Loading...
Comprehensive Annual Financial Report (CAFR) and Audito'rs Communication Copyright 2014 City of Dubuque Action Items # 3. ITEM TITLE: Comprehensive Annual Financial Report (CAFR) and Auditor's Communication SUMMARY: City Manager transmitting the Fiscal Year 2016 Comprehensive Financial Report(CAFR), Auditor's Communication with Those Charged with Governance Letter, the City Finance staff responses to auditor's and findings and Eide Bailly CPA Audit Partner Brian Unsen will make a presentation. SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Make Matter of Record ATTACHMENTS: Description Type CAFR Submission-MVM Memo City Manager Memo CAFR Submission Memo Staff Memo Response to Audit Mgmt Letter Staff Memo 2016 CAFR Staff Memo Auditor's Communication Letter Supporting Documentation THE CITY OF Dubuque DUB E i" Masterpiece on the Mississippi 2007.2012.2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Submission of Fiscal Year Ended June 30, 2016 Comprehensive Annual Financial Report (CAFR) and Auditor's Communication with Those Charged with Governance and City Responses to Findings DATE: January 30, 2017 Finance Director Jean Nachtman is transmitting the Fiscal Year 2016 Comprehensive Financial Report (CAFR), Auditor's Communication with Those Charged with Governance Letter, along with the City Finance staff's responses to auditor's findings. The City's independent auditor issued an unmodified opinion on the financial statements. Eide Bailly CPA Audit Partner Brian Unsen will make a presentation to City Council. v � 6ax,-,- Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Jean Nachtman, Finance Director THE CITY OF Dubuque AII11-America CiI.ty UB E1 Masterpiece on the Mississippi 2007-2012-2013 TO: Michael C. Van Milligen, City Manager FROM: Jean Nachtman, Finance Director SUBJECT: Submission of Fiscal Year Ended June 30, 2016 Comprehensive Annual Financial Report (CAFR) and Auditor's Communication with Those Charged with Governance and City Responses to Findings DATE: January 26, 2017 INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2016 CAFR audited by Eide Bailly, LLP, Auditor's Communication with Those Charged with Governance Letter along with the City Finance staff's responses to auditor's findings. The City's independent auditor issued an unmodified opinion on the financial statements. BACKGROUND Iowa state code requires an annual audit by independent certified public accountants or the State Auditor. In addition to meeting the requirements set forth in state statues, the audit also was designed to meet the requirements of an annual single audit in conformity with the Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award. This Comprehensive Annual Financial Report is in conformance with the standards set by Title 2 U.S. Code of Federal Regulations (CFR) Part 200. This federal regulation mandates audit standards for federal programs. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Separate financial statements are required for Dubuque Metropolitan Area Solid Waste Agency, Dubuque Initiatives and Subsidiaries and Dubuque Convention and Visitors Bureau (CVB) and have been received. The financial information for these entities is included in the City of Dubuque CAFR. AUDITOR'S COMMUNICATION with THOSE CHARGED with GOVERNANCE Included is a separate letter from Eide Bailly, LLP. The letter contains audit information required by auditing standards to be communicated to the Mayor and City Council. ACTION STEP It is recommended that the City Council receives and files the Fiscal Year 2016 reports identified above and receives and files this communication and related enclosures. Copies of the financial statements for the Dubuque Metropolitan Area Solid Waste Agency are available in the Finance Department if desired by Council members. Brian Unsen, audit partner in charge from Eide Bailly CPA's, will make a brief presentation at the City Council meeting and be available for any questions. Finance staff will also be attending the meeting. JN/eml Enclosures: Fiscal Year 2016 CAFR Auditor's Communication with Those Charged with Governance Letter Responses to Auditor's Findings THE CITY OF Dubuque A11-America City DUB E11111.1 Masterpiece on the Mississippi 2007.2012.2013 TO: Michael C. Van Milligen, City Manager FROM: Jean Nachtman, Finance Director SUBJECT: Responses to Auditor's Findings DATE: January 26, 2017 INTRODUCTION The Auditor's Communication with Those Charged with Governance letter was issued by Eide Bailly LLP on December 21, 2016 and is hereby submitted. The letter is required by AU 260 and was formally referred to as the management letter. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2016 details specific findings. Pages 192-198 of the report provide this information and city responses. In addition to the comments in the report, the Auditor's Communication with Those Charged with Governance letter dated December 21, 2016, was issued which includes more general comments relative to the audit. DISCUSSION Most of the information in the Auditor's Communication with Those Charged with Governance does not require a response. 2016-A Material Audit Adjustments (Page 193 in CAFR) Finding: Decrease receivable. Correction: A formula error in the receivable workpaper caused the receivable to be overstated. The receivable workpaper has been redesigned to identify possible errors in future. Finding: Decrease notes receivable in relation to sale of land. Correction: The receivable for the sale of land was incorrectly recorded at the promissory note value. 50% of the note will be forgiven in the form of an acquisition grant. Finance will further review development agreements to be aware of any acquisition grants in future land sales. 1 Finding: Increase notes receivable. Correction: A formula error in the notes receivable workpaper. The workpaper has been redesigned to prevent this from happening in the future. Finding: Increase intergovernmental grant receivable FTA . Correction: An FTA grant receivable was only reported for eligible expenses incurred through February 2016. The receivable's eligible expenses should have been included through June 2016. The additional eligible grant expenses for February through June, were not yet approved by FTA. Past history, however, indicates that the City will most likely receive these funds. Therefore, it was determined that the full year of expenses should have been included in the intergovernmental receivable. Documentation has been added to this grant's work folder to include eligible, but not yet approved, expenses for this grant unless further information indicates that the City is unlikely to receive the money. Finding: Decrease intergovernmental receivable in Street construction Correction: A reimbursable expense was inadvertently recorded twice as a receivable. The grant reconciliation workpaper has been redesigned to assist in identifying duplicates. Finding: Decrease intergovernmental receivable in the Stormwater fund. Correction: An entire retainage payable was picked up as a grant receivable. Only 4.86% was eligible for grant reimbursement. The grant reconciliation workpaper has been modified to assist in detection of overstatements. Finding: Increase airport capital asset for retainage payable. Correction: Fixed assets are a large component of the CAM and must be started before all relevant workpapers are completed. The airport fixed assets computations were completed before retainage payable workpaper was finalized, Adjustments for retainage payable were not revised on asset workpaper. Tracking procedures have been put in place to prevent this from happening in the future. 2 Finding: Projected over statement of General Fund's accounts payable. Correction: An invoice was erroneously reported as an account payable in the auditor's random statistical sample. The statistical sample is used to project the possible implication of the misstatement to the overall financial statements. Additional checks have been identified and put in place to monitor the situation identified in this audit. The Finance staff will continue to receive relevant training for timing and recognition of accounts payable. Management will review all documentation completed by staff for use in preparing the financial statements. 2016-B Grant Reconciliation Process (Page 193 in CAFR) Finding: During the course of the engagement, several instances were noted in which the City did not properly reconcile grant revenues with grant expenditures on the accrual basis. Correction: See grant audit adjustments above. The grant reconciliation process is a manual process which relies heavily on departmental input, multiple spreadsheets, and manual tracking. The grant reconciliation workpaper has been restructured to further assist in the grant reconciliation process. A new requirement was added to provide proof of reconciliation between each grant draw request and the financial system reports, to insure all qualifying expenses are requested, received, and reported. The grant administrative policy has been updated to incorporate additional checks and balances. Through the budget process the city is investigating grant management software to assist departments in the grant tracking and reconciliation process. The finding will be reviewed at the next quarterly grant committee meeting. 2106-C Tax Increment Financing Reconciliation Process (Page 194 in CAFR) Finding: During the course of the engagement it was noted that the Budget Director prepares, reviews and maintains all Tax Increment Financing Duties. Correction: Auditors are concerned with the level of concentration of TIF information and reporting requirements on one employee. The Finance Department and Economic Development Department prepared the State Annual Urban Report for fiscal year ended June 30, 2016. This was previously prepared in the Budget Office. Finance tied all fund balances for each TIF Fund. Budget Department filed the County TIF report. The City is currently reviewing possibilities of further segregating duties. Both departments will continue to take advantage of relevant training opportunities for TIF reporting. 3 2016-001 US Department of Housing and Urban DevelopmentSignificant Deficiency in Internal Control over Compliance (Page 196 in CAFR) Finding: Two "covered transactions" did not have the required documentation to support that a System of Award Management (SAM) check was performed to determine if the entities receiving the funds were suspended or disbarred. Correction: The covered transactions included a loan payoff to a local financial institution and a smaller payment to another vendor. There was confusion in both departments as to when the SAM disbarment check was required. The City's grant and purchasing policies now address the requirement to check all vendors/contractors that are covered transactions on SAM. The check will be performed and documented, even if it falls below the $25,000 requirement. The grant check list was revised to include this requirement. The finding will be reviewed at the next quarterly grant committee meeting. 2016-002 Significant Deficiency in Internal Control over Compliance (Page 196 in CAFR) Finding: One federal financial report with no expenditure amounts reported, even though expenditures were incurred. Correction: There was miscommunication between the Finance staff preparing the Schedule of Expenditures of Federal Awards (SEFA) and a department. The department originally conveyed to the Finance staff that there were no grant qualifying expenses in the fiscal year. It was later discovered that there were reimbursable expenses for that grant, and a receivable should have been recorded. Finance is reviewing wording to clarify what is reportable and the period covered. Finance will continue working one on one with some departments that may have less grant management experience. This finding will be reviewed at the next quarterly grant committee meeting. 2016-IA-A Certified Budget (Page 197 in CAFR) Item: The City went over budget in expenditures in General government and Debt service. Correction: Any amount over program budget is considered an audit finding. Estimation for debt service requirements for new debt issues and refunding, and a change made in a refunding policy cause the general government and debt service programs to be slightly over budget. The budget will be amended as needed in the future. 4 2016-IA-1 Tax Increment Financing (Page 198 in CAFR) Finding: The annual urban renewal report did not include the proper amount of interest relating to the General Obligation 2009B Central Parking Ramp debt. Correction: The City identified and corrected the misreported debt amount on City TIF Form 3 of the County TIF Certification Form that was filed December 1 , 2016. The TIF form is prepared from source documentation including general ledger reports, TIF development agreements and TIF debt amortization schedules. The Budget staff will continue to monitor source documents, and implement a review check to prevent future errors. s Fiscal Year Ended 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT f �i Dubuque Intermodal Transportation lcinci _. �CMOF DuB f 'llll� Masterpiece m the Mississippi .� About the Cover: The recently constructed Dubuque Intermodal Transportation Center opened to the public in August 2016 in Dubuque's Historic Millwork District. This project, which serves over 8,000 transit passengers per month, is a collaboration between the Federal Transit Administration, Iowa Department of Transportation and City of Dubuque Transit and Parking Divisions to promote park and ride opportunities in the community. The Intermodal Center offers 292 vehicle parking spaces, secure bike storage, indoor waiting area, restrooms and outdoor seating for transit passengers. Office space is utilized by Transit Division employees and the site also features leased space for out- of-town bus service providers Burlington Trailways and Lamers Lines, each providing connections to destinations across the country. This project provides a variety of transportation choices for residents of Dubuque and specifically those living in or near the Historic Millwork District. It replaces the on-street bus transfer area previously located on Iowa Street. The Intermodal Center improves bus traffic flow and provides a more comfortable environment and amenities for transit passengers and visitors to the community. This project supports the redevelopment efforts in Dubuque's downtown, Washington Neighborhood and Historic Millwork District. Photo by: Candace Eudaley-Loebach Cover design by: Kelli Buchenau Copy provided by: Candace Eudaley-Loebach Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2016 City of Dubuque, Iowa Prepared by: Department of Finance THIS PAGE IS INTENTIONALLY LEFT BLANK Introductory Section June 30, 2016 City of Dubuque, Iowa THIS PAGE IS INTENTIONALLY LEFT BLANK CITY OF DUBUQUE, IOWA TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION Table of Contents 1-2 Letter of Transmittal 3-10 City Organizational Chart 11 Officials 12 Certificate of Achievement for Excellence in Financial Reporing 13 FINANCIAL SECTION Independent Auditor's Report 17-19 Management's Discussion and Analysis 21-30 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 1 32-33 Statement of Activities 2 34 Fund Financial Statements Balance Sheet—Governmental Funds 3 36-37 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 3-1 39 Statement of Revenues,Expenditures, and Changes in Fund Balances—Governmental Funds 4 40-41 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 4-1 43 Statement of Net Position—Proprietary Funds 5 44-47 Statement of Revenues,Expenses, and Changes in Fund Net Position —Proprietary Funds 6 48-49 Statement of Cash Flows—Proprietary Funds 7 50-53 Statement of Fiduciary Assets and Liabilities—Agency Funds 8 54 Notes to Financial Statements 55-106 Required Supplementary Information Schedule of Receipts,Expenditures, and Changes in Balances—Budget and Actual(Budgetary Basis)—Governmental Funds and Enterprise Funds 108 Note to Required Supplementary Information—Budgetary Reporting 109 Schedule of the City's Proportionate Share of Net Pension Liability— Iowa Employees'Retirement System 110 Schedule of City's Contribution—Iowa Employees'Retirement System 111 Notes to Required Supplementary Information— Net Pension Liability IPERS 112-113 Schedule of the City's Proportionate Share of Net Pension Liability— Municipal Fire and Police Retirement System of Iowa 114 Schedule of City's Contributions—Municipal Fire and Police Retirement System of Iowa 115 Notes to Required Supplementary Information— Net Pension Liability MFPRSI 116 Schedule of Funding Progress for the Retiree Benefit Plan 117 Combining Fund Statements Combining Balance Sheet—Nonmaj or Governmental Funds A-1 120-122 Combining Statement of Revenues,Expenditures, and Changes in Fund Balances—Nonmajor Governmental Funds A-2 124-126 Combining Statement of Net Position—Nonmajor Enterprise Funds B-1 128 Combining Statement of Revenues,Expenses, and Changes in Fund Net Position—Nonmaj or Enterprise Funds B-2 129 1 CITY OF DUBUQUE, IOWA TABLE OF CONTENTS FINANCIAL SECTION(continued) Exhibit Page Combining Statement of Cash Flows—Nonmajor Enterprise Funds B-3 130-131 Combining Statement of Net Position—Internal Service Funds C-1 134-135 Combining Statement of Revenues,Expenses, and Changes in Fund Net Position(Deficit)—Internal Service Funds C-2 136-137 Combining Statement of Cash Flows—Internal Service Funds C-3 138-139 Combining Statement of Changes in Assets and Liabilities— Agency Funds D-1 141 STATISTICAL SECTION(Unaudited) Table Paae Statistical Section Contents 145 Financial Trends Net Position by Component 1 146-147 Changes in Net Position 2 148-151 Fund Balances of Governmental Funds 3 152-153 Changes in Fund Balances of Governmental Funds 4 154-155 Revenue Capacity Taxable and Assessed Value of Property 5 156 Property Tax Rates—Direct and Overlapping Governments 6 157 Principal Property Taxpayers 7 158 Property Tax Levies and Collections 8 159 Debt Capacity Ratios of Outstanding Debt by Type 9 160-161 Ratios of General Bonded Debt Outstanding 10 162 Direct and Overlapping Governmental Activities Debt 11 163 Legal Debt Margin Information 12 164-165 Revenue Debt Coverage 13 166 Water and Sewer Receipt History 14 167 Water Meters by Rate Class 15 168 Largest Water and Sewer Customers 16 169 Sales Tax Increment Actual Receipts and Cumulative Sales Tax Balance Remaining Demographic and Economic Information Demographic and Economic Statistics 17 170 Principal Employers 18 171 Operating Information Full-Time Equivalent City Government Employees by 19 172 Function/Department 20 174-175 Operating Indicators by Function/Program 21 176-177 Capital Asset Statistics by Function 22 178-179 Retail 23 180 COMPLIANCE SECTION Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with GovemmentAuditing Standards 183-184 Independent Auditor's Report on Compliance with Requirements for Each Major Program and on Internal Control Over Compliance Required by The Uniform Guidance 185-186 Schedule of Expenditures of Federal Awards 187-190 Notes to the Schedule of Expenditures of Federal Awards 191 Schedule of Findings and Questioned Costs 192-198 Summary Schedule of Prior Federal Audi Findings 199-200 2 17iE CITY OF Finance Department T TI R DLbLgnC 50 West 131hStrt D�JL E Duce(56Iowa)5854133 805 qp query Dube (563)5a 52001 Fax(563)690-6689 mm.mu.mia T (563) 78Maste iece on the Mississippi finarwe@cftyofdabuque.org oeorg wwwAtyoflubuque.org December 21, 2016 Honorable Mayor, City Council Members, and Citizens ofthe City of Dubuque The Comprehensive Annual Financial Report (CAFR) of the City of Dubuque, Iowa, for the fiscal year ended June 30, 2016, is hereby submitted as required by various state and federal regulations. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and activities of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial operations have been included. State code requires an annual audit by independent certified public accountants or the State Auditor. The accounting firm of Eide Bailly LLP conducted the audit for fiscal year 2016. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of an annual single audit in conformity with the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance). Information related to this single audit, including the Schedule of Expenditures of Federal Awards, findings and recommendations, and the auditor's report on internal control over financial reporting and compliance with requirements applicable to federal statutes, regulations, and the terms and conditions of federal awards are included in the Compliance Section of this report. The independent auditors' report is included in the Financial Section of this report. This report includes all funds of the City of Dubuque, as well as its component units. Component units are legally separate entities for which the City of Dubuque is financially accountable. The City provides a full range of services including: police and fire protection; sanitation services; the construction and maintenance of roads, streets, and infrastructure; inspection and licensing functions; maintenance of grounds and buildings; municipal airport; library; recreational activities; and cultural events. In addition to general government activities, the municipality owns and operates enterprises for a water system, water resource and recovery center (wastewater treatment), storm water system, parking facilities, refuse collection, and public transportation. This report includes the Dubuque Metropolitan Area Solid Waste Agency (DMASWA), Dubuque Initiatives and Subsidiaries, and the Dubuque Convention and Visitors Bureau (CVB) as discretely presented component units. A 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 of Dubuque and to differentiate its financial position and results of operations from those of the City. The City of Dubuque appoints a voting majority to the DMASWA governing board and operates the landfill. Dubuque Initiatives is organized to render service to the City Council of the City of Dubuque on matters of community interest, and in the event of dissolution, any assets or property of the organization are transferred to the City. In 2009, the City of Dubuque guaranteed debt issued by Dubuque Initiatives and Subsidiaries. In fiscal year 2014, the Dubuque CVB, formerly part of the Dubuque Area Chamber of Commerce, was established as a separate non-profit corporation. Dubuque CVB's purpose is to strengthen the Dubuque area economy by 3 competitively marketing the area as a destination for conventions, tour groups, sporting events and individual travelers. The organization's board members include one City Council member, the City of Dubuque Mayor, and the City Manager. In the event of dissolution, any assets or property of the organization shall be transferred to the City. The City collects hotel/motel taxes and forwards 50% to the CVB as the primary source of funds for its operations. Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Dubuque's MD&A can be found immediately following the independent auditor's report. PROFILE OF THE CITY The City of Dubuque is located on the Mississippi River in northeast Iowa, adjacent to the states of Illinois and Wisconsin. Julien Dubuque, the city's namesake, first began mining lead in the area now known as Dubuque in 1788. Dubuque is the oldest city in Iowa and has a unique combination of the old and new, ranging from a historic downtown, numerous examples of Victorian architecture, and a Civil War era shot tower, to expanding industrial parks, multiple retail centers, a revitalized riverfront, and two casinos, one with a pari-mutuel dog track. The City is also home to two Smithsonian-affiliated museums, the National Mississippi River Museum and Aquarium, and the Dubuque Museum of Art. The City of Dubuque currently has a land area of 31.8 square miles, and a census 2010 population of 57,637. As the largest city in the tri-state area,Dubuque serves as the hub of a trade area with a population estimated at 250,000. Dubuque has a stable and diversified economic base and is the major tri-state retail center. As of September 2016, the City's unemployment rate was 3.5% and the Dubuque County rate was 3.4%, both below the 3.7%state and 5.0%national unemployment rates. The City of Dubuque is empowered to levy a property tax on real property located within the city limits. The City has operated under a council-manager form of government since 1920. Policymaking and legislative authorities are vested in the governing council, which consists of a mayor and a six-member council. The mayor is elected to a four-year term. The city council is elected on a non-partisan basis. Council members are elected to four-year staggered terms with three council members elected every two years. Four of the council members are elected within their respective wards; the mayor and the two remaining council members are elected at-large. The governing council is responsible for, among other things, setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the city manager, city attorney, and city clerk. The city manager is responsible for overseeing the day-to-day operations of the government, making recommendations to the city council on the budget and other matters, appointing the heads of the government's departments, and hiring employees. ECONOMIC CONDITION Dubuque has a diverse employer base including manufacturing, software, health services, insurance, education, and government. The top 10 employers in the area employ less than 19%of the total workforce. This insulates the City from the negative impact on a downturn in any one area of the economy. Several trade and business publications have recognized the community's efforts to diversify its economy. In fact, in July 2016, a new book was published highlighting Dubuque's economic success and diversification. The book, titled "Growing Jobs, Transforming the Way We Approach Economic Development," profiled Dubuque and Austin, Texas, as models of success. Area Development magazine named Dubuque one of the"Top 100 Leading Locations"for 2014,ranking it 21st in the U.S. Also in 2014, 4 Site Selection magazine named Dubuque the "Top Metro in the U.S." among metros with populations of 50,000-200,000 for number of economic development projects. In August 2014, SmartAsset.com named Dubuque one of the "10 Best American Cities to Work in Technology."This ranking was based on pay for tech workers, percentage of tech workers in the workforce (representing high levels of opportunity in the field), and a low cost of living indices. According to data from Iowa Workforce Development, 6.5% of Iowa's non-farm employment growth over 2009-2015 time period occurred in Dubuque, which has just 3.2% of the state's population. Most recently (2005-2016) Forbes.com named Dubuque one of the best places in America to climb the economic ladder to success. Industrial: The City's continual development in its industrial parks has not only attracted new industries but,just as importantly,retained existing businesses. Dubuque Industrial Center West(DICW) Over 550 saleable acres were acquired in 1997. The DICW comprises 21 local businesses expansions and four new businesses. Most recently, in the south portion of the park, Rite Hite is adding 138,000 square-feet to their current 193,500 square-foot building. This new addition is expected to add 35 new jobs by 2021. Dubuque Industrial Center South (DICS) The newest development in the Dubuque Industrial Center South was opened in November 2013 and contains 76.16 available acres. TriState Quality Metals was the first business to relocate to DICS from its 10,000 square-foot operations in Peosta, Iowa. TriState constructed a 44,000 square-foot facility and increased its workforce by 27 jobs. Roasting Solutions, LLC (dba Verena Street Coffee) recently constructed a 34,000 square-foot facility. The company invested over $7 million in plant and equipment and plans to add 10 new full-time workers by 2020, bringing their total employment to 17 full-time positions. Verena Street Coffee, which just began operations in 2010, now supplies over 700 grocery stores and wholesales in Iowa, Illinois,Minnesota, and Wisconsin. Dubuque Technology Park Located on the south side of the city is a 100-acre park designed to accommodate growing office businesses. Eight businesses are currently located in the park. In 2015, Rockfarm Holdings completed construction of their new 14,000 square-foot headquarter office building. In August 2016, Kunkel &Associates completed a $2.5 million expansion which added an extra 10,000 square-feet to the company's current Dubuque facility and created 16 new jobs. Commercial and Retail: Downtown Development Over $100 million has been invested in the downtown area where more than 9,000 people work. Over 500 IBM employees work on three renovated floors of the nine-story Roshek Building. Heartland Financial relocated existing staff to the third floor. In April 2016, Cottingham&Butler announced plans to renovate the fifth floor of the building and add 90 new jobs. A major remodel is also underway to house RSM US LLC's Dubuque workforce. Historic Millwork District The Schmid Innovation Center, a $33 million private renovation project received $8.9 million in CDBG funds to develop workforce housing. The 72-unit residential project was completed in September 2012. Nonprofits moved into the basement space while multiple commercial tenants fully occupy the first floor. The first floor is 100% occupied. Gigantic Design opened its new headquarters in the complex in 2016. The $32 million renovation and the creation of 76 residential units in the nearby Novelty Iron Works has been completed. The Linseed Oil Building renovation, completed in 2015, includes 16 apartments. 5 Commercial Development 2016 was an exceptional year for commercial development as many businesses broke ground on new projects in Dubuque. Ashley Furniture Store constructed a 38,000 square-foot store off the Northwest Arterial and Laundry Max, a 4,160 square-foot laundromat, is under construction on the corner of Grandview and University Avenue. Truck Country, a long-time Dubuque business, completed their new 53,127 square-foot complex in Key West just off Hwy 61/151 south. Additionally, Foodliner and McCoy Group intend to start the renovation work of the previous Truck Country facility, renovating portions of this structure to accommodate additional office space. Walmart submitted plans for an extensive interior and exterior renovation and updates to the existing space with a construction value around $1 million. The Plaza 20 retail center has also submitted plans to add three new commercial buildings totaling of 50,000 square-feet. Currently, a 15,000 square-foot building is under permit for the first phase of this project New restaurants that are under construction or recently opened are Chick-Fil-A, Popeye's, Chipotle Grill, Devil's Pit, Five Guy's Burgers, Smoke Stack, and The Dungeon. Site plan reviews are underway for a Wacker Plaza addition which may include Caribou Coffee and Pepperjack. Construction of a 54-room Marriot TownPlace Suite extended-stay hotel is slated to start in the spring of 2017 and open in spring of 2018. The four-story hotel will be in the Historic Millwork District and is being designed to model the existing architecture in the area. Health Services: UnityPoint-Health Finley Hospital has completed a $42 million, three-story, 70,000 square-foot addition that houses the Finley Heart and Vascular Center, and new emergency and surgery departments. Finley Hospital also opened a new family practice office on the west side of town. Mercy Hospital started an interior renovation in 2016 for switchboard and emergency room renovations and updates to its the medical lab facility. Education: Senior High School began construction on two large additions to the existing school along with extensive interior renovation work. There is an additional gymnasium being constructed on one addition and a three-story addition, consisting of a cafeteria and a new library, in the existing courtyard. Wahlert High School is undergoing an interior renovation and will be replacing and modifying the existing roof structure. Clarke University remodeled its Science Food Lab and the University of Dubuque is constructing a Green House. The City's recent awards and recognition from a variety of sources include: • The National League of Cities (NLC) selected Dubuque for its first place award in the 2016 NLC City Cultural Diversity Awards to the City of Dubuque for the City's support of Inclusive Dubuque and its efforts to develop a community equity profile. (March 2016) • In May 2015, Dubuque became the third Iowa community and the 25th in the nation to achieve certification under the national STAR Community Rating System, a sustainability rating system which evaluates communities based on a range of different aspects: built environment; climate and energy; economy and jobs; education, arts and community; health and safety; and natural systems. MAJOR INITIATIVES For the Year. The City of Dubuque staff, following the adopted priorities of the mayor and city council, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment 6 to continue to provide high quality services to the residents and stakeholders of Dubuque within the budget guidelines set by the mayor and city council. The Dubuque Regional Airport opened its new 35,000 square-foot passenger terminal on June 9, 2016. The completion of the terminal project follows several years of significant commercial airline growth by American Airlines in Dubuque. Nationally, the Federal Aviation Administration (FAA) states the average growth rate is two percent. Dubuque grew by seven percent in 2015, 6.8 percent in 2014, and 3.8 percent in 2013 —far exceeding the national average. The new facility will allow the community to continue to grow well into the future and was designed with the capability to expand when needed. The new terminal also has the enticement of free parking for all travelers. All projects were completed six months ahead of schedule and under budget The airport was informed that, in terms of overall airport activity, it was the second-busiest airport in the state of Iowa for 2015. This activity includes general aviation, agricultural, business aircraft, airline, and military traffic. The airport also hosted the North American Trainer's Association for their tenth visit to the Dubuque area. Airport staff hosted the Iowa Public Airports Association annual conference and exposition at the Grand River Center and the airport. This was the first time in decades the event was held outside of Des Moines. The University of Dubuque's Flight Operation Center is also located at the Dubuque Regional Airport. The Flight Operations program includes courses ranging from private pilot through commercial pilot with instrument and multi-engine ratings, each supported by an appropriate ground school. The University of Dubuque Aviation Program is currently using 15 new C172S aircraft to complete training requirements in the Private Pilot,Instrument Rating, Commercial Pilot and Flight Instructor training course outlines. The City continues to implement components of the Drainage Basin Master Plan adopted in 2001 and amended in 2013. Improvements in the North Fork Catfish Creek Drainage Basin have been addressed with expanded detention along the Northwest Arterial and conveyance improvements along the North Fork Catfish Creek between the Northwest Arterial and Pennsylvania Avenue. The City's $219 million Bee Branch Watershed Flood Mitigation Project is a 20-year, multi-phased investment to mitigate flooding, improve water quality, stimulate investment, and enhance quality of life within the Bee Branch Watershed. As part of the Bee Branch project, the City will convert 240 alleys in the Bee Branch Watershed to "green alleys" which feature permeable concrete pavers. These specially designed pavers allow water to pass through the surface and filter into the soil below. The green alleys are expected to reduce the amount of storm water run-off in the watershed by up to 80 percent and prevent flooding. In addition to reducing storm water run-off, the green alleys will replenish ground water and help prevent pollutants on roadways from running off into the storm sewer system, and ultimately, the Mississippi River. As of fall 2016, more than 70 alleys have been completed. The Jule, the City of Dubuque's Public Transit Division, completed its $12 million Intermodal Transportation Center in the Historic Millwork District in spring of 2016. This facility provides vital transportation connections required for the success of existing investments and will be instrumental in leveraging additional investments required to achieve the long-term goals for downtown Dubuque. The centralized transportation hub connects automobile, bus, and pedestrian traffic, while increasing demand for alternative transportation modes. Dubuque County and the Dubuque Community School District will benefit from the center, as it provides various transportation options for Millwork District and Washington Neighborhood residents, as well as visitors and downtown employees, spurring economic development in the district. Part of the project was funded with an $8 million grant from the U.S. Federal Transit Administration. A $4.2 million renovation of the nearby former public works building will house the bus maintenance center and is scheduled to begin in 2017. The Jule was recognized by the Federal Transit Administration, Region 7 Office, for the largest percent increase in ridership for urban transit systems in Iowa with a 15.4 percent increase from fiscal year 2014 to 2015. Transit ridership has increased 26 percent, or over 150,000 rides, in the last five years. This year,the Jule continues its trend of annual growth. The 553,387 total ridership in fiscal year 2016 consists of a 14,786 ride increase in fixed-route ridership even with the $100,000 reduction in operating costs from combining low ridership routes in August 2015. In 2013, the City of Dubuque and the Dubuque Metropolitan Area Transportation Study (DMATS) successfully negotiated a Memorandum of Understanding with the Iowa Department of Transportation (Iowa DOT) for the transfer of jurisdiction of the Southwest ArteriaFUS52 project The Iowa DOT, DMATS, Dubuque County, and the City of Dubuque have budgeted over $159 million to build the Southwest Arterial over the next five years with a preliminary two-lane design scheduled for completion in 2019. Following the completion of the Southwest Arterial, the project has the potential to generate $80 million in property taxes, $1.67 billion in economic output, $653 million in labor income, and $1.02 billion in value added from 2021 to 2030. The Southwest Arterial will also annually generate $135 million in state and local taxes and $130 million in federal tax from new economic development, as well as save $30 million in vehicle and property damage for the 10-year period. This project will also generate $16 million in property tax, $304 million in economic output, $24 million in state and local taxes, and $24 million in federal taxes due to economic development, in addition to $3 million in safety savings from 2030 onward. Side benefits include removing over 500 commercial vehicles a day from downtown streets and encouraging redevelopment on Central Avenue and White Street. Almost 1,000 trucks per day will be removed from US Highway 20/Dodge Street. Additional traffic will be removed from Kelly Lane, Fremont Avenue, Cedar Cross Road,Rockdale Road, and other residential streets. For the Future. The mayor and city council will continue to take action to achieve their goals of maintaining a strong local economy, sustaining stable property tax levies, and enhancing the safety and security of residents through neighborhood vitality. City staff will work to implement the city council's vision for Dubuque. A program of comprehensive service reviews has continued as a vehicle for analyzing City services, identifying opportunities for improvement, and determining areas of possible cost reductions. The goal of the service review program is to ensure that services desired by the citizens are provided in the most cost effective and efficient method possible. The city council's goals for the next five years and beyond include the following: • Planned and Managed Growth • Partnering for a Better Dubuque • Improved Connectivity: Transportation and Communications • Economic Prosperity • Social/Cultural Vibrancy • Environmental/Ecological Integrity FINANCIAL INFORMATION Internal Controls: City management is responsible for establishing and maintaining internal controls to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management 8 Single Audit: As a recipient of federal and state financial assistance, the City of Dubuque's government is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws, regulations, contracts, and grants related to those programs. These internal controls are subject to periodic evaluation by management. As a part of the City's single audit described earlier, tests are made to determine the adequacy of internal controls, including that portion related to federal programs, as well as to determine that the government has complied with applicable laws,regulations, contracts, and grants. Budgeting Controls: In addition, the government maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the city council. All funds, except for fiduciary fund types which include pension trust funds, private purpose trust funds and agency funds are included in the annual budget process. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established by state programs. The government also maintains an encumbrance accounting system as one technique for accomplishing budgetary control. Encumbered amounts lapse at year-end; however, encumbrances generally are re-appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Cash Management: Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, federal agency obligations, and authorized mutual funds. The City (including DMASWA) received cash basis investment earnings of$814,172 for the year. The investment policy adopted by the city council stresses the importance of capital preservation. The policy directives intend to minimize credit and market risks while maintaining a competitive yield on the portfolio. Risk Management: The City of Dubuque is a member of a statewide risk pool for local governments, the Iowa Communities Assurance Pool (ICAP). The coverage for general and auto liability, as well as public official and police professional liability are acquired through this pool. Worker's compensation coverage up to $500,000 for each accident is provided through self-insurance. The accumulated reserve provision for such claims reflected a $162,874 net position as of June 30, 2016. A provision for a large number of claims were accrued at fiscal year-end with funds to cover payment available in next fiscal year. The City has also established a self-insurance plan for medical, prescription drug, and short-term disability. The accumulated reserve provision for such claims equaled $2,005,595 as of June 30, 2016. All self-insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. Bond Rating: Moody's Investor Service assigned a Aa3 rating on the Series 2016 A, B and C bonds, which reflects the City's sizable tax base and role as a regional economic center in northeastern Iowa; a trend of strong employment growth which is projected to continue;recent declines in fund balance and cash reserves which are expected to stabilize at healthy levels going forward; high debt burden with additional borrowing planned; and moderate exposure to unfunded pension liabilities. In October of 2016,Moody's upgraded the 2015A bond to an A2 from an A3 rating. The notching reflects the City's adequate debt service coverage provided be the pledged sales tax revenue and their expectation to provide coverage of 2.5 times the maximum annual debt service. The City's revenue bonds are rated Aa3. Moody's provides credit ratings and research covering debt instruments and securities. The purpose of Moody's ratings is to provide investors with a simple system to gauge future relative creditworthiness of securities. The firm uses nine rating classifications to designate least credit risk to greatest credit risk: Aaa, 9 Aa, A, Baa, Ba, B, Caa, Ca, and C. Moody's appends numerical modifiers 1, 2, and 3 to each rating classification. AWARDS AND ACKNOWLEDGEMENTS Awards: The Government Finance Officers Association of the United States and Canada(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dubuque, Iowa, for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015. This was the 28th consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. GFOA also awarded a Certificate of Recognition for Budget Preparation to the City of Dubuque, Iowa, for its annual budget for the fiscal year ended June 30, 2016. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This was the 11th consecutive year that the City has achieved this prestigious award. This award is valid for a period of one year. The City of Dubuque's investment policy was awarded the Certification of Excellence in July 2009 by the Association of Public Treasurers of the United States and Canada. The investment policy is reviewed every five years by the APT US&C. The investment policy was successfully recertified in 2016. Acknowledgments: The preparation of this report could not be accomplished without the efficient and dedicated services of the entire Finance Department staff. We also thank the mayor and city council for their interest and support in planning and conducting the financial operations of the City of Dubuque in a responsible and progressive manner. We also thank the independent certified public accountants, Eide Bailly LLP,whose competent assistance and technical expertise have enabled the production of this report. Sincerely, Michael C. Van Milligen Jean M.Nachtman, CPA, CPFO City Manager Finance Director 10 CITY OF DUBUQUE ORGANIZATIONAL CHART Citizens of Dubuque City AttorneyCity Council City Clerk ----------------------"'Library - Airport Management/Legislative City Manager's Neighborhood Office Development Personnel f� Public Information Office Sustainability Cable TV G ogaphic Budget Finance Information fNunnaem 9ervlces 9yrtans Emergency Health Services Communications Planning Services Police Department Economic NSre Department TransitDmisim Parking Development amagmcy Arwu�ance Division Managemeu[ Services Arts mtl Cultural Affairs Engineering jHousing& Department Community Development Leisure Services Human Rights Recreztlm Park Divisim Training& Human Relatims Div6wn Workforce Developmm[ MuI ra-ural GrantlRwer Pantily Cmter emter Building Services Water Department Civic Cm@[ r Public Works Fater& Resource Recovery Center Elected by the Appointed by the Appointed by the Appointed by the Citizens of Dubuque City Council Library Board of Airport Commission 11 Trustees CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30,2016 CITY COUNCIL Roy D. Buol Mayor Ric W. Jones Council Member—At Large David T. Resnick Council Member—At Large Kevin J. Lynch Council Member— 1st Ward Luis Del Toro Council Member—2nd Ward Joyce E. Connors Council Member—3rd Ward Jake A. Rios Council Member—4th Ward COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen City Manager Barry A. Lindahl City Attorney Crenna M. Brumwell-Sahm Assistant City Attorney Maureen A. Quann Assistant City Attorney Kevin S. Firnstahl City Clerk DEPARTMENT MANAGERS Robert A. Grierson Airport Manager Therese H. Goodmann Assistant City Manager Cynthia M. Steinhauser Assistant City Manager Jenny M. Larson Budget Director Todd M. Carr Building Services Manager Gus N. Psihoyos City Engineer Maurice S. Jones Economic Development Director Jean M. Nachtman Finance Director Rick A. Steines Fire Chief Mary Rose Corrigan Health Services Manager Alvin L. Nash Housing and Community Development Manager Kelly R. Larson Human Rights Director Randall K. Peck Personnel Manager Christine A. Kohlmann Information Services Manager Marie L. Ware Leisure Services Manager Susan A. Hemicks Library Director John L. Klostermann Public Works Director Laura B. Carstens Planning Services Manager Mark M. Dalsing Police Chief Robert M. Green Water Department Manager William J. O'Brien Water&Resource Recovery Center Manager 12 k Govcrnmcnt Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Dubuque Iowa For its Comprehensive Annual Financial Rgort for the Fiscal Year Ended June 30, 2015 Pxecudve IylrectadCgO 13 THIS PAGE IS INTENTIONALLY LEFT BLANK 14 Financial Section June 30, 2016 City of Dubuque, Iowa 15 THIS PAGE IS INTENTIONALLY LEFT BLANK 16 Eid�lly® CPAs&BUSINESS ADVISORS Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa 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 City of Dubuque, Iowa as of and for the year ended June 30, 2016, 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 did not audit the financial statements of Dubuque Initiatives and Subsidiaries, which represent 73 percent, 70 percent, and 39 percent of the assets, net position, and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Dubuque Initiatives and Subsidiaries, is based on the report of the other auditors. 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-4udifing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perforin the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of Dubuque Initiatives and Subsidiaries and Dubuque Convention and Visitors Bureau, discretely presented component units, were not audited in accordance with Government Auditing Standards. www.eidebailly.com 17 1545 Associates Dr.,Ste. 101 1 Dubuque,IA 52002-2299 1 1563.556.1790 1 F 563.557.7842 1 EOE 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. Opinions In our opinion, based on our audit and the report of other auditors, 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 of Dubuque, Iowa, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the other required supplementary information 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 of Dubuque, Iowa's financial statements. The introductory section, combining no=ajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying 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 FederalAwards, and is also not a required part of the financial statements. 18 The combining nonmajor fund financial statements 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 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 combining nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 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 a report dated December 21, 2016, on our consideration of the City of Dubuque, Iowa'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 the City's internal control over financial reporting and compliance. ,A,,, SGT Dubuque, Iowa December 21, 2016 19 THIS PAGE IS INTENTIONALLY LEFT BLANK 20 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 This section of the City of Dubuque's annual financial report presents our discussion and analysis of the City's financial performance during the fiscal year that ended on June 30, 2016. Please read it in conjunction with the transmittal letter at the front of this report and the City's financial statements found in the next section of this report. FINANCIAL HIGHLIGHTS • The net position of the City of Dubuque increased to $501,793,953 compared to net position of $472,356,199 for fiscal year 2015. • Governmental program revenues increased by $12,695,366 from fiscal year 2015. The largest portion of the increase is the higher grants reimbursement for the new terminal parking at the airport and for the Southwest Arterial project • The City's business type activities program revenues decreased $354,144. Charges for services increased $2,985,596. Water (10%), sewer (10%), stormwater (7%), and refuse (5%) rates were increased in fiscal year 2016. Grant reimbursements for construction of the new Intermodal Facility decreased as the project neared completion while grant reimbursements for the Bee Branch project increased. OVERVIEW OF THE FINANCIAL STATEMENTS The City's basic financial statements consist of government-wide financial statements, fund financial statements, and notes to the financial statements. This discussion and analysis is intended to serve as an introduction to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to private-sector business. The paragraphs below provide a brief description of the government-wide financial statements. The statement of net position presents information on all of the City's assets, deferred outflows, liabilities, and deferred inflows, with the difference between assets plus deferred outflows, and liabilities plus deferred inflows 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. To assess the overall health of the City,you need to consider additional non-financial factors such as changes in the City's property tax base and the condition of the City's 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 result in cash flows in future fiscal periods such as uncollected taxes and earned but unused sick and vacation leave. 21 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 The government-wide financial statements include not only the City itself (known as the primary government), but also three other legally separate entities (known as component units), the Dubuque Metropolitan Area Solid Waste Agency (DMASWA), Dubuque Initiatives (DI) and Subsidiaries, and the Dubuque Convention and Visitors Bureau (CVB) for which the City of Dubuque is considered financially accountable. Financial information for DMASWA,DI, and CVB are reported separately from the financial information presented for the primary government. The Dubuque Metropolitan Area Solid Waste Agency, Dubuque Initiatives and Subsidiaries, and Dubuque Convention and Visitors Bureau issue separate financial statements. Dubuque Initiatives and Subsidiaries' financial statements are prepared on a calendar year basis while the Dubuque Metropolitan Area Solid Waste Agency's and Dubuque Convention and Visitors Bureau's financial statements are prepared on the same fiscal year basis as the City of Dubuque. The government-wide financial statements are divided into two categories: Governmental activities. This category consists of services provided by the City that are principally supported by taxes and intergovernmental revenues. Basic City services such as police, fire, public works,planning, parks, library, and general administration are governmental activities. Business-type activities. These activities are supported primarily by user fees. The services provided by the City in this category include water, sewer, storm water, refuse, salt, parking,transit and the America's River Project. Fund Financial Statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with legal requirements for financial transactions and reporting. All of the funds of the City can be divided into three categories: governmental funds,proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as 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 financial 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 City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances are followed by a reconciliation to facilitate this comparison between governmental funds and governmental activities. 22 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 The City maintains four individual major 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 general fund, tax increment financing fund, street construction fund, and debt service fund, all of which are considered to be major funds. Data from all other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City legally adopts an annual budget by function. A budgetary comparison schedule has been provided. 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 enterprises funds to account for its sewer, water, storm water, and refuse utilities, transit service, parking facilities, salt, and America's River Project. Internal service funds are accounting devices used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its engineering services, garage services, stores/printing, health insurance, and workers' compensation. The City's internal service funds predominately benefit the governmental activities and have been included in the governmental activities in the government-wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has two fiduciary funds, an agency fund reporting resources held for the Dubuque Racing Association for improvements at the greyhound racing facility and an agency fund used for reporting resources from Mediacom for purchasing equipment relevant to public, educational, and governmental (PEG) access broadcasting. 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. Required supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budget and actual results of the City, the City's proportionate share of the net pension liability and related contributions for both of the City's pension plans, and the funding progress for the retiree benefit plan. Other information. The combining statements referred to earlier in connection with nonrnajor governmental funds, non major enterprise funds, internal service funds, and agency funds, are presented immediately following the required supplementary information. 23 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position. As noted earlier, net position may serve as a useful indicator of a government's financial position when observed over time. The analysis that follows focuses on the change in net position for the governmental and business-type activities. The largest part of the City's net position reflects its net investment in capital assets such as land, buildings, infrastructure, machinery, and equipment less any related debt used to acquire those assets that is still outstanding. The debt related to the investment in capital assets is liquidated with resources other than capital assets. Restricted net position represents resources subject to external restrictions, constitutional provisions or enabling legislation on how they can be used. Unrestricted net position, the part of net position that can be used to frlance day-to-day operations without constraints established by debt covenants, legislation, or other legal requirements. CITY OF DUBUQUE'S NET POSITION Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Current and other assets $ 95,997,489 $ 93,298,918 $ 46,385,321 $ 56,877,806 $ 142,382,810 $ 150,176,724 Capital assets 411,932,115 392,392,426 312,026,175 271,529,923 723,958,290 663,922,349 Total assets 507,929,604 485,691,344 358,411,496 328,407,729 866,341,100 814,099,073 Deferred outflows ofresomces 8,309,113 7,605,182 811,944 768,132 9,121,057 8,373,314 Longterm liabilities 125,242,041 120,426,392 185,823,575 165,817,987 311,065,616 286,244,379 Other liabilities 16,658,669 14,310,233 14,609,023 10,229,278 31,267,692 24,539,511 Total liabilities 141,900,710 134,736,625 200,432,598 176,047,265 342,333,308 310,783,890 Deferredinflows of resources 30,786,633 37,918,563 548,263 1,413,735 31,334,896 39,332,298 Net position: Net investment in capital assets 369,244,904 348,173,267 161,326,743 148,487,126 530,571,647 496,660,393 Restricted 21,473,309 22,047,405 4,254,907 7,796,668 25,728,216 29,844,073 Unrestricted (47,166,839) (49,579,334) (7,339,071) (4,568,933) (54,505,910) (54,148,267) Total net position $ 343,551,374 $ 320,641,338 $ 158,242,579 $ 151,714,861 $ 501,793,953 $ 472,356,199 Net position of the governmental activities increased $22,910,036 over fiscal year 2015 balance of $320,641,338. Grant revenues increased $12.1 million. The majority of the increase was made up of an increase of$4.2 million in grant revenues for the newly completed Airport terminal and an increase of $5.7 million in grant revenues for the Southwest Arterial project. 24 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 Net position for the business-type activities increased $6,527,718 over fiscal year 2015 of$151,714,861. Charges for services increased $2,985,596. The increase in charges for services revenue reflects the increase in water, and sewer rates by 10%and the 5% increase in refuse and 7% increase in stormwater rates Grants and contributions decreased $2.6 million, this was due to a decrease in transit grants. A portion of the City's net position $25,728,216 or 5.1%represents resources that are subject to external restrictions on how they may be used. At the close of fiscal year 2016, the City has negative total unrestricted net position. The government-wide negative unrestricted results from the TIF (governmental activities) debt being used to finance capital assets of the business-type activites. The City has recorded a $1.6 million payable for settlement of the WCS lawsuit in relation to excavation work at the airport. The settlement is expected to be paid in full by July 1, 2017. Business type activites negative unrestricted results from storm water capital projects completed in fiscal year 2016 of which $1.9 million were covered under the State Revolving Loan fund proceeds received in fiscal year 2017. Governmental activities. Taxes are the largest source of governmental revenues with property taxes of $36,518,506 in 2016. Other governmental revenues included gaming $8,440,161, local option sales taxes $9,155,411, and charges for services $15,088,466. Governmental operating expenses during 2016 totaled $87,665,252. The largest programs were public safety of $26,851,624, public works of $24,323,023, community and economic development of $15,464,781, and culture and recreation of$12,993,331. Business-type activities. Business-type activities increased net position by $6,527,718 in fiscal year 2016 compared to fiscal year 2015 net position of $151,714,861. Operating revenue increased $2,986,422. Water's supplies and services expenses were lower in fiscal year 2016 than fiscal year 2015, due to fewer water main breaks and completing many of the repairs in house rather than contracting the work out. Transit also had a large decrease in supplies and services due to no longer contracting a portion of the labor out to ECIA. Intergovernmental revenue decreased $8,909,813; of which, $5 million was a decrease FTA capital grant for the Intermodal Transportation Center, the project was completed. There was an increase of$1.8 million in intergovernmental revenues in the Stormwater fund largely due to an increase in grant revenues in relation to the Bee Branch project. 25 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 CITY OF DUBUQUE CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Revenues: Program revenues Charges for services $ 15,088,466 $ 14,665,456 $ 31,971,251 $ 28,985,655 $ 47,059,717 $ 43,651,111 Operating grants and contributions 15,301,219 11,992,439 1,648,077 1,866,535 16,949,296 13,858,974 Capital grants and contributions 18,667,619 9,704,043 7,607,721 10,020,715 26,275,340 19,724,758 General revenues Property taxes 36,518,506 36,277,719 - - 36,518,506 36,277,719 Local option sales tax 9,155,411 8,760,246 - - 9,155,411 8,760,246 Hotel/motel tax 2,128,042 2,623,551 - - 2,128,042 2,623,551 Utility franchise fees 4,360,107 2,828,688 - - 4,360,107 2,828,688 Gaming 8,440,161 7,397,709 - - 8,440,161 7,397,709 Unrestricted investment earnings 1,082,165 668,134 407,528 185,356 1,489,693 853,490 Gain on sale of capital assets 813,492 19,495 102,824 6,571 916,316 26,066 Total revenues 111,555,188 94,937,480 41,737,401 41,064,832 153,292,589 136,002,312 Expenses: Public safety 26,851,624 25,525,937 - - 26,851,624 25,525,937 Public works 24,323,023 19,207,837 - - 24,323,023 19,207,837 Health and social services 967,936 928,968 - - 967,936 928,968 Cuture and recreation 12,993,331 13,002,690 - - 12,993,331 13,002,690 Community and economic development 15,464,781 18,064,831 - - 15,464,781 18,064,831 General government 4,101,423 6,420,173 - - 4,101,423 6,420,173 Interest on long-term debt 2,963,134 3,903,667 - - 2,963,134 3,903,667 Sewage disposal works - - 12,817,669 12,019,866 12,817,669 12,019,866 Water utility - - 6,483,229 7,800,393 6,483,229 7,800,393 Stommater utility - - 5,021,523 4,131,562 5,021,523 4,131,562 Parking facilities - - 3,420,296 3,383,419 3,420,296 3,383,419 America's River Project - - 21,521 24,000 21,521 24,000 Refuse collection - - 3,968,761 3,740,404 3,968,761 3,740,404 Transit system - - 4,274,967 4,245,823 4,274,967 4,245,823 Salt 181,617 244,691 181,617 244,691 Total expenses 87,665,252 87,054,103 36,189,583 35,590,158 123,854,835 122,644,261 Increase(decrease)in net position before extraordinary item and transfers 23,889,936 7,883,377 5,547,818 5,474,674 29,437,754 13,358,051 Transfers (979,900) (7,288,593) 979,900 7,288,593 Increase(decrease)in net position 22,910,036 594,784 6,527,718 12,763,267 29,437,754 458,998,508 Net position,beginning 320,641,338 320,046,554 151,714,861 138,951,954 472,356,199 458,998,508 Net position,ending $ 343,551,374 $ 320,641,338 $ 158,242,579 $ 151,714,861 $ 501,793,953 $ 472,356,199 26 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. The City's governmental funds reported a combined fund balance of $53,612,468 at June 30, 2016. $6,532,932 is in nonspendable for inventory, advances to other funds, receivables, and prepaid items. $69,412 is nonspendable endowment corpus. $27,450,187 is restricted for debt service and bond ordinance, road use tax funds, capital improvements, community development programs, employee benefits, endowments, and various grants. Council ordinance has committed $7,635,502 for capital improvements. $1,015,938 is assigned for capital improvements and equipment. This leaves $10,908,497 for unassigned fund balances in the government funds. The General Fund's fund balance reserve goal is 10% of budgeted annual expenditures. The fund balance of the General Fund increased by $2,550,148 to $17,973,487. Gaming revenues increased $1,042,452 or 14.1% in fiscal year 2016. Tax revenues increased $1.2 million and there were increases in licenses and permits, intergovernmental revenues and charges for services. There was an increase of expenditures of $2.8 million in public works, $2.7 million of this was due to the utility franchise fee payout in relation to the Zaber lawsuit. The fund balance of special revenue fund Tax Increment Financing increased by $1,274,751 to $7,324,281. $721,800 of this was due to a sale of TIF development land. The decrease of$566,000 in tax revenues was offset by a a combined increase of$574,000 in investment earnings and contributions. The fund balance of the Capital Projects Fund street construction decreased by$5,248,306 to $2,063,549. Revenue for capital projects are not always received in the same fiscal year as project expenses occur. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements,but in more detail. The combined net position of the enterprise funds at June 30, 2016, totaled $158,242,579 of which the unrestricted is a negative $7,339,071. This is primarily due to expenses in 2016 for stormwater projects being reimbused through the State of Iowa revolving loan fund in 2017. The net position of the Internal Service Funds increased by $790,330 to $463,391. The Health Insurance Reserve Fund increased $447,671 and the Workers' Comp Reserve increased $737,590. Workmen's Comp experienced $878,495 less expenses in 2016 as compared to 2015. The unrestricted net position of the Internal Service Funds is $261,678. 27 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 The Sewer Fund had a decrease by $4,116,913 for total net position of $27,352,916. Assets for green alley improvements are moved yearly from Sewer Fund into Stormwater Fund to reflect the enterprise benefiting from the assets. The debt for the green alley project is paid with sewer revenue funds. This is an agreement with the Iowa State Revolving Loan. Currently $6.8 million of debt for green alley is recorded in the Sewer Fund and assets in the Stormwater Fund. The Water Utility had an increase in net position by $2,310,768 for total net position of $24,812,636. Water rates were increased 10%in 2016. The Storm Water Utility had a 21.9% increase in net position of $8,449,928. Ending net position is $46,919,580. $3.6 million in assets for green alley project was transferred to Stormwater from Sewer. The debt for this asset is remaining in the Sewer Sund. Stormwater had a 7% increase in rate for fiscal year 2016. The Parking Facilities had a increase in net position of$8,940,425. Ending net position is $47,727,130. Assets of $9.3 for the parking ramp at the new Intermodal Center were transferred from Transit to Parking to reflect the enterprise benfiting from the asset. Revenues increased $211,169. Fiscal year 2016 fees for parking tickets and parking ramps were increased. Other Enterprise Funds net position decreased by $9,056,490 to $11,430,317. This was primarily due to Transit being moved back to a nonrnajor fund. Transit saw a decrease of$8,849,408 in net position due due a transfer of capital assets to the Parking Fund. Health Insurance Reserve increased in fiscal year 2016 by $447,671. Revenues increased by $1,906,743 and claims increased 18%over 2015. Workmen's Comp Reserve net position increased by $737,590. The fund saw a 71% decrease in expenses as compared to prior year. BUDGETARY HIGHLIGHTS There were two amendments to the City's 2015-2016 cash basis budget. The first amendment was passed in September 2015 to reflect operating and capital budget carryovers (continuing appropriation authority) from fiscal year 2015 and amended the fiscal year 2015 budget for operating and capital City Council actions since the beginning of the fiscal year. The second budget amendment was passed in April 2016 to reflect City Council actions since the second budget amendment and amendments to add additional appropriation authority due to increased revenues. The final budget for total cash basis receipts increased by $36,680,731. The increase was primarily attributable to revenue associated with capital projects and operating carryovers which mainly include grants to intergovermnental funds. The final budget for total expenditures increased $102,910,097 from the original budget. The increase was primarily attributable to purchase order encumbrances carryover, capital projects, and operating carryovers from the prior year and expenditures associated with new grants received. 28 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 Actual cash basis revenues were $41,133,723 less than the final amended budget; and, cash basis expenditures were $96,784,409 less than the final amended budget due primarily to projected capital projects not completed by fiscal year end. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets. The City's investment in capital assets for its governmental and business-type activities as of June 30, 2016, amounts to $723,958,290 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress. Additional information on the City's assets can be found in Note 6 to the financial statements in this report. CAPITAL ASSETS(net of accumulated depreciation) Govemmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Land $ 79,762,,721 $ 68,906,,705 $ 23,070,018 $ 22,482,687 $ 102,832,]39 $ 91789,392 Buildings 140,451997 127,812756 151,445,382 136,395,921 291,897,379 264708,177 Improvements other than buildings 23,764,449 22,219,094 142,579,440 99,006,869 166,343,889 121725,963 Maclunery and equipment 46,318,972 40,667979 103,872,339 96,550,475 150,191,311 137718,454 In9astmcture 227,944,685 216,205,431 - - 227,944,685 216705,431 Contraction in progress 38,114714 52,565,551 1,888,488 21,008,496 40,002,702 73,574,047 Accmmilated depreciation (144,424,923) (135984,590) (110,829,492) (103914,525) (255,254,415) (239,899,115) $ 411,932,115 $ 392,392,426 $ 312,026,175 $ 271,529923 $ 723,958,290 $ 663922,349 Major expenditures during 2015-2016 were for the construction work on the Intermodal projects, SouthWest Arterial construction, Green Alley projects, new Airport terminal related contruction, and Bee Branch storm water projects. Long-term debt At year end, the City had $271,003,845 of debt outstanding. During fiscal year 2016,the City issued $6,975,000 of general obligation bonds and $10,920,000 of refunding bonds. The City refunded $11,775,000 of general obligation bonds. The issued bonds were used to finance various projects including water main replacements, sanitary sewer lift stations, manhole reconstructions, new terminal roads and parking lots, and to finance the $2.7 million settlement of the Zaber franchise fee lawsuit. The City received $21,831,579 in distributions four the State of Iowa Revolving Loan Fund for Stormwater Bee Branch projects. The City continues to operate under the State debt capacity limitations. The State limits the amount of general obligation debt outstanding to 5%of the assessed value of all taxable property in the community. Thus the City's debt capacity is $196,031,074. With $165,838,102 of debt applicable against the capacity, the City is utilizing 84.60% of this limit. Additional information on the City's long-term debt can be found in Note 7 of this report. 29 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30,2016 ECONOMIC FACTORS The City's unemployment rate as of September 2016 was 3.5%down from 3.6%in December 2015. The national average was 4.9% for October 2016, according to the Bureau of Labor Statistics. State of Iowa was 3.7%as reported in Sepetember 2016. The assessed valuation of taxable property, net of exemptions, decreased by .0052%to $2,508,933,000. In fiscal year 2016, the minimum monthly refuse rate increased from $13.24 to $13.90, sewer and water rates increased 10%, and the storm water monthly fee increased from $5.98 to $6.38 per single family unit(SFU). Requests for information. This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 50 West 13th Street,Dubuque,Iowa 52001-4864. 30 Basic Financial Statements June 30, 2016 City of Dubuque, Iowa 31 CITY OF DUBUQUE,IOWA STATEMENT OF NET POSITION JUNE 30,2016 Primary Government Component Units Dubuque Metropolitan Dubuque Dubuque Governmental Business-type Area Solid Initiatives and Convention and Activities Activities Total Waste Agency Subsidiaries Visitors Bureau ASSETS CURRENT ASSETS Cash and pooled cash investments $ 26,141,553 $ 7,523,605 $ 33,665,158 $ 1,398,739 $ 1,726,816 $ 12,504 Receivables Property tax Delinquent 289,731 - 289,731 - - - Succeeding year 26,376,219 - 26,376,219 - - - Accounts and other 1,620,988 2,939,379 4,560,367 347,766 326,587 Special assessments 675,864 - 675,864 - - Accrued interest 107,452 21,185 128,637 9,749 - - Notes 442,713 - 442,713 - 28,800 - Intergovernmental 13,366,420 4,498,495 17,864,915 15,553 - - Internal balances 549,973 (549,973) - - - - Inventories 693,082 756,621 1,449,703 - 133,347 13,665 Prepaid items 262,516 19,012 281,528 986 Total Current Assets 70,526,511 15,208,324 85,734,835 1,772,793 2215550 26,169 NONCURRENT ASSETS Expendable restricted cash&investments 12,529,305 31,176,997 43,706,302 5,787,374 1,190,749 45,394 Nonexpendable restricted cash and investments 69,412 - 69,412 - - - Notes receivable 12,872,261 - 12,872,261 - 10,200,604 - Capital assets Land 79,762,721 23,070,018 102,832,739 2,952,666 117,723 - Buildings 140,451,997 151,445,382 291,897,379 106,495 44,701,388 - Improvements other than buildings 23,764,449 142,579,440 166,343,889 10,306,408 - - Machinery and equipment 46,318,972 103,872,339 150,191,311 4,255,081 - 320,333 Infrastructure 227,944,685 - 227,944,685 - - - Construction in progress 38,114,214 1,888,488 40,002,702 3,464,862 -Accumulated depreciation (144,424,923) (110,829,492) (255,254,415) (9,646,651) (6,663,742) Total Noncurrent Assets 437,403,093 343,203,172 780,606,265 17,226,235 49,546,722 365,727 Total Assets 507,929,604 358,411,496 866,341,100 18,999,028 51,762,272 391,896 DEFERRED OUTFLOWS OF RESOURCES Pension Related deferred outflows $ 8,309,113 $ 811,944 $ 9,121,057 $ 82,654 $ - $ 32 CITY OF DUBUQUE,IOWA STATEMENT OF NET POSITION(continued) JUNE 30,2016 Primary Government Component Units Dubuque Metropolitan Dubuque Dubuque Governmental Business-type Area Solid Initiatives and Convention and Activities Activities Total Waste Agency Subsidiaries Visitors Bureau LIABILITIES CURRENT LIABILITIES Accounts payable $ 8,654,869 $ 7,972,159 $ 16,627,028 $ 288,118 $ 226,598 $ 207,402 Accrued payroll 884,256 240,655 1,124,911 23,278 - - Loans payable 97,142 26,721 123,863 - - 47,448 Notes payable 173,666 3,182,000 3,355,666 - 879,701 - General obligation bonds payable 5,105,525 2,444,475 7,550,000 190,000 - - Revenuebondspayable - 295,000 295,000 - - - Taxincrementfinancingbondspayable 440,000 - 440,000 - - - Accruedcompensatedabsences 350,138 51,222 401,360 14,422 - - Accruedinterestpayable 349,853 396,791 746,644 10,324 52,990 Intergovernmental payable 7,978 - 7,978 71,436 - - Unearned revenue 595,242 595,242 Total Current Liabilities 16,658,669 14,609,023 31,267,692 597,578 1,159,289 254 850 NONCURRENT LIABILITIES Loans payable 5,250,000 209,902 5,459,902 - - 98,655 Notes payable 451,763 100,974,549 101,426,312 - 25,339,023 - General obligation bonds payable 53,764,287 44,361,998 98,126,285 4,257,132 - - Revenuebondspayable - 33,901,999 33,901,999 - - - Landfill closure and posiclosure care - - - 2,794,735 - - Taxincrementfinancingbondspayable 20,324,818 - 20,324,818 - - - Accrued compensated absences 5,555,966 851,957 6,407,923 249,780 - - Netpensionliability 36,085,349 4,695,669 40,781,018 478,004 - - NetOPEBLiability 3,809,858 827,501 4,637,359 88,742 Total Noncurrent Liabilities 125,242,041 185,823,575 311,065,616 7,868,393 25,339,023 98,655 Total Liabilities 141,900,710 200,432,598 342,333,308 8,465,971 26,498,312 353,505 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows 4,410,414 548,263 4,958,677 55,811 - - Succeeding year property tax 26,376,219 26,376,219 Total deferred inflows of resources $ 30,786,633 $ 548,263 $ 31,334,896 $ 55,811 $ - $ NET POSITION Net investment in capital assets 369,244,904 161,326,743 530,571,647 8,188,062 11,936,645 - Restricted for/by: Bond ordinance development agreement 2,140,740 4,254,907 6,395,647 - - Debt service 224,997 - 224,997 - - - Employee benefits 23,851 - 23,851 - -Community development 9,118,412 - 9,118,412 - - - IowaFinanceAuthorityTmst 179,149 - 179,149 - -Capital projects 7,824,448 - 7,824,448 - -Franchise agreement 500,534 - 500,534 - - - Endowments,expendable 107,521 - 107,521 - - 5,161 Endowments,nonexpendable 69,412 - 69,412 - - - Other 1,284,245 - 1,284,245 - - - State statute - - - 113,022 - - Landfill closure&post closure care - - - 1,648,705 -Minority interest - - - 138,495 - - Unrestricted (47,166,839) (7,339,071) (54,505,910) 471,616 13,327,315 33,230 Total Net Position $ 343,551,374 $ 158,242,579 $ 501,793,953 $ 10,559,900 $ 25,263,960 $ 38,391 See notes to financial statements. 33 9_ . . . . . . . . . . . . F P O W P N O 0 m ¢ e of Q � ¢ 3 a a v A v ° E � v v � N t „ a > MSM aM MM e � tb aP4M H S P4 U c N A z z 0 n h W � wz 0 > a g 3 Nw .o '` A�� b 6 W W g A � o '° � o > O [W. F °o � 5 � e v ' A v 3 ° '� v _ iO• F e o c o 0 0 v OmW � �C o w v H 34 THIS PAGE IS INTENTIONALLY LEFT BLANK 35 CITY OF DUBUQUE, IOWA BALANCESHEET GOVERNMENTAL FUNDS JUNE 30,2016 Special Revenue Capital Projects Tax Increment General Financing Street Construction ASSETS Cash and pooled cash investments $ 7,491,845 $ 4,118,160 $ - Receivables Property tax Delinquent 123,567 130,644 Succeeding year 20,273,143 - - Accounts and other 1,333,848 - 2,473 Special assessments - - - Accrued interest 19,986 43,915 - Notes 5,750,925 289,800 - Intergovemmental 1,508,130 - 8,399,746 Due from other funds 3,798,982 - - Inventories 174,469 - - Prepaid items 123,658 - 8,541 Restricted cash and pooled cash investments 1,143,860 2,741,762 56,345 Total Assets $ 41,742,413 $ 7,324,281 $ 8,467,105 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ 1,507,621 $ - $ 1,869,486 Accrued payroll 748,067 - - Intergovemmental payable - - - Due to other funds - - 2,209,602 Unearned revenue 595,242 Total Liabilities 2,850,930 4,079,088 DEFERRED INFLOW OF RESOURCES Unavailable revenues Succeeding year property tax 20,273,143 - - Special assessments - - - Grants 34,491 - 1,150,812 Other 610,362 1,173,656 Total Deferred Inflows of Resources 20,917,996 2,324,468 FUND BALANCES Nonspendable Endowment corpus - - - Inventory 174,469 - - Long-term notes receivable 5,750,925 - - Prepaid items 123,658 - - Restricted Endowments - - - Library Debt service - - Bond ordinance - 2,140,740 - Capital improvements - 5,183,541 - Franchise agreement - - - Special assessments - - - Claims Iowa Finance Authority Trust - -Community programs - - - Employee benefits - - - Committed,capital improvements - - 2,063,549 Assigned DRA gaming and distribution 1,015,938 - - Unassigned 10,908,497 Total Fund Balances 17,973,487 7,324,281 2,063,549 Total Liabilities,Deferred Inflows of Resources, and Fund Balances $ 41,742,413 $ 7,324,281 $ 8,467,105 See notes to financial statements. 36 EXHIBIT 3 other Govemmmtal Debt Service Funds Total $ 223,268 $ 10,376,217 $ 22,209,490 2,172 33,348 289,731 311,691 5,791,385 26,376,219 - 198,718 1,535,039 675,864 675,864 36,290 100,191 7,274,249 13,314,974 3,458,544 13,366,420 - 3,798,982 450,199 624,668 33,681 165,880 8,656,750 12,598,717 $ 537,131 $ 36,985,245 $ 95,056,175 $ - $ 1,823,649 $ 5,200,756 84,500 832,567 7,978 7,978 625,222 2,834,824 11,327 606,569 2,552,676 9,482,694 311,691 5,791,385 26,376,219 - 645,727 645,727 - 1,961,615 3,146,918 443 7,688 1,792,149 312,134 8,406,415 31,961,013 - 69,412 69,412 450,199 624,668 - 5,750,925 33,681 157,339 107,521 107,521 - 1,252,231 1,252,231 224,997 - 224,997 - - 2,140,740 8,687,197 13,870,738 500,534 500,534 30,205 30,205 1,809 1,809 179,149 179,149 9,118,412 9,118,412 23,851 23,851 5,571,953 7,635,502 - 1,015,938 10,908,497 224,997 26,026,154 53,612,468 $ 537,131 $ 36,985,245 $ 95,056,175 37 THIS PAGE IS INTENTIONALLY LEFT BLANK 38 CITY OF DUBUQUE, IOWA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET EXHIBIT 3-1 TO THE STATEMENT OF NET POSITION JUNE 30,2016 Total fund balances-governmental funds $ 53,612,468 Amounts reported for the governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Cost of capital assets $ 556,032,790 Accumulated depreciation (144,302,387) 411,730,403 Some of the City's revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures and therefore are deferred in the funds. Those revenues consist of: Property tax 36,511 Special assessments 645,727 Other 4,913,882 5,596,120 Pension related deferred outflows of resources and deferred inflows of resources are not due and payable in the current year and,therefore, are not reported in the government funds as follows: Deferred inflows or resources (4,211,944) Deferred outflows of resources 8,015,193 3,803,249 Internal service funds are used by the City's management to charge the costs of equipment maintenance and self-insurance programs to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 463,391 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: General obligation bonds (58,869,812) Tax increment financing bonds (20,764,818) Notes payable (625,429) Loans payable (5,347,142) Accounts payable WCS lawsuit (1,595,715) Accrued interest (349,853) Compensated absences (5,906,104) Net pension liability (34,385,526) Net OPEB liability (3,809,858) (131,654,257) Net position of governmental activities $ 343,551,374 See notes to financial statements. 39 CITY OF DUBUQUE,IOWA STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED NNE 30,2016 Special Revenue Capital Projects Tax Increment General Financing Street Construction REVENUES Taxes $ 30,881,068 $ 10,324,023 $ 2,746,624 Special assessments - - - Licenses and permits 1,480,643 - - Intergovemmental 1,617,334 - 9,141,093 Charges for services 10,655,692 - 36,933 Fines and forfeits 421,925 - - Investment earnings 245,338 556,712 17,477 Contributions 996,533 350,970 - Gaming 8,440,161 - - Miscellaneous 502,793 4,869 Total Revenues 55,241,487 11,231,705 11,946,996 EXPENDITURES Current Public safety 28,036,551 - - Public works 8,799,037 - - Health and social services 1,005,395 - - Cultureandrecreation 11,677,088 - - Communityandeconomicdevelopment 3,757,062 3,175,345 - General government 5,927,995 - - Debt service Principal - - - Interestandfiscalcharges - - - Capital projects 13,905 17,357,382 Total Expenditures 59,203,128 3,189,250 17,357,382 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER)EXPENDITURES (3,961,641) 8,042,455 (5,410,386) OTHER FINANCING SOURCES(USES) Issuance of debt 2,830,000 - - Issuance of refunding debt - - - Premium on bonds 21,561 - - Premium on refunding bonds - - - Transfers in 6,056,765 563,112 481,250 Transfers out (2,599,112) (8,074,797) (347,283) Insurance recovery 58,246 - 28,113 Sale of capital assets 144,329 743,981 Total Other Financing sources(Uses) 6,511,789 (6,767,704) 162,080 NET CHANGE IN FUND BALANCES 2,550,148 1,274,751 (5,248,306) FUND BALANCES,BEGINNING 15,423,339 6,049,530 7,311,855 FUND BALANCES,ENDING $ 17,973,487 $ 7,324,281 $ 2,063,549 See notes to financial statements. 40 EXHIBIT 4 other Govemmmtal Debt Service Funds Total $ 304,058 $ 7,324,311 $ 51,580,084 - 111,193 111,193 - - 1,480,643 46,077 18,498,320 29,302,824 - 227,229 10,919,854 - - 421,925 3,929 258,709 1,082,165 - 92,902 1,440,405 - 8,440,161 860,213 1,367,875 354,064 27,372,877 106,147,129 - 28,036,551 5,798,786 14,597,823 - 10,592 1,015,987 14,669 217,272 11,909,029 38,826 6,502,180 13,473,413 - 508,119 6,436,114 10,302,412 - 10,302,412 3,707,268 - 3,707,268 14,133,294 31,504,581 14,063,175 27,170,243 120,983,178 (13,709,111) 202,634 (14,836,049) - 1,103,882 3,933,882 4,650,000 - 4,650,000 - 8,200 29,761 262,760 - 262,760 8,995,817 1,300,063 17,397,007 - (7,355,715) (18,376,907) - 86,359 175,504 1,063,814 13,908,577 (4,768,066) 9,046,676 199,466 (4,565,432) (5,789,373) 25,531 30,591,586 59,401,841 $ 224,997 $ 26,026,154 $ 53,612,468 41 THIS PAGE IS INTENTIONALLY LEFT BLANK 42 CITY OF DUBUQUE, IOWA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXHIBIT 4-1 EXPENDITURES,AND CHANGES IN FUND BALANCES TO THE STATEMEMT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30,2016 Net change in fund balances-total governmental funds $ (5,789,373) Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However,in the statement of activities,the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period,these amounts are: Capital assets expended in governmental funds $ 28,619,466 Transfers of capital assets to enterprise funds (48,873) Contributions from developers and federal government 539,889 Depreciation expense (9,282,096) 19,828,386 In the statement of activities,only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds,the entire proceeds from the sale increase financial resources.Thus,the change in net position differs from the change in fund balances by the book value of the asset being disposed. (250,322) Because some revenues will not be collected for several months after the City's fiscal year ends,they are not considered"available"revenues and are deferred in the governmental funds. Deferred inflows of resources increased(decreased) by these amounts this year: Property tax 4,051 Special assessments (74,985) Other 3,248,919 3,177,985 Debt proceeds provide current financial resources to governmental funds,but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net position and does not affect the statement of activities.Also,governmental funds report the effect of issuance discounts and premiums when debt is first issued,whereas these amounts are deferred and amortized in the statement of activities. Debt issuances including premium (8,876,403) Debt repayments 10,302,412 1,426,009 Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.These items consist of. Increase in accrued interest (40,223) Amortization of bond discount/premium 3,570 Decrease in compensated absences 485,248 Accounts payable Zaber lawsuit 2,700,000 Accounts payable WCS lawsuit (1,595,715) Pension adjustment 2,560,131 Increase in net OPEB liability (385,990) Total additional expenses 3,727,021 Internal service funds are used by management to charge the costs of certain activities to individual funds.The change in net position of the internal service funds is reported with governmental activities. 790,330 Change in net position of governmental activities $ 22,910,036 See notes to financial statements. 43 CITY OF DUBUQUE,IOWA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2016 Business-type Activities-Enterprise Funds Sewage Disposal Water Stormwater Works Utility Utility ASSETS CURRENT ASSETS Cash and pooled cash investments $ 2,585,044 $ 3,285,760 $ - Receivables Accounts 1,194,414 837,342 369,427 Accrued interest 71948 9,601 - Intergovernmental - - 2,520,097 Prepaid items 2,441 420 - Inventories - 756,621 - Total Current Assets 3,789,847 4,889,744 2,889,524 NONCURRENT ASSETS Restricted cash and pooled cash investments 4,988,991 5,065,033 20,506,296 Capital assets Land 167,855 115,727 20,625,971 Buildings 72,005,065 9,765,805 - Improvements to other than buildings 45,926,210 956,707 90,834,782 Machinery and equipment 39,532,532 52,315,431 1,078,754 Construction in progress 814,929 1,005,580 67,979 Accumulated depreciation (53,236,577) (24,740,220) (12,283,002) Net Capital Assets 105,210,014 39,419,030 100,324,484 Total Noncurrent Assets 110,199,005 44,484,063 120,830,780 Total Assets 113,988,852 49,373,807 123,720,304 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows $ 176,396 $ 199,744 $ 35,615 44 EXHIBIT 5 (continued) Business-type Activities-Enterprise Funds Governmental Activities- Parking Other Enterprise Intemal Service Facilities Funds Total Funds $ 913,835 $ 738,966 $ 7,523,605 $ 3,932,063 187,000 351,196 2,939,379 85,949 2,395 1,241 21,185 7,261 - 1,978,398 4,498,495 - 6,720 9,431 19,012 96,636 - - 756,621 68,414 1,109,950 3,079,232 15,758,297 4,190,323 546,166 70,511 31,176,997 - 2,124,465 36,000 23,070,018 - 62,337,568 7,336,944 151,445,382 - 3,379,337 1,482,404 142,579,440 - 2,423,667 8,521,955 103,872,339 324,248 - - 1,888,488 - (14,849,800) (5,719,893) (110,829,492) (122,536) 55,415,237 11,657,410 312,026,175 201,712 55,961,403 11,727,921 343,203,172 201,712 57,071,353 14,807,153 358,961,469 4,392,035 $ 65,383 $ 334,806 $ 811,944 $ 293,920 45 CITY OF DUBUQUE,IOWA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2016 Business-type Activities-Enterprise Funds Sewage Disposal Water Stormwater Works Utility Utility LIABILITIES CURRENT LIABILITIES Accounts payable $ 2,046,676 $ 562,300 $ 4,539,422 Accrued payroll 53,308 59,407 7,149 Loans payable-current - - - General obligation bonds payable 423,879 403,595 898,618 Revenue bonds payable - 295,000 - Capital loan notes payable 2,652,000 178,000 352,000 Accrued compensated absences 30,805 7,044 - Accrued interest payable 152,531 60,788 150,462 Due to other funds - - 549,974 Total Current Liabilities 5,359,199 1,566,134 6,497,625 NONCURRENT LIABILITIES Loans payable - - - General obligation bonds payable 11,585,266 13,218,634 11,630,256 Revenue bonds payable - 5,133,350 28,768,649 Capital loan notes payable 68,328,080 2,994,000 29,652,469 Accrued compensated absences 190,279 324,812 11,532 Net pension liability 1,020,145 1,155,171 205,964 Net OPEB Liability 210,252 233,938 45,795 Total Noncurrent Liabilities 81,334,022 23,059,905 70,314,665 Total Liabilities 86,693,221 24,626,039 76,812,290 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows $ 119,111 $ 134,876 $ 24,049 NET POSITION Net investment in capital assets 34,196,730 22,029,759 46,686,137 Restricted by bond ordinance/development agreement - 686,138 2,842,650 Unrestricted (6,843,814) 2,096,739 (2,609,207) Total Net Position $ 27,352,916 $ 24,812,636 $ 46,919,580 See notes to financial statements. 46 EXHIBIT 5 (continued) Business-type Activities-Enterprise Funds Governmental Activities- Parking Other Enterprise Intemal Service Facilities Funds Total Funds $ 8,280 $ 815,480 $ 7,972,158 $ 1,858,398 16,321 104,470 240,655 51,689 26,721 - 26,721 - 713,727 4,656 2,444,475 - - - 295,000 - - - 3,182,000 - 8,350 5,023 51,222 - 32,767 243 396,791 - - - 549,974 414,184 806,166 929,872 15,158,996 2,324,271 209,902 - 209,902 - 7,847,071 80,771 44,361,998 - - - 33,901,999 - - - 100,974,549 - 45,699 279,635 851,957 - 378,123 1,936,266 4,695,669 1,699,823 78,495 259,021 827,501 - 8,559,290 2,555,693 185,823,575 1,699,823 9,365,456 3,485,565 200,982,571 4,024,094 $ 44,150 $ 226,077 $ 548,263 $ 198,470 46,842,134 11,571,983 161,326,743 201,713 321,850 404,269 4,254,907 - 563,146 (545,935) (7,339,071) 261,678 $ 47,727,130 $ 11,430,317 $ 158,242,579 $ 463,391 47 CITY OF DUBUQUE,IOWA STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30,2016 Business-type Activities-Enterprise Funds Sewage Disposal Water Stormwater Works Utility Utility OPERATING REVENUES Charges for sales and services $ 12,124,378 $ 8,398,756 $ 3,736,904 Other 34,061 8,172 17,244 Total Operating Revenues 12,158,439 8,406,928 3,754,148 OPERATING EXPENSES Employee expense 3,626,427 2,598,030 1,566,114 Utilities 474,143 650,159 8,509 Repairs and maintenance 750,559 187,982 46,621 Supplies and services 2,727,599 1,274,845 462,257 Insurance 122,776 114,533 56,695 Depreciation 3,314,861 960,193 858,549 Total Operating Expenses 11,016,365 5,785,742 2,998,745 OPERATING INCOME(LOSS) 1,142,074 2,621,186 755,403 NONOPERATING REVENUES(EXPENSES) Intergovernmental - 7,187 14,656 Investment earnings 78,529 101,175 193,642 Contributions 187 - 152,656 Interest expense (1,801,304) (697,487) (2,022,778) Gain on disposal of assets 1,378 250 91,303 Net Nonoperating Revenues(Expenses) (1,721,210) (588,875) (1,570,521) INCOME(LOSS)BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (579,136) 2,032,311 (815,118) CAPITAL CONTRIBUTIONS 97,200 202,643 5,307,207 TRANSFERS IN 9,547 75,814 3,962,839 TRANSFERS OUT (3,644,524) - (5,000) CHANGE IN NET POSITION (4,116,913) 2,310,768 8,449,928 NET POSITION,BEGINNING 31,469,829 22,501,868 38,469,652 NET POSITION,ENDING $ 27,352,916 $ 24,812,636 $ 46,919,580 See notes to financial statements. 48 EXHIBIT 6 Business-type Activities-Enterprise Funds Governmental Other Activities- Parking Enterprise Intemal Facilities Funds Total Service Funds $ 3,056,609 $ 4,273,509 $ 31,590,156 $ 16,876,880 190,774 130,844 381,095 190,212 3,247,383 4,404,353 31,971,251 17,067,092 927,573 5,257,223 13,975,367 3,454,504 259,213 105,615 1,497,639 30,597 259,595 723,709 1,968,466 66,954 351,143 1,421,538 6,237,382 12,572,880 93,492 67,490 454,986 157,075 1,099,810 868,304 7,101,717 38,377 2,990,826 8,443,879 31,235,557 16,320,387 256,557 (4,039,526) 735,694 746,705 117,974 2,089,551 2,229,368 - 20,522 13,660 407,528 41,106 73,570 35,708 262,121 - (429,470) (2,987) (4,954,026) - 9,861 32 102,824 2,519 (207,543) 2,135,964 (1,952,185) 43,625 49,014 (1,903,562) (1,216,491) 790,330 48,873 1,108,386 6,764,309 - 9,380,764 1,106,036 14,535,000 - (538,226) (9,367,350) (13,555,100) - 8,940,425 (9,056,490) 6,527,718 790,330 38,786,705 20,486,807 151,714,861 (326,939) $ 47,727,130 $ 11,430,317 $ 158,242,579 $ 463,391 49 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2016 Business-type Activities-Enterprise Funds Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 12,072,108 $ 8,390,005 $ 3,728,916 $ 3,010,604 Cash payments to suppliers for goods and services (2,516,969) (1,790,555) (556,651) (965,911) Cash payments to employees for services (3,606,531) (2,599,897) (1,492,487) (963,653) Other operating receipts 34,061 8,172 17,244 190,774 NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES 5,982,669 4,007,725 1,697,022 1,271,814 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 9,547 75,814 3,962,839 13,415 Transfers to other funds (3,644,524) - (5,000) (538,226) Proceeds from interfund balances - - (4,621,488) - Payment of interfund balances - - - - Intergovernmental grant proceeds NET CASH PROVIDED BY(USED FOR) NONCAPITAL FINANCING ACTIVITIES (3,634,977) 75,814 (663,649) (524,811) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 1,378 250 91,303 9,861 Acquisition and construction of capital assets (5,809,442) (7,226,903) (28,246,126) (111,264) Proceeds from issuance of debt 6,019,398 633,643 24,489,656 Premium on debt issuance 17,882 4,707 354,303 1,321 Payment of debt (2,931,590) (832,475) (7,697,565) (713,682) Interest paid (1,816,628) (732,961) (2,083,483) (423,530) Contributions 97,387 202,643 320,076 73,570 Intergovernmental grant proceeds 7,187 3,767,267 117,974 NET CASH PROVIDED BY(USED FOR)CAPITAL AND RELATED FINANCING ACTIVITIES (4,421,615) (7,943,909) (9,004,569) (1,045,750) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 76,045 97,051 194,949 20,393 NET INCREASE(DECREASE)IN CASH AND POOLED INVESTMENTS (1,997,878) (3,763,319) (7,776,247) (278,354) CASH AND CASH EQUIVALENTS,BEGINNING 9,571,913 12,114,112 28,282,543 1,738,355 CASH AND CASH EQUIVALENTS,ENDING $ 7,574,035 $ 8,350,793 $ 20,506,296 $ 1,460,001 50 Exhibit 7 Business-type Activities-Enterprise Funds Governmental Other Activities- Enterprise Internal Funds Total Service Funds $ 4,258,306 $ 31,459,939 $ 17,104,166 (3,932,212) (9,762,298) (13,027,745) (5,126,090) (13,788,658) (3,492,915) 130,844 381,095 190,212 (4,669,152) 8,290,078 773,718 1,106,036 5,167,651 - (4,187,750) - (4,621,488) 387,258 (88) (88) 3,371,295 3,371,295 4,477,243 (270,380) 387,258 32 102,824 2,519 (2,480,516) (43,874,250) - 31,142,697 - 378,213 (4,626) (12,179,938) - (3,013) (5,059,615) - 35,708 729,384 - 3,892,428 (2,452,415) (24,868,257) 2,519 13,778 402,216 38,080 (2,630,546) (16,446,343) 1,201,575 3,440,023 55,146,946 2,730,488 $ 809,477 $ 38,700,603 $ 3,932,063 (Continued) 51 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2016 Business-type Activities-Enterprise Funds Sewage Disposal Water Stortnwater Parking Works Utility Utility Facilities RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES Operating income(loss) $ 1,142,074 $ 2,621,186 $ 755,403 $ 256,557 Adjustments to reconcile operating income(loss)to net cash provided by(used for)operating activities Depreciation 3,314,861 960,193 858,549 1,099,810 Change in assets and liabilities (Increase)decrease in receivables (52,270) (8,751) (7,988) (46,005) (Increase)decrease in inventories and prepaid items (171) 20,235 - 6,431 Increase(decrease)in accounts payable 1,558,279 416,729 17,431 (8,899) Increase(decrease)in accrued liabilities (32,707) 12,005 3,541 (14,324) Increase(decrease)net pension liability 223,852 188,460 95,870 47,843 Qncrease)in deferred outflows (11,395) 570 (12,802) 3,055 Increase(decrease)in deferred inflows (184,572) (233,800) (17,937) (81,809) Increase in net OPEB liability 24,718 30,898 4,955 9,155 Total Adjustments 4,840,595 1,386,539 941,619 1,015,257 NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES $ 5,982,669 $ 4,007,725 $ 1,697,022 $ 1,271,814 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Contribution of capital assets from outside sources $ 97,200 $ 202,643 $ 5,307,207 $ Contributions of capital assets from Governmental Activities $ $ $ $ 48,873 See notes to financial statements. 52 Exhibit 7 (continued) Business-type Activities-Enterprise Funds Governmental Other Activities- Enterprise Internal Funds Total Service Funds $ (4,039,526) $ 735,694 $ 746,705 868,304 7,101,717 38,377 (15,203) (130,217) 227,286 (9,431) 17,064 (83,855) (1,604,429) 379,111 (116,384) 32,446 961 12,901 432,661 988,686 289,721 (23,240) (43,812) (1,731) (347,354) (865,472) (339,302) 36,620 106,346 (629,626) 7,554,384 27,013 $ (4,669,152) $ 8,290,078 $ 773,718 $ 467,263 $ 6,074,313 $ $ - $ 48,873 $ 53 CITY OF DUBUQUE, IOWA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES EXHIBIT 8 AGENCY FUNDS JUNE 30, 2016 Agency Funds ASSETS Cash and pooled cash investments S 1,469,421 Accounts receivable 51,414 Accrued interest 1,418 Total Assets S 1,522,253 LIABILITIES Accounts Payable S 135,135 Due to other agency 1,387,118 Total Liabilities S 1,522,253 See notes to financial statements. 54 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 The notes to financial statements contain a summary of significant accounting policies and other notes considered necessary for an understanding of the financial statements of the City and are an integral part of this report The index to the notes is as follows: 1. Summary of Significant Accounting Policies 2. Deficit Fund Equity 3. Cash on Hand,Deposits, and Investments 4. Notes Receivable 5. Interfund Balances and Transfers 6. Capital Assets 7. Long-Term Debt 8. Risk Management 9. Commitments and Contingent Liabilities 10. Other Postemployment Benefits (OPEB) 11. Employee Retirement Systems 12. Landfill Closure and Postclosure Care 13. Leases Where City is Lessor 14. Subsequent Events 15. Prospective Accounting Pronouncements 55 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Dubuque, Iowa, is a municipal corporation governed by an elected mayor and a six-member council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City has no blended component units. The discretely presented component units are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the City. Discretely Presented Component Units The Dubuque Metropolitan Area Solid Waste Agency was created under the provisions of Chapter 28E of the Code of Iowa by the City of Dubuque and Dubuque County. The purpose of the Agency is to provide solid waste management for the Dubuque metropolitan area. The City appoints a voting majority of the Agency's governing board and has authority over those persons responsible for the day-to-day operations of the Agency. The Agency is presented as a proprietary fund type and has a June 30 year end. During the year ended June 30, 2016, $438,692 of the Dubuque Metropolitan Area Solid Waste Agency's charges for services were related to services provided to the City of Dubuque. Dubuque Initiatives and Subsidiaries is a non-profit corporation organized under the laws of Iowa and Section 501(c)(3) of the Internal Revenue Code. The Organization was created to render service to the City Council of the City of Dubuque,Iowa, on matters of community interest. The Organization's articles require that its board members include two city council members, the mayor, and the city manager of the City of Dubuque, Iowa; and in the event of dissolution, any assets or property of the Organization be transferred to the City of Dubuque, Iowa. During the fiscal year 2009, the City of Dubuque, Iowa guaranteed debt issued by Dubuque Initiatives and Subsidiaries for the rehabilitation of the Roshek Building. The Organization is presented as a proprietary fund type and has a December 31 year end. Dubuque Convention and Visitors Bureau is a non-profit corporation organized under the laws of Iowa and Section 501(c)(3) of the Internal Revenue Code. The Organization's purpose is to strengthen the Dubuque area economy by competitively marketing the area as a destination for conventions, tour groups, sporting events and individual travelers. The Organization's articles require that its board members include one City Council member, the City of Dubuque Mayor and the City Manager. In the event of dissolution, any assets or property of the Organization shall be distributed to the City of Dubuque, Iowa after paying or making provision for the payment of all liabilities of the Corporation. The City collects hotel/motel taxes and forwards 50%to the CVB as the primary source of funds for its operations. The CVB is presented as a governmental fund type and has a June 30 year end. Dubuque Initiatives and Subsidiaries and the Dubuque Convention and Visitors Bureau present their financial information in accordance with the Financial Accounting Standards Board(FASB). Complete financial statements for the Component Units may be obtained from the City of Dubuque's Finance Department for the Dubuque Metropolitan Area Solid Waste Agency and Dubuque Area Convention and Visitors Bureau, and the Economic Development Office for Dubuque Initiatives and Subsidiaries. These offices are located at: City Hall, 50 West 13th Street, Dubuque,Iowa 52001. 56 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Jointly Governed Organizations The City participates in several jointly governed organizations that provide goods or services to the citizenry of the City but do not meet the criteria of a joint venture since there is no ongoing financial interest or responsibility by the participating governments. City officials are members of the following boards and commissions: City of Dubuque Conference Board Dubuque County E-911 Committee Dubuque Drug Task Force Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for services. Likewise, the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants, contributions, and interest restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and a fiduciary fund, even though the latter is excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period(year-end). 57 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, interest, special assessments, and grants are susceptible to accrual. Sales taxes are considered measurable and available at the time the underlying transaction occurs, provided they are collected by the City within 60 days after year-end. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The General Fund is the City'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 Tax Increment Financing Fund is used to account for the receipt of property taxes, for the payment of projects within the tax increment financing district, and for the payment of remaining principal and interest costs on the tax increment financing districts' long-term debt service. The Street Construction Fund is used to account for the resources and costs related to street capital improvements. The Debt Service Fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the government is obligated in some manner for the payment. The City reports the following major proprietary funds: The Sewage Disposal Works Fund is used to account for the operations of the City's sewage disposal works and services. The Water Utility Fund is used to account for the operations of the City's water facilities and services. The Stormwater Utility Fund is used to account for the operations of the City's stormwater services. The Parking Facilities Fund is used to account for the operations of the City-owned parking ramps and other parking facilities. Additionally, the City reports the internal service fund type. Internal service funds are used to account for general, garage, stores/printing, health insurance, and worker's compensation insurance services provided by one department to other departments of the City on a cost-reimbursement basis. These funds cannot be used to support City activities. Fiduciary funds, other than agency funds, use the economic resources measurement focus and the full accrual basis of accounting. Agency funds use the full accrual basis of accounting but do not have a measurement focus and therefore report only assets and liabilities. The City reports Agency Funds to account for assets held by the City as an agent under the cable franchise agreement and for the Dubuque Racing Association. 58 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the City. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first,then unrestricted resources as they are needed. Assets,Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity Deposits and Investments The City's cash, pooled cash investments, and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. The cash balances of most City funds are pooled and invested. Interest earned on investments is recorded in the General Fund unless otherwise provided by law. Investments are stated at fair value except for the investment in the Iowa Public Agency Investment Trust and non-negotiable certificates of deposit which are valued at amortized cost For purposes of the Statement of Cash Flows, all short-term cash investments that are highly liquid are considered to be cash equivalents. Cash equivalents are readily convertible to known amounts of cash and, at the day of purchase, have a maturity date no longer than three months. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at year-end are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." 59 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property tax receivable is recognized in the funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents taxes collected by the County but not remitted to the City at June 30, 2016, and 2016 unpaid taxes. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred in both the government-wide and fund financial statements and will not be recognized as revenue until the year for which it is levied. Property taxes are levied as of July 1 on property values assessed as of January 1 of the previous year. The tax levy is divided into two billings. The billings are due September 1 and March 1. On September 30 and March 31,the bill becomes delinquent, and penalties and interest may be assessed by the City. Inventories and Prepaid Items Inventories included in the governmental funds are valued at cost using the first-in first-out (FIFO) method. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased. Inventories of materials and supplies in the enterprise funds are determined by actual count and priced on the FIFO method. Inventories included in internal service funds are stated at the lower of cost(FIFO method) or market and consist of consumable supplies. The cost of these supplies is recorded as an expense at the time they are removed from inventory for use. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. The costs of governmental fund prepaids are recorded as expenditures when consumed rather than when purchased. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because their use is limited by applicable bond covenants. The "revenue bond operating" account is used to report resources set aside to subsidize potential deficiencies from the enterprise fund's operation that could adversely affect debt service payments. The "revenue bond sinking" account is used to segregate resources accumulated for debt service payments over the next twelve months. The "revenue bond reserve" account is used to report resources set aside to make up potential future deficiencies in the revenue bond sinking account. 60 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Certain assets of the special revenue funds and capital project funds are classified as restricted assets because their use is limited by debt agreement, the City's cable television franchise agreement, or Iowa Finance Authority housing program agreement. Certain assets of the Dubuque Metropolitan Area Solid Waste Agency are classified as restricted assets because their use is restricted by state statute for certain specified uses. Capital Assets Capital assets, which include property, plant, equipment, intangibles, and infrastructure assets (e.g., roads,bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide statement of net position and in the proprietary funds statement of net position. Capital assets are defined by the government as assets with an initial, individual cost of more than $100,000 for infrastructure and intangible assets, $20,000 for building assets, and $10,000 for the remaining assets, and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repair not adding to the value of the asset or materially extending asset lives are not capitalized. All of the City's infrastructure has been recorded, including infrastructure acquired prior to June 30, 1980. Major outlays for capital assets and improvements are capitalized as projects are constructed. There was no interest incurred during the construction phase of capital assets of business-type activities to capitalize with the value of the assets constructed in the current year. Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 40 to 125 Improvements other than buildings 15 to 50 Machinery and equipment 2 to 30 Infrastructure and intangibles 15 to 75 Deferred Outflows of Resources Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure)until then. Deferred outflows of resources consist of unrecognized items not yet charged to pension expense and contributions from the employer after the measurement date but before the end of the employer's reporting period. Compensated Absences The City allows employees to accumulate a limited amount of earned but unused vacation and sick pay benefits. Vacation pay is payable to employees upon retirement or termination. Sick pay is payable only upon retirement, in which event, employees with twenty years or more of service are paid 100% of their accrued sick leave balance over a five year period. All vacation pay and applicable sick pay benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for 61 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-tern obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, and deferred amounts on refunding are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Pensions For purposes of measuring the net pension liability, deferred outflows of resources, and deferred inflows of resources related to pensions, and pension expense, information about fiduciary net position of the Iowa Public Employees' Retirement System and the Municipal Fire and Police Retirement System (Systems') and additions to/deductions from the Systems fiduciary net position have been determined on the same basis as they are reported by the Systems'. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Deferred inflows of Resources Deferred inflows of resources represents an acquisition of net position that applies to a future period(s) and will not be recognize as an inflow of resources (revenue) until that time. Although certain revenues are measurable, they are not available. Available means collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources in the governmental fund financial statements represent the amount of assets that have been recognized, but the related revenue has not been recognized since the assets are not collected within thecurrent year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources consist of property tax receivable and other receivables not collected within sixty days after year end. Deferred inflows of resources in the Statement of Net Position consist of succeeding year property tax and tax increment financing receivable that will not be recognized as revenue until the year for which they are levied, and unrecognized items not yet charged to pension expense. Net PositionlRund Balance The Dubuque Metropolitan Area Solid Waste Agency's restricted net position represents outside third-party restrictions and amounts restricted for minority interest of the Agency. The Agency is 62 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) restricted to using certain amounts for purposes specified by state statute. The net position restricted for minority interest is calculated at 22.7% of unrestricted net position, based on the 1976 revenue bond resolution authorizing the issuance of revenue bonds for the construction of the landfill. In the government-wide and proprietary fund financial statements, net position is displayed in three components as follows: • Net investment in capital assets: This consists of capital assets, net of accumulated depreciation, less the outstanding balances of any bonds, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Net investment in capital assets excludes unspent debt proceeds. Unspent debt proceeds were $8,921,899 for the governmental activities and $27,405,361 for business-type activities. • Restricted: This consists of net position that is legally restricted by outside parties or by law through constitutional provisions or enabling legislation. Net position restricted through enabling legislation as of June 30, 2016 consists of $224,997 for debt service and $23,851 for employee benefits. All other restrictions are by outside parties through grants, debt agreements or donors. • Unrestricted: This consists of net position that does not meet the definition of restricted or net investment in capital assets. In the governmental fund financial statements,fund balances are classified as follows: • Nonspendable: Nonspendable fund balances cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. • Restricted: Restricted fund balances are restricted to specific purposes when constraints placed on the use of the resources are either externally imposed by creditors, grantor or state or federal laws or imposed by law through constitutional provisions or enabling legislation. • Committed: Committed fund balances can be used only for specific purposes determined pursuant to constraints formally imposed by the City Council through resolution approved prior to year-end. • Assigned: Assigned fund balances contain self-imposed constraints of the government to be used for a particular purpose. Intent can be expressed by the City Council or by an official or body to which the City Council delegates the authority. The City Council has by resolution delegated the authority to the City Manager,Budget Director, and Finance Director. • Unassigned: Unassigned fund balances are amounts not included in the other spendable classifications. When an expenditure is incurred for purposes for which amounts in the committed, assigned, or unassigned fund balance classifications could be used, the City first considers the committed to be spent and then the assigned and unassigned,respectively. The budget guideline of the City of Dubuque maintains a General Fund working balance or operating reserve of 10%of the total General Fund operating budget requirements. An operating reserve or working balance must be carried into a fiscal year to pay operating costs until tax money, or other anticipated revenue is received. 63 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The State of Iowa recommends a reasonable amount for a working balance as (a) anticipated revenues for the first three months of the fiscal year, less anticipated expenditures or (b) 5%of the total General Fund operating budget, excluding fringes and tort liability expenses. The City's rating agency, Moody's Investor Service, recommends a reserve balance of at least 10% for "A"rated cities. This is based on the fact that a large portion of the revenue sources are beyond the City's control and therefore uncertain. Budgets and Budgetary Accounting The budgetary comparison and related disclosures are reported as Required Supplementary Information. Other Significant Accounting Policies Other significant accounting policies are set forth in the financial statements and the notes thereto. 64 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 2—DEFICIT FUND EQUITY The following funds have deficit net position amounts as of June 30, 2016: America's River Project $ 7,041 Internal Service Funds Garage Service $ 87,208 General Service $ 1,602,382 Stores/Printing $ 15,488 The General Service and Garage Service deficit will be addressed during next fiscal year's reallocation of expenses. The Stores deficit is a result of a change in phone recharges. America's River Project will be addressed next fical year with a transfer from General. NOTE 3—CASH ON HAND,DEPOSITS,AND INVESTMENTS Cash on Hand. Cash on hand represents authorized change funds and petty cash funds used for current operating purposes. The carrying amount at year-end was $16,097 for the City and $1,200 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year-end,the City's carrying amount of deposits was $48,998,970, and the bank balance was $54,327,655. The City's deposits in banks at June 30, 2016, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The carrying amount of deposits for the Dubuque Metropolitan Area Solid Waste Agency was $7,184,913, and the bank balance was $7,772,738. The Agency's deposits in banks at June 30, 2016, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. 65 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 3—CASH ON HAND,DEPOSITS,AND INVESTMENTS (continued) Investments. As of June 30, 2016, the City had the following investments and maturities. (The City assumes callable bonds will not be called): Investment Maturities(In Years) More than Investment Type Less Than 1 1 to 5 6 to 10 10 Total Money Market Funds- U.S. Treasury $ 1,815,390 $ $ $ - $ 1,815,390 U.S. Treasury Securities - 1,618,908 3,014,593 4,633,501 Federal Agency Obligations 250,585 15,637,963 1,442,484 4,610,714 21,941,746 Managed Accounts L/T CD 895,475 499,421 - - 1,394,896 Corporate Stock 109,693 - - - 109,693 $ 3,071,143 $ 17,756,292 $ 1,442,484 $ 7,625,307 $ 29,895,226 The City and the Dubuque Metropolitan Solid Waste Agency are authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council or Board of Trustees and the Treasurer of the State of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district Corporate stock was donated in 1957 to the City to establish the Ella Lyons Peony Trail Permanent Trust Fund. The City uses the fair value heirarchy established by generally accepted accounting principles based on the valuation inputs used to measure the fair value of the asset Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. All the of the City's investments were determined using the last reported sales price at current exchange rates. (Level 1 inputs) Interest Rate Risk. The City's investment policy limits the investment of operating funds (funds expected to be expended in the current budget year or within 15 months of receipt) to instruments that mature within 397 days. Funds not identified as operating funds may be invested in instruments with maturities longer than 397 days, but the maturities shall be consistent with the needs and use of the City. Credit Risk. The City's investment policy limits investments in commercial paper and other corporate debt to the top two highest classifications. The City did not invest in any commercial paper or other corporate debt during the year. The City's investments in Money Market Funds and US Agencies were rated AAA. Concentration of Credit Risk The City's investment policy does not allow for a prime bankers' acceptance or commercial paper and other corporate debt balances to be greater than ten percent of its total deposits and investments. The policy also limits the amount that can be invested in a single issue to five percent of its total deposits and investments. The City held no such investments during the year. 66 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 3—CASH ON HAND,DEPOSITS,AND INVESTMENTS (continued) Custodial Credit Risk-Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City's deposits are entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. Custodial Credit Risk—Investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City had no custodial risk with regards to investments, since all investments were held by the City or its agent in the City's name. Due to legal and budgetary reasons, the General Fund is assigned a portion of the investments earnings associated with other funds. These funds are the employee benefits, community development, tort liability, road use tax, cable TV, general construction, transit system, general service, garage service, and stores/printing funds. The Dubuque Metropolitan Area Solid Waste Agency had no investments at June 30, 2016. A reconciliation of cash and investments as shown on the government-wide statement of net position for the primary government and statement of fiduciary assets and liabilities follows: Cash on hand $ 16,097 Carrying amount of deposits 48,998,970 Carrying amount of investments 29,895,226 Total $ 78,910,293 Government-wide Cash and pooled cash investments $ 33,665,158 Cash and pooled cash investments-temporarily restricted 43,706,302 Cash and pooled cash investments-permanently restricted 69,412 Fiduciary Cash and pooled cash investments 1,469,421 Total $ 78,910,293 A reconciliation of cash and investments as shown on the government-wide statement of net position for the Dubuque Metropolitan Solid Waste Agency follows: Cash on hand $ 1,200 Carrying amount of deposits 7,184,913 Total $ 7,186,113 Cash and pooled cash investments $ 1,398,739 Cash and pooled cash investments-temporarily restricted 5,787,374 Total $ 7,186,113 67 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 3—CASH ON HAND,DEPOSITS,AND INVESTMENTS (continued) A reconciliation of cash and investments as shown on the government-wide statement of net position for the Dubuque Initiatives and Subsidiaries(December 31, 2015)follows: Deposits $ 1,726,816 Beneficial interest in assets held by others 1,190,749 Total $ 2,917,565 Cash and pooled cash investments $ 1,726,816 Cash and pooled cash investments-temporarily restricted 1,190,749 Total $ 2,917,565 68 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 4-NOTES RECEIVABLE The City provides low interest and no interest loans to promote economic and community development, provide opportunities for home ownership to low and moderate income citizens and improve rental properties for low income citizens. Loans may contain a forgivable portion if recipient meets specific conditions such as job creation for economic development or residency requirements community development. Loans are secured by mortgage liens against the property. At June 30, 2016 the City had the follow notes receivable. Economic Development Notes Receivable: Original Interest Current Balance Rate Issued Maturity Balance Portion Downtown Rehabilitation Loan Program At Last Fluid Power Co. $ 17,200 3 % 1998 6/1/2018 $ 2,764 $ 1,361 Butts Florist,Inc. 300,000 3 2011 7/1/2031 294,000 15,759 Clark Wolff 150,000 3 2001 5/1/2022 54,057 8,456 Dubuque Museum of Art 300,000 3 1999 7/1/2021 128,199 23,701 Greenfield, Jane 188,000 3 1998 10/1/2019 49,306 14,242 Gronen Adaptive 300,000 2 2006 5/1/2036 183,459 7,575 Hartig Realty III,L.C. 300,000 3 2009 9/1/2029 253,436 15,817 BID Landlord LLC 466,000 3 2016 4/1/2036 466,000 15,000 Interstate Building LLLP 300,000 3 2010 9/22/2015 287,985 16,446 Lower Main Development, 300,000 LLC 3 2006 3/1/2026 147,105 12,329 Moore, Jorga 55,442 3 1999 5/1/2019 13,147 4,268 Security Partners,L.P. 300,000 3 2001 8/1/2021 39,455 14,428 Town Clock Building Co. 300,000 3 2001 8/1/2021 114,878 20,871 Urban Development Action Grant 40 Main,LLC-Note A 300,000 - 2,009 7/1/2016 300,000 - Downtown Housing Incentive Loan Caradco Landlord,LLC 4,500,000 3 2,012 6/1/2030 4,500,000 - 40 Main Real Estate Loan 156,583 - 2,009 11/1/2015 156,583 - Sales Tax Construction DB&T Community Development Corporation 1,700,000 2,012 2/1/2032 1,700,000 - $ 8,690,374 $ 170,253 69 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 4—NOTES RECEIVABLE(continued) Interest Current Rate Balance Portion Community Development Installment Loans Receivables Residential Rehabilitation Installment Loan Programs First Time Home Buyers 6 % $ 433,651 $ 47,000 Local Housing Assistance Program (LHAP) 6 115,678 3,000 Homebuyers Assistance Program 6 2,212,346 246,000 Infill 6 302,405 7,000 Residential Rehab Program 6 171,325 88,000 RRP Reserve - 46,089 1,000 Washington Neighborhood Revitalize - 51,860 3,528 The Accessibility Rehabilitation Program (for rentals) 6 554,952 56,641 Iowa Finance Authority - 119,558 6,091 HOME Program (1) - 268,284 89,000 Historic Preservation Revolving Loan Fund/Historic Preservation Housing Forgivable Loan Program 6 58,654 15,000 TIF Receivables Roasting Solutions - 289,800 - $ 4,624,602 $ 562,260 (1)Principal payments deferred if one tenant is low income At December 31, 2015,Dubuque Initiatives and Subsidiaries had the following notes receivable: Lower Main Development, 4.00%,unsecured,matures August 2018 S 43,039 City of Dubuque, 5.00%,unsecured,matures July 2023 236,622 Roshek Building Investment Fund, LLC, 4.74%, collateralized by a pledge agreement,matures June 2039 9,949,743 Total notes receivable 10,229,404 Less: current maturities (28,800) Noncurrent portion S 10,200,604 70 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 5—INTERFUND BALANCES AND TRANSFERS Interfund balances at June 30, 2016, include amounts due to/from other funds and advances due to/from other funds. Interfund balances are as follows: Due From Due To Other Funds Other Funds Governmental activities: General Fund $ 3,798,982 $ - Internal Service 414,184 Street Construction 2,209,602 Nonmajor 625,222 Business-type activities: Stormwater Utility - 549,974 $ 3,798,982 $ 3,798,982 These balances result from a time lag between the date that 1)the internal service funds goods and services are provided or reimbursement occurs, 2) transactions are recorded in the accounting system, and 3)payments between funds are made. 71 U r U ° 0 o U a o c� U 'z c _ 0 0 U 21 WO r VO V f� O Y Taj U] O 'Z y�� W � O n n La U N � ��• '^� Q is W � _ y N " qz °p `O3m Jaz 72 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 6—CAPITAL ASSETS Capital asset activity for the year ended June 30, 2016,was as follows: Primary Government: Governmental activities: Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Capital assets,not being depreciated: Land $ 68,906,705 $ - $ - $ 11,106,338 $ (250,322) $ 79,762,721 Construction in Progress 52,565,551 27,630,693 (42,082,030) 38,114,214 Total Capital assets,not bang depreciated 121,472,256 38,737,031 (42,332,352) 117,876,935 Capital assets,bang depreciated: Buildings 127,812,256 - - 12,639,741 - 140,451,997 Improvements other than buildings 22,219,094 - - 1,545,355 - 23,764,449 Machinery and equipment 40,667,979 - - 6,558,659 (907,666) 46,318,972 Infrastructure 216,205,431 11,739,254 227,944,685 Total capital assets,bang depreciated 406,904,760 32,483,009 (907,666) 438,480,103 Less accumulated depreciation for: Buildings (36,447,542) - - (2,146,129) - (38,593,671) Improvements other than buildings (9,229,078) - - (797,131) - (10,026,209) Machinery and Equipment (22,647,868) - - (2,703,646) 880,140 (24,471,374) Infrastructure (67,660,102) (3,673,567) (71,333,669) Total accumulated depreciation (135,984,590) (9,320,473) 880,140 (144,424,923) Total capital assets,bang depreciated,net 270,920,170 23,162,536 (27,526) 294,055,180 Govemmeatal activities capital assets,net $ 392,392,426 $ $ $ 61,899,567 $ (42,359,878) $ 411,932,115 73 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 6—CAPITAL ASSETS (continued) Business-type activities: Beginning Transfers Transfers Darling Balance In Out Increases Decreases Balance Capital assets,not being depreciated: Land $ 22,482,687 $ - $ - $ 587,331 $ - $ 23,070,018 Construction in progress 21,008,496 13,006,874 (13,006,874) 50,321,465 (69,441,473) 1,888,488 Total Capital assets,not bang depreciated 43,491,183 13,006,874 (13,006,874) 50,908,796 (69,441,473) 24,958,506 Capital assets,bang depreciated: Buildings 136,395,921 - - 15,049,461 - 151,445,382 Improvements other than builrlings 99,006,869 - - 43,572,571 - 142,579,440 Machinery and equipment 96,550,475 7,527,356 (205,492) 103,872,339 Total capital assets,bang depreciated 331,953,265 66149 388 (205,492) 397,897,161 Less accumulated depreciation for: Buildings (47,437,781) - - (1,785,836) - (49,223,617) Improvements other than builrlings (26,272,135) - - (1,786,501) - (28,058,636) Machinery and equipment (30,204,609) (3,529,380) 186,750 (33,547,239) Total accumulated depreciation (103,914,525) (7,101,717) 186,750 (110,829,492) Total capital assets,bang depreciated,net 228,038,740 59,047,671 (18,742) 287,067,669 Business-type activities capital assets,net $ 271,529,923 $ 13,006,874 $ (13,006,874) $ 109,956,467 $ (69,460,215) $ 312,026,175 74 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 6—CAPITAL ASSETS (continued) Depreciation expense was charged to functions/programs for the primary government as follows: Governmental activities: Public safety $ 842,472 Public works 5,509,172 Health and social services 6,975 Culture and recreation 2,097,300 Community and economic development 15,940 General government 810,237 Capital assets held by the government's internal service funds are charged to various functions based on their usage of their assets 38,377 Total depreciation expense -governmental activities $ 9,320,473 Business-type activities: Sewage disposal works $ 3,314,861 Water utility 960,193 Stormwater utility 858,549 Parking facilities 1,099,810 Refuse collection 282,494 Salt 27,640 Transit system 558,170 Total depreciation expense -business-type activities $ 7,101,717 75 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 6—CAPITAL ASSETS (continued) Dubuque Metropolitan Area Solid Waste Agency(Component Unit): Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Capital assets,not being depreciated: Land $ 2,952,666 $ - $ - $ - $ - $ 2,952,666 Construction in progress 810,960 2,683,957 (30,055) 3,464,862 Total Capital assets,not bang depreciated 3,763,626 2,683,957 (30,055) 6,417,528 Capital assets,bang depreciated: Buildings 106,495 - - - - 106,495 Improvements other than buildings 10,306,408 - - - - 10,306,408 Machinery and equipment 4,022,922 232,159 4,255,081 Total capital assets,bang depreciated 14,435,825 232,159 14,667,984 Less accumulated depreciation for: Buildings (52,100) - - (1,922) - (54,022) Improvements other than buildings (6,600,926) - - (131,218) - (6,732,144) Machinery and equipment (2,521,640) (338,845) (2,860,485) Total accumulated depreciation (9,174,666) (471,985) (9,646,651) Total capital assets,bang depreciated,net 5,261,159 (239,826) 5,021,333 Dubuque Metropolitan Area Solid Waste,capital assets $ 9,024,785 $ $ $ 2,444,131 $ (30,055) $ 11,438,861 Depreciation expense of$471,985 was charged to the Dubuque Metropolitan Area Solid Waste Agency. 76 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7-LONGTERM DEBT General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. The original amount of general obligation bonds issued in prior years was $130,370,000. During fiscal year 2016, the City issued $17,895,000 of general obligation bonds, $10,920,000 of which was used for a current refunding bonds. The City refunded $11,390,000 of general obligation bonds. The refunding was undertaken to reduce total debt service payments. The results of the transaction is a reduction of$1,315,457 in future debt service payments for an economic gain of$1,192,008. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. General obligation bonds outstanding at June 30, 2016, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Corporate purpose Series 2007A 12/01/2007 06/01/09-06/01/17 3.45-3.65 $ 1,055,000 $ 135,000 Corporate purpose (taxable)Series 2008C 11/04/2008 06/01/09-06/01/18 5.25-5.50 2,465,000 830,000 Corporate purpose (taxable)Series 2009A 11/10/2009 06/01/11-06/01/29 1.90-5.60 2,935,000 2,165,000 Corporate purpose (taxable)Series 2009B 11/10/2009 06/01/11-06/01/29 1.50-5.50 11,175,000 8,345,000 Refunding Series 2009C 11/10/2009 06/01/10-06/01/21 2.00-4.00 8,885,000 4,075,000 Corporate purpose and refunding Series 2010A 08/30/2010 06/01/11-06/01/30 2.00-3.00 4,470,000 3,330,000 Corporate purpose Series 201013 08/30/2010 06/01/12-06/01/30 1.00-4.15 2,675,000 2,205,000 Corporate purpose Series 2010C 08/30/2010 06/01/12-06/01/30 2.00-3.00 2,825,000 2,240,000 Corporate purpose Series 2011A 09/01/2011 06/01/12-06/01/31 2.00-4.00 6,330,000 5,270,000 Corporate purpose (taxable)Series 201113 09/01/2011 06/01/13-06/01/26 2.25-4.35 1,590,000 1,190,000 Corporate purpose Series 2012A 03/15/2012 06/01/14-06/01/31 2.00-3.00 4,380,000 3,760,000 Corporate purpose and refund Series 2012B 03/15/2012 06/01/13-06/01/31 2.00-3.13 7,495,000 6,370,000 Corporate purpose 06/28/2012 06/01/14-06/01/32 2.00-3.90 6,965,000 (taxable)Series 2012C 6,090,000 Corporate purpose Series 2012D 06/28/2012 06/01/14-06/01/32 2.00-3.46 7,175,000 5,745,000 Corporate purpose Series 2012E 12/12/2012 06/01/14-06/01/32 2.00-3.00 3,640,000 3,045,000 Corporate purpose (taxable)Series 2012F 12/10/2012 06/01/14-06/01/22 1.00-2.20 1,035,000 790,000 Corporate purpose andrefund Series 2012G 11/28/2012 06/01/14-06/01/17 1.00-1.25 950,000 195,000 Corporate purpose Series 2012H 12/10/2012 06/01/15-06/01/32 2.00-3.00 2,385,000 2,065,000 Corporate purpose(taxable) and refund Series 2012I 12/04/2013 06/01/13-06/01/21 0.30-2.20 7,285,000 3,005,000 Corporate purpose Series 2014B 12/08/2014 06/01/16-06/01/34 3.00-3.65 18,835,000 18,605,000 Corporate purpose(taxable) Series 2014C 12/08/2014 06/01/16-06/01/34 3.00-4.16 7,615,000 7,515,000 Corporate Purpose Series 2016A 04/04/2016 06/01/17-06/01/35 2.00-3.75 2,830,000 2,830,000 Corporate Purpose Refunding Series 20106B 04/04/2016 06/01/16-06/01/28 2.00-3.00 10,920,000 10,470,000 Corporate Purpose Series 2016C 04/04/2016 06/01/17-06/01/35 2.00-3.13 4,145,000 4,145,000 $ 130,060,000 $ 104,415,000 77 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Governmental Activities Business-type Activities June 30 Principal Interest Principal Interest 2017 $ 5,105,525 $ 1,835,806 $ 2,444,475 $ 1,559,699 2018 5,265,410 1,681,372 2,449,590 1,485,118 2019 4,738,605 1,535,063 2,971,396 1,419,087 2020 4,776,035 1,404,860 2,994,065 1,329,526 2021 4,509,143 1,267,971 2,870,867 1,235,983 2022-2026 15,377,203 4,736,421 14,787,798 4,728,173 2027-2031 14,255,266 2,247,812 13,264,634 2,139,277 2032-2035 4,048,978 295,396 4,555,997 319,465 Total $ 58,076,165 $ 15,004,701 $ 46,338,822 $ 14,216,328 Tax Increment Financing Bonds. The City issues tax increment financing bonds to provide funds for urban renewal projects. The City pledges property tax revenues from the tax increment financing districts to pay debt service. These bonds are generally issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Tax increment financing bonds outstanding at June 30, 2016, are as follows: Amount Amount Date of Interest Originally Outstanding Current Purpose Issue Maturity Dates Rates Issued End of Year Portion Diamond Jo Parking Ramp 10/16/07 06/01/11-06/01/37 7.50 % $ 23,025,000 $ 20,960,000 $ 440,000 $ 23,025,000 $ 20,960,000 $ 440,000 Annual debt service requirements to maturity for tax increment financing bonds are as follows: Fiscal Year Governmental Activities June 30 Principal Interest 2017 $ 440,000 $ 1,572,000 2018 475,000 1,539,000 2019 510,000 1,505,375 2020 550,000 1,465,125 2021 590,000 1,423,875 2022-2026 3,675,000 6,386,250 2027-2031 5,280,000 4,805,375 2032-2036 7,570,000 2,486,250 2037 1,870,000 140,250 Total $ 20,960,000 $ 21,323,500 78 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Revenue Bonds. The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. These bonds are generally issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Revenue bonds outstanding at June 30, 2016, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Water Utility Series 2008D 11/04/2008 06/01/10-06/01/23 3.00-5.00% $ 1,195,000 $ 675,000 Water Utility Series 201OD 09/21/2010 06/01/12-06/01/30 2.00-4.00 5,700,000 4,735,000 Sales Tax Incremental 2014 06/14/2014 06/01/23-06/01/29 4.00-5.00 7,190,000 7,190,000 Sales Tax Incremental 2015 06/15/2015 06/01/23-06/01/29 3.25-4.00 20,800,000 20,800,000 $ 34,885,000 $ 33,400,000 The Water Utility revenue debt covenants include a requirement for the utility to produce net revenues of at least 125%of the current year debt service requirement and all other revenue debt. Revenue bond debt service requirements to maturity are as follows: Fiscal Year Business-type Activities June 30 Principal Interest 2017 $ 295,000 $ 1,288,010 2018 305,000 1,278,978 2019 315,000 1,268,388 2020 330,000 1,257,408 2021 340,000 1,245,798 2022-2026 13,830,000 5,451,923 2027-2031 17,985,000 2,025,413 Total $ 33,400,000 $ 13,815,918 79 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Notes Payable. Notes payable have been issued to provide funds for economic development and for the purchase of capital assets. Notes payable at June 30, 2016, are as follows: Amount Amount Date of Interest Originally Outstanding Current Purpose Issue Maturity Dates Rates Issued End of Year Portion Theisen Supply 11/22/06 12/31/08-06/30/18 8.00 % 810,323 224,660 103,545 40 Main LLC 08/06/09 06/01/11-06/01/37 6.50 690,529 400,769 70,121 $ 1,500,852 $ 625,429 $ 173,666 Annual debt service requirements to maturity for notes payable are as follows: Fiscal Year Governmental Activities June 30 Principal Interest 2017 $ 173,666 $ 41,743 2018 195,880 28,381 2019 79,827 15,582 2020 85,174 10,235 2021 90,882 4,529 Total $ 625,429 $ 100,470 80 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Capital Loan Notes. Revenue capital loan notes have been issued for the planning and construction of sewer, stormwater, and water capital projects through the State of Iowa State Revolving Loan Funds. The City issued an additional $18,219,656 of SRF debt in 2016 as part of the Bee Branch stormwater construction project and $3,611,923 for green alley projects reducing stormwater run off. The City has pledged income derived from the acquired or constructed assets to pay debt service. Capital loan notes payable at June 30, 2016, are as follows: Final Amount Date Maturity Interest Amount Outstanding Current Purpose Authorized Date Rates Authorized End of Year Portion Clean Water 01/14/09 06/01/28 3 % $ 1,847,000 $ 1,238,000 $ 86,000 Drinking Water 10/18/07 06/01/28 3 1,037,000 614,000 43,000 North Catfish Creek Stormwater 01/13/10 06/01/30 3 998,000 611,000 35,000 North Catfish Creek Sewer 01/13/10 06/01/30 3 1,141,000 697,000 40,000 Water Meter Replacement Stormwater 02/12/10 06/01/30 3 4,338,000 2,558,000 135,000 Water Meter Replacement Sewer 02/12/10 06/01/30 3 4,338,000 2,558,000 135,000 Upper Bee Branch Sewer 10/27/10 06/01/41 3 7,850,000 7,005,000 186,000 Water and Resource Recovery Center 08/18/10 06/01/39 3 74,285,000 65,061,080 2,344,000 Cogeneration 05/17/13 06/01/33 2 3,048,000 2,664,000 133,000 Bee Branch Stormwater 02/18/14 06/01/33 2 1,029,000 146,720 45,000 Bee Branch Stormwater 06/19/15 06/01/37 2 29,541,000 21,003,749 - $ 129,452,000 $ 104,156,549 $ 3,182,000 Annual debt service requirements to maturity for capital loan notes are as follows: Fiscal Year Business-type Activities June 30 Principal Interest 2017 $ 3,182,000 $ 1,902,253 2018 3,725,800 2,144,653 2019 4,337,999 2,112,441 2020 4,403,721 2,018,062 2021 3,696,292 1,921,277 2022-2026 23,854,000 8,165,273 2027-2031 25,924,000 5,448,829 2032-2036 25,051,656 2,521,410 2037-2040 9,981,080 265,590 Total $ 104,156,548 $ 26,499,788 At June 30, 2016,the City of Dubuque had $11,853,720 of capital loan note funds available. These funds are available to the City by filing a disbursement request with the State of Iowa. The City expects to use the remaining available funds by fiscal year 2018. The Sewer Utility revenue capital loan notes covenants include a requirement for the utility to produce net revenue of at least 110%of the current year debt service requirement. 81 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7-LONGTERM DEBT (continued) Loans Payable. Loans payable have been issued to fund several City projects. Loans payable at June 30, 2016, are as follows: Amount Amount Date of Interest Originally Outstanding Current Purpose Issue Maturity Dates Rates Issued End of Year Portion Parking Lot Purchase 07/08/08 01/01/09-07/01/23 5.0 % $ 400,000 $ 236,621 $ 26,721 Building Purchase Agreement 02/01/10 02/01/10-02/01/16 0.0 330,000 47,142 47,142 Iowa Finance Authority 08/26/11 06/01/20-06/01/30 3.0 4,500,000 4,500,000 - Bowling&Beyond Inc. 07/25/12 12/04/12-12/04/32 0.0 1,000,000 800,000 50,000 $ 6,230,000 $ 5,583,763 $ 123,863 Annual debt service requirements to maturity for loans payable are as follows: Fiscal Year Governmental Activities Business-type Activities June 30 Principal Interest Principal Interest 2017 $ 97,142 $ 135,000 $ 26,721 $ 11,501 2018 50,000 135,000 28,074 10,148 2019 50,000 135,000 29,495 8,727 2020 132,922 135,000 30,988 7,234 2021 219,594 131,250 32,557 5,665 2022-2026 1,178,030 577,191 88,787 6,769 2027-2031 3,569,454 354,878 - - 2032 50,000 - - - Total $ 5,347,142 S 1,603,319 S 236,622 S 50,044 82 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7-LONGTERM DEBT (continued) Changes in Long-term Liabilities. Long-term liability activity for the year ended June 30, 2016, was as follows: Balance Beginning Balance End Due Within of Year Additions Reductions of Year One Year Governmental activities: General obligation bonds $ 59,101,394 $ 8,583,881 $ (9,609,091) $ 58,076,184 $ 5,105,525 Unaccreted premium 650,334 292,521 (25,135) 917,720 - Unamortized discounts (136,787) - 12,695 (124,092) - Totalgeneralobligationbonds 59,614,941 8,876,402 (9,621,531) 58,869,812 5,105,525 Tax increment financing bonds 21,370,000 - (410,000) 20,960,000 440,000 Unamortized discounts (204,054) - 8,872 (195,182) - Total tax increment financing bonds 21,165,946 - (401,128) 20,764,818 440,000 Notes payable 811,608 - (186,179) 625,429 173,666 Loans payable 5,444,285 - (97,143) 5,347,142 97,142 Compensated absences 6,391,352 3,042,687 (3,527,935) 5,906,104 350,138 Net pension liability 29,391,256 6,694,093 - 36,085,349 Net OPEB liability 3,423,868 385,990 - 3,809,858 - Total governmental activities $ 126,243,256 $ 18,999,172 $ (13,833,916) $ 131,408,512 $ 6,166,471 Business-type activities: General obligation bonds $ 45,773,606 $ 9,311,118 $ (8,745,902) $ 46,338,822 $ 2,444,475 Unaccreted premium 227,870 353,320 (18,174) 563,016 - Unamortized discounts (133,082) - 37,717 865,888 - Total general obligation bonds 45,868,394 9,664,438 (8,726,359) 46,806,473 2,444,475 Revenue bonds 33,685,000 - (285,000) 33,400,000 295,000 Unaccreted premium 932,248 - (66,360) 865,888 - Unamortized discounts (73,816) - 4,927 (68,889) - Total revenue bonds 34,543,432 - (346,433) 34,196,999 295,000 Capital loan notes 85,447,973 21,831,578 (3,123,000) 104,156,551 3,182,000 Loans payable 262,055 - (25,434) 236,621 26,721 Compensated absences 963,599 472,989 (533,409) 903,179 51,222 Net pension liability 3,706,983 988,686 - 4,695,669 - Net OPEB liability 721,155 106,346 - 827,501 - Total business-type activities $ 171,513,591 $ 33,064,037 $ (12,754,635) $ 191,822,993 $ 5,999,418 For the governmental activities, compensated absences and net OPEB liability are generally liquidated by the General Fund, Community Development Fund, and Section VIII Housing Fund. 83 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Dubuque Metropolitan Area Solid Waste Agency General Obligation Bonds. Dubuque County, Iowa issued a general obligation landfill facilities bond to provide funds for the acquisition and construction of major capital facilities. The Dubuque Area Metropolitan Solid Waste Agency will reimburse Dubuque County for interest and principal payments from operating revenue. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. The amount outstanding as of June 30, 2016 is as follows: Amount Amount Interest Originally Outstanding Purpose Date of Issue Maturity Date Rate Issued End of Year Landfill Facility 12/30/2014 06/01/16-06/34 2.0-4.0 % $ 4,500,000 $ 4,315,000 Annual debt service requirements to maturity of the general obligation bond is as follows: Fiscal Year June 30 Principal Interest 2017 $ 190,000 $ 123,884 2018 195,000 120,084 2019 195,000 116,184 2020 200,000 110,334 2021 205,000 104,334 2022-2026 1,125,000 426,031 2027-2031 1,310,000 264,773 2032-2034 895,000 57,760 Total $ 4,315,000 $ 1,323,384 Changes in Long-Term Liabilities. Long term liability activity for the year ended June 30, 2016 is as follows: Balance Beginning Balance Due Within of Year Additions Reductions End of Year One Year General obligation bond $ 4,500,000 $ - $ (185,000) $ 4,315,000 $ 190,000 Unaccreted premium 139,086 - (6,954) 132,132 - Total general obligation bond $ 4,639,086 $ - (191,954) $ 4,447,132 $ 190,000 84 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) Dubuque Initiatives and Subsidiaries. At December 31, 2015,Dubuque Initiatives and Subsidiaries had the following notes and loan payable: Note payable to Dubuque Bank&Trust(Loan A),with the following interest rate provisions: fixed interest rate of 5.85% during the"Fixed Interest Rate Period"; during the"Initial Loan A Variable Interest Rate Period", an interest rate equal to the greater of the `Loan A Index Rate"plus 2.75%and 5.00%; during the "Second Loan A Variable Interest Rate Period", an interest rate equal to the`Loan A Index Rate" plus 2.75%. Monthly interest only payments are due with final principal and interest due at maturity on June 15, 2029.* $ 5,294,384 Note payable to Dubuque Bank&Trust(Loan B),with the following interest rate provisions: fixed interest rate of 5.85% during the"Fixed Interest Rate Period", during the"Variable Interest Period: an interest rate equal to the`Loan A Index Rate"plus 2.75%. Monthly interest only payments due until March 2010, principal and interest payments of$54,167 begin on April 1, 2010. This note matures on June 15, 2019.* 1,224,340 Note payable to ICD VIII,LLC(QLICI QA1 Loan),fixed interest rate of 4.74%. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039.** 5,897,192 Note payable to USBCDE Sub-CDE XXXV, LLC(QLICI QA2 Loan),fixed interest rate of 4.47%. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039.** 5,897,192 Note payable to ICD VIII,LLC(QLICI QB1 Loan),fixed interest rate of 1.80%. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039.** 3,902,808 Note payable to USBCDE Sub-CDE XXXV, LLC(QLICI Q132 Loan),fixed interest rate of 1.80%. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039.** 4,002,808 26,218,724 Less: Current maturities (879,701) Non-current liability $ 25,339,023 85 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 7—LONGTERM DEBT (continued) The following is a schedule by years of the principal maturities of long-term debt obligations for the years ending June 30: 2016 $ 879,701 2017 559,088 2018 335,350 2019 352,507 2020 370,542 Thereafter 23,721,536 $ 26,218,724 * - Notes A, B, and D payable to Dubuque Bank& Trust are collateralized by a security agreement dated June 22, 2009, a collateral assignment of tax credit purchase agreement dated June 22, 2009, and a collateral assignment of fund loan documents dated June 22, 2009. ** - These notes payable to various entities are collateralized by, among other things, a certain Open-End Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing of even date herewith executed by Borrower, as Mortgagor, to Administrative Agent, in its capacity as the Administrative Agent for the Lenders and for the benefit of the Lenders, as Mortgagee, encumbering the Property. 86 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 8—RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance purchased from independent third parties and participates in a local government risk pool. The City assumes liability for deductibles and claims in excess of coverage limitations. The City has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Service Fund Type. Health benefits were self-insured up to an individual stop-loss amount of $120,000, and an aggregate stop-loss of $11,303,498 for 2016. Coverage from a private insurance company is maintained for losses in excess of the stop-loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop-loss amount of $600,000, and an aggregate-stop loss consistent with statutory limits for 2016. Coverage from a private insurance company is maintained for losses in excess of the stop-loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City purchases private insurance to include sworn Police Officers and Fire Fighters medical claims under a self-insured retention of$750,000 for each accident. All funds of the City participates in both programs and makes payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the amounts needed to pay prior and current year claims. The claims liability of $795,381 in the Health Insurance Reserve Fund and $1,039,904 in the Workers' Compensation Reserve Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in reported liabilities, all of which are expected to be paid within one year of year end, for the fiscal years ended June 30, 2016 and 2015, are summarized as follows: Health Workers' Insurance Compensation Reserve Fund Reserve Fund Liabilities at June 30, 2014 $ 749,763 $ 1,082,310 Claims and changes in estimates during fiscal year 2015 9,393,954 1,411,769 Claim payments (9,639,205) (1,039,886) Liabilities at June 30, 2015 504,512 1,454,193 Claims and changes in estimates during fiscal year 2016 11,710,806 (152,553) Claim payments (11,419,937) (261,736) Liabilities at June 30, 2016 $ 795,381 $ 1,039,904 87 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 8—RISK MANAGEMENT (continued) The City is a member in the Iowa Communities Assurance Pool (Pool), as allowed by Chapter 670.7 of the Code of Iowa. The Pool is a local government risk-sharing pool whose 701 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials' liability, police professional liability, property, inland marine, and boiler/machinery. The City acquires automobile physical damage coverage through the Pool. All other property, inland marine, and boiler/machinery insurance is acquired through commercial insurance. There have been no reductions in insurance coverage from prior years. Each member's annual casualty contributions to the Pool fund current operations and provide capital. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general and administrative expenses, claims, claims expenses, and reinsurance expenses due and payable in the current year, plus all or any portion of any deficiency in capital. Capital contributions are made during the first six years of membership and are maintained not to exceed 300 percent of the total current members' basis rates or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and reinsurance premiums, all of which are due and payable in the current year, plus all or any portion of any deficiency in capital. Any year-end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent year's member contributions. The City has property insurance coverage in addition to the Pool. The City's property and casualty contributions to the risk pool are recorded as expenditures from its operating funds at the time of payment to the risk pool. The City's annual contributions to the Pool for the year ended June 30, 2016,were $484,620. The Pool uses reinsurance and excess risk-sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, police professional, and public officials' liability risks up to $350,000 per claim. Excess coverage is provided for claims exceeding $350,000 under various reinsurance agreements. Property and automobile physical damage risks are retained by the Pool up to $250,000 each occurrence, each location, with excess coverage reinsured on an individual-member basis. The Pool's Iowa Risk Management Agreement with its members provides that in the event a casualty claim or series of claims exceeds the amount of risk-sharing protection provided by the member's risk-sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. As of June 30, 2016, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. 88 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 8—RISK MANAGEMENT (continued) Members agree to continue membership in the Pool through the Iowa Risk Management Agreement for a period of not less than one full year. After such period, a member who has given 60 days' prior written notice may withdraw from the Pool. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member,regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing within the first six years of membership may receive a partial refund of their capital contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its capital contributions. However, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one-year period following withdrawal and Cumulative Reserve Fund distributions. NOTE 9—COMMITMENTS AND CONTINGENT LIABILITIES Grants The City has received financial assistance from numerous federal and state agencies in the form of grants and entitlements. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, liabilities resulting from disallowed claims, if any, will not have a material effect on the City's financial position as of June 30, 2016. Litigation The City Attorney reported that various claims and lawsuits were on file against the City. The City has booked a payable for settlement of the WCS v. City of Dubuque, lawsuit. City Council has approved a settlement agreement to pay $1.6 million to WCS. Both parties agreed to arbitrate rather than litigate the case, which stems from site work the company performed in 2011 and 2012 related to construction of a new commercial terminal at Dubuque Regional Airport. W.C. Stewart claims the city was in breach of contract for failing to provide accurate geotechnical information. The company claimed it removed more rock and moved more dirt than was specified in its $3.2 million contract, and that it was not paid for that additional work. The City Attorney has estimated that all other potential settlements and lawsuits against the City not covered by insurance would not materially affect the financial position of the City. The City has authority to levy additional taxes (outside the regular limit)to cover uninsured judgments against the City. 89 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 9—COMMITMENTS AND CONTINGENT LIABILITIES (continued) Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2016. The City has additional commitments for signed construction contracts of $23,065,639 as of June 30, 2016. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. Dubuque Metropolitan Area Solid Waste Agency has recognized a liability only that portion of construction contracts representing construction completed through June 30, 2016. DMASWA has an additional commitment for a signed construction contract of$296,265 as of June 30, 2016. This commitment will be funded by bond proceeds. Debt Guarantee The City has guaranteed debt issued by Dubuque Initiatives and Subsidiaries related to the rehabilitation of the Roshek Building. The guarantee is limited to $25,000,000. Dubuque Initiatives & Subsidiaries Roshek Building, Inc. also anticipates receipt of State of Iowa Certified Historic Rehabilitation Tax Credit ('State Credits') in excess of$10,000,000 and Federal Certified Historic Rehabilitation Tax Credits in excess of$11,000,000. The funds will be used to retire debt The State credits were subject to a completion of the rehabilitation project by December 31, 2010. The Organization has received all available Rehabiliatation Tax Credits as of December 31, 2015 and satisfied compliance requirements. The Organization also recevied the benefit of new market tax credits during the project that carry a seven year compliance period, which expires during 2016. Compliance has been maintained as of December 31, 2015. NOTE 10—OTHER POST EMPLOYMENT BENEFITS (OPEB) The City implemented GASH Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other Than Pensions prospectively during the year ended June 30, 2009. Plan Description - The City operates a single-employer retiree benefit plan which provides postemployment benefits for eligible participants enrolled in the City-sponsored plans, which include the employees of the Dubuque Metropolitan Area Solid Waste Agency (a component unit). The Plan does not issue a stand-alone financial report. The benefits are provided in the form of: An implicit rate subsidy where pre-65 retirees receive health insurance coverage by paying a combined retiree/active rate for the self-insured medical and prescription drug plan. An explicit rate subsidy where the City pays the full cost of a $1,000 policy in the fully-insured life insurance plan. 90 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 10—OTHER POST EMPLOYMENT BENEFITS (OPEB) (continued) To be eligible for the health insurance coverage, retirees must be at least 55 years old, have completed 4 years of service, and be vested with either the Iowa Public Employee's Retirement System (IPERS) or the Municipal Fire and Police Retirement System of Iowa (MFPRSI). In addition to the health eligibility coverage requirements, one must have belonged to a bargaining group to be eligible for life insurance benefits. There are approximately 534 active and 45 retired members in the plan, as of most recent actuarial valuation report. Funding Policy-The contribution requirements of plan members are established and may be amended by the City. The City currently finances the retiree benefit plan on a pay-as-you-go basis. Annual OPEB Cost and Net OPEB Obligation - The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2016, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Annual required contribution $ 456,947 Interest on net OPEB obligation 211,059 Adjustment to annual required contribution (200,046) Annual OPEB cost 467,960 Contributions made,net of retiree contributions 36,964 Increase in net OPEB obligation 504,924 Net OPEB obligation, beginning of year 4,221,177 Net OPEB obligation, end of year $ 4,726,101 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2016. For the year ended June 30, 2016, the City paid $480,830 for retiree claims. Plan members eligible for benefits contributed $517,794 or 100% of the premium costs. The net resulted in City contributions of $36,964. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation as of June 30, 2016 are summarized as follows: Percentage of Net Annual Annual OPEB OPEB Year Ended OPEB Cost Cost Contributed Obligation June 30, 2016 $ 467,960 (8)% $ 4,726,101 June 30, 2015 466,758 1 4,221,176 June 30, 2014 583,450 32 3,760,615 91 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 10—OTHER POST EMPLOYMENT BENEFITS (OPEB) (continued) Funded Status and Funding Progress - As of July 1, 2014, the most recent actuarial valuation date for the period July 1, 2015 through June 30, 2016, the actuarial accrued liability was $4,550,896, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $4,550,896. The covered payroll (annual payroll of active employees covered by the plan) was approximately $32,126,628 and the ratio of the UAAL to covered payroll was 14.17%. As of June 30, 2016,there were no trust fund assets. Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumption about future employment, mortality, and the health care cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary Information in the section following the Notes to Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. As of the July 1, 2014 actuarial valuation date, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 5% discount rate based on the City's funding policy. The projected annual medical trend rate (inflation rate) is 6%. The ultimate medical trend rate is 5% beginning in year 2. The underlying inflation rate is 3%. Mortality rates are from the RP2014 Group Annuity Mortality Tables, applied on a gender-specific basis. Annual retirement and termination probabilities were developed consistent with the City's experience and the IPERS and MFPRSI retirement patterns. Annual turnover rates were based on Scale T-2 of the actuary's pension handbook. Projected claim costs of the medical plan are $10,356 per year for retirees. The salary increase rate was assumed to be 2.5%per year. The UAAL is being amortized as a level percentage of pay on an open basis over 30 years. 92 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS Iowa Public Employees Retirement System IPERS Plan Description—IPERS membership is mandatory for employees of the City, except for those covered by another retirement system. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by Iowa Public Employees' Retirement System (IPERS). IPERS issues a stand-alone financial report which is available to the public by mail at 7401 Register Drive P.O. Box 9117, Des Moines, Iowa 50306-9117 or at www.ipers.or¢. IPERS benefits are established under Iowa Code chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits —A regular member may retire at normal retirement age and receive monthly benefits without an early-retirement reduction. Normal retirement age is age 65, anytime after reaching age 62 with 20 or more years of covered employment, or when the member's years of service plus the member's age at the last birthday equals or exceeds 88, whichever comes first. (These qualifications must be met on the member's first month of entitlement to benefits.)Members cannot begin receiving retirement benefits before age 55. The formula used to calculate a regular member's monthly IPERS benefit includes: • A multiplier(based on years of service). • The member's highest five-year average salary. (For members with service before June 30, 2012, the highest three-year average salary as of that date will be used if it is greater than the highest five-year average salary.) If a member retires before normal retirement age, the member's monthly retirement benefit will be permanently reduced by an early-retirement reduction. The early-retirement reduction is calculated differently for service earned before and after July 1, 2012. For service earned before July 1, 2012, the reduction is 0.25 percent for each month that the member receives benefits before the member's earliest normal retirement age. For service earned starting July 1, 2012, the reduction is 0.50 percent for each month that the member receives benefits before age 65. Generally, once a member selects a benefit option, a monthly benefit is calculated and remains the same for the rest of the member's lifetime. However, to combat the effects of inflation, retirees who began receiving benefits prior to July 1990 receive a guaranteed dividend with the regular November benefit payments. 93 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) Disabilitv and Death Benefits - A vested member who is awarded federal Social Security disability or Railroad Retirement disability benefits is eligible to claim IPERS benefits regardless of age. Disability benefits are not reduced for early retirement. If a member dies before retirement, the member's beneficiary will receive a lifetime annuity or a lump-sum payment equal to the present actuarial value of the member's accrued benefit or calculated with a set formula, whichever is greater. When a member dies after retirement, death benefits depend on the benefit option the member selected at retirement. Contributions - Effective July 1, 2012, as a result of a 2010 law change, the contribution rates are established by IPERS following the annual actuarial valuation, which applies IPERS' Contribution Rate Funding Policy and Actuarial Amortization Method. Statute limits the amount rates can increase or decrease each year to 1 percentage point. IPERS Contribution Rate Funding Policy requires that the actuarial contribution rate be determined using the "entry age normal" actuarial cost method and the actuarial assumptions and methods approved by the IPERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30-year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll,based on the Actuarial Amortization Method adopted by the Investment Board. In fiscal year 2016, pursuant to the required rate, regular members contributed 5.95 percent of pay and the City contributed 8.93 percent for a total rate of 14.88 percent. The City's total contributions to IPERS for the year ended June 30, 2016 were $2,196,542. The Dubuque Metropolitan Area Solid Waste Agency's total contribution to IPERS for the year ended June 30,2016 were $60,496. Citv Specific IPERS Disclosures Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2016, the City reported a liability of $17,358,468 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all IPERS participating employers. At June 30, 2015, the City's collective proportion was .35135 percent which was a decrease of.01900 percent from its proportion measured as of June 30, 2014. For the year ended June 30, 2016, the City recognized pension expense of$1,346,988. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 94 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ 262,262 $ Changes of assumptions 477,929 - Net difference between projected and actual - 1,444,678 earnings on pension plan investments Net Change in proportion and differences between City contributions and proportionate share of contributions 64,767 582,080 City contributions subsequent to the measurement date 2,196,542 - Total $ 3,001,500 $ 2,026,758 $2,196,542 reported as deferred outflows of resources related to pensions resulting from the City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30 Total 2016 $ (599,231) 2017 (599,231) 2018 (599,231) 2019 602,839 2020 (26,946) $ (1,221,800) Sensitivity of the City's Proportionate Share of the Net Pension Liabilitv to Changes in the Discount Rate- The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-point higher(8.5 percent)than the current rate. 95 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) 1% Discount 1% Decrease Rate Increase (6.5%) (7.5%) (8.5%) City's proportionate share of the net pension liability: $ 30,391,555 $ 17,358,468 $ 6,357,608 Dubuque Metropolitan Area Sold Waste Aaency Specific(DMASWA) IPERS Disclosures Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2016, the DMASWA reported a liability of$478,004 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The DMASWA's proportion of the net pension liability was based on the DMASWA's share of contributions to the pension plan relative to the contributions of all IPERS participating employers. At June 30, 2015, the DMASWA's collective proportion was 0.009615 percent which was a decrease of 0.000310 percent from its proportion measured as of June 30, 2014. For the year ended June 30, 2016, the DMASWA recognized pension expense of$37,092. At June 30, 2016, the DMASWA reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual experience $ 7,224 $ Changes of assumptions 13,163 - Net difference between projected and actual - 39,782 earnings on pension plan investments Net changes in proportion and differences between City contributions and proportionate share of contributions 1,771 16,029 City contributions subsequent to the measurement date 60,496 - Total $ 82,654 $ 55,811 96 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) $60,496 reported as deferred outflows of resources related to pensions resulting from the Agency contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30 Total 2016 $ (16,628) 2017 (16,628) 2018 (16,628) 2019 16,728 2020 (497) $ (33,653) Sensitivity of the Agency's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the Agency's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the Agency's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-point higher(8.5 percent)than the current rate. 1% Discount 1% Decrease Rate Increase (6.5%) (7.5%) (8.5%) Agency's proportionate share of the net pension liability: $ 836,898 $ 478,004 $ 175,070 There were no non-employer contributing entries at IPERS. Actuarial Assumptions - The total pension liability in the June 30, 2015, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Rate of inflation 3.00 percent per annum (effective June 30, 2015) Rates of salary increase 4.00 to 17.00 percent, average, including inflation. (effective June 30, 2010) Rates vary by membership group. Long-term Investment rate of return 7.50 percent, compounded annually,net of investment (effective June 30, 1996) expense, including inflation. Wage Growth 4.00 percent per annum based on 3 percent (effective June 30, 1990) inflation and 1 percent real wage inflation 97 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) The actuarial assumptions used in the June 30, 2015 valuation were based on the results of actuarial experience studies with dates corresponding to those listed above. Mortality rates were based on the RP-2000 Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale AA. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Long-Term Expected Asset Class Allocation Real Rate of Return Core Plus Fixed Income 28% 2.04 Domestic Income 24 6.29 International Equity 16 6.75 Private Equity/debt 11 11.32 Real Estate 8 3.48 Credit Opportunities 5 3.63 TIPS 5 1.91 Other Real Assets 2 6.24 Cash 1 (0.71) Total 100% Discount Rate - The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the contractually required rate and that contributions from the City will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Pension Plan Fiduciary Net Position - Detailed information about the pension plan's fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS' website at www.ipers.org. Payables to the Pension Plan - At June 30, 2016, the City reported no payables to the defined benefit pension plan for legally required employer contributions. There were no legally required employee contributions which had been withheld from employee wages but not yet remitted to IPERS. 98 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) Municipal Fire and Police Retirement System of Iowa MFPRSI Plan Description—MFPRSI membership is mandatory for fire fighters and police officers covered by the provisions of Chapter 411 of the Code of Iowa. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by MFPRSI. MFPRSI issues a stand-alone financial report which is available to the public by mail at 7155 Lake Drive, Suite#201, West Des Moines, Iowa 50266 or at www.mfprsi.org. MFPRSI benefits are established under Chapter 411 of the Code of Iowa and the administrative rules thereunder. Chapter 411 of the Code of Iowa and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits - Members with 4 or more years of service are entitled to pension benefits beginning at age 55. Full service retirement benefits are granted to members with 22 years of service, while partial benefits are available to those members with 4 to 22 years of service based on the ratio of years completed to years required (i.e., 22 years). Members with less than 4 years of service are entitled to a refund of their contribution only, with interest,for the period of employment Benefits are calculated based upon the member's highest 3 years of compensation. The average of these 3 years becomes the member's average final compensation. The base benefit is 66 percent of the member's average final compensation. Additional benefits are available to members who perform more than 22 years of service (2 percent for each additional year of service, up to a maximum of 8 years). Survivor benefits are available to the beneficiary of a retired member according to the provisions of the benefit option chosen plus an additional benefit for each child. Survivor benefits are subject to a minimum benefit for those members who chose the basic benefit with a 50 percent surviving spouse benefit. Active members, at least 55 years of age, with 22 or more years of service have the option to participate in the Deferred Retirement Option Program (DROP). The DROP is an arrangement whereby a member who is otherwise eligible to retire and commence benefits opts to continue to work. A member can elect a 3, 4, or 5 year DROP period. By electing to participate in DROP the member is signing a contract indicating the member will retire at the end of the selected DROP period. During the DROP period the member's retirement benefit is frozen and a DROP benefit is credited to a DROP account established for the member. Assuming the member completes the DROP period, the DROP benefit is equal to 52% of the member's retirement benefit at the member's earliest date eligible and 100% if the member delays enrollment for 24 months. At the member's actual date of retirement, the member's DROP account will be distributed to the member in the form of a lump sum or rollover to an eligible plan. Disabilitv and Death Benefits - Disability coverage is broken down into two types, accidental and ordinary. Accidental disability is defined as permanent disability incurred in the line of duty, with benefits equivalent to the greater of 60 percent of the member's average final compensation or the member's service retirement benefit calculation amount. Ordinary disability occurs outside the call of duty and pays benefits equivalent to the greater of 50 percent of the member's average final compensation, for those with 5 or more years of service, or the member's service retirement benefit calculation amount, and 25 percent of average final compendation for those with less than 5 years of service. 99 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) Death benefits are similar to disability benefits. Benefits for accidental death are 50 percent of the average final compensation of the member plus an additional amount for each child, or the provisions for ordinary death. Ordinary death benefits consist of a pension equal to 40 percent of the average final compensation of the member plus an additional amount for each child, or a lump-sum distribution to the designated beneficiary equal to 50 percent of the previous year's earnable compensation of the member or equal to the amount of the member's total contributions plus interest Benefits are increased (escalated) annually in accordance with Chapter 411.6 of the Code of Iowa which states a standard formula for the increases. The surviving spouse or dependents of an active member who dies due to a traumatic personal injury incurred in the line of duty receives a $100,000 lump-sum payment. Contributions -Member contribution rates are set by state statute. In accordance with Chapter 411 of the Code of Iowa, the contribution rate was 9.40% of earnable compensation for the year ended June 30, 2016. Employer contribution rates are based upon an actuarially determined normal contribution rate and set by state statute. The required actuarially determined contributions are calculated on the basis of the entry age normal method as adopted by the Board of Trustees as permitted under Chapter 411 of the Code of Iowa. The normal contribution rate is provided by state statute to be the actuarial liabilities of the plan less current plan assets, with such total divided by 1 percent of the actuarially determined present value of prospective future compensation of all members, further reduced by member contributions and state appropriations. Under the Code of Iowa the employer's contribution rate cannot be less than 17.00% of earnable compensation. The contribution rate was 27.77%for the year ended June 30, 2016. The City's contributions to MFPRSI for the year ended June 30, 2016 was $3,727,581. If approved by the state legislature, state appropriation may further reduce the employer's contribution rate, but not below the minimum statutory contribution rate of 17.00% of earnable compensation. The State of Iowa therefore is considered to be a nonemployer contributing entity in accordance with the provisions of the Governmental Accounting Standards Board Statement No. 67—Financial Reporting for Pension Plans, (GASB 67). There were no state appropriations to MFPRSI during the fiscal year ended June 30, 2016. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2016, the City reported a liability of $23,422,551 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the new pension liability was determined by an 100 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all MFPRSI participating employers. At June 30, 2015, the City's proportion was 4.985491% which was a decrease of 0.0933% from it proportions measured as of June 30, 2014. For the year ended June 30, 2016, the City recognized pension expense of$2,057,499. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Net difference between expected and $ 629,602 $ 40,028 actual experience Changes of assumptions 1,762,359 - Net difference between projected and actual earnings on pension plan investments - 2,410,920 Changes in proportion and differences between - 480,969 City contributions and proportionate share of contributions City contributions subsequent to the 3,727,581 - measurement date Total $ 6,119,542 $ 2,931,917 $3,727,581 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30 Total 2016 $ (671,819) 2017 (671,819) 2018 (671,819) 2019 1,350,555 2020 124,947 $ (539,955) 101 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) Actuarial Assumptions: The total pension liability in the June 30, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Rate of inflation 3.00 percent per annum Rates of salary increase 4.00 to 15.11 percent, including inflation. Investment rate of return 7.50 percent, net of pension plan investment expense, including inflation The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period from July 1, 2002 to June 30, 2012. Mortality rates were based weighting equal to 1/12 of the 1971 GAM table and 11/12 of the 1994 GAM table with no projection of future mortality improvement. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates (i.e., expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Long-Tenn Expected Asset Class Target Allocation Real Rate of Return Core Plus Fixed Income 7.0% 3.8% Emerging Markets Debt 3.0 6.5 Domestic Equities 12.5 6.0 Master Limited Partnerships (MLP) 5.0 8.5 International Equities 12.5 7.0 Core Investments 40.0% Tactical Assets Allocation 35.0 6.0 Private Equity 15.0 9.8 Private Non-Core Real Estate 5.0 9.3 Private Core Real Estate 5.0 6.8 Real Estate 10.0 Total 100.0% Discount Rate - The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions will be made at 9.40%of covered payroll and the City contributions will be made at rates equal to the difference between actuarially determined rates and the member rate. Based on those assumptions,the pension plan's 102 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 11—EMPLOYEE PENSION PLANS (continued) fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of City's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.50 percent, as well as what the city's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percent lower (6.50 percent) or 1-percent higher(8.5 percent)than the current rate. 1% Discount 1% Decrease Rate Increase (6.5%) (7.5%) (8.5%) City's proportionate share of the net pension liability: $ 40,779,355 $ 23,422,551 $ 9,001,074 Pension Plan Fiduciary Net Position - Detailed information about the pension plan's fiduciary net position is available in the separately issued MFPRSI financial report which is available on MFPRSI's website at www.mfursi.org. Pavables to the Pension Plan-At June 30, 2016, City of Dubuque, Iowa reported payables to the defined benefit pension plan of $25,716 for legally required employer contributions. There were no legally required employee contributions which had been withheld from employee wages but not yet remitted to MFPRSI. 103 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 12—LANDFILL CLOSURE AND POST CLOSURE CARE To comply with federal (40 CFR 258.74) and state regulations (IAC 113.14 (455b)), the DMASWA is required to complete a closure and post-closure plan and to provide funding necessary to effect that plan, including the proper monitoring and care of the landfill after closure. Once the landfill is no longer accepting waste and is closed, the owner is responsible for maintaining the final cover, monitoring ground water and methane gas, and collecting leachate(the liquid that drains out of waste)for thirty years. State governments are primarily responsible for implementation and enforcement of those requirements and have been given flexibility to tailor requirements to accommodate local conditions that exist A variey of financial mechanisms can be used to demonstrate compliance with federal and state financial assurance rules. The Agency utilizes the dedicated fund mechanism, which is funded through the tipping fees it receives. The Agency files and annual report with the State to provide compliance with its legal requirements of maintaining a balance per the prescribed formula. Any adjustments to the account are made prior to June 30. The Agency is required to estimate total landfill closure and post-closure care costs and recognize a portion of these costs each year based on the percentage of estimated total landfill capacity used that period. Estimated total costs, for closure and post-closure, would consist of four components: (1) the cost of equipment and facilities used in post-closure monitoring and care, (2) the cost of final cover (material and labor), (3) the cost of environmental monitoring of the landfill during the post-closure period and(4)the cost of any environmental cleanup required after closure. Estimated total cost is based on an engineer's estimate for these services is required to be updated annually for changes due to inflation or deflation, technology, and/or changes to applicable laws or regulations. The Agency's estimated closure and post-closure care expected costs are as follows: 2016 Closure $2,240,156 Post-closure care 1,485,000 Totals $3,725,156 The total closure and post-closure care costs for the DMASWA has been estimated at approximately $3,725,156 as of June 30, 2016, and the portion of the liability, that has been recognized is $2,794,735. This liability represents the cumulative amount reported to date based on the use of 100% of the esitmated capacity of cells 1, 2, 3, 4, 5, 6, 7 and 8, and 80%of cell 9 Phase 1 and 25% of cell 9 Phase 2. The Agency has accumulated resources to fund closure and post-closure costs; they are included in assets whose use is limited on the balance sheet and total $4,443,440 as of June 30, 2016. The Agency will recognize the remaining estimated cost of closure and post closure care of$930,421 over the estimated remaining life of 23 years as the remaining capacity is filled. NOTE 13—LEASES WHERE CITY IS LESSOR The City of Dubuque leases riverfront property, airport property (hangars and terminal space), farm land, parking areas, space for antennas on top of water towers, and concession areas under operating leases. The most significant lease is the lease of the greyhound racing and gambling facility and related parking area to the Dubuque Racing Association (DRA). The City's cost of the leased DRA assets total $10,144,771. The carrying amount of the assets at June 30, 2016 is $6,441,778, with $142,423 of depreciation expense during the year ended June 30, 2016. The DRA lease amount is based on the association's gross gambling receipts. During the year ended June 30, 2016,the DRA lease generated $5,003,434 in lease revenue. 104 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 14—SUBSEQUENT EVENTS On December 19, 2016, the Dubuque City Council approved to purchase a private water system from the Central Iowa Water Association (CIWA). The purchase agreement would settle litigation between the City and CIWA and transfer ownership of the private water system to the City of Dubuque. Dubuque's municipal water system has readily available capacity. The agreement has unique terms for each customer area. CIWA will assign its Vernon water service agreements (approximately 165 customers) and Barrington Lakes Property Owners Association(BLPOA) water systems agreement(approximately 155 customers), to the City of Dubuque. On or before December 31, 2016, the BLPOA must decide whether it wants to receive City water or opt out of that agreement. If the Barrington Lakes residents choose not to use City water, the City would purchase the CIWA system, excluding Barrington Lakes, for $4.1 million. The purchase price would be payable through four annual payments. The City would issue an $8 million Iowa Finance Authority State Revolving Fund loan with a 20-year term to fund the purchase of the CIWA system and for the construction of new water lines to the water tower. If the City purchases the CIWA system, including Barrington Lakes, the cost is $6.1 million, also payable through six annual payments. The City would issue an $11 million Iowa Finance Authority State Revolving Fund loan with a 20-year term. Principal payments on the Iowa Finance Authority State Revolving Fund(SRF) loan would not begin until June 1, 2018. The first contract payment of $1,110,000 will be due on December 20, 2016, under either scenario. Initial contract payments would be paid from the City's water fund reserve and then reimbursed by the SRF loan when proceeds are available in 2017. The SRF loan would be repaid by revenue from water fees. Additionally, a portion of the CIWA service areas involved in the proposed purchase will be in Housing TIF (Tax Increment Finance) areas and some of that revenue will be used for loan repayments. The City would also delay several water service related CIP projects totaling almost $1.6 million which could be completed at a later date. On December 5, 2016 Dubuque County, Iowa authorized $5.1 million in general obligation bonds for the purpose of funding the construction of landifll facility improvements by the Dubuque Metropolitan Area Solid Waste Agency(DMASWA), of which the County is an organized member. The proceeds of the bonds will be transferred to the DMAS WA in March of 2017. The DMAS WA will set up a long-term note payable to the County to reimburse the County for all debt service payments related to the 2016 bond issue. The interest rate on the bonds range from 3.00%to 3.25%,with a maturity date of June 1, 2036. NOTE 15—PROSPECTIVE ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board (GASH)has issued eight statements not yet implemented by the City. The statements which might impact the City are as follows: Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans, will be effective for the fiscal year ending June 30, 2017. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. 105 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30,2016 NOTE 15—PROSPECTIVE ACCOUNTING PRONOUNCEMENTS (continued) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, will be effective for fiscal year ending June 30, 2018. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. Statement No. 77, Tax Abatement Disclosures, will be effective for the fiscal year June 30, 2017. The objective of this Statement is to improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. Disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to financial statement users. Statement No. 78, Pension Provided through Certain Multiple Employer Defined Benefit Pension Plans, will be effective for the fiscal year June 30, 2017. The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68,Accounting and Financial Reporting for Pensions. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. Statement No. 79, Certain External Investment Pools and Pool Participants, will be effective for the fiscal year June 30, 2017. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. Specifically, it establishes criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. Statement No. 80, Blending Requirement for Certain Component Units, will be effective for the fiscal year June 30, 2017. The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. Statement No. 81 Irrevocable Split-Interest Agreements, will be effective for the fiscal year June 30, 2018. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Statement No. 82, Pension Issues-an Amendment of No. 67, 68, & 73, will be effective for the fiscal year June 30,2017. The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68,Accounting and Financial Reporting for Pensions, and No. 73,Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1)the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The City's management has not yet determined the effect these statements will have on the City's financial statements. 106 Required Supplementary Information June 30, 2016 City of Dubuque, Iowa 107 CITY OF DUBUQUE, IOWA SCHEDULE OF RECEIPTS, DISBURSEMENTS AND CHANGES IN BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS) GOVERNMENTAL AND ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30,2016 Budgeted Amounts Final to Actual Actual Original Final Variance RECEIPTS Property tax $ 24,082,860 $ 24,082,860 $ 24,082,860 $ - Tax increment financing 9,395,173 9,866,823 9,866,823 (471,650) Other City tax 11,417,044 16,693,150 17,512,174 (6,095,130) Licenses and permits 6,339,471 1,652,955 1,415,087 4,924,384 Use of money and property 13,865,982 12,258,833 13,323,671 542,311 Intergovernmental 33,809,422 37,519,418 70,780,332 (36,970,910) Charges for fees and service 37,724,416 40,375,398 40,066,558 (2,342,142) Special assessments 316,279 54,000 145,667 170,612 Miscellaneous 9,460,499 8,360,701 10,351,697 (891,198) Total Receipts 146,411,146 150,864,138 187,544,869 (41,133,723) EXPENDITURES Public safety 27,716,209 27,915,176 28,897,544 1,181,335 Public works 11,393,683 13,085,057 13,598,191 2,204,508 Health and social services 1,043,170 1,061,444 1,148,343 105,173 Culture and recreation 11,392,093 11,327,820 11,927,357 535,264 Community and economic development 13,417,640 12,712,312 13,643,912 226,272 General government 8,107,876 7,768,723 8,052,658 (55,218) Debt service 14,744,640 9,948,088 14,733,088 (11,552) Capital projects 40,545,227 39,757,912 97,946,081 57,400,854 Business-type activities 80,035,868 78,694,186 115,233,641 35,197,773 Total Expenditures 208,396,406 202,270,718 305,180,815 96,784,409 EXCESS (DEFICIENCY)OF RECEIPTS OVER(UNDER)EXPENDITURES (61,985,260) (51,406,580) (117,635,946) 55,650,686 OTHER FINANCING SOURCES,NET 41,266,240 50,382,376 55,720,820 (14,454,580) EXCESS DEFICIENCY OF RECEIPTS AND OTHER FINANCING SOURCES OVER (UNDER)EXPENDITURES AND OTHER FINANCING USES (20,719,020) (1,024,204) (61,915,126) 41,196,106 BALANCE,BEGINNING OF YEAR 92,138,677 22,664,094 102,091,141 - BALANCE,ENDING OF YEAR $ 71,419,657 $ 21,639,890 $ 40,176,015 $ 41,196,106 See Notes to Required Supplementary Information. 108 CITY OF DUBUQUE, IOWA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION—BUDGETARY REPORTING FOR THE YEAR ENDED JUNE 30,2016 The budgetary comparison is presented as Required Supplementary Information in accordance with Governmental Accounting Standards Board Statement No. 41 for governments with significant budgetary perspective differences resulting from not being able to present budgetary comparisons for the General Fund and each major Special Revenue Fund. The Code of Iowa requires the adoption of an annual budget by the City Council on or before March 15 of each year which becomes effective July 1 and constitutes the appropriation for each function specified therein until amended. The legal level of control(the level on which expenditures may not legally exceed appropriations) is the function level for the City as a whole, rather than at the fund or fund type level. The internal service fund or agency fund activity is not included in the adopted budget. The City's budget is prepared on the cash basis of accounting with an adjustment for accrued payroll following required public notice and hearings. After the initial annual budget is adopted, it may be amended for specified purposes. Budget amendments must be prepared and adopted in the same manner as the original budget. Management is not authorized to amend the budget or to make budgetary transfers between functions without the approval of the City Council. Management may make budgeting transfers between funds as long as the transfers are within the same function. The City has adopted a policy relative to budgetary control and amendment which provides for control at the line-item level and review of the current year's budget at the time the next year's budget is prepared. This usually results in amending the appropriations of all functions to adjust to current conditions. Supplemental appropriations are only provided when unanticipated revenues or budget surpluses become available. Appropriations as adopted lapse at the end of the fiscal year. The budget for the fiscal year ended June 30, 2016, was amended two times during the year to allow the City to increased function expenditures by $102,910,097 primarily for the carry-forward of unfinished capital improvement projects. During the year ended June 30, 2016, expenses for general government and debt service exceeded the budgeted amount. The following is a reconciliation of the budgetary basis to the modified accrual basis of accounting: Governmental Enterprise Modified Fords Funds Budgetary Accrual Accrual/Accrual Modified Accrual Basis Adjustments Basis Accrual Basis Basis Total Receipts/Reveore $ 146,411,146 $ (5,290,925) $ 141,120,221 $ 106,147,129 $ 34,973,092 $ 141,120,221 Expeaditures/Expeases 208,396,406 (51,223,645) 157,172,761 120,983,178 36,189,583 157,172,761 Deficiency of Receipts/Reveore Under Expeaditmes/Expeases (61,985,260) 45,932,720 (16,052,540) (14,836,049) (1,216,491) (16,052,540) Other Financing Sources 41,266,240 (24,475,355) 16,790,885 9,046,676 7,744,209 16,790,885 Net (20,719,020) 21,457,365 738,345 (5,789,373) 6,527,718 738,345 Balance,Beginning 92,138,677 118,978,025 211,116,702 59,401,841 151,714,861 211,116,702 Balance,Ending $ 71,419,657 $ 140,435,390 $ 211,855,047 $ 53,612,468 $ 158,242,579 $ 211,855,047 109 CITY OF DUBUQUE, IOWA SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM LAST TWO FISCAL YEARS* (IN THOUSANDS) Required Supplementary Information 2016 2015 City's proportion of the net pension liability(asset) 0.35135 % 0.37035 % City's proportionate share of the net pension liability S 17,358 S 14,688 City's covered-employee payroll S 24,039 S 24,210 City's proportionate share of the net pension liability as a percentage of its covered-employee payroll 72.21 % 60.67 % Plan fiduciary net position as a percentage of the total pension liability 85.19 % 87.61 % *In accordance with GASB Statement No. 68,the amounts presented for each fiscal year were determined as of June 30 of the preceeding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled,the City will present information for those years for which information is available. 110 2 © , ) z z z � ' \ \ ~ ~ ` / / z z z , _ . 4 \ \ § , ® _ \ \ � � z z \ / � \ - u ) O _ © _ \ ) 2 \ } } \ Q = \ � � � \ ) T z = 7 [ � ) � � / \ � } / � � � f / \ \ \ � \ \\ o / \ \ § 2 : : / ) \ \ \ / \ \ \ \ \ \ � uz _ � � � « 2 » 2 0 2 ° ,,, CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMNATRY INFORMATION--PENSION LIABILITY IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEMS YEAR ENDED JUNE 30,2016 Changes of benefit terms: Legislation passed in 2010 modified benefit terms for current Regular members. The definition of final average salary changed from the highest three to the highest five years of covered wages. The vesting requirement changed from four years of service to seven years. The early retirement reduction increased from 3 percent per year measured from the member's first unreduced retirement age to a 6 percent reduction for each year of retirement before age 65. In 2008, legislative action transferred four groups - emergency medical service providers, county jailers, county attorney investigators, and National Guard installation security officers - from Regular membership to the protection occupation group for future service only. Benefit provisions for sheriffs and deputies were changed in the 2004 legislative session. The eligibility for unreduced retirement benefits was lowered from age 55 by one year each July 1 (beginning in 2004) until it reached age 50 on July 1, 2008. The years of service remained at 22 or more. Their contribution rates were also changed to be shared 50-50 by the employee and employer, instead of the previous 40-60 split Changes of assumption: The 2014 valuation implemented the following refinements as a result of a quadrennial experience study: • Decreased the inflation assumption from 3.25 to 3.00 percent. • Decreased the assumed rate of interest on members account from 4.00 percent to 3.75 percent per year. • Adjusted male mortality rates for retirees in the Regular membership group. • Moved from an open 30 year amortization period to a closed 30 year amortization period for the UAL beginning June 30, 2014. Each year thereafter, changes in the UAL from plan experience will be amortized on a separate closed 20 year period. The 2010 valuation implemented the following refinements as a result of a quadrennial experience study: • Adjusted retiree mortality assumptions. • Modified retirement rates to reflect fewer retirements. • Lowered disability rates at most ages. • Generally increased the probability of terminating members receiving a deferred retirement benefit. • Modified salary increase assumptions based on various service duration. 112 CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMNATRY INFORMATION--PENSION LIABILITY IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEMS YEAR ENDED JUNE 30,2016(continued) The 2007 valuation adjusted the application of the entry age normal cost method to better match projected contributions to the projected salary streams in the future years. It also included the calculation of the UAL amortization payments the one-year lag between the valuation date and the effective date of the annual actuarial contribution rate. The 2006 valuation implemented the following refinements as a result of a quadrennial experience study: • Adjusted salary increase assumptions to service based assumptions. • Decreased the assumed interest rate credited on employee contributions from 4.25 percent to 4.00 percent. • Lowered the inflation assumption from 3.50 percent to 3.25 percent. • Lowered disability rates for sheriffs and deputies and protection occupation members. 113 CITY OF DUBUQUE, IOWA SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY MUNICIPAL FIRE AND POLICE RETIREMENT SYSTEM OF IOWA LAST TWO FISCAL YEARS* (IN THOUSANDS) Required Supplementary Information 2016 2015 City's proportion of the net pension liability(asset) 4.9854 % 5.0788 % City's proportionate share of the net pension liability $ 23,423 $ 18,410 City's covered-employee payroll $ 13,052 $ 12,968 City's proportionate share of the net pension liability as a percentage of its covered-employee payroll 179.46 % 141.96 % Plan fiduciary net position as a percentage of the total pension liability 83.04 % 86.27 % *In accordance with GASB Statement No. 68,the amounts presented for each fiscal year were determined as of June 30 of the preceeding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which he information is available. 114 / 2 _ ± ` ~ 4 \ \ § _ o = e = § 2 ( ( 115 CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMNATRY INFORMATION--PENSION LIABILITY MUNICIPAL FIRE AND POLICE RETIREMENT SYSTEM OF IOWA YEAR ENDED JUNE 30,2016 Changes of benefit terms: There were no significant changes of benefit terms. Changes of assumptions Effective July 1, 2014, two additional steps were taken to phase in the 1994 Group Annuity Mortality Table for post-retirement mortality. The two additional steps result in a weighting of 2/12 of the 1971 Group Annuity Mortality Table and 10/12 of the 1994 Group Annuity Mortality Table. 116 CITY OF DUBUQUE, IOWA SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE BENEFIT PLAN(OPEB) FOR THE YEAR ENDED JUNE 30,2016 Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Year Actuarial Value of Liability AAL Funded Covered of Covered Ended Valuation Assets (AAL) (UAAL) Ratio Payroll Payroll June 30 Date (a) (b) db-a) (a/b) (c) (b-a/c) 2012 07/01/10 - $ 5,481,802 $ 5,481,802 - % $ 31,183,497 17.60 2014 07/01/12 - 5,720,577 $ 5,720,577 - 32,626,573 17.43 2016 07/01/14 - 4,550,896 4,550,896 - 32,126,628 14.17 117 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Road Use Tax Fund — This fund is used to account for state revenues allocated to the City for maintenance and improvement of City streets. Section VIII Housing Fund—This fund is used to account for the operations of federal Section VIII existing,voucher, and moderate rehabilitation projects. Employee Benefits Fund — This fund is used to account for pension and related employee benefit costs for those employees paid wages from the General Fund. Tort Liability Fund — This fund is used to collect a special property tax levy which is then transferred to the General Fund. The General Fund accounts for the administration and payment of damage claims against the City. Special Assessments Fund —This fund is used to account for the financing of public improvements that are deemed to benefit primarily the properties against which special assessments are levied and to accumulate monies for the payment of principal and interest on the outstanding long-term debt service. Cable TV Fund — This fund is used to account for the monies and related costs as set forth in the cable franchise agreement between the City of Dubuque and the cable franchisee. Library Expendable Gifts Trust — This fund is used to account for contributions given to the library to be spent for specific purposes. IFA Housing Trust — This fund is used to account for funds received under the Iowa Finance Authority State Housing Trust Fund Program. Community Development Fund — This fund is used to account for the use of Community Development Block Grant funds as received from federal and state governmental agencies. 118 NONMAJOR GOVERNMENTAL FUNDS CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Airport Construction Fund — This fund is used to account for the resources and costs related to airport capital improvements. Sales Tax Construction Fund — This fund is used to account for the resources and costs related to capital improvements financed through the local option sales tax. General Construction Fund — This fund is used to account for the resources and costs related to general capital improvements. PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal,may be used for purposes that support the reporting City's programs. Ella Lyons Peony Trail Trust Fund —This fund is used for dividends and maintenance cost related to the City Peony Trail,per trust agreement. Library Gifts Trust Fund—This fund is used to account for testamentary gifts to the City library. 119 CITY OF DUBUQUE,IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30,2016 Special Revenue Funds Road Use Section VIII Employee Tort Tax Housing Benefits Liability ASSETS Cash and pooled cash investments $ 2,745,388 $ 396,538 $ - $ - Receivables Property tax Delinquent - - 30,997 2,351 Succeeding year - - 5,438,547 352,838 Accounts and other 4,049 47,771 - - Special assessments - - - - Accruedinterest - 1,946 - - Notes - - - - Intergovernmental 536,404 - - - Inventories 450,199 - - - Prepaid items 12,500 - - - Restricted cash and pooled cash investments 159,500 Total Assets $ 3,748,540 $ 605,755 $ 5,469,544 $ 355,189 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ 375,938 $ 173,704 $ - $ Accrued payroll 55,386 9,865 - - Intergovernmental payable - 7,978 - - Due to other funds - - - - Unearned revenue 11,327 Total Liabilities 431,324 202,874 DEFERRED INFLOWS OF RESOURCES Unavailable revenues Succeeding year property tax - - 5,438,547 352,838 Special assessments - - - - Grams - - - - Cther - - 7,146 542 Total Deferred Inflows of Resources 5,445,693 353,380 FUND BALANCES Nonspendable: Endowment corpus - - - - Inventory 450,199 - - - Prepaiditems 12,500 - - - Restricted: Endowments - - - - Library - - -Capital improvements 2,854,517 - - - Franchise agreement - - - - Special assessments - - - - Claims - - - 1,809 Iowa Finance Authority Trust - - - - Community programs - 402,881 - - Employee benefits - - 23,851 - Committed,capital improvements Total Fund B alances 3,317,216 402,881 23,851 1,809 Total Liabilities,Deferred Inflows of Resources and Fund Balances $ 3,748,540 $ 605,755 $ 5,469,544 $ 355,189 120 EXHIBIT A-1 Special Revenue Funds Capital Projects Funds Library IFA Special Expendable Housing Community Airport General Sales Tax Assessments Cable TV Gifts Trust Trust Development Construction Construction Construction $ 67 $ 360,756 $ 1,255,628 $ 69,297 $ 2,152,128 $ - $ 532,767 $ 2,863,562 - 146,898 - - - - - - 675,864 - - - - - - - 1 684 2,392 - 24,197 - 237 6,705 - - - 109,852 6,497,173 - 9,706 657,518 - - - 1,623 129,430 2,355,706 132,201 303,180 - 16,285 - - 4,896 - - - 20,066 1,164,337 5,344,652 1,791,476 $ 675,932 $ 524,623 $ 1,258,020 $ 180,772 $ 8,827,890 $ 3,520,043 $ 6,019,563 $ 5,622,441 $ - $ 2,849 $ 5,789 $ - $ 46,462 $ 835,480 $ 332,939 $ 50,488 - 4,955 - - 14,294 - - - - - - - - 625,222 - - 7,804 5,789 60,756 1,460,702 332,939 50,488 645,727 - - - - - - - - - - 1,623 46,707 1,781,084 132,201 - 645,727 1,623 46,707 1,781,084 132,201 - 16,285 - - 4,896 - - - - - 1,252,231 - - - - - - - - - - 278,257 5,554,423 - - 500,534 - - - - - - 30,205 - - - - - - - - - - 179,149 - - - - - - - - 8,715,531 - - - 5,571,953 30,205 516,819 1,252,231 179,149 8,720,427 278,257 5,554,423 5,571,953 $ 675,932 $ 524,623 $ 1,258,020 $ 180,772 $ 8,827,890 $ 3,520,043 $ 6,019,563 $ 5,622,441 (Continued) 121 CITY OF DUBUQUE,IOWA COMBINING BALANCE SHEET EXHIBIT A-1 NONMAJOR GOVERNMENTAL FUNDS (continued) JUNE 30,2016 Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds ASSETS Cash and pooled cash investments $ - $ 86 $ 10,376,217 Receivables Property tax Delinquent - - 33,348 Succeeding year - - 5,791,385 Accounts and other - - 198,718 Special assessments - - 675,864 Accruedinterest 93 35 36,290 Notes - - 7,274,249 Intergovernmental - - 3,458,544 Inventories - - 450,199 Prepaid items - - 33,681 Restricted cash and pooled cash investments 158,647 18,072 8,656,750 Total Assets $ 158,740 $ 18,193 $ 36,985,245 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ - $ - $ 1,823,649 Accrued payroll - - 84,500 Intergovernmental payable - - 7,978 Due to other funds - - 625,222 Unearned revenue 11,327 Total Liabilities 2,552,676 DEFERRED INFLOWS OF RESOURCES Unavailable revenues Succeeding year property tax - - 5,791,385 Special assessments - - 645,727 Grants - - 1,961,615 Other 7,688 Total Deferred Inflows of Resources 8,406,415 FUND BALANCES Nonspendable: Endowment corpus 57,412 12,000 69,412 Inventory - - 450,199 Prepaiditems - - 33,681 Restricted: Endowments 101,328 6,193 107,521 Library - - 1,252,231 Capital improvements - - 8,687,197 Franchise agreement - - 500,534 Special assessments - - 30,205 Claims - - 1,809 Iowa Finance Authority Trust - - 179,149 Community programs - - 9,118,412 Employee benefits - - 23,851 Committed,capital improvements 5,571,953 Total Fund B alances 158,740 18,193 26,026,154 Total Liabilities,Deferred Inflows of Resources and Fund Balances $ 158,740 $ 18,193 $ 36,985,245 122 THIS PAGE IS INTENTIONALLY LEFT BLANK 123 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2016 Special Revenue Funds Road Use Section VIII Employee Tort Tax Housing Benefits Liability REVENUES Taxes $ - $ - $ 5,105,703 $ 387,527 Special assessments - - - - Intergovernmental 7,077,733 4,539,017 - - Chargesforservices - - - Investment earnings - 11,976 - - Contributions - 1,720 - - Miscellaneous 57,812 99,248 - - Total Revenues 7,135,545 4,651,961 5,105,703 387,527 EXPENDITURES Governmental activities Current Public works 5,694,866 - - - Health and social services - - - - Culture and recreation - - - - Community and economic development - 4,968,537 - - General government 9,748 - 240 Capital projects 30,843 - - - Total Expenditures 5,735,457 4,968,537 240 - EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER)EXPENDITURES 1,400,088 (316,576) 5,105,463 387,527 OTHER FINANCING SOURCES (USES) Issuance of debt - - - - Premium on bonds - - - - Transfer sin - 224,166 - - Transfers out (228,246) - (5,109,383) (387,782) Sale of capital assets - - - - Total Other Financing Sources(Uses) (228,246) 224,166 (5,109,383) (387,782) NET CHANGE IN FUND BALANCES 1,171,842 (92,410) (3,920) (255) FUND BALANCES,BEGINNING 2,145,374 495,291 27,771 2,064 FUND BALANCES,ENDING $ 3,317,216 $ 402,881 $ 23,851 $ 1,809 124 EXHIBIT A-2 Special Revenue Funds Capital Projects Funds Library IFA Special Expendable Housing Community Airport General Sales Tax Assessments Cable TV Gifts Trust Trust Development Construction Construction Construction $ - $ - $ - $ - $ - $ - $ - $ 1,831,081 111,193 - - - - - - - - - - 110,229 1,020,491 5,553,641 142,415 54,794 - 1,260 9,327 - 7,894 208,748 - - 58,191 4,443 14,842 - 65,052 10,835 21,401 51,618 - - 61,953 - 975 10,000 3,254 15,000 8,845 591,919 87,984 - 11,312 - - 3,033 178,229 597,622 174,106 110,229 1,105,724 5,783,224 167,070 1,955,526 - - - - 73,500 - 30,420 - - 592 - - 10,000 - - - - - 100,664 - 111,534 - - - - - - 23,631 1,510,012 - - - - 498,131 - - - - - - - - - - 41,167 7,504,433 5,038,039 1,518,812 - 498,723 100,664 23,631 1,746,213 7,504,433 5,068,459 1,518,812 178,229 98,899 73,442 86,598 (640,489) (1,721,209) (4,901,389) 436,714 - - - - - 635,217 - 468,665 - - - - - 4,719 - 3,481 - - - - 32,453 326,874 715,454 1,116 (183,677) - (33,581) - (3,140) (205,731) (206,572) (997,019) - - - - 129,250 - 31,817 14,437 (183,677) - (33,581) - 158,563 761,079 540,699 (509,320) (5,448) 98,899 39,861 86,598 (481,926) (960,130) (4,360,690) (72,606) 35,653 417,920 1,212,370 92,551 9,202,353 1,238,387 9,915,113 5,644,559 $ 30,205 $ 516,819 $ 1,252,231 $ 179,149 $ 8,720,427 $ 278,257 $ 5,554,423 $ 5,571,953 (Continued) 125 CITY OF DUBUQUE,IOWA EXHIBIT A-2 COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES (continued) NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2016 Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds REVENUES Taxes $ - $ - $ 7,324,311 Special assessments - - 111,193 Intergovernmental - - 18,498,320 Charges for services - - 227,229 Investment earnings 20,140 211 258,709 Contributions - - 92,902 Miscellaneous - 60 860,213 Total Revenues 20,140 271 27,372,877 EXPENDITURES Governmental activities Current Public works - - 5,798,786 Health and social services - - 10,592 Culture and recreation 2,084 2,990 217,272 Community and economic development - - 6,502,180 General government - - 508,119 Capital projects - - 14,133,294 Total Expenditures 2,084 2,990 27,170,243 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER)EXPENDITURES 18,056 (2,719) 202,634 OTHER FINANCING SOURCES (USES) Issuance of debt - - 1,103,882 Premium on bonds - - 8,200 Transfers in - - 1,300,063 Transfers out (584) - (7,355,715) Sale of capital assets - - 175,504 Total Other Financing Sources(Uses) (584) - (4,768,066) NET CHANGE IN FUND BALANCES 17,472 (2,719) (4,565,432) FUND BALANCES,BEGINNING 141,268 20,912 30,591,586 FUND BALANCES,ENDING $ 158,740 $ 18,193 $ 26,026,154 126 NONMAJOR ENTERPRISE FUNDS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises --where the intent of the City Council is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the City Council has decided that periodic determination of net income is appropriate for accountability purposes. Refuse Collection Fund — This fund is used to account for the operations of the City's refuse collection services. Transit Fund — This fund is used to account for the operations of the City's bus and other transit services. Salt Fund—This fund is used to account for the operations of the City's salt distribution. America's River Project—This fund is used to account for all projects covered by the Vision Iowa Grant, including all matching funds. 127 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF NET POSITION EXHIBIT B-1 NONMAJOR ENTERPRISE FUNDS JUNE 30,2016 Total Other Refuse Transit America's Enterprise Collection System Salt River Project Funds ASSETS CURRENT ASSETS Cash and pooled cash investments $ 600,001 $ 138,510 $ 455 $ - $ 738,966 Receivables Accounts 327,998 23,198 - - 351,196 Accrued interest 1,240 - 1 - 1,241 Intergovernmental - 1,978,398 - - 1,978,398 Prepaid items - 9,431 - - 9,431 Total Current Assets 929,239 2,149,537 456 - 3,079,232 NONCURRENT ASSETS Restricted cash and pooled cash investments 50,000 20,511 - - 70,511 Capital assets Land - 36,000 - - 36,000 Buildings - 7,161,486 175,458 - 7,336,944 Improvements to other than buildings - 796,092 686,312 - 1,482,404 Machinery and equipment 2,322,582 6,163,031 36,342 - 8,521,955 Accumulated depreciation (1,284,677) (4,368,192) (67,024) - (5,719,893) Net Capital Assets 1,037,905 9,788,417 831,088 - 11,657,410 Total Noncurrent Assets 1,087,905 9,808,928 831,088 - 11,727,921 Total Assets 2,017,144 11,958,465 831,544 - 14,807,153 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows 126,803 208,003 - - 334,806 LIABILITIES CURRENT LIABILITIES Accounts payable 3,006 732,603 72,830 7,041 815,480 Accrued payroll 40,813 63,657 - - 104,470 General obligation bonds payable 4,656 - - - 4,656 Accrued compensated absences 889 4,134 - - 5,023 Accrued interest payable 243 - - - 243 Total Current Liabilities 49,607 800,394 72,830 7,041 929,872 NONCURRENT LIABILITIES General obligation bonds payable 80,771 - - - 80,771 Accrued Compensated Absences 267,546 12,089 - - 279,635 Net pension liability 733,334 1,202,932 - - 1,936,266 Net OPEB Liability 188,550 70,471 - - 259,021 Total Noncurrent Liabilities 1,270,201 1,285,492 - - 2,555,693 Total Liabilities 1,319,808 2,085,886 72,830 7,041 3,485,565 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows 85,624 140,453 - - 226,077 NET POSITION Net investment in capital assets 952,478 9,788,417 831,088 - 11,571,983 Restricted by bond ordinance/development agreement - 404,269 - - 404,269 Unrestricted (213,963) (252,557) (72,374) (7,041) (545,935) Total Net Position $ 738,515 $ 9,940,129 $ 758,714 $ (7,041) $ 11,430,317 128 CITY OF DUBUQUE,IOWA EXHIBIT B-2 COMBINING STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30,2016 Total Other Refuse Transit America's Enterprise Collection System Salt River Project Funds OPERATING REVENUES Charges for sales and services $ 3,856,455 $ 335,334 $ 81,720 $ - $ 4,273,509 Other 885 128,354 - 1,605 130,844 Total Operating Revenues 3,857,340 463,688 81,720 1,605 4,404,353 OPERATING EXPENSES Employee expense 2,712,748 2,544,475 - - 5,257,223 Utilities 16,898 88,717 - - 105,615 Repairs and maintenance 270,570 451,464 1,675 - 723,709 Supplies and services 663,406 584,309 152,302 21,521 1,421,538 Insurance 19,658 47,832 - - 67,490 Depreciation 282,494 558,170 27,640 - 868,304 Total Operating Expenses 3,965,774 4,274,967 181,617 21,521 8,443,879 OPERATING INCOME(LOSS) (108,434) (3,811,279) (99,897) (19,916) (4,039,526) NONOPERATING REVENUES Intergovernmental - 2,089,551 - - 2,089,551 Investment earnings 9,259 4,430 (29) - 13,660 Contributions - 35,708 - - 35,708 Interest expense (2,987) - - - (2,987) Gain on disposal of assets 32 - - - 32 Net Nonoperating Revenues 6,304 2,129,689 (29) - 2,135,964 INCOME(LOSS)BEFORE TRANSFERS (102,130) (1,681,590) (99,926) (19,916) (1,903,562) CAPITAL CONTRIBUTIONS - 1,108,386 - 1,108,386 TRANSFERS IN - 1,091,146 14,890 1,106,036 TRANSFERS OUT - (9,367,350) - (9,367,350) CHANGE IN NET POSITION (102,130) (8,849,408) (99,926) (5,026) (9,056,490) NET POSITION,BEGINNING 840,645 18,789,537 858,640 (2,015) 20,486,807 NET POSITION,ENDING $ 738,515 $ 9,940,129 $ 758,714 $ (7,041) $ 11,430,317 129 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS YEAR ENDED JUNE 30,2016 America's Total Other Refuse Transit River Enterprise Collection System Salt Project Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 3,850,931 $ 325,685 $ 81,690 $ - $ 4,258,306 Cash payments to suppliers for goods and services (982,267) (2,852,303) (81,147) (16,495) (3,932,212) Cash payments to employees for services (2,715,850) (2,410,240) - - (5,126,090) Other operating receipts 885 128,354 - 1,605 130,844 NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES 153,699 (4,808,504) 543 (14,890) (4,669,152) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - 1,091,146 - 14,890 1,106,036 Contributions - 35,708 - - 35,708 Intergovernmental grant proceeds - 3,371,295 - - 3,371,295 Payment of interfund balances - - (88) - (88) NET CASH PROVIDED BY(USED FOR)NONCAPITAL FINANCING ACTIVITIES - 4,498,149 (88) 14,890 4,512,951 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 32 - - - 32 Acquisition and construction of capital assets (327,000) (2,153,516) - - (2,480,516) Principal Paid (4,626) - - - (4,626) Interest paid (3,013) - - - (3,013) NET CASH USED FOR CAPITAL AND RELATED FINANCING ACTIVITIES (334,607) (2,153,516) - - (2,488,123) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 9,348 4,430 - - 13,778 NET INCREASE(DECREASE)IN CASH AND POOLED INVESTMENTS (171,560) (2,459,441) 455 - (2,630,546) CASH AND POOLED INVESTMENTS,BEGINNING 821,561 2,618,462 - - 3,440,023 CASH AND POOLED INVESTMENTS,ENDING $ 650,001 159,021 $ 455 $ - $ 809,477 130 EXHIBIT B-3 Business-type Activities-Enterprise Funds America's Total Other Refuse River Enterprise Collection Transit Salt Project Funds RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED BY(USED FOR) OPERATING ACTIVITIES Operating income(loss) $ (108,434) $ (3,811,279) $ (99,897) $ (19,916) $ (4,039,526) Adjustments to reconcile operating income(loss)to net cash provided by(used for)operating activities Depreciation 282,494 558,170 27,640 - 868,304 Change in assets and liabilities (Increase)Decrease in receivables (5,524) (9,649) (30) - (15,203) (Increse)in inventories and prepaid items - (9,431) - - (9,431) Increase(Decrease)in accounts payable (11,735) (1,670,550) 72,830 5,026 (1,604,429) Increase(Decrease)in accrued liabilities 7,250 25,196 - - 32,446 Increase(Decrease)in net pension liability 116,509 316,152 - - 432,661 (Increase)Decrease in deferred outflows 1,011 (24,251) - - (23,240) Increase(Decrease)in deferred inflows (149,615) (197,739) - - (347,354) Increase in net OPEB liability 21,743 14,877 - - 36,620 Total Adjustments 262,133 (997,225) 100,440 5,026 (629,626) NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES $ 153,699 $ (4,808,504) $ 543 $ 14,890 $ (4,669,152) 131 THIS PAGE IS INTENTIONALLY LEFT BLANK 132 INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the government and to other government units, on a cost-reimbursement basis. General Service Fund - This fund is used to account for engineering, street, and general services supplied to other departments. Garage Service Fund - This fund is used to account for maintenance and repair services for the City's automotive equipment. Stores/Printing Fund - This fund is used to account for printing, supplies, and other services provided to other departments. Health Insurance Reserve Fund - This fund is used to account for health insurance costs. Workers' Compensation Reserve Fund - This fund is used to account for workers' compensation costs. 133 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30,2016 General Garage Stores/ Service Service Printing ASSETS CURRENT ASSETS Cash and pooled cash investments $ - $ 118,155 $ - Receivables Accounts - - - Accrued interest - Prepaid items - - - Inventories - 53,131 15,283 Total Current Assets - 171,286 15,283 NONCURRENT ASSETS Capital assets Machinery and equipment - 324,248 - Accumulated depreciation - (122,536) - Net Capital Assets - 201,712 - Total Noncurrent Assets - 201,712 - Total Assets - 372,998 15,283 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows 214,939 78,981 - LIABILITIES CURRENT LIABILITIES Accounts payable - 4,035 19,078 Accrued payroll 26,644 25,045 - Due to other funds 402,491 - 11,693 Total Current Liabilities 429,135 29,080 30,771 NONCURRENT LIABILITIES Net pension liability 1,243,049 456,774 - Total Noncurrent Liabilities 1,243,049 456,774 - Total Liabilities 1,672,184 485,854 30,771 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows 145,137 53,333 - NET POSITION Net investment in capital assets - 201,713 - Unrestricted (1,602,382) (288,921) (15,488) Total Net Position(Deficit) $ (1,602,382) $ (87,208) $ (15,488) 134 EXHIBIT C-1 Health Workers' Insurance Compensation Reserve Reserve Total $ 2,709,870 $ 1,104,038 $ 3,932,063 85,949 - 85,949 5,157 2,104 7,261 - 96,636 96,636 - - 68,414 2,800,976 1,202,778 4,190,323 - - 324,248 - - (122,536) - - 201,712 - - 201,712 2,800,976 1,202,778 4,392,035 - - 293,920 795,381 1,039,904 1,858,398 - - 51,689 - - 414,184 795,381 1,039,904 2,324,271 - - 1,699,823 - - 1,699,823 795,381 1,039,904 4,024,094 - - 198,470 - - 201,713 2,005,595 162,874 261,678 $ 2,005,595 $ 162,874 $ 463,391 135 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION(DEFICITS) INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30,2016 General Garage Stores/ Service Service Printing OPERATING REVENUES Charges for sales and services $ 2,124,187 $ 1,930,517 $ 22,163 Other - 43,145 518 Total Operating Revenues 2,124,187 1,973,662 22,681 OPERATING EXPENSES Employee expense 2,433,662 1,020,842 - Utilities - 25,881 4,716 Repairs and maintenance - 66,954 - Supplies and services 4,440 851,018 35,749 Insurance 11,194 25,147 - Depreciation - 38,377 - Total Operating Expenses 2,449,296 2,028,219 40,465 OPERATING INCOME(LOSS) (325,109) (54,557) (17,784) NONOPERATING REVENUES(EXPENSES) Investment earnings - - - Gain on disposal of assets - 2,519 - CHANGE IN NET POSITION (325,109) (52,038) (17,784) NET POSITION(DEFICIT),BEGINNING (1,277,273) (35,170) 2,296 NET POSITION(DEFICIT),ENDING $ (1,602,382) $ (87,208) $ (15,488) 136 EXHIBIT C-2 Health Workers' Insurance Compensation Reserve Reserve Total $ 11,730,902 $ 1,069,111 $ 16,876,880 139,317 7,232 190,212 11,870,219 1,076,343 17,067,092 - - 3,454,504 30,597 - - 66,954 11,419,937 261,736 12,572,880 30,153 90,581 157,075 - - 38,377 11,450,090 352,317 16,320,387 420,129 724,026 746,705 27,542 13,564 41,106 - - 2,519 447,671 737,590 790,330 11557,924 (574,716) (326,939) $ 2,005,595 $ 162,874 $ 463,391 137 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30,2016 General Garage Stores/ Service Service Printing CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,124,187 $ 1,930,517 $ 22,163 Cash payments to suppliers for goods and services (15,634) (972,331) (23,805) Cash payments to employees for services (2,494,687) (998,228) - Other operating receipts - 43,145 518 NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES (386,134) 3,103 (1,124) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds - - - Proceeds from interfund balances 386,134 - 1,124 Payment of interfund balances - - - NET CASH PROVIDED BY(USED FOR)NONCAPITAL FINANCING ACTIVITIES 386,134 - 1,124 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets - - - Proceeds from sale of capital assets - 2,519 NET CASH PROVIDED BY(USED FOR)CAPITAL AND RELATED FINANCING ACTIVITIES - 2,519 - CASH FLOWS FROM INVESTING ACTIVITIES Interest received - - - NET INCREASE(DECREASE)IN CASH AND POOLED INVESTMENTS - 5,622 - CASH AND POOLED INVESTMENTS,BEGINNING - 112,533 - CASH AND POOLED INVESTMENTS,ENDING $ - $ 118,155 $ - RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES Operating income(joss) $ (325,109) $ (54,557) $ (17,784) Adjustments to reconcile operating income(loss)to net cash provided by(used for)operating activities Depreciation - 38,377 - Change in assets and liabilities (Increase)Decrease in receivables - - - (Increase)Decrease in inventories and prepaid items - 8,711 (2,418) Increase(Decrease)in accounts payable - (12,042) 19,078 Increase(Decrease)in net pension liability 185,850 103,871 - (Increase)Decrease in deferred outflows 4,125 (5,856) - Increase in deferred inflows (258,048) (81,254) - Increase(Decrease)in accrued liabilities 7,048 5,853 - Total Adjustments (61,025) 57,660 16,660 NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES $ (386,134) $ 3,103 $ (1,124) 138 EXHIBIT C-3 Health Workers' Insurance Compensation Reserve Reserve Total $ 11,958,188 $ 1,069,111 $ 17,104,166 (11,159,221) (856,754) (13,027,745) - - (3,492,915) 139,317 7,232 190,212 938,284 219,589 773,718 387,258 387,258 2,519 2,519 25,210 12,870 38,080 963,494 232,459 1,201,575 1,746,376 871,579 2,730,488 $ 2,709,870 $ 1,104,038 $ 3,932,063 $ 420,129 $ 724,026 $ 746,705 - - 38,377 227,286 - 227,286 - (90,148) (83,855) 290,869 (414,289) (116,384) - - 289,721 - - (1,731) - - (339,302) - - 12,901 518,155 (504,437) 27,013 $ 938,284 $ 219,589 $ 773,718 139 AGENCY FUNDS The agency fund is used to report resources held by the City in a purely custodial capacity. Cable Equipment Fund — This fund is used to account for resources received under the cable franchise agreement to support public, educational, and governmental access and internet use grants. Dog Track Depreciation Fund — This fund is used to account for the resources held for improvements at the greyhound racing facility. 140 CITY OF DUBUQUE,IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES EXHIBIT D-1 AGENCY FUND FOR THE YEAR ENDED JUNE 30,2016 Balance Balance Beginning End of Year Additions Deductions of Year CABLE EQUIPMENT FUND ASSETS Cash and pooled cash investments $ 640,274 $ 207,332 $ 122,828 $ 724,778 Accounts receivable 51,078 336 - 51,414 Total Assets $ 691,352 $ 207,668 $ 122,828 $ 776,192 LIABILITIES Accounts payable $ - $ 135,135 $ - $ 135,135 Due to other agency 691,352 72,533 122,828 641,057 Total Liabilities $ 691,352 $ 207,668 $ 122,828 $ 776,192 DOG TRACK DEPRECIATION FUND ASSETS Cash and pooled cash investments $ 667,744 $ 128,561 $ 51,662 $ 744,643 Accrued interest 1,080 1,418 1,080 1,418 Total Assets $ 668,824 $ 129,979 $ 52,742 $ 746,061 LIABILITIES Due to other agency $ 668,824 $ 129,979 $ 52,742 $ 746,061 TOTAL AGENCY FUNDS ASSETS Cash and pooled cash investments $ 1,308,018 $ 335,893 $ 174,490 $ 1,469,421 Accounts receivable 51,078 336 - 51,414 Accrued interest 1,080 1,418 1,080 1,418 Total Assets $ 1,360,176 $ 337,647 $ 175,570 $ 1,522,253 LIABILITIES Accounts payable $ - $ 135,135 $ - $ 135,135 Due to other agency 1,360,176 202,512 175,570 1,387,118 Total Liabilities $ 1,360,176 $ 337,647 $ 175,570 $ 1,522,253 141 THIS PAGE IS INTENTIONALLY LEFT BLANK 142 Statistical Section (Unaudited) June 30, 2016 City of Dubuque, Iowa 143 THIS PAGE IS INTENTIONALLY LEFT BLANK 144 CITY OF DUBUQUE, IOWA STATISTICAL SECTION This statistical section of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 146 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. 156 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 160 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. 171 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 174 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 145 CITY OF DUBUQUE,IOWA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal- 2007 2008 2009 2010 2011 Governmental activities Net investment in capital assets $ 288,978,975 $ 296,143,451 $ 298,855,346 $ 309,126,684 $ 329,416,245 Restricted 23,900,328 31,970,724 27,171,123 26,064,318 23,738,199 Unrestricted 21,921,571 18,987,841 (5,280,715) (11,256,312) (4,891,381) Total governmental activities net position $ 334,800,874 $ 347,102,016 $ 320,745,754 $ 323,934,690 $ 348,263,063 Business-type activities Net investment in capital assets $ 91,483,532 $ 95,104,575 $ 120,473,286 $ 124,805,513 $ 135,026,753 Restricted 554,318 554,505 770,157 129,642 893,519 Unrestricted 11,214,900 11,312,806 12,321,125 11,679,961 2,603,799 Total business-type activities net position $ 103,252,750 $ 106,971,886 $ 133,564,568 $ 136,615,116 $ 138,524,071 Primary government Net investment in capital assets $ 380,462,507 $ 391,248,026 $ 419,328,632 $ 433,932,197 $ 464,442,998 Restricted 24,454,646 32,525,229 27,941,280 26,193,960 24,631,718 Unrestricted 33,136,471 30,300,647 7,040,410 423,649 (2,287,582) Total primarygovemment net positions $ 438,053,624 $ 454,073,902 $ 454,310,322 $ 460,549,806 $ 486,787,134 146 TABLE 1 Year 2012 2013 2014 2015 2016 $ 347,890,769 $ 342,046,442 $ 354,732,451 $ 348,173,267 $ 369,244,904 26,180,100 23,491,207 21,501,638 22,047,405 21,473,309 (16,876,988) (8,361,688) (18,151,279) (49,579,334) (47,166,839) $ 357,193,881 $ 357,175,961 $ 358,082,810 $ 320,641,338 $ 343,551,374 $ 132,237,734 $ 138,498,777 $ 138,842,390 $ 148,487,126 $ 161,326,743 957,802 6,011,848 5,315,519 7,796,668 4,254,907 10,665,596 (641,384) (593,202) (4,568,933) (7,339,071) $ 143,861,132 $ 143,869,241 $ 143,564,707 $ 151,714,861 $ 158,242,579 $ 480,128,503 $ 480,545,219 $ 493,574,841 $ 496,660,393 $ 530,571,647 27,137,902 29,503,055 26,817,157 29,844,073 25,728,216 (6,211,392) (9,003,072) (18,744,481) (54,148,267) (54,505,910) $ 501,055,013 $ 501,045,202 $ 501,647,517 $ 472,356,199 $ 501,793,953 147 CITY OF DUBUQUE,IOWA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal- 2007 2008 2009 2010 2011 Expenses Governmental activities: Public safety $ 20,326,724 $ 16,966,210 $ 22,038,265 $ 22,067,988 $ 23,759,068 Public works 16,505,560 18,847,068 19,079,688 22,121,629 18,978,423 Health and social services 759,367 800,566 849,237 852,099 1,072,347 Culture and recreation 9,837,299 10,857,409 12,640,716 11,446,084 10,911,733 Community and economic development 11,965,805 11,961,584 12,693,140 15,422,099 12,890,841 General government 4,940,154 5,804,003 6,423,908 7,963,016 9,052,704 Interest on long-term debt 1,400,748 2,577,417 3,164,126 3,101,897 3,294,951 Total governmental activities expenses 65,735,657 67,814,257 76,889,080 82,974,812 79,960,067 Business-type activities: Sewage disposal works 5,814,076 6,141,524 6,326,708 6,631,326 7,899,011 Water utility 4,780,063 4,814,692 6,100,491 6,093,827 6,523,993 Stormwater utility 1,198,675 1,706,735 2,138,198 2,213,144 2,811,321 Parking facilities 1,611,447 2,173,110 2,147,405 4,003,776 4,775,834 America's River Project 434,667 126,699 61,927 423,158 180,086 Refuse collection 2,496,018 2,724,050 2,788,665 2,703,887 2,828,891 Transit system 2,760,459 2,703,983 2,625,145 2,832,066 2,947,958 Salt 671,647 Total business-type activities expenses 19,095,405 20,390,793 22,188,539 24,901,184 28,638,741 Total primary government expenses $ 84,831,062 $ 88,205,050 $ 99,077,619 $ 107,875,996 $ 108,598,808 Program Revenues Governmental activities: Charges for services Public safety 1,857,324 2,088,723 2,020,625 2,348,064 2,579,573 Public works 4,839,781 4,061,883 4,456,364 4,046,583 5,331,667 Culture and recreation 2,251,562 2,109,571 2,279,688 2,192,886 2,108,177 Other activities 1,074,550 1,382,889 1,557,597 2,412,880 2,530,234 Operating grants and contributions 11,641,904 11,709,123 12,599,967 20,830,113 14,204,627 Capital grants and contributions 23,741,282 8,032,602 4,811,729 10,748,522 23,482,866 Total governmental activities program revenues 45,406,403 29,384,791 27,725,970 42,579,048 50,237,144 Business-type activities: Charges for services Sewage disposal works 5,259,432 5,484,079 5,904,535 5,893,730 6,643,974 Water utility 4,743,896 4,875,530 5,320,642 5,326,202 5,638,277 Stortnwater utility 1,227,243 1,766,334 2,291,249 2,282,625 2,993,539 Parking facilities 1,977,757 2,141,607 2,224,185 2,399,843 2,750,610 America's River Project 3,099 2,140 - 7,000 - Refuse collection 2,642,251 2,710,583 2,872,649 2,893,017 3,082,197 Transit system 237,088 195,817 196,260 273,433 193,236 Salt - - - - 773,258 Operating grants and contributions 1,167,344 1,209,636 1,095,946 1,652,277 2,773,933 Capital grants and contributions 1,670,874 2,830,263 3,613,321 3,800,582 6,536,527 Total business-type activities program revenues 18,928,984 21,215,989 23,518,787 24,528,709 31,385,551 Total primary government program revenues $ 64,335,387 $ 50,600,780 $ 51,244,757 $ 67,107,757 $ 81,622,695 148 TABLE2 Year 2012 2013 2014 2015 2016 $ 26,326,367 $ 28,292,481 $ 27,578,517 $ 25,525,937 $ 26,851,624 22,917,747 21,607,536 21,306,882 19,207,837 24,323,023 913,954 716,970 1,055,398 928,968 967,936 12,749,558 13,647,178 13,696,331 13,002,690 12,993,331 22,030,950 17,388,720 14,591,257 18,064,831 15,464,781 6,133,983 6,248,483 9,610,084 6,420,173 4,101,423 3,294,912 4,049,640 3,684,993 3,903,667 2,963,134 94,367,471 91,951,008 91,523,462 87,054,103 87,665,252 9,718,669 9,375,748 11,481,103 12,019,866 12,817,669 7,410,710 6,817,772 8,812,340 7,800,393 6,483,229 2,750,767 3,347,304 3,431,096 4,131,562 5,021,523 3,152,055 3,586,405 3,732,492 3,383,419 3,420,296 22,787 22,770 33,579 24,000 21,521 3,173,075 3,468,859 3,750,366 3,740,404 3,968,761 3,629,750 3,492,095 3,847,320 4,245,823 4,274,967 661,395 346,066 56,468 244,691 181,617 30,519,208 30,457,019 35,144,764 35,590,158 36,189,583 $ 124,886,679 $ 122,408,027 $ 126,668,226 $ 122,644,261 $ 123,854,835 2,915,562 2,495,737 2,624,455 2,532,114 2,713,065 5,178,439 4,472,479 5,829,293 6,092,356 5,765,075 2,321,553 2,488,844 2,321,265 2,547,843 2,723,270 2,873,298 3,264,979 3,921,256 3,493,143 3,887,056 23,013,997 13,995,316 12,784,907 11,992,439 15,301,219 16,560,811 10,791,945 12,162,649 9,704,043 18,667,619 52,863,660 37,509,300 39,643,825 36,361,938 49,057,304 7,827,281 8,924,785 10,025,673 10,582,662 12,158,439 6,037,073 6,922,582 7,248,790 7,463,430 8,406,928 3,180,134 3,192,256 3,224,504 3,490,040 3,754,148 2,908,989 2,883,865 2,920,148 3,036,214 3,247,383 - - - 1,605 3,257,960 3,346,795 3,700,922 3,783,493 3,857,340 278,835 307,314 275,907 397,545 463,688 665,942 395,000 45,600 232,271 81,720 1,579,493 2,264,695 1,717,208 1,866,535 1,648,077 5,323,486 1,240,583 2,920,942 10,020,715 7,607,721 31,059,193 29,477,875 32,079,694 40,872,905 41,227,049 $ 83,922,853 $ 66,987,175 $ 71,723,519 $ 77,234,843 $ 90,284,353 (Continued) 149 CITY OF DUBUQUE,IOWA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal- 2007 2008 2009 2010 2011 Net(Expense)/Revenue Governmental activities $ (20,329,254) $ (38,429,466) $ (49,163,110) $ (40,395,764) $ (29,722,923) Business-type activities (166,421) 825,196 1,330,248 (372,475) 2,746,810 Total primary government net expense $ (20,495,675) $ (37,604,270) $ (47,832,862) $ (40,768,239) $ (26,976,113) General Revenues and Other Changes in Net Position Governmental activities: General Revenues Property taxes 21,656,908 22,744,563 23,716,819 24,876,073 28,249,114 Local option sales tax 7,817,403 8,020,889 7,649,853 8,112,471 7,929,761 Hotel/moteltax 1,569,743 1,622,455 1,611,954 1,678,806 1,826,809 Utility franchise fees 1,492,920 1,516,123 1,486,292 1,591,712 2,488,858 Gaming 15,556,551 15,346,468 9,627,391 8,209,761 13,327,223 Unrestricted investment earnings 1,870,403 2,741,499 2,215,413 1,339,709 668,363 Gain on sale of capital assets - 92,525 407,503 - 149,937 Other 586,931 898,241 918,605 880,930 622,494 Transfers (7,633) (2,252,155) (24,826,982) (3,104,762) (1,211,263) Total governmental activities 50,543,226 50,730,608 22,806,848 43,584,700 54,051,296 Business-type activities: General Revenues Unrestricted investment earnings 796,636 630,049 433,148 294,562 184,581 Gain on sale of capital assets - 11,736 2,304 23,699 19,337 Extraordinary item - - - - (2,253,036) Transfers 7,633 2,252,155 24,826,982 3,104,762 1,211,263 Total business-type activities 804,269 2,893,940 25,262,434 3,423,023 (837,855) Total primary government $ 51,347,495 $ 53,624,548 $ 48,069,282 $ 47,007,723 $ 53,213,441 Change in Net Position Governmental activities $ 30,213,972 $ 12,301,142 $ (26,356,262) $ 3,188,936 $ 24,328,373 Business-type activities 637,848 3,719,136 26,592,682 3,050,548 1,908,955 Total primary government $ 30,851,820 $ 16,020,278 $ 236,420 $ 6,239,484 $ 26,237,328 150 TABLE2 (continued) Year 2012 2013 2014 2015 2016 $ (41,503,811) $ (54,441,708) $ (51,879,637) $ (50,692,165) $ (38,607,948) 539,985 (979,144) (3,065,070) 5,282,747 5,037,466 $ (40,963,826) _L__(5 5,420,852) $ (54,944,707) $ (45,409,418) $ (33,570,482) 30,816,614 32,668,554 33,264,283 36,277,719 36,518,506 8,459,888 8,764,787 8,211,366 8,760,246 9,155,411 1,903,944 1,953,763 2,006,514 2,623,551 2,128,042 2,272,481 2,568,347 2,609,421 2,828,688 4,360,107 8,785,453 8,452,298 7,878,008 7,397,709 8,440,161 1,529,149 201,153 777,958 668,134 1,082,165 1,417,048 907,122 483,782 19,495 813,492 (4,749,948) (1,092,236) (2,444,846) (7,288,593) (979,900) 50,434,629 54,423,788 52,786,486 51,286,949 61,517,984 206,672 65,351 135,461 185,356 407,528 84,178 384,697 180,229 6,571 102,824 (243,722) (555,031) - - - 4,749,948 1,092,236 2,444,846 7,288,593 979,900 4,797,076 987,253 2,760,536 7,480,520 1,490,252 $ 55,231,705 $ 55,411,041 $ 55,547,022 $ 58,767,469 $ 63,008,236 $ 8,930,818 $ (17,920) $ 906,849 $ 594,784 $ 22,910,036 5,337,061 8,109 (304,534) 12,763,267 6,527,718 $ 14,267,879 $ (Q811) $ 602,315 $ 13,358,051 $ 29,437,754 151 CITY OF DUBUQUE,IOWA FUND BALANCES,GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal- 2007 2008 2009 2010 2011* General Fund Reserved $ 4,455,303 $ 1,699,825 $ 4,864,701 $ 5,199,760 $ - Unreserved 17,827,631 17,982,016 14,206,181 8,622,705 - Nonspendable - - - - 868,631 Assigned - - - - 8,904,490 Unassigned - - - - 6,139,306 Total general fund $ 22,282,934 $ 19,681,841 $ 19,070,882 $ 13,822,465 $ 15,912,427 All Other Governmental Funds Reserved $ 13,942,519 $ 31,887,038 $ 19,634,305 $ 24,404,656 $ - Unreserved,reported in: Special revenue fiords 7,586,898 7,431,931 5,981,390 4,011,022 - Debt service fimd - - - - - Capital projects fiords 4,195,354 7,875,448 5,659,214 (989,025)Permanentfimds 115,825 33,958 35,550 33,273 - Nonspendable - - - - 10,320,305 Restricted - - - - 18,010,570 Committed - - - - 5,203,472 Unassigned - - - - (377,363) Total all other governmental fiords $ 25,840,596 $ 47,228,375 $ 31,310,459 $ 27,459,926 $ 33,156,984 *Classification changed in 2011 due to adoption of GASB 54. 152 TABLE3 Yeu 2012 2013 2014 2015 2016 5,613,359 6,646,278 6,549,063 6,082,043 6,049,052 5,549,803 3,434,440 1,904,805 647,772 1,015,938 9,371,016 8,806,171 7,356,066 8,693,524 10,908,497 $ 20,534,178 $ 18,886,889 $ 15,809,934 $ 15,423,339 $ 17,973,487 10,975,468 9,092,520 8,640,780 1,183,423 553,292 31,362,126 30,738,046 23,620,615 30,496,183 27,450,187 5,843,671 10,827,172 10,548,592 12,298,896 7,635,502 (429,344) - - - - $ 47,751,921 $ 50,657,738 $ 42,809,987 $ 43,978,502 $ 35,638,981 153 CITY OF DUBUQUE,IOWA CHANGES IN FUND BALANCES,GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal- 2007 2008 2009 2010 2011 Revenues Taxes $ 32,526,525 $ 33,898,692 $ 34,454,146 $ 36,252,156 $ 40,428,894 Special assessments 586,459 177,585 250,372 318,178 232,535 Licenses and permits 1,052,896 1,153,429 1,088,386 1,115,472 1,170,922 Intergovernmental 16,744,703 14,256,523 15,796,822 27,310,624 26,171,082 Charges for services 7,351,191 7,833,151 8,029,189 8,063,284 8,723,086 Fines and forfeits 158,360 188,603 199,839 224,601 454,117 Investment earnings 1,913,420 2,731,953 2,206,382 1,348,615 654,587 Contributions 1,168,463 6,134,002 1,369,759 2,333,995 1,297,621 Gaming 15,556,551 15,346,468 9,627,391 8,209,761 13,327,223 Miscellaneous 1,149,546 1,269,376 1,600,679 2,111,834 2,075,262 Total revenues 78,208,114 82,989,782 74,622,965 87,288,520 94,535,329 Expenditures Current Public safety 20,743,196 21,542,661 21,335,192 21,979,729 23,950,386 Public works 12,506,378 16,331,107 14,261,551 19,251,625 14,429,415 Health and social services 783,209 797,644 815,873 813,609 1,040,114 Culture and recreation 10,244,244 10,277,787 12,227,506 14,909,517 11,279,951 Community and economic development 11,695,902 11,847,512 11,953,279 14,654,816 12,361,176 General government 4,441,043 6,310,939 5,836,839 6,368,308 7,686,929 Debt service Principal 1,663,339 1,762,375 2,169,678 2,651,765 2,820,371 Interest 1,412,012 2,406,431 3,095,166 3,145,735 3,321,157 Capital projects 8,227,257 15,351,848 24,274,120 14,831,118 15,102,893 Total expenditures 71,716,580 86,628,304 95,969,204 98,606,222 91,992,392 Excess(deficiency)of revenues over (under)expenditures 6,491,534 (3,638,522) (21,346,239) (11,317,702) 2,542,937 Other Financing Sources(Uses) Issuance of bonds 743,591 23,083,696 5,905,000 4,722,176 6,996,722 Discount on bonds - (266,158) (48,516) (31,990) (39,547) Premiums on bonds - - - 554,796 1,642 Issuance of refunding bonds - 2,965,000 - 8,885,000 705,000 Payment to refunded bonds escrow agent - (2,875,000) - (9,405,000) (690,000) Transfers in 10,394,726 14,801,589 7,451,152 7,993,297 15,850,523 Transfers out (11,789,548) (18,185,109) (9,084,228) (10,562,137) (18,961,892) Insurance recovery - - - - 628,482 Sale of capital assets 2,811,483 2,901,190 593,956 62,610 753,153 Total other financing sources(uses) 2,160,252 22,425,208 4,817,364 2,218,752 5,244,083 Net change in fund balances $ 8,651,786 $ 18,786,686 $ (16,528,875) $ (9,098,950) $ 7,787,020 Debt service as a percentage of noncapital expenditures 5.01 % 6.55 % 7.68 % 7.74 % 8.49 % 154 TABLE4 Year 2012 2013 2014 2015 2016 $ 43,443,669 $ 45,440,973 $ 46,034,361 $ 50,490,204 $ 51,580,084 596,138 175,486 154,692 85,501 111,193 1,570,022 1,271,771 1,136,941 1,198,420 1,480,643 37,574,783 26,580,831 23,050,052 20,828,524 29,302,824 9,296,329 8,952,179 10,264,257 10,711,243 10,919,854 525,389 484,128 455,219 362,661 421,925 1,511,437 180,016 756,809 668,134 1,082,165 1,578,376 370,154 678,561 789,268 1,440,405 8,785,453 8,452,298 7,878,008 7,397,709 8,440,161 1,319,558 1,315,915 1,705,275 1,466,542 1,367,875 106,201,154 93,223,751 92,114,175 93,998,206 106,147,129 24,476,772 26,506,714 27,644,190 27,570,773 28,036,551 12,385,929 13,416,108 13,942,772 11,200,427 14,597,823 828,837 680,466 1,049,194 939,172 1,015,987 10,873,474 11,218,019 12,351,497 12,300,454 11,909,029 22,237,140 18,678,496 14,420,980 16,418,909 13,473,413 6,335,947 5,035,108 5,898,293 5,977,605 6,436,114 3,224,680 3,182,240 4,595,808 4,910,735 10,302,412 3,220,546 3,991,115 3,650,694 3,577,829 3,707,268 23,459,891 16,636,698 18,779,651 14,829,037 31,504,581 107,043,216 99,344,964 102,333,079 97,724,941 120,983,178 (842,062) (6,121,213) (10,218,904) (3,726,735) (14,836,049) 27,215,363 6,577,268 - 11,137,321 3,933,882 (71,689) - - 72,852 292,521 123,990 - - - - - 4,949,148 - - 4,650,000 - (4,949,148) - - - 8,773,387 15,295,630 15,862,516 18,073,553 17,397,007 (18,336,603) (16,981,203) (17,294,762) (25,241,795) (18,376,907) 132,425 49,209 59,796 106,288 86,359 2,221,877 2,438,837 666,648 360,436 1,063,814 20,058,750 7,379,741 (705,802) 4,508,655 9,046,676 $ 19,216,688 $ 1,258,528 $ (10,924,706) $ 781,920 $ (5,789,373) 7.65 % 8.57 % 9.51 % 9.97 % 15.17 % 155 CITY OF DUBUQUE,IOWA TAXABLE AND ASSESSED VALUE OF PROPERTY TABLE 5 LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Total Taxable Value to Real Property Exemptions Total Total Levy Fiscal Taxable Assessed Real Taxable Assessed Assessed Total Direct Year Year Value Value Property Value Value Value Tax Rate 2005 2007 $ 1,780,354 $ 2,804,568 $ 9,122 $ 1,771,232 $ 2,804,568 63.16 % 9.98030 % 2006 2008 1,823,304 2,870,178 8,939 1,814,365 2,870,178 63.21 10.31685 2007 2009 1,949,071 3,171,681 9,298 1,939,773 3,171,681 61.16 9.96904 2008 2010 2,033,135 3,239,112 9,246 2,023,889 3,239,112 62.48 9.85777 2009 2011 2,159,622 3,349,823 8,885 2,150,737 3,349,823 64.20 10.02742 2010 2012 2,243,474 3,406,186 8,875 2,234,599 3,406,186 65.60 10.45111 2011 2013 2,337,129 3,476,638 8,872 2,328,257 3,476,638 66.97 10.78478 2012 2014 2,398,151 3,503,774 8,799 2,389,352 3,503,774 68.19 11.02586 2013 2015 2,522,048 3,686,202 8,729 2,513,319 3,686,202 68.18 11.02588 2014 2016 2,508,933 3,723,003 8,631 2,500,302 3,723,003 67.16 11.02590 Source: Dubuque County Assessor's and Auditor's Offices 156 CITY OF DUBUQUE,IOWA PROPERTY TAX RATES TABLE6 DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES PER$1,000 ASSESSED VALUE Dubuque Boarder Ratio of Levy Fiscal Dubuque School Education and Area 1 Dubuque Dubuque Year Year City District Independents Voc.Tech County Total City to Total 2005 2007 $ 9.98033 $ 15.92538 $ 0.60802 $ 0.61127 $ 6.17924 $ 33.30424 29.97 2006 2008 10.31690 16.40925 0.63160 0.61270 6.42691 34.39736 29.99 2007 2009 9.96904 16.89000 0.95250 0.55713 6.41459 34.78326 28.66 2008 2010 9.85777 16.87918 0.57970 0.99471 6.40435 34.71571 28.40 2009 2011 10.02742 16.88349 0.55740 1.03532 6.50193 35.00556 28.65 2010 2012 10.45111 16.87685 0.67766 1.07379 6.49167 35.57108 29.38 2011 2013 10.78477 15.40388 0.71653 0.98407 6.43124 34.32049 31.42 2012 2014 11.02586 14.60281 0.75274 0.90455 6.43124 33.71720 32.70 2013 2015 11.02588 13.99630 0.66355 0.90807 6.43124 33.02504 33.39 2014 2016 11.02590 14.05629 0.63899 0.91036 6.38779 33.01933 33.39 Separate components of the Dubuque City Rate is as follows: Levy Fiscal Public Employee Debt Year Year General Transit Insurance Benefits Service Total 2005 2007 $ 8.10000 $ 0.53643 $ 0.21308 $ 1.13082 $ - $ 9.98033 2006 2008 8.10000 0.60729 0.21760 1.39201 - 10.31690 2007 2009 8.10000 0.66727 0.08685 1.11492 - 9.96904 2008 2010 8.10000 0.60000 0.21492 0.90583 0.03702 9.85777 2009 2011 8.10000 0.54469 0.20531 1.12441 0.05300 10.02741 2010 2012 8.10000 0.35273 0.19508 1.75052 0.05278 10.45111 2011 2013 8.10000 0.49516 0.13965 2.02267 0.02729 10.78477 2012 2014 8.10000 0.38382 0.16288 2.33093 0.04823 11.02586 2013 2015 8.10000 0.48268 0.16595 2.23209 0.04516 11.02588 2014 2016 8.10000 0.48461 0.16428 2.16440 0.11261 11.02590 Source: Dubuque County Auditor's Office. 157 CITY OF DUBUQUE,IOWA PRINCIPAL PROPERTY TAXPAYERS TABLE 7 CURRENT YEAR AND NINE YEARS AGO (IN THOUSANDS OF DOLLARS) 2016 2007 Percentage of Percentage of Taxable Total City Taxable Total City Assessed Taxable Assessed Taxable Taxpayer Value Rank Assessed Value Value Rank Assessed Value Peninsula Gaming Company LLC $ 56,945 1 2.27 % Kennedy Mall Inc. 35,410 2 1.41 $ 26,338 1 1.48 % Walter Development LLC 26,516 3 1.06 Progressive Processing LLC(Hormel) 25,065 4 1.00 Medical Associates Realty LLC 20,945 5 0.83 19,271 2 1.08 Nordstrom,Inc. 15,559 6 0.62 16,884 4 0.95 The McGraw Hill Companies Inc. 14,487 7 0.58 Platinum Holdings LLC 14,062 8 0.56 11,178 5 0.63 Queck Capital Management LLC 13,028 9 0.52 Flexsteel Industries Inc. 12,534 10 0.50 Lexington Dubuque LLC 9,844 7 0.55 Otto A LLC 17,500 3 0.98 Plaza 20 Inc. 9,693 9 0.54 Minglewood Limited Partnership 9,948 6 0.56 Angelus of Dubuque LLC 9,810 8 0.55 American Trust&Savings Bank 9,523 10 0.53 $ 234,551 9.35 % $ 139,989 7.85 % Source: Dubuque County Auditor's Office 158 CITY OF DUBUQUE,IOWA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS TABLES (IN THOUSANDS OF DOLLARS) Total Percent of Total Tax Ratio of Tax Current Current Delinquent Total Tax Collections Outstanding Delinquent Fiscal Levy Levy Tax Taxes Tax Collections to Total Delinquent Taxes to Total Year Year (1) Collections Collected Collections (2) Tax Levy Taxes Tax Levy 2007 2006 17,216 17,193 99.9 % 4 17,197 99.9 % 174 1.01 2008 2007 18,211 18,160 99.7 3 18,163 99.7 215 1.18 2009 2008 18,992 18,690 98.4 5 18,695 98.4 262 1.38 2010 2009 19,124 19,117 99.9 (10) 19,107 99.9 202 1.06 2011 2010 19,906 19,793 99.4 13 19,806 99.5 276 1.39 2012 2011 21,340 21,339 100.0 1 21,340 99.9 185 0.87 2013 2012 22,789 22,752 99.8 7 22,759 99.9 182 0.80 2014 2013 23,993 23,915 99.7 8 23,923 99.7 211 0.88 2015 2014 24,866 24,715 99.4 7 24,722 99.4 362 1.46 2016 2015 24,944 24,889 100 84 24,973 100 288 1.15 (1)Excludes tax increment levy. (2)Includes taxes collected in June by the County but not received by the City until July. 159 CITY OF DUBUQUE RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities Business- General Tax Increment Tax Increment General Fiscal Obligation Financing Financing Other Loans Obligation Year Bonds Bonds Notes Payable Bonds 2007 $ 22,870,646 $ 2,594,831 $ 1,279,885 $ $ 10,895,593 2008 21,752,907 24,879,116 1,279,885 11,384,371 2009 25,941,693 24,363,262 1,169,684 150,000 14,448,770 2010 27,887,864 24,449,674 1,049,696 282,857 23,957,802 2011 32,561,048 23,037,222 1,931,348 282,857 25,254,652 2012 53,087,811 22,258,283 1,767,664 4,735,714 35,108,003 2013 56,517,165 21,920,537 1,235,903 5,638,871 34,921,131 2014 52,568,648 21,556,435 1,030,036 5,541,428 32,738,862 2015 59,614,941 21,165,946 811,608 5,444,285 45,868,394 2016 58,869,812 20,764,818 625,429 5,347,142 46,806,473 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1)Population and personal income data can be found in Table 18. * Personal Income unavailable at report date 160 TABLE 9 Type Activities Capital Other Total Percentage of Loan Revenue Loans Primary Personal Per Notes Bonds Payable Government Income (1) Capita(1) $ - $ 720,000 $ $ 38,360,955 2 % $ 665 611,977 490,000 60,398,256 3 2,174 3,914,076 1,434,713 390,890 71,813,088 3 1,245 8,289,621 1,115,430 371,978 87,404,922 4 1,515 33,195,408 6,777,793 2,252,109 125,292,437 5 2,174 61,957,749 6,521,188 331,235 185,767,647 7 3,223 75,415,431 6,260,299 309,304 202,218,641 8 3,508 82,924,949 14,151,437 286,263 210,798,058 8 3,657 85,477,970 34,543,432 262,055 253,188,631 10 4,393 104,156,549 34,196,999 236,623 271,003,845 * 4,638 161 CITY OF DUBUQUE RATIOS OF GENERAL BONDED DEBT OUTSTANDING TABLE 10 LAST TEN FISCAL YEARS DOLLARS IN THOUSANDS EXCEPT PER CAPITA Percentage of Percentage of General Taxable Taxable Assessed Assessed Fiscal Obligation Value of Value of Value of Value of Per Year Bonds Property Property Property Property Capita 2007 $ 33,766 $ 1,771,232 1.91 % $ 2,804,658 1.20 % 585 2008 33,137 1,814,365 1.83 % 2,870,178 1.15 % 574 2009 40,390 1,939,773 2.08 % 3,171,681 1.27 % 700 2010 51,846 2,023,899 2.56 % 3,239,112 1.60 % 899 2011 57,816 2,159,622 2.68 % 3,349,823 1.73 % 1,003 2012 88,196 2,243,474 3.93 % 3,406,186 2.59 % 1,530 2013 91,438 2,337,129 3.91 % 3,476,638 2.63 % 1,586 2014 85,308 2,398,151 3.56 % 3,503,774 2.43 % 1,480 2015 105,483 2,522,048 4.18 % 3,686,202 2.86 % 1,830 2016 105,676 2,508,933 4.21 % 3,723,003 2.84 % 1,808 162 rl Y Y Vl N b b Vl O W P W vl fn P vl O R G O W W W H £'" • Y W Q Q M EA Vj 0 0 0 0 Y Y O D W D a °J CC � R Vl P P to bD U N O S7 Vj Vj V 4�. N N N R 7 rri Ki Ki C 'O � Rei FQ Q Q Q R L ,� Y o � .5out � u bA O O v a oaf' o o o u 2 o R `2 O N bA 9 O o fn fn M � +s••. � v � b�^A L �=• R O y p O .�2 v, 'O �i Fes- '� W 7 `• � N � N N Q '�-� � O � O Go o � 7 � y � F ,v O• � A ¢ q o g q z F F m � zHCaN 163 CITY OF DUBUQUE, IOWA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) 2007 2008 2009 2010 Debit limit $ 145,401 S 148,824 S 163,621 S 167,247 Total net debt applicable to limit 38,060 60,485 76,182 101,152 Legal debit margin $ 107,341 S 88,339 S 87,439 S 66,095 Total net debt applicable to the debt limit as a percentage of debt limit 26.18 % 40.64 % 46.56 % 60.48 % 164 TABLE 12 2011 2012 2013 2014 2015 2016 $ 174,333 $ 177,668 $ 181,668 $ 183,621 $ 193,114 $ 196,031 92,443 142,316 143,303 149,923 173,597 165,838 $ 81,890 $ 35,352 $ 38,365 $ 33,698 $ 19,517 $ 30,193 53.03 % 80.10 % 78.88 % 81.65 % 89.89 % 84.60 % Legal Debt Margin Calculation for Fiscal Year 2016 Estimated actual value $ 3,920,621,472 Debt limit- 5%of total actual valuation $ 196,031,074 Debt applicable to limit: (Including GO Debt, TIF Debt, and Lease Obligations Paid from General Fund) $ 165,838,102 Legal debt margin $ 30,192,972 165 CITY OF DUBUQUE,IOWA REVENUE DEBT COVERAGE TABLE 13 LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Gross Operating Net Revenue Next Fiscal Year's Fiscal Revenues Expenses Available For Debt Service Requirements Coverage Year (1) (2) Debt Service Principal Interest Total (3) WATER UTILITY 2008 $ 4,933 $ 3,959 $ 974 $ 39 $ 57 $ 96 10.15 2009 5,391 5,196 195 70 52 122 1.60 2010 5,353 5,153 200 70 182 252 0.79 2011 5,680 5,316 364 255 238 493 0.74 2012 6,087 5,895 192 260 231 491 0.39 2013 6,944 5,391 1,553 432 344 776 2.00 2014 7,283 7,384 (101) 275 218 493 (0.20) 2015 7,511 6,322 1,189 285 211 496 2.40 2016 8,508 4,826 3,682 473 305 778 4.73 STORMWATER UTILITY 2009 2,402 1,309 1,093 75 58 133 8.22 2010 2,357 1,320 1,037 100 178 278 3.73 2011 3,023 1,679 1,344 231 243 474 2.84 2012 3,211 1,497 1,714 462 268 730 2.35 2013 3,194 2,019 1,715 320 309 629 1.87 2014 3,240 1,833 1,407 331 311 642 2.19 2015 3,551 2,162 1,389 341 356 697 1.99 2016 3,948 2,140 1,808 352 346 698 2.59 SEWAGE DISPOSAL WORKS 2009 6,084 5,093 991 - 7 7 141.57 2010 5,995 5,331 664 33 382 415 1.60 2011 6,699 6,029 670 34 1,129 1,163 0.58 2012 7,878 7,018 860 1,719 1,443 3,162 0.27 2013 8,951 6,113 2,838 2,326 1,423 3,749 0.76 2014 10,083 6,754 3,329 2,603 1,358 3,961 0.84 2015 10,629 6,950 3,679 2,610 1,435 4,045 0.91 2016 12,237 7,702 4,535 2,652 1,454 4,106 1.10 PARKING BONDS 2005 1,934 960 974 210 54 264 3.69 2006 1,933 977 956 220 44 264 3.62 2007 2,113 1,014 1,099 230 34 264 4.16 2008 2,224 1,495 729 240 23 263 2.77 2009 2,270 1,412 858 250 12 262 3.27 Parking revenue bonds matured in 2010. (1) Total operating revenues(including interest). (2) Total operating expenses exclusive of depreciation. (3) Coverage is computed by dividing net revenue available for debt service by debt service requirement. 166 CITY OF DUBUQUE, IOWA WATER AND SEWER RECEIPT HISTORY TABLE 14 LAST TEN FISCAL YEARS Water Sewer Gallons Fiscal Year Revenue Revenue Billed 2007 $ 4,599,040 $ 5,142,044 1,929,908,816 2008 4,747,206 5,348,001 1,971,517,064 2009 5,085,319 5,684,459 1,836,957,848 2010 5,209,591 5,710,768 1,822,051,488 2011 5,561,910 6,502,740 1,903,364,420 2012 6,298,768 8,682,927 1,914,175,940 2013 6,701,771 8,472,382 1,945,227,547 2014 7,028,091 9,756,996 1,845,151,329 2015 7,231,393 10,417,833 1,864,028,948 2016 8,159,240 11,772,847 1,883,797,577 Source: Cash basis receipt ledgers. Note: Revenue includes charges for services,penalties, and investment earnings. This table has been restated from prior years to remove sales tax from revenue. WATER RATE SCHEDULE HISTORY Unit Price by Fiscal Year Steps Gallons 2016 2015 2014 2013 2012 2011 2010 First 22,440 @ $ 0.00447 $ 0.00406 $ 0.00387 $ 0.00355 $ 0.00309 $ 0.00294 $ 0.00283 Next 89,760 @ 0.00365 0.00332 0.00316 0.00290 0.00252 0.00240 0.00231 Next 261,800 @ 0.00340 0.00309 0.00294 0.00270 0.00235 0.00224 0.00215 Next 374,000 @ 0.00301 0.00274 0.00261 0.00239 0.00208 0.00198 0.00190 Excess @ 0.00264 0.00240 0.00229 0.00210 0.00183 0.00174 0.00167 167 CITY OF DUBUQUE,IOWA WATER METERS BY RATE CLASS TABLE 15 LAST TEN FISCAL YEARS Fiscal Year Residential Commercial Industrial Government Total 2007 19,914 1,839 74 38 21,865 2008 19,970 1,878 70 45 21,963 2009 20,058 1,895 72 48 22,073 2010 20,204 1,887 71 48 22,210 2011 20,338 1,904 79 51 22,372 2012 20,532 1,902 79 52 22,565 2013 20,753 1,921 80 53 22,807 2014 20,887 1,945 81 68 22,981 2015 20,969 1,968 83 76 23,096 2016 21,157 1,972 84 104 23,317 168 CITY OF DUBUQUE,IOWA LARGEST WATER AND SEWER CUTOMERS TABLE 16 FISCAL YEAR 2016 Percentage of Percentage of Water Total Water Sewer Total Sewer Customer Receipts Rank Receipts Receipts Rank Receipts Rousselot Inc $ 379,947 1 4.66 % Hormel Foods Corporation* 169,253 2 2.07 $ 381,881 1 3.24 % Prairie Farms Dairy Inc 103,755 3 1.27 Hormel Foods Corporation* 90,955 4 1.11 199,184 2 1.69 Premier Linen&Dry Cleaning 58,799 5 0.72 124,152 3 1.05 Finley Hospital 54,825 6 0.67 96,632 4 0.82 Krieg Boys 45,349 7 0.56 Peninsula Gaming Co LLC 44,709 8 0.55 59,747 7 0.51 Mercy Medical Center* 39,652 9 0.49 Stonehill Nursing Home 34,701 10 0.43 59,367 8 0.50 Grand Harbor Resort&Waterpark 62,108 5 0.53 Alpine Park Community 59,023 9 0.50 Tablemound Investments 60,111 6 0.51 Mercy Medical Center* 56,242 10 0.48 Total Receipts $ 8,159,240 $ 11,772,847 *Same company,separate accounts.Previously combined several accounts under same business,now listed seperately. 169 CITY OF DUBUQUE, IOWA SALES TAX INCREMENT BONDS TABLE 17 FISCAL YEAR ENDING JUNE 30,2016 Estimated Second Lien Remaining Sales Tax Senior Lien Remaining Series 2014 Revenues Increment Series 2015A Revenues After Net Debt After Second Fiscal Revenue Net Debt Service Senior Lien Service Lien Debt Year Receipts* (1) Debt Service (2) Service 2015 $ 2,037,489 $ $ 2,037,489 $ $ 2,037,489 2016 2,532,846 2,532,846 2,532,846 2017 4,115,150 4,115,150 (323,100) 3,792,050 2018 4,744,708 (762,650) 3,982,058 (323,100) 3,658,958 2019 4,782,875 (762,650) 4,020,225 (323,100) 3,697,125 2020 4,783,907 (762,650) 4,021,257 (323,100) 3,698,157 2021 5,574,673 (762,650) 4,812,023 (323,100) 4,488,923 2022 6,380,938 (762,650) 5,618,288 (323,100) 5,295,188 2023 6,866,198 (2,767,650) 4,098,548 (438,100) 3,660,448 2024 6,956,351 (2,771,000) 4,185,351 (1,393,500) 2,791,851 2025 6,957,401 (2,768,969) 4,188,432 (1,400,500) 2,787,932 2026 6,952,046 (2,771,031) 4,181,015 (1,344,250) 2,836,765 2027 6,952,532 (2,768,719) 4,183,813 (1,363,000) 2,820,813 2028 6,947,494 (2,768,394) 4,179,100 (1,365,000) 2,814,100 2029 6,723,750 (2,767,300) 3,956,450 (1,365,000) 2,591,450 2030 6,250,000 (2,768,800) 3,481,200 - 3,481,200 2031 4,467,912 (686,400) 3,781,512 - 3,781,512 2032 2,217,912 2,217,912 - 2,217,912 2033 2,250,000 2,250,000 - 2,250,000 *Fiscal Years 2015 and 2016 reflect actual receipts. (1)Net of capitalized interest and the debt service reserve fund. (2)Net of capitalized interest 170 CITY OF DUBUQUE,IOWA DEMOGRAPHIC AND ECONOMIC STATISTICS TABLE 18 LAST TEN CALENDAR YEARS Per Capita Public Personal Median School Unemployment Personal Income Age Enrollment Rate Year Population Income (1) (2) (3) (4) 2007 57,686 $ 2,115,980,166 $ 36,681 37 10,727 3.7 % 2008 57,686 2,237,466,882 38,787 38 10,614 3.8 2009 57,686 2,155,437,390 37,365 37 10,697 6.2 2010 57,686 2,188,952,956 37,946 37 10,517 6.4 2011 57,637 2,354,759,635 40,855 37 10,467 5.8 2012 57,637 2,453,952,912 42,576 37 10,469 5.2 2013 57,637 2,489,053,845 43,185 39 10,513 4.6 2014 57,637 2,560,293,177 44,421 39 10,578 4.4 2015 57,637 2,645,653,574 45,902 38 10,634 3.7 2016 58,436 * * 38 10,588 3.9 Data Sources: (1) U.S. Department of Commerce,Bureau of Economic Analysis. Numbers were revised from FYI based on revised data published September 2016. (2) Greater Dubuque Development Corporation. (3) Dubuque Community School District (4) Iowa Department of Employment Services as of June 30. * Unavailable at report date. 171 CITY OF DUBUQUE,IOWA PRINCIPAL EMPLOYERS TABLE 19 CURRENT YEAR AND NINE YEARS AGO 2016 2007 Percentage of Percentage of #of Total City #of Total City Employer Employees Rank Employment(1) Employees Rank Employment(1) John Deere (2) 2,400 1 4.26 % 1,900 1 3.48 % Dubuque Community Schools 1,946 2 3.45 1,730 2 3.17 Mercy Medical Center 1,313 3 2.33 1,324 3 2.43 Medical Associates 1,027 4 1.82 935 6 1.71 Unity Point Health-Finley Hospital 859 5 1.52 920 5 1.69 Andersen Windows 750 6 1.33 950 4 1.74 City of Dubuque 695 7 1.23 627 7 1.15 Sedgwick 550 8 0.98 Dubuque Bank&Trust and Heartland Financial USA, 538 9 0.95 IBM 538 9 0.95 Prudential Retirement 590 10 1.08 Woodward Communications,Inc 600 8 1.10 Holy Family Catholic Schools 600 8 1.10 10,616 18.82 % 10,176 18.65 % Source: Greater Dubuque Development Corp. (1)Based on the percentage of total employment for Dubuque area from the U.S. Department of Labor,Bureau of Labor Statistics. (2)Located just outside City Limits. 172 THIS PAGE IS INTENTIONALLY LEFT BLANK 173 CITY OF DUBUQUE,IOWA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/DEPARTMENT LAST TEN FISCAL YEARS Full-Time 2007 2008 2009 2010 Public Safety Emergency Communications 11.00 11.00 13.00 13.00 Fire 90.00 90.00 90.00 90.00 Police 100.00 101.00 108.67 110.84 Building Services 7.00 7.00 8.00 8.00 Public Works Public Works 87.00 87.00 88.00 87.42 Engineering 25.00 25.00 26.00 26.00 Health&Social Services Health Services 5.00 4.00 4.00 4.00 Human Rights 3.00 3.00 3.00 3.00 Cultural and Recreation Civic Center 0.15 0.15 0.15 0.15 Library 18.00 18.00 18.00 18.00 Park 21.92 21.92 21.92 22.51 Recreation 7.93 7.93 7.93 8.43 Community&Economic Development Community/Economic Dev 3.00 3.00 3.00 3.00 Housing Services 20.25 18.00 22.00 22.00 Planning Services 8.00 8.00 8.00 8.00 General Government Airport 13.23 12.00 12.00 12.00 Cable TV 2.00 2.00 2.00 2.00 City Clerks Office 3.00 3.00 3.00 3.00 City Manager's Office 11.00 11.00 13.50 15.00 Finance 14.00 14.00 14.00 14.00 Legal 3.00 3.00 4.00 4.66 Information Services 6.00 7.00 7.00 7.00 Business Type Water 23.00 23.00 23.00 24.00 Water&Resource Recovery Center 18.00 18.00 18.00 18.00 Parking 8.00 7.00 7.50 9.00 Transit 8.00 7.00 7.00 6.00 Total 516.48 512.00 532.67 539.01 Source: City Budget Records Departments with employees who are allocated to more than one function are reflected in the area with largest number of employees. 174 TABLE20 Equivalent as of June 30 2011 2012 2013 2014 2015 2016 13.00 13.00 13.00 13.00 13.00 13.00 90.00 90.00 90.00 90.00 90.00 90.00 113.34 114.25 115.00 115.08 115.88 116.00 9.00 9.00 9.00 9.24 11.66 12.00 87.42 87.42 86.17 86.42 86.42 86.42 27.00 27.00 29.00 29.00 29.00 29.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00 4.00 5.00 5.00 5.00 5.00 0.15 0.15 0.15 0.15 0.15 0.15 18.00 18.00 19.00 19.00 19.00 19.00 22.50 23.50 23.50 23.50 23.50 23.50 8.93 9.93 9.93 9.93 10.93 11.93 3.00 3.00 3.00 4.00 4.00 2.00 22.25 23.00 25.80 27.00 26.00 21.00 8.00 8.00 8.00 8.00 8.00 8.00 12.00 12.00 12.00 12.00 12.00 12.00 2.00 2.00 2.00 2.00 2.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 15.00 14.00 15.00 15.00 16.00 16.00 14.00 14.00 14.00 14.08 14.88 15.00 5.00 5.00 5.00 5.00 5.00 5.00 7.00 7.00 7.50 8.00 8.00 8.00 25.00 25.00 25.00 26.00 26.00 25.00 18.00 18.00 18.00 18.00 18.00 17.00 9.00 9.00 9.00 9.00 9.00 9.00 7.00 6.00 6.00 6.32 8.00 13.00 546.59 549.25 557.05 561.72 568.42 566.00 175 CITY OF DUBUQUE,IOWA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal- 2007 2008 2009 2010 Public Safety Police Physical arrests 5,078 5,090 6,325 6,365 Traffic violations 6,842 6,881 8,801 8,901 Parking violations 42,530 40,741 36,457 37,056 Fire Number of calls answered 4,454 4,699 4,480 4,557 Inspections conducted 360 624 443 1,035 Sewer Sewage system Daily average treatment in gallons 8,000,000 10,310,000 7,981,000 9,068,000 Maximum daily capacity of treatment plant in gallons 13,500,000 13,500,000 21,131,000 21,131,000 Water systems Daily average consumption in gallons 7,950,000 7,812,000 7,845,000 7,684,000 Maximum daily capacity of plant in gallons 18,000,000 17,000,000 18,000,000 18,000,000 Refuse(Municipal Collection) Tonnage 10,807 11,798 10,774 10,615 Sources: Various City Departments. Statistics updated for fiscal year 2006, 2007&2008. 176 TABLE 21 Year 2011 2012 2013 2014 2015 2016 6,350 6,319 6,106 5,532 3,767 3,397 12,289 11,836 12,089 8,959 7,354 9,058 35,799 34,910 35,516 36,768 37,635 38,880 4,884 5,307 4,792 5,165 5,603 5,750 555 589 512 471 791 993 8,132,000 7,817,000 10,987,000 7,091,000 7,237,000 7,016,000 23,240,000 23,240,000 23,240,000 24,500,000 24,500,000 24,500,000 7,636,000 7,226,000 6,953,000 7,235,000 6,956,000 7,068,184 18,000,000 18,000,000 18,000,000 18,000,000 18,000,000 18,000,000 10,660 11,180 10,535 10,311 10,690 11,098 177 CITY OF DUBUQUE,IOWA CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS Fiscal- 2007 2008 2009 2010 Public safety Police Stations 1 1 1 1 Patrol units 19 19 19 22 Fire Stations 6 6 6 6 Aerial trucks 3 3 3 3 Public works Streets Miles(1) 307 317 320 321 Street lights(1) 1,802 1,855 1,877 1,916 Health and social services Hospital 2 2 2 2 Number of patient beds 405 405 405 389 Cultural and recreation Library 1 1 1 1 Golf 1 1 1 1 Parks 47 47 47 48 Acreage 898 898 898 901 Recreation Civic center 1 1 1 1 Swimming pools 2 2 2 2 Softball fields 8 8 7 7 Baseball fields 1 1 1 1 Tennis courts 19 19 20 20 Sewer Sewage system Miles of sanitary sewer(1) 286 290 295 300 Miles of storm sewers(1) 120 122 143 144 Number of treatment plants 1 1 1 1 Number of service connectors 21,568 21,633 21,347 21,599 Water systems Miles of water mains 315 316 317 318 Number of service connectors 21,210 21,243 21,347 21,986 Number of city owned fire hydrants 2,798 2,812 2,831 2,843 Sources: Various City Departments. (1) City GIS System 178 TABLE 22 Year 2011 2012 2013 2014 2015 2016 1 1 1 1 1 1 22 22 22 22 22 22 6 6 6 6 6 6 3 3 3 3 3 3 325 328 329 331 333 332 1,931 2,081 2,084 2,110 2,161 2,162 2 2 2 2 2 2 389 389 389 389 373 373 1 1 1 1 1 1 1 1 1 1 1 1 48 51 51 51 53 53 901 1,001 1,001 1,001 974 974 1 1 1 1 1 1 2 2 2 2 2 2 7 7 7 7 11 11 1 1 1 1 1 1 20 20 20 20 20 20 300 304 304 307 320 322 150 155 141 144 145 147 1 1 1 1 1 1 21,702 22,393 22,428 22,888 22,928 23,119 319 320 321 315 318 329 22,092 22,161 22,536 22,702 22,787 22,970 2,854 2,863 2,879 2,336 2,346 2,380 179 CITY OF DUBUQUE,IOWA Table 23 RETAIL SALES LAST TEN CALENDAR YEARS Taxable Number of Year Retail Sales Businesses 2009 $ 961,287,890 2,026 2010 971,050,048 2,043 2011 1,014,284,468 2,009 2012 1,060,222,499 1,993 2013 1,057,837,212 2,008 2014 1,240,664,593 3,337 2015 1,305,893,119 3,347 2016 Data Sources: Iowa Department of Revenue Prior years not available *Unavailable at report date 180 Compliance Section June 30, 2016 City of Dubuque, Iowa 181 THIS PAGE IS INTENTIONALLY LEFT BLANK 182 Eid�lly. CPAs&BUSINESS ADVISORS Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentAuditing Standards To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited, 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, the 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 Dubuque, Iowa, (City) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated December 21, 2016. The financial statements of Dubuque Initiatives and Subsidiaries, a discretely presented component unit which was audited by other auditors, were not audited in accordance with Government Auditing Standards, and accordingly, this report does not extend to those financial statements. The financial statements of Dubuque Convention and Visitors Bureau, a discretely presented component unit, were not audited in accordance with Government Auditing Standards, and accordingly, this report does not extend to those financial statements. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting(internal control)to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses. www.eidebailly.com 183 1545 Associates Dr.,Ste. 101 1 Dubuque,IA 52002-2299 1 1563.556.1790 1 F 563.557.7842 1 EOE A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in Part 11 of the accompanying schedule of findings and questioned costs as items 2016-A, 2016-B and 2016-C to be material weaknesses. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement,we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements,noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However,we noted certain immaterial instances of non- compliance which are described in Part IV of the accompanying schedule of findings and questioned costs. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2016 are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City and are reported in Part IV of the accompanying schedule of findings and questioned costs. Since our audit was based on tests and samples,not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. City's Responses to Findings The City's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The City's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly,we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. ,A,,, SGT Dubuque, Iowa December 21, 2016 184 Eid�lly. CPAs&BUSINESS ADVISORS Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Report on Compliance for Each Major Federal Program We have audited the City of Dubuque, Iowa's (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2016. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on the compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance 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 audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, andAudit Requirements forFederalAwards(Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. www.eidebailly.com 185 1545 Associates Dr.,Ste. 101 1 Dubuque,IA 52002-2299 1 1563.556.1790 1 F 563.557.7842 1 EOE Opinion on Each Major Federal Program In our opinion,the City of Dubuque, Iowa, complied, in all material respects,with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct,noncompliance with a type of compliance requirement of a federal program on a timely basis.A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis.A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance,yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore,material weaknesses and significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However,we identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as items 2016-001 and 2016-002 to be significant deficiencies. The City's responses to the internal control over compliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The City's responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly,we express no opinion on the responses. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly,this report is not suitable for any other purpose. ��' A,,I,, ,/,G � Dubuque, Iowa December 21, 2016 186 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Pass-through Federal Entity Amounts Passed- Federal Grantor/Pass-Through CFDA Identifying Through to Grantor/Program or Cluster Tide Number Number Expenditures Subrecipients U.S. Department of Commerce Direct program: Economic Adjustment Assistance 11.307 $ 849,548 $ - U.S. Department of Housing and Urban Development: Direct program: Community Development Block Grants/Entiflement Grants 14.218 844,324 113,414 Community Development Block Grants/Entiflement Grants 14.218 207,352 - 1,051,676 113,414 Pass-through program from: Iowa Department of Economic Development: Community Development Block Grants/ State's Program and Non-Entiflement Grants in Hawaii 14.228 08-DRH-212 11,433 - Direct program: Continuum of Care Program 14.267 76,531 Lower Income Housing Assistance Program- Section 8 Moderate Rehabilitation 14.856 81,787 - Section 8 Housing Choice Vouchers 14.871 3,849,509 - Section 8 Housing Choice Vouchers 14.871 538,532 - Section 8 Housing Choice Vouchers 14.871 66,240 - Section 8 Housing Choice Vouchers 14.871 31,479 - 4,485,760 - Lead-Based Paint Hazard Control in Privately-Owned Housing 14.900 282,165 - Total U.S. Department of Housing and Urban Development 5,989,352 113,414 187 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Pass-through Federal Entity Amounts Passed- Federal Grantor/Pass-Through CFDA Identifying Through to Grantor/Program or Cluster Tide Number Number Expenditures Subrecipients U.S. Department of Justice: Pass-through program from: Iowa Department of Justice: Violence Against Women Formula Grants 16.588 VW-16-42B-CJ $ 3,822 $ - Public Safety Partnership and Community Policing Grants 16.710 14-HotSpots-04 7,111 Direct program: Edward Byrne Memorial Justice Assistance Grant Program 16.738 1,000 - Pass-through program from: Dubuque County Sheriffs Office: Edward Byrne Memorial Justice Assistance Grant Program 16.738 13-JAG-111022 31,053 - 32,053 Direct program: Body Worn Camera Policy and Implementation 16.835 17,964 - Total U.S. Department of Justice 60,950 U.S. Department of Transportation: Direct program: Airport Improvement Program 20.106 4,078,463 - Airport Improvement Program 20.106 1,802,011 - Airport Improvement Program 20.106 398,826 - Airport Improvement Program 20.106 272,554 - Airport Improvement Program 20.106 67,524 - Airport Improvement Program 20.106 3,138 - Airport Improvement Program 20.106 2,332 - 6,624,848 - Pass-through program from: Iowa Department of Transportation: Highway Planning and Construction 20.205 HDP-2100-(679) -71-31 4,458,180 - Highway Planning and Construction 20.205 HDP-2100-(657) -71-31 1,670,785 - Highway Planning and Construction 20.205 STP-U-2100(634) -70-31 1,538,733 - Highway Planning and Construction 20.205 HDP-2100-(678) -71-31 1,155,585 - Highway Planning and Construction 20.205 STP-U-2100(674) -70-31 682,228 - Highway Planning and Construction 20.205 TAP-U-2100(683) -8I-31 528,057 - Highway Planning and Construction 20.205 SB-IA-2100(675) -7T-31 57,082 - Highway Planning and Construction 20.205 RGPL-PA270-ST -31 39,382 - Highway Planning and Construction 20.205 HDP-2100-(655) -70-31 22,816 10,152,848 - 188 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Pass-through Federal Entity Amounts Passed- Federal Grantor/Pass-Through CFDA Identifying Through to Grantor/Program or Cluster Tide Number Number Expenditures Subrecipients U.S. Department of Transportation: (continued) Federal Transit Cluster: Direct program: Federal Transit-Formula Grants 20.507 $ 1,216,056 $ - Federal Transit-Formula Grants 20.507 22,310 - Pass-through program from: Iowa Department of Transportation: Federal Transit-Formula Grants 20.507 2016-017-210-16 412,765 - Federal Transit-Formula Grants 20.507 IA-95-XO14-FF15 116,259 - 1,767,390 - Direct program: State of Good Repair Grants Program 20.525 1,086,076 - State of Good Repair Grants Program 20.525 132,200 - 1,218,276 - Total Federal Transit Cluster 2,985,666 - Pass-through program from: Iowa Department of Transportation: Formula Grants for Rural Areas 20.509 ICB-CY15 7,310 - Enhanced Mobility of Seniors and Individuals with Disabilities 20.513 IA-16-XO05-210 -16 45,939 - Iowa Department of Public Safety. State and Community Highway Safety 20.600 PAP 15-402 -MOOP 12,367 - State and Community Highway Safety 20.600 PAP 16-402 -MOOP 11,597 - 23,964 Total U.S. Department of Transportation 19,840,575 - Environmental Protection Agency: Pass-through program from: Iowa Department of Natural Resources: State Clean Diesel Grant Program 66.040 DS-97745501-0 14,375 Iowa Finance Authority Capitalization Grants for Clean Water State Revolving Funds 66.458 GNS10-5 2,158,524 Direct program: Brownfields Training,Research,and Technical Assistance Grants and Cooperative Agreements 66.814 48,344 Brownsfields Assessment and Cleanup Cooperative Agreements 66.818 197,104 - Total Environmental Protection Agency 2,418,347 - 189 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Pass-through Federal Entity Amounts Passed- Federal Grantor/Pass-Through CFDA Identifying Through to Grantor/Program or Cluster Tide Number Number Expenditures Subrecipients U.S. Department of Health and Human Services: Pass-through program from: Dubuque County Health Department: Hospital Preparedness Program(HPP) and Public Health Emergency Preparedness(PHEP)Aligned Cooperative Agreements 93.074 5885BT22 $ 4,118 $ - Corporation for National and Community Service: Pass-through program from: Iowa Commission on Volunteers: AmenCorps 94.006 15-AC-14 175,807 - AmeriCorps 94.006 14-AC-14 34,693 - Total Corporation for National and Community Service 210,500 - U.S. Department of Homeland Security: Direct Program: Assistance to Firefighters Grant 97.044 54,794 Total $ 29,428,184 $ 113414 190 City of Dubuque Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Dubuque, Iowa, and is presented on the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for the proprietary funds. The information in this schedule is presented in accordance with the requirements of the Uniform Guidance. The City received federal awards both directly from federal agencies and indirectly through pass-through entities. Federal financial assistance provided to a subrecipient is treated as an expenditure when it is paid to the subrecipient. Note 2 - Significant Accounting Policies Governmental and proprietary fund types account for the City's federal grant activity. Therefore, expenditures in the schedule of expenditures of federal awards are recognized on the modified accrual basis —when they become a demand on current available financial resources in the governmental fund types and on the full accrual basis — when expenditures are incurred in the proprietary fund types. The City's summary of significant accounting policies is presented in Note 1 in the City's basic financial statements. The City has not elected to use the 10%de minimis cost rate. 191 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part I: Summary of the Independent Auditor's Results: Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting: Material weaknesses identified Yes Significant deficiencies identified not considered to be material weaknesses None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified No Significant deficiencies identified not considered to be material weaknesses Yes Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516: Yes Identification of major programs: Name of Federal Program CFDA Number Economic Adjustment Assistance 11.307 Community Development Block Grants/Entitlement Grants 14.218 Highway Planning and Construction 20.205 Federal Transit Cluster: Federal Transit-Formula Grants 20.507 State of Good Repair Grant Program 20.525 Capitalization Grants for Clean Water State Revolving Funds 66.458 Dollar threshold used to distinguish between type A and type B programs: $882,845 Auditee qualified as low-risk auditee? No 192 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part II: Findings Related to the Financial Statements: MATERIAL WEAKNESS 2016-A Material Audit Adjustments Criteria—A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process, and report financial data reliably in accordance with generally accepted accounting principles and the requirements of the Uniform Guidance. Condition—During the course of our engagement, we proposed material audit adjustments to intergovernmental and notes receivables and the schedule of expenditures of federal awards that were not identified as a result of the City's existing internal controls and, therefore, could have resulted in a material misstatement of the City's financial statements. Cause—There is a limited number of office employees with varying levels of experience with the reporting requirements. This significantly limits the City's review procedures. Effect—The effect of this condition was financial data not in accordance with generally accepted accounting principles and the requirements of the Uniform Guidance. Recommendation—We recommend that finance staff continue to receive relevant training and that additional review procedures be implemented in preparing the financial statements. View of Responsible Officials—The Finance Department will continue to receive relevant training, and management will review all documentation completed by staff for use in preparing the financial statements. Additional checks have been put in place to monitor the situations identified in this audit. 2016-B Grant Reconciliation Process Criteria—A properly designed system of internal control over grant accounting allows entities to initiate, authorize, record, process, and report financial data reliably in accordance with generally accepted accounting principles. Condition —During the course of our engagement, we noted several instances in which the City did not properly reconcile grant revenues with grant expenditures on the accrual basis. Cause—Control activities relating to grant recording and processing vary between the different departments of the City. Furthermore, monitoring of grant revenues and expenses is not always performed by personnel of the Finance Department. Effect—The effect of this condition was financial data not in accordance with generally accepted accounting principles. 193 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part II: Findings Related to the Financial Statements: (continued) Recommendation—We recommend that the Finance Department designate a staff member to monitor the grant reconciliation process for all of the grants of the City. We also recommend staff follow City policy to perform monthly grant reimbursement requests if a grant request is over $100,000. View of Responsible Officials—The Finance Department will continue to receive relevant training, and management will review all documentation completed by staff for use in preparing the financial statements. Additional finance staff will be assigned for the review and auditing of grant documentation. The City's grant policy directs staff to request monthly draws if reimbursements due are $100,000 or more. 2016-C Tax Increment Financing Reconciliation Process Criteria—A properly designed system of internal control over Tax Increment Financing (TIF) allows entities to properly segregate duties surrounding the preparation of TIF information. Condition—During the course of our engagement, we noted the Budget Director prepares, reviews, and maintains all Tax Increment Financing duties. Cause—Complexities surrounding the nature of TIF have caused most of the duties to be assigned to one individual. Effect—The effect of this condition was controls were not properly segregated surrounding the preparation of the TIF forms certified to the County. Recommendation—The Finance Department should implement additional controls over the management of its approximately $158,000,000 in TIF indebtedness. Such controls should include increasing supporting documentation for the amounts certified, formalizing a review and approval procedure, comparing future TIF needs with TIF abatement schedules and rebate agreements, and comparing future needs with cash on hand for each TIF district. View of Responsible Officials—The Finance Department and Economic Development Department prepared the State Annual Urban Report for fiscal year ended June 30, 2016. This was previously prepared in the Budget Office. Finance tied all fund balances for each TIF Fund. The City is currently reviewing possibilities of segregating duties within the Budget Department for the preparation of the County report, and review of source and summary documents and worksheets. Both departments will continue to take advantage of relevant training opportunities. 194 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part III: Findings and Questioned Costs for Federal Awards: 2016-001 U.S Department of Housing and Urban Development CFDA 14.218 Community Development Block Grants/Entitlement Grants U.S. Department of Transportation CFDA#20.507 Federal Transit—Formula Grants Procurement and Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria—The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. Suspension and Debarment Requirements Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. "Covered transactions" include those procurement contracts for goods and services awarded under a non-procurement transaction(e.g., grant or cooperative agreement)that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient(i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non- federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS)maintained by the General Services Administration(GSA) and available at https://www.sam.gov/portal/public/SAM/. Condition—We tested compliance and internal controls over suspension and debarment and noted two"covered transactions", in which there was no documentation to support that a System of Award Management(SAM) check was performed to determine if the entity was suspended or debarred. Cause—There is a lack of effective controls over the suspension and debarment compliance requirements. Effect—Failure to provide documentation of the SAM's check being performed may result in disallowed cost. Questioned Costs—None reported. Context/Sampling—Program expenditures for the year ended June, 30, 2016, contained only the two tested"covered transaction". Sampling was not used. 195 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part III: Findings and Questioned Costs for Federal Awards: (continued) Repeat Finding from Prior Year(s)—No. Recommendation—We recommend that management review and improve the approval and documentation process for program expenditures to identify "covered transactions" and ensure SAM'S checks are performed. View of Responsible Officials—The grant policy has been updated to require the SAM's check. Added an additional requirement that request for grant draws will require reconciliation to financial system transaction reports prior to submittal to agency. Departments will receive relevant training and updates as required. 2016-002 U.S. Department of Transportation CFDA#20.507 Federal Transit—Formula Grants Reporting Significant Deficiency in Internal Control over Compliance Criteria—The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition —We noted one federal financial report with no expenditure amounts reported, even though expenditures were incurred. Cause—There is a lack of effective controls over the reporting compliance requirements. Effect—Inaccurate federal financial reports were filed. Questioned Costs—None reported. Context/Sampling—A nonstatistical sample of 3 reports out of 10 reports were selected for testing. Repeat Finding from Prior Year(s)—No. Recommendation—We recommend that management review and improve internal controls over financial reporting requirements. View of Responsible Officials—Management has added procedures for reconciliation of grant reimbursable expenditures to grant draw requests. Departments will provide quarterly evidence of reconciliation to Finance Department. The reconciliation will become part of the SEFA preparation. 196 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part IV: Other Findings Related to Required Statutory Reporting: 2016-IA-A Certified Budget—Disbursements during the year ended June 30, 2016 exceeded the amount budgeted in the general government and debt service functions. Chapter 384.20 of the Code of Iowa states, in part, "Public monies may not be expended or encumbered except under an annual or continuing appropriation." Recommendation—The budget should have been amended in accordance with Chapter 384.18 of the Code of Iowa before disbursements were allowed to exceed the budget. Response —The budget will be amended in the future, if applicable. 2016-IA-B Questionable Expenditures—No expenditures that may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979, were noted. 2016-IA-C Travel Expense—No expenditures of City money for travel expenses of spouses of City officials or employees were noted. 2016-IA-D Business Transactions—Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Transaction Business Connection Description Amount Riley Fairchild, employee, spouse is owner of Fairchild Business Coaching, Inc. Services $ 800 Gina Hodgson, employee, spouse is Brian Hodgson Right-of-Way 100 In accordance with Chapter 362.5(3)(j)of the Code of Iowa, the transactions with Fairchild Business Coaching, Inc. and Brian Hodgson do not appear to represent conflicts of interest since total transactions were less than $1,500 during the fiscal year. 2016-IA-E Bond Coverage— Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure the coverage is adequate for current operations. 2016-IA-F Council Minutes—No transactions were found that we believe should have been approved in the Council minutes but were not. 2016-IA-G Deposits and Investments—No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 197 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Part IV: Other Findings Related to Required Statutory Reporting: (continued) 2016-IA-H Revenue Debt—No instances of non-compliance with the provisions of the Sewage Disposal Works, Water Utility, or Stormwater Utility revenue debt resolutions were noted. 2016-IA-I Annual Urban Renewal Report—The annual urban renewal report was properly approved and certified to the Iowa Department of Management on or before December 1. However, the following reporting exception was noted: The City did not include the proper amount of interest relating to the General Obligation 2009B Central Parking Ramp debt within the Annual Urban Renewal Report. Recommendation —The City should implement additional preparation and review procedures relating to Annual Urban Renewal Report. Response —The Finance and Economic Development Departments will evaluate opportunities for additional training in the preparation of the AURR. Management will review documents used for the preparation of TIF Reports. 2016-IA-J Tax Increment Financing—Chapter 403.19 of the Code of Iowa provides a municipality shall certify indebtedness to the County Auditor. While performing our audit procedures, we noted several amounts certified inaccurately. Recommendation—To minimize the likelihood of future errors, the City should implement additional controls over the management of its approximately $158,000,000 in TIF indebtedness. Such controls should include increasing supporting documentation for the amounts certified and formalizing a review and approval procedure. Response—The City will monitor source documents and worksheets to prevent future errors. 2016-IA-K Solid Waste Tonnage Fees Retained—No instances of non-compliance with the solid waste fees used or retained in accordance with provisions of Chapter 45513.310 of the Code of Iowa by the Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, were noted. 2016-IA-L Financial Assurance—The Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, has demonstrated financial assurance for closure and postclosure care costs by establishing a local government dedicated fund as provided in 567-113.14(6)of the Iowa Administrative Code. 198 City of Dubuque Summary Schedule of Prior Year Findings Year Ended June 30, 2016 Prior Year Findings Related to the Financial Statements: 2015-A Material Audit Adjustments Material Weakness Initial Fiscal Year Finding Occurred—2009 Finding Summary—During the course of our engagement, we proposed material audit adjustments to intergovernmental receivables, capital assets, and schedule of expenditures of federal awards that were not identified as a result of the City's existing internal controls and, therefore, could have resulted in a material misstatement of the City's financial statements. Status—Material audit adjustments were proposed during the fiscal year 2016 audit. The finding has been repeated as a material weakness as finding 2016-A. 2015-B Grant Reconciliation Process Significant Deficiency Initial Fiscal Year Finding Occurred—2015 Finding Summary—During the course of our engagement, we noted several instances in which the City did not reconcile grant revenues with grant expenditures on the accrual basis. Control activities relating to grant recording and processing vary between the different departments of the City. Furthermore, monitoring of grant revenues and expenses is not always performed by personnel of the finance department. Status—The lack of proper grant reconciliation was noted during the fiscal year 2016 audit. The finding has been repeated as a material weakness as finding 2016-B. 2015-C Tax Increment Financing Reconciliation Process Significant Deficiency Initial Fiscal Year Finding Occurred—2015 Finding Summary—During the course of our engagement, we noted the Budget Director prepares, reviews, and maintains all Tax Increment Financing (TIF) duties. The complexities surrounding the nature of TIF have caused most of the duties to be assigned to one individual. This situation has resulted in the controls over the preparation of the TIF forms certified to the County not being properly segregated. Status—The controls over the preparation of the TIF forms certified to the County are not yet segregated. The finding has been repeated as a material weakness as finding 2016-C. 199 City of Dubuque Summary Schedule of Prior Federal Audit Findings Year Ended June 30, 2016 Prior Year Findings for Federal Awards: 2015-001 U.S. Department of Transportation CFDA#20.525 State of Good Repair Grants Program Matching, Level of Effort, Earmarking Material Weakness in Internal Control and Noncompliance Status—The appropriate corrective action was taken. 200 EideBailly® CPAs&BUSINESS ADVISORS December 21, 2016 To the Honorable Mayor and Members of the City Council City of Dubuque,Iowa We have audited the 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 Dubuque,Iowa,for the year ended June 30,2016. We did not audit the financial statements of Dubuque Initiatives and Subsidiaries(a discretely presented component unit). Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Dubuque Initiatives and Subsidiaries, is based solely on the reports of the other auditors. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government 4uditing Standards and Title 2 U.S. Code of Federal Regulation(CFR)Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards(Uniform Guidance), as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated May 3,2016. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Dubuque,Iowa, are described in Note I to the financial statements.During the year ended June 30, 2016,the City adopted GASB 72,Fair Value Measurement and Application.No other significant new accounting policies were adopted, and the application of other existing policies was not changed during the year ended June 30,2016. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus.All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City's financial statements were: Management's estimate of incurred but not reported health insurance and workers' compensation liabilities are based on third-party administrator's calculations and estimates. We evaluated the key factors and assumptions used to develop incurred by not reported liabilities in determining that they are reasonable in relation to the financial statements taken as a whole. www.eidebaiIly.com 1 1545 Associates Dr.,Ste. 101 1 Dubuque,IA 52002-2299 1 T 563.556.1790 1 F 563.557.7842 1 EOE Management's estimate of other postemployment benefits liability is based on a calculation of actuarially determined contributions for health insurance benefits. We evaluated the key factors and assumptions used to develop other postemployment benefits liability in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of the net pension liability, pension related deferred outflows of resources and deferred inflows of resources, and pension expense are based on plan level actuarial reports, allocated to the City using annual employer contributions. We evaluated the key factors and assumptions used to develop the pension related balances in determining that they are reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The following misstatements, some of which were material to the City's financial statements,were detected as a result of audit procedures and were corrected by management: Equity Increase(Decrease) Governmental/ Fund Business-type Statements Activities General To decrease library fines receivable $ (80,323) $ (80,323) Tax Increment Financing To decrease notes receivable related to sale of land (material misstatement) (289,800) (289,800) Street Construction To decrease intergovernmental receivable(material misstatement) - (377,182) Community Development To increase notes receivable 167,547 167,547 Stormwater Fund To decrease intergovernmental grant receivable (909,476) (909,476) To decrease accounts payable and capital assets by$226,574 - - 2 Equity Increase(Decrease) Governmental/ Fund Business-type Statements Activities Transit System To increase intergovernmental grant receivable(material misstatement) 581,174 581,174 Governmental Activities To increase capital assets for retainage payable - 60,717 In addition to the corrected misstatements above, sampling procedures also projected a$125,106 overstatement of the General Fund's accounts payable balance.Management has not corrected the misstatement and has determined that the effects are immaterial to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting,reporting, or auditing matter, whether or not resolved to our satisfaction,that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 21,2016. Management Consultations with Other Independent Accountants In some cases,management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a"second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our luiowledge,there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards,with management each year prior to retention as the City's auditors. However,these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. 3 Other Matters We applied certain limited procedures to the management's discussion and analysis,the budgetary comparison schedule,the schedule of the City's proportionate share of net pension liability,the schedule of the City's pension contributions and schedule of funding progress for the retiree benefit plan,which are required supplementary information(RSI)that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining non-major fund financial statements and the schedule of expenditures of federal awards,which accompany the financial statements but are not RSI. With respect to this supplementary information,we made certain inquiries of management and evaluated the form, content,and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America,the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on introductory and statistical sections,which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. This information is intended solely for the use of the Mayor, City Council, and management of the City of Dubuque,Iowa, and is not intended to be,and should not be,used by anyone other than these specified parties. Sincerely, EIDE BAILLY LLP ��- ./G T Dubuque,Iowa 4