Statement of Changes in Net Position (in millions of dollars) Governmental Activities Business-type Activities Total Revenue Program revenue: Charges for services $ 18.0 $ 18.1 $ 41.6 $ 37.0 $ 59.6 $ 55.1 Operating grants and contributions Capital grants and contributions General revenue: Property taxes State-shared revenue Rental income and fees Interest Transfer and miscellaneous (0.9) Total revenue Program Expenses General government Public safety Public works Community and economic development Recreation and culture Interest on long-term debt Water and sewer Golf course Housing Total expenses Change in Net Position Net Position - Beginning of year Impact of GASB Statement No. 68* Net Position - End of year $ $ $ $ 96.6 $ $ * The implementation of GASB Statement No. 68 required an adjustment to beginning of year net position in Governmental Activities In reviewing governmental activities in the above table, it can be noted that revenue increased by $2.5 million and expenses decreased by $3.4 million. The change in revenue is primarily attributable to reimbursement of lost personal property revenue from the Local Community Stabilization Authority (LCSA). The significant factors impacting expenses were increased public safety spending on personnel and equipment and increased costs for medical expenses. 7

12 Management s Discussion and Analysis (Continued) Business-type Activities The City has three business-type activities. These include the water and sewer system, the operating fund for the Fox Creek, Idyl Wyld, and Whispering Willows golf courses, and nonfederal senior housing at Silver Village and Newburgh Village. The following table shows the operating income (loss) before contributions, transfers, and interest for each of these activities in the current and prior year: (In thousands of dollars) Water and Sewer Golf Courses Housing Operating Revenue $ 38,435 $ 33,851 $ 1,782 $ 1,747 $ 1,404 $ 1,388 Operating Expenses (36,925) (34,192) (1,731) (1,790) (1,034) (1,169) Operating Income (Loss) $ 1,510 $ (341) $ 51 $ (43) $ 370 $ 219 The operating income (loss) of the Water and Sewer Fund increased between 2015 and Units of water sold increased by 4 percent, and rates increased by 8 percent, resulting in a current year net operating income vs. loss in the prior year. The golf course operating loss also transitioned to a net operating income based on increased rounds and expenditure controls. Capital Assets and Debt Distribution At the end of fiscal year 2016, the City has $503.8 million invested, before depreciation, in a wide range of capital assets, including land, buildings, infrastructure, public safety equipment, computer equipment, and water and sewer lines. Debt of $32.2 million related to the construction of the above-mentioned capital assets is reported as a liability in the governmental activities in the statement of net position. Debt related to the water and sewer system totaling $13.6 million is recorded as a liability in the business-type activities in the statement of net position. This debt represents construction of and improvements to existing water and sewer lines. Significant additions to capital assets during fiscal year 2016 include $9.4 million invested in the construction of infrastructure and improvements to roads, $1.9 million invested in equipment and vehicles, and $7.5 million in water and sewer system infrastructure. Significant disposals of capital assets during fiscal year 2016 included the disposal of vehicles and equipment with a total cost of $1.9 million. 8

13 Management s Discussion and Analysis (Continued) The City s Funds The fund financial statements begin on page 15 and provide detailed information on the most significant governmental funds - not the City as a whole. Funds are created to help manage money for special purposes, as well as to show accountability for certain activities, such as special property tax millages. The City s major governmental funds for 2016 include the General Fund and Refuse Disposal Fund. The City s governmental funds reported a combined fund balance of $43.2 million. This is an increase of approximately $0.5 million for the year. The increase was caused primarily by spending constraint in the General Fund and capital improvement projects which began in 2016 but will not be completed until General Fund Budgetary Highlights Over the course of the year, the City administration and City Council monitor and amend the budget, primarily to prevent expenditures in excess of budget, as required by the State of Michigan Budget Act. The final amended budget included the same total revenue as the original adopted budget. The amended budget expenditures were $2.1 million more than the original budget. The budget was amended to allow for the purchase of a vacant building adjacent to the DPW yard which will be used to replace the existing water and sewer building at a much lower cost than a new building. The budget was also amended for medical expenses that were higher than originally projected. Actual General Fund revenue was approximately $833,000 above the final budget. The biggest factors in the actual revenue exceeding budget were from better than anticipated property taxes ($237,000) and building permits ($586,000). Actual General Fund expenditures were approximately $1,067,000 below the final budget. Nearly all departments held expenditures below the final budget. Current Economic Conditions The City continues to maintain positive fund balances in each of its funds. However, concerns arise when considering the revenue and expenses that the City is facing in upcoming years. The majority of the City s revenue base is constrained by factors outside the City s control. Property taxes, state-shared revenue, and interest income total 75 percent of the City s total governmental activities revenue. Revenue is beginning to slowly increase after many years of reductions. Property assessments are projected to increase in fiscal year State-shared revenue is projected to increase slightly in fiscal year On the expense side, we expect that normal inflationary increases as well as employee wage and benefit increases will offset the small revenue increases. We are committed to living within our means, although the result may be diminished programs and service response capabilities. 9

14 Management s Discussion and Analysis (Continued) Contacting the City s Financial Management The financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City s finances and to show the City s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the director of finance at the City of Livonia, Civic Center Drive, Livonia, Michigan

15 Statement of Net Position November 30, 2016 Governmental Activities Primary Government Business-type Activities Total Component Units Assets Cash and investments $ 47,184,106 $ 15,231,445 $ 62,415,551 $ 383,996 Accounts receivable: Taxes 304, , ,684 Customers - 14,175,380 14,175,380 - Workers' compensation 78,173-78,173 - Due from other governmental units 7,372,117-7,372,117 - VEBA 349, ,694 - Other accounts receivable 4,130,578 1,311,061 5,441,639 - Special assessments 210, , ,190 - Allowance for doubtful accounts - (2,083) (2,083) - Due from primary government ,641 Inventory, prepaid expenditures, and deposits 6,608, ,193 7,292,439 - Restricted assets (Note 8) - 1,333,262 1,333,262 - Net pension asset (Note 14) 2,742, ,847 2,946,202 - Capital assets (Note 5): Nondepreciable capital assets 35,084,417 13,368,782 48,453, ,448 Depreciable capital assets - Net 157,596,571 73,831, ,427,799 2,526,600 Total assets 261,660, ,656, ,316,631 3,666,369 Deferred Outflows of Resources Bond refunding loss being amortized 498,467 49, ,032 - Deferred outflows related to pensions 9,314, ,378 10,006,932 - Total deferred outflows of resources 9,813, ,943 10,554,964 - Liabilities Accounts payable 3,608,460 2,054,833 5,663, ,107 Due to other governmental units - 3,369,509 3,369,509 2,995 Due to component units 4,641-4,641 - Accrued liabilities and other 2,696, ,609 2,943,500 4,331 Unearned revenue 572,296 29, ,213 - Bonds and deposits - 265, ,111 - Noncurrent liabilities (Note 7): Due within one year: Compensated absences 2,917, ,816 3,167,364 - Current portion of long-term debt 2,205,453 1,434,415 3,639, ,000 Due in more than one year: Compensated absences and insurance claims 8,095, ,573 8,248,685 - Landfill closure and postclosure 641, ,420 - Net OPEB obligation 4,963, ,911 5,176,569 - Long-term debt 30,042,245 12,188,302 42,230, ,000 Total liabilities 55,747,724 20,204,996 75,952,720 1,406,433 The Notes to Financial Statements are an Integral Part of this Statement. 11

16 Statement of Net Position (Continued) November 30, 2016 Governmental Activities Primary Government Business-type Activities Component Units Total Net Position Net investment in capital assets $ 160,931,757 $ 73,626,858 $ 234,558,615 $ 1,876,048 Restricted for: Community recreation 3,773,845-3,773,845 - Municipal refuse 4,276,500-4,276,500 - Street, roads, and sidewalks 6,048,452-6,048,452 - Library 1,715,108-1,715,108 - Public safety communication 3,699,255-3,699,255 - Grants 87,464-87,464 - Street lighting 221, ,138 - Adjudicated forfeitures 1,937,240-1,937,240 - Community transit 734, ,653 - Ordinance requirements - 1,333,262 1,333,262 - Capital improvements 8,057,178-8,057,178 - Unrestricted 24,243,048 26,233,117 50,476, ,888 Total net position $ 215,725,638 $ 101,193,237 $ 316,918,875 $ 2,259,936 The Notes to Financial Statements are an Integral Part of this Statement. 12

17 Expenses Charges for Services Program Revenue Operating Grants and Contributions Capital Grants and Contributions Functions/Programs Primary government: Governmental activities: General government $ 11,471,972 $ 3,298,523 $ - $ - Public safety 43,007,428 8,417, ,169 - Public works 25,032,578 1,755,397 6,821,805 1,382,953 Community and economic development 1,477, , ,609 - Recreation and culture 11,141,824 4,263, , ,828 Interest on long-term debt 1,408, Total governmental activities 93,539,394 18,039,634 8,354,872 1,496,781 Business-type activities: Water and sewer 37,231,477 38,434,634-1,705,934 Housing 1,033,620 1,403, Golf course 1,730,888 1,781, Total business-type activities 39,995,985 41,619,802-1,705,934 Total primary government $ 133,535,379 $ 59,659,436 $ 8,354,872 $ 3,202,715 Component units: Plymouth Road Development Authority $ 1,120,035 $ - $ - $ - Brownfield Redevelopment Authority 288, Total component units $ 1,408,336 $ - $ - $ - General revenue: Property taxes State-shared revenue Investment income Cable franchise fees Other miscellaneous income Gain on sale of fixed assets Transfers Change in Net Position Total general revenue Net Position - Beginning of year Net Position - End of year The Notes to Financial Statements are an Integral Part of this Statement. 13

18 Statement of Activities Year Ended November 30, 2016 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Activities Business-type Activities Total Component Units $ (8,173,449) $ - $ (8,173,449) $ - (34,199,811) - (34,199,811) - (15,072,423) - (15,072,423) - (184,212) - (184,212) - (6,609,751) - (6,609,751) - (1,408,461) - (1,408,461) - (65,648,107) - (65,648,107) - - 2,909,091 2,909, , , ,747 50, ,329,751 3,329,751 - (65,648,107) 3,329,751 (62,318,356) (1,120,035) (288,301) (1,408,336) 54,700,221-54,700,221 1,034,860 12,486,936-12,486,936 6, ,740 68, , ,577,243-2,577, , , ,060 10,060-70,277,244 78,346 70,355,590 1,041,543 (1,156,161) 1,156, ,472,976 4,564,258 8,037,234 (366,793) 212,252,662 96,628, ,881,641 2,626,729 $ 215,725,638 $ 101,193,237 $ 316,918,875 $ 2,259,936 14

19 Governmental Funds Balance Sheet November 30, 2016 Major Special Revenue Fund General Fund Refuse Disposal System Nonmajor Funds Total Assets Cash and investments $ 10,823,000 $ 4,933,138 $ 28,002,932 $ 43,759,070 Receivables: Property taxes receivable 175,846 62,883 65, ,069 Special assessments receivable , ,015 Workers' compensation 78, ,173 Due from other governmental units 4,400, ,822 2,144,630 7,372,117 VEBA 349, ,694 Other 1,973,932 50, ,965 2,538,170 Due from other funds (Note 6) 163, ,818 Inventory, prepaid expenses, and deposits 288, ,126 1,257,596 Total assets $ 18,253,598 $ 5,873,116 $ 31,906,008 $ 56,032,722 Liabilities Accounts payable $ 1,170,952 $ 915,814 $ 1,521,694 $ 3,608,460 Due to component units (Note 6) 4, ,641 Due to other funds (Note 6) , ,818 Accrued and other liabilities 2,346,355 39, ,992 2,662,729 Unearned revenue , ,296 Total liabilities 3,521, ,196 2,534,800 7,011,944 Deferred Inflows of Resources - Unavailable revenue 3,558, ,883 1,384,861 5,830,783 Fund Balances Nonspendable - Inventory and prepaid assets 288, ,126 1,257,596 Restricted: Streets. roads, and sidewalks - - 5,773,750 5,773,750 Adjudicated forfeitures - - 1,937,240 1,937,240 Grants ,464 87,464 Capital improvements - - 6,908,710 6,908,710 Community recreation - - 3,531,207 3,531,207 Municipal refuse - 4,030,037-4,030,037 Street lighting , ,138 Library - - 1,465,274 1,465,274 Public safety communication - - 3,415,358 3,415,358 Community transit , ,205 Committed - Cable access television - - 1,044,258 1,044,258 Assigned: Capital improvements , ,042 Golf course capital improvements , ,758 Court building improvements , ,817 Unassigned 10,885, ,885,141 Total fund balances 11,173,611 4,030,037 27,986,347 43,189,995 Total liabilities, deferred inflows of resources, and fund balances $ 18,253,598 $ 5,873,116 $ 31,906,008 $ 56,032,722 The Notes to Financial Statements are an Integral Part of this Statement. 15

20 Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position November 30, 2016 Total Fund Balances of Governmental Funds $ 43,189,995 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds 192,680,988 Certain receivables are expected to be collected over several years, including special assessments, delinquent personal property taxes, and grants 1,592,408 Net pension asset is not a financial resource in the current year and is not reported in the funds 2,742,355 Certain changes in pension plan net position are reported as deferred outflows of resources in the statement of net position, but are not reported in the funds 9,314,554 Grants and other receivables that are collected after year end, such that they are not available to pay bills outstanding as of year end, are not recognized in the funds 5,830,783 The liability for compensated absences is recorded when incurred in the statement of activities (8,753,517) Landfill closure and postclosure liability is not due and payable in the current period and is not reported in the funds (641,420) Long-term liabilities are not due and payable in the current period and are not reported in the funds (32,247,698) Deferred charges on bond refunding are reported as deferred outflows of resources in the statement of net position, but are not reported in the funds 498,467 Net OPEB obligation is not due and payable in the current period and is not reported in the funds (4,963,658) Accrued interest payable (34,162) The Internal Service Fund (self-insurance) is included as part of the governmental activities 6,516,543 Net Position of Governmental Activities $ 215,725,638 The Notes to Financial Statements are an Integral Part of this Statement. 16

21 Governmental Funds Statement of Revenue, Expenditures, and Changes in Fund Balances Year Ended November 30, 2016 General Fund Major Special Revenue Fund Refuse Disposal System Nonmajor Funds Total Governmental Funds Revenue Property taxes $ 31,481,752 $ 11,440,741 $ 11,671,042 $ 54,593,535 Licenses and permits 2,699, ,699,558 Federal revenue 150,038-1,205,782 1,355,820 State and local revenue 8,415,059 23,228 7,933,309 16,371,596 Charges for services 4,346, ,465 4,498,410 8,964,070 Fines and forfeitures 4,415, ,058 5,391,568 Interest 62,824 29, , ,039 Other revenue: Special assessments - - 1,382,953 1,382,953 Other miscellaneous income 3,540, ,910 4,190,211 Total revenue 55,111,237 11,612,710 28,454,403 95,178,350 Expenditures Current: General government 8,682, ,682,104 Public safety 33,682,044-1,526,968 35,209,012 Public works 3,417,179 10,987,900 11,792,081 26,197,160 Community and economic development 633, ,205 1,477,131 Recreation and culture 1,710,062-8,598,333 10,308,395 Employee benefits, insurance, and other 3,024, ,024,759 Capital outlay - - 5,150,722 5,150,722 Debt service - - 3,587,487 3,587,487 Total expenditures 51,150,074 10,987,900 31,498,796 93,636,770 Excess of Revenue Over (Under) Expenditures 3,961, ,810 (3,044,393) 1,541,580 Other Financing (Uses) Sources Face value of debt issue - - 6,180,000 6,180,000 Debt premium or discount , ,152 Transfers in (Note 6) ,334,450 10,334,450 Transfers out (Note 6) (4,183,357) (273,462) (7,033,792) (11,490,611) Payment to bond refunding escrow agent - - (6,892,788) (6,892,788) Total other financing (uses) sources (4,183,357) (273,462) 3,406,022 (1,050,797) Net Change in Fund Balances (222,194) 351, , ,783 Fund Balances - Beginning of year 11,395,805 3,678,689 27,624,718 42,699,212 Fund Balances - End of year $ 11,173,611 $ 4,030,037 $ 27,986,347 $ 43,189,995 The Notes to Financial Statements are an Integral Part of this Statement. 17

22 Governmental Funds Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended November 30, 2016 Net Change in Fund Balances - Total Governmental Funds $ 490,783 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures; however, in the statement of activities, these costs are allocated over their estimated useful lives as depreciation: Capital outlay 13,967,743 Depreciation expense (8,762,172) Loss on disposal of fixed assets (261,782) Certain revenue reported in the statement of activities is recorded in the governmental funds as unavailable revenue 2,923,327 Decrease in net pension asset and related deferred outflows related to pensions reported in the statement of activities does not require the use of current resources, and therefore, is not reported in the fund statements until it comes due for payment (6,232,770) Bond proceeds provide financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position (6,998,152) Repayment of bond principal is an expenditure in the governmental funds, but not in the statement of activities (where it reduces long-term debt) 8,440,000 Interest expense is recorded when incurred in the statement of activities 631,815 Net decrease in accumulated employee sick and vacation pay is recorded when incurred in the statement of activities 208,131 Increase in landfill liability is recorded when incurred in the statement of activities (7,713) Increase in net OPEB obligation is recorded when incurred in the statement of activities (586,242) Internal service funds are included as part of governmental activities (339,992) Change in Net Position of Governmental Activities $ 3,472,976 The Notes to Financial Statements are an Integral Part of this Statement. 18

23 Proprietary Funds Statement of Net Position November 30, 2016 Major Enterprise Funds Nonmajor Enterprise Funds Water and Sewer Housing Golf Course Total Enterprise Funds Governmental Activities Internal Service Fund Assets Current assets: Cash and investments $ 13,879,136 $ 938,037 $ 414,272 $ 15,231,445 $ 3,425,036 Accounts receivable: Customers 14,175, ,175,380 - Other 1,301,170-9,891 1,311,061 - Allowance for doubtful accounts - - (2,083) (2,083) - Inventory, prepaid expenses, and deposits 684, ,193 5,350,650 Total current assets 30,039, , ,080 31,399,996 8,775,686 Noncurrent assets: Restricted assets (Note 8) 1,333, ,333,262 - Special assessment receivables 519, ,175 - Net pension asset (Note 14) 184,103 19, ,847 - Capital assets (Note 5): Nondepreciable capital assets 8,201,496 1,584,798 3,582,488 13,368,782 - Depreciable capital assets - Net 69,704,099 3,314, ,056 73,831,228 - Total noncurrent assets 79,942,135 4,918,615 4,395,544 89,256,294 - Total assets 109,982,014 5,856,652 4,817, ,656,290 8,775,686 Deferred Outflows of Resources Bond refunding charge being amortized 49, ,565 - Deferred outflows related to pensions 625,315 67, ,378 - Total deferred outflows 674,880 67, ,943 - Liabilities Current liabilities: Accounts payable 1,973,909 34,910 46,014 2,054,833 - Due to other governmental units 3,369, ,369,509 - Accrued liabilities and other 222,840 18,147 5, ,609 - Unearned revenue 29, ,917 - Bonds and deposits 111, , ,111 - Compensated absences - Due within one year (Note 7) 216,164 27,042 6, ,816 - Current portion of long-term debt (Note 7) 1,434, ,434,415 - Total current liabilities 7,358, ,672 58,246 7,650,210 - Noncurrent liabilities: Compensated absences - Due in more than one year (Note 7) 39,108 86,138 28, ,573 - Net OPEB obligation (Note 15) 212, ,911 - Long-term debt and insurance claims - Net of current portion (Note 7) 12,188, ,188,302 2,259,143 Total noncurrent liabilities 12,440,321 86,138 28,327 12,554,786 2,259,143 Total liabilities 19,798, ,810 86,573 20,204,996 2,259,143 The Notes to Financial Statements are an Integral Part of this Statement. 19

24 Proprietary Funds Statement of Net Position (Continued) November 30, 2016 Major Enterprise Funds Nonmajor Enterprise Funds Governmental Activities Water and Sewer Housing Golf Course Total Enterprise Funds Internal Service Fund Net Position Net investment in capital assets $ 64,332,443 $ 4,898,871 $ 4,395,544 $ 73,626,858 $ - Restricted - Ordinance requirements 1,333, ,333,262 - Unrestricted 25,192, , ,507 26,233,117 6,516,543 Total net position $ 90,858,281 $ 5,603,905 $ 4,731,051 $ 101,193,237 $ 6,516,543 The Notes to Financial Statements are an Integral Part of this Statement. 20

25 Proprietary Funds Statement of Revenue, Expenses, and Changes in Net Position Year Ended November 30, 2016 Major Enterprise Fund Nonmajor Enterprise Funds Water and Sewer Housing Golf Course Total Enterprise Funds Internal Service Fund Operating Revenue Customer billings $ 36,291,332 $ - $ - $ 36,291,332 $ - Fines and forfeitures 1,760, ,760,443 - Service connections 39, ,331 - Greens fees - - 1,541,827 1,541,827 - Golf cart fees , ,000 - City contributions ,324,906 Rental income - 1,402,903 4,000 1,406,903 - Other revenue 343, , ,966 - Total operating revenue 38,434,634 1,403,533 1,781,635 41,619,802 11,324,906 Operating Expenses Cost of water 13,316, ,316,848 - Cost of sewage disposal 14,469, ,469,546 - System maintenance and operation 5,265, ,265,488 - General and administrative 910, ,561 - Reinsurance charges and claims ,681,599 Salaries and wages - 487, , ,688 - Supplies - 18, , ,413 - Other services and charges - 369,801 1,298,182 1,667,983 - Depreciation 2,962, ,524 74,900 3,194,526 - Total operating expenses 36,924,545 1,033,620 1,730,888 39,689,053 11,681,599 Operating Income (Loss) 1,510, ,913 50,747 1,930,749 (356,693) Nonoperating Revenue (Expenses) Investment income (loss) 63,389 5,253 (356) 68,286 16,701 Interest expense (306,932) - - (306,932) - Gain on sale of assets 9, ,060 - Total nonoperating (expenses) revenue (233,768) 5,253 (71) (228,586) 16,701 Income (Loss) - Before contributions and transfers 1,276, ,166 50,676 1,702,163 (339,992) Capital Contributions from Developers and Grants Capital grants 1,104, ,104,653 - Special assessments 2, ,499 - Capital contributions 598, ,782 - Total capital contributions from developers and grants 1,705, ,705,934 - Transfers In (Note 6) 1,093,661-62,500 1,156,161 - Change in Net Position 4,075, , ,176 4,564,258 (339,992) Net Position - Beginning of year 86,782,365 5,228,739 4,617,875 96,628,979 6,856,535 Net Position - End of year $ 90,858,281 $ 5,603,905 $ 4,731,051 $ 101,193,237 $ 6,516,543 The Notes to Financial Statements are an Integral Part of this Statement. 21

26 Proprietary Funds Statement of Cash Flows Year Ended November 30, 2016 Major Enterprise Fund Nonmajor Enterprise Funds Water and Sewer Housing Golf Course Total Enterprise Funds Internal Service Fund Cash Flows from Operating Activities Receipts from customers $ 37,708,560 $ 1,406,298 $ 1,783,559 $ 40,898,417 $ 10,531,705 Payments to suppliers (29,097,304) (377,573) (1,553,049) (31,027,926) (11,491,705) Payments to employees (3,626,470) (438,668) (136,351) (4,201,489) - Other payments (236,886) - - (236,886) - Net cash provided by (used in) operating activities 4,747, ,057 94,159 5,432,116 (960,000) Cash Flows from Noncapital Financing Activities - Net transfers from other funds 1,093,661-62,500 1,156,161 - Cash Flows from Capital and Related Financing Activities Issuance of bonds 3,470, ,470,132 - Receipt of capital grants 1,104, ,104,653 - Special assessment collections 40, ,502 - Proceeds from sales of capital assets 9, ,060 - Net purchases of capital assets (5,695,592) (187,188) - (5,882,780) - Principal and interest paid on long-term debt (1,431,278) - - (1,431,278) - Net cash (used in) provided by capital and related financing activities (2,501,808) (187,188) 285 (2,688,711) - Cash Flows from Investing Activities Interest received (loss) on investments 63,389 5,253 (356) 68,286 16,701 Purchase of investment securities (1,711,070) (204,060) (78,294) (1,993,424) (8,351) Net cash (used in) provided by investing activities (1,647,681) (198,807) (78,650) (1,925,138) 8,350 Net Increase (Decrease) in Cash and Cash Equivalents 1,692, ,062 78,294 1,974,428 (951,650) Cash and Cash Equivalents - Beginning of year 6,581, , ,842 6,974,807 2,032,714 Cash and Cash Equivalents - End of year $ 8,273,080 $ 469,019 $ 207,136 $ 8,949,235 $ 1,081,064 Balance Sheet Classification of Cash and Cash Equivalents Cash and investments $ 13,879,136 $ 938,037 $ 414,272 $ 15,231,445 $ 3,425,036 Restricted assets (Note 8) 1,333, ,333,262 - Less investments (6,939,318) (469,018) (207,136) (7,615,472) (2,343,972) Total cash and cash equivalents $ 8,273,080 $ 469,019 $ 207,136 $ 8,949,235 $ 1,081,064 The Notes to Financial Statements are an Integral Part of this Statement. 22

27 Proprietary Funds Statement of Cash Flows (Continued) Year Ended November 30, 2016 Major Enterprise Fund Nonmajor Enterprise Funds Water and Sewer Housing Golf Course Total Enterprise Funds Internal Service Fund Reconciliation of Operating Income (Loss) to Net Cash from Operating Activities Operating income (loss) $ 1,510,089 $ 369,913 $ 50,747 $ 1,930,749 $ (356,693) Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation 2,962, ,524 74,900 3,194,526 - Changes in assets and liabilities: Receivables (726,074) 2,765 1,924 (721,385) - Inventories 81, ,802 - Prepaid and other assets 2, , ,894 Accounts payable 744,462 10,764 (34,990) 720,236 - Accrued and other liabilities 13,056 11,391 1,578 26,025 (793,201) Other assets (236,886) - - (236,886) - Net pension asset 373,895 37, ,759 - Deferred outflows of resources 22,645 (164) - 22,481 - Net cash provided by (used in) operating activities $ 4,747,900 $ 590,057 $ 94,159 $ 5,432,116 $ (960,000) During the year ended November 30, 2016, the City received $598,782 of donated lines reported as capital assets in the Water and Sewer Fund. The Notes to Financial Statements are an Integral Part of this Statement. 23

28 Fiduciary Funds Statement of Fiduciary Net Position November 30, 2016 Pension and Other Employee Benefits Agency Funds Assets Cash and cash equivalents (Note 3) $ 638,624 $ 11,485,033 Investments (Note 3): U.S. government securities 19,732,663 - Collateralized mortgage obligations 9,150,352 - Common stock 141,933,109 - Corporate bonds 20,502,508 - Real estate investment trust 11,261,275 - Foreign bonds 2,376,118 - Mutual funds 108,796,652 - Securities lending collateral pool - Mutual funds 3,712,075 - Accounts receivable 59,911 - Due from agency funds 761,929 37,212 Total assets 318,925,216 $ 11,522,245 Liabilities Accounts payable 4,304,571 $ - Due to other governmental units 25,488 6,940,230 Due to primary government 349,694 - Due to fiduciary/agency funds - 799,141 Accrued and other liabilities - 3,782,874 Amounts due to broker under securities lending agreement 3,874,448 - Total liabilities 8,554,201 $ 11,522,245 Net Position Held in Trust for Pension and Other Employee Benefits $ 310,371,015 The Notes to Financial Statements are an Integral Part of this Statement. 24

29 Fiduciary Funds Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefits Trust Funds Year Ended November 30, 2016 Pension and Other Employee Benefits Additions Investment income: Interest and dividends $ 11,279,703 Net change in fair value of investments 9,576,130 Less investment expenses (751,227) Net investment income 20,104,606 Contributions: Employer 5,480,954 Employee 900,816 Total contributions 6,381,770 Total additions 26,486,376 Deductions Pension benefit payments 16,485,015 Medical benefit payments 6,861,343 Refunds of contributions 1,308,913 Administrative expenses 260,022 Total deductions 24,915,293 Net Increase in Net Assets Held in Trust 1,571,083 Net Position Held in Trust for Pension and Other Employee Benefits - Beginning of year 308,799,932 Net Position Held in Trust for Pension and Other Employee Benefits - End of year $ 310,371,015 The Notes to Financial Statements are an Integral Part of this Statement. 25

30 Component Units Statement of Net Position November 30, 2016 Economic Development Corporation Plymouth Road Development Authority Brownfield Redevelopment Authority Total Assets Cash and cash equivalents $ 23,824 $ 272,387 $ 87,785 $ 383,996 Accounts receivable - 69, , ,684 Due from primary government - 4,641-4,641 Capital assets (Note 5): Nondepreciable capital assets - 474, ,448 Depreciable capital assets - Net - 2,526,600-2,526,600 Total assets 23,824 3,347, ,144 3,666,369 Liabilities Accounts payable - 108, , ,107 Due to other governmental units - - 2,995 2,995 Accrued liabilities and other - 4,331-4,331 Noncurrent liabilities: Due within one year - 555, ,000 Due in more than one year - 570, ,000 Total liabilities - 1,237, ,886 1,406,433 Net Position Net investment in capital assets - 1,876,048-1,876,048 Unrestricted 23, , , ,888 Total net position $ 23,824 $ 2,109,854 $ 126,258 $ 2,259,936 The Notes to Financial Statements are an Integral Part of this Statement. 26

31 Functions/Programs Expenses Charges for Services Program Revenue Operating Grants and Contributions Capital Grants and Contributions Economic Development Corporation - General government $ - $ - $ - $ - Plymouth Road Development Authority: Community and economic development 1,056, Interest on long-term debt 63, Total Plymouth Road Development Authority 1,120, Brownfield Redevelopment Authority - Community and economic development 288, Total component units $ 1,408,336 $ - $ - $ - General revenue: Property taxes State-shared revenue Interest Change in Net Position Total general revenue Net Position - Beginning of year Net Position - End of year The Notes to Financial Statements are an Integral Part of this Statement. 27

32 Component Units Statement of Activities Year Ended November 30, 2016 Net (Expense) Revenue and Changes in Net Position Economic Development Corporation Plymouth Road Development Authority Brownfield Redevelopment Authority Total $ - $ - $ - $ - - (1,056,922) - (1,056,922) - (63,113) - (63,113) - (1,120,035) - (1,120,035) - - (288,301) (288,301) - (1,120,035) (288,301) (1,408,336) - 696, ,604 1,034,860-6,304-6, , ,678 1,041, (417,255) 50,377 (366,793) 23,739 2,527,109 75,881 2,626,729 $ 23,824 $ 2,109,854 $ 126,258 $ 2,259,936 28

33 Notes to Financial Statements November 30, 2016 Note 1 - Summary of Significant Accounting Policies The following is a summary of the significant accounting policies used by the City of Livonia, Michigan: Reporting Entity The (the "City") is governed by an elected seven-member council. The City's administration operates under the overall direction of an elected mayor. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Although blended component units are legal separate entities, in substance, they are part of the City's operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the City (see discussion below for description). Blended Component Units - The Municipal Building Authority of Livonia is governed by a board that is appointed by the mayor. Although it is legally separate from the City, it is reported as if it were part of the primary government because its primary purpose is to finance and construct the City's public buildings. The operations of the Municipal Building Authority are reported as a nonmajor Debt Service Fund. The District Court Funds of District No. 16 are reported within the Trust and Agency Funds. Although it is legally separate from the City, it is reported as if it were part of the primary government because of the fiduciary relationship it has with the City. Discretely Presented Component Units - The Economic Development Corporation (the "EDC") was created to provide means and methods for the encouragement and assistance of industrial and commercial enterprises in relocating, purchasing, constructing, improving, or expanding within the City so as to provide needed services and facilities of such enterprises to the residents of the City. The EDC's governing body, which consists of eight individuals, is selected by the mayor and approved by the City Council. Internally prepared financial statements for the EDC can be obtained from the City of Livonia Finance Department at Civic Center Drive, Livonia, MI The Plymouth Road Development Authority was created to encourage additional economic activity and growth in the Plymouth Road business district. The Plymouth Road Development Authority's governing body, which consists of 12 individuals, is selected by the mayor and approved by the City Council. Internally prepared financial statements for the Plymouth Road Development Authority can be obtained from the City of Livonia Finance Department at Civic Center Drive, Livonia, MI