This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. * Investors mustreadtheentire OfficialStatementtoobtaininformationessential tomakinganinformeddecision. or aboutApril__,2016through thefacilitiesofDTC. Eggleston &CramerPC,Montpelier, Vermont.ItisexpectedthatdeliveryoftheSeries 2016ABondswillbemadeon other conditions.Certain legalmatters will be passed upon for the Underwriter by itscounsel,Primmer Piper receipt ofthelegalopinionBurakAnderson&Melloni, PLCofBurlington,Vermont,BondCounsel,andcertain 2016A Bondsaresubjecttooptionalandmandatoryredemption priortomaturityasdescribedherein. beneficial ownersoftheSeries2016ABondsasdescribed herein.(See“Book-EntryOnlySystem”herein.)TheSeries be paidtoDTCwhichwillinturnremitsuchprincipal andinteresttoitsparticipantsforsubsequentdispersalthe and interestontheSeries2016ABonds,payableeach May1andNovember1,commencing2016,will interest intheSeries2016ABondspurchased. principal amountof$5,000orintegralmultiplesthereof. Purchaserswillnotreceivecertificatesrepresentingtheir securities depositoryoftheSeries2016ABonds.Individualpurchasesmaybemadeinbook-entryformonly, inthe registered inthenameofCede&Co.,asnomineeTheDepositoryTrustCompany(“DTC”).DTCwill actas resolutions oftheCityCouncil. costs ofissuancetheSeries2016ABonds. Bonds shallbeusedforthepurposesof:(i)refundingcertainoutstandingdebtofCityand(ii)paying certain the levyofadvaloremtaxestopaySeries2016ABondsandinterestthereon.Theproceeds 2016A general obligationsoftheCityBurlington,Vermont(the“City”),withinwhichalltaxablerealpropertyissubject to Dated: Date of Delivery B –FormofProposedLegalOpinion”herein. to theVermontpersonalincometaxorcorporatetax.See“TaxExemption”and“Appendix Counsel isfurtheroftheopinionthat,underexistinglaw,interestonSeries2016ABondsnotsubject earnings forpurposesofcalculatingthefederalalternativeminimumtaximposedoncertaincorporations.Bond on individualsandcorporations;however,suchinterestwillbeincludedindeterminingtheadjustedcurrent will notbeanitemoftaxpreferenceforpurposescomputingthefederalalternativeminimumimposed income forfederaltaxpurposesunderSection103oftheInternalRevenueCode1986(the“Code”),and City andthecompliancewithcertaincovenants,interestonSeries2016ABondswillbeexcludedfromgross regulations andrulings,assuming,amongothermatters,theaccuracyofcertainrepresentations N
e Preliminary, subjectto change. w I This cover page contains certain information for quick reference only. It is not a summary of this issue. The Series 2016A Bonds are issued when, as and if issued and received by the Underwriter and subject to the Principal of the Series 2016A Bonds, payable annually on each November 1, commencing November 1, 2016, The Series2016ABondswillbeissuedasfullyregisteredbondswithoutcouponsand,whenissued, be The Series2016ABondsarebeingissuedpursuantto(i)Sections59and60oftheCharterCity (ii) The $16,930,000*GeneralObligationRefundingBonds,Series2016A(the“SeriesBonds”or“Bonds”) are In the opinion of Burak Anderson & Melloni, PLC, Bond Counsel, based upon an analysis of existing laws, ss u e : Fu ll PRELIMINARY OFFICIAL STATEMENT DATED MARCH 9, 2016 B oo
G k-E eneral ObligationRefundingBonds,Series2016A ntry C ity ONLY
OFFICIAL STATEMENT of W Bu
ells FargoSecurities $16,930,000* rlin g ton , V ermont Due: November1,asshownonthe
Ratings: insidecover Moody’s “A3” MATURITY SCHEDULES
$16,930,000* Series 2016A Bonds Serial Bonds
Maturity Principal Interest Price November 1* Amount* Rate or Yield CUSIP** 2016 $ 300,000 % % 2017 865,000 2018 1,025,000 2019 1,435,000 2020 1,500,000 2021 1,560,000 2022 1,655,000 2023 1,670,000 2024 1,415,000 2025 1,495,000 2026 1,385,000 2027 965,000 2028 805,000 2029 855,000
The Series 2016A Bonds are subject to optional and mandatory redemption prior to maturity as described herein.
+ Priced to the call date of November 1, 2026.
* Preliminary, subject to change.
**The CUSIP (Committee on Uniform Securities Identification Procedures) numbers appearing in this Official Statement have been assigned by an organization not affiliated with the City or the Underwriter, and neither the City nor the Underwriter is responsible for the selection or use of CUSIP numbers. The CUSIP numbers appearing in this Official Statement are included solely for the convenience of holders of the Bonds and no representation is made as to the correctness of any CUSIP number appearing in this Official Statement. Any CUSIP number assigned to any of the Bonds may be changed during the term of the Bonds based on a number of factors including without limitation the refunding or defeasance of such issue or the use of secondary market financial products. Neither the City nor the Underwriter has agreed to, nor does either of such parties have any duty or obligation to, update this Official Statement to reflect any change or correction in any CUSIP number included in this Official Statement.
No dealer, broker, salesman or other person has been authorized by the City of Burlington, Vermont (the “City”) to give any information or to make any representations, other than those contained in this Official Statement and if given or made, such information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Series 2016A Bonds in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.
The Underwriter has provided the following sentence and paragraph for inclusion in this Official Statement: “The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of its responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.”
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the Appendices, must be considered in its entirety.
IN MAKING ANY INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Other than as to matters expressly set forth in “Appendix A – Audited Financial Statements for FY 2015” herein, the Independent Auditors of the City are not passing on and do not assume any responsibility for the accuracy or adequacy of the statements made in this Official Statement and make no representation that they have independently verified the same.
The City deems this Official Statement to be “final” for purposes of Securities and Exchange Commission (“SEC”) Rule 15c2-12(b)(1) (“Rule”), but this Official Statement is subject to revision or amendment to the extent provided for by the Rule.
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan”, “expect”, “anticipate”, “estimate”, “budget”, “forecast”, or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The City does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based, occur.
References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such web sites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined in, SEC rule 15c2-12.
The cover page, inside cover, this page and the appendices attached hereto are a part of this Official Statement.
i TABLE OF CONTENTS
Page Page
INTRODUCTION TO THE OFFICIAL PROPERTY VALUATIONS AND TAXES...... 36 STATEMENT ...... 1 Property Taxation ...... 36 FINANCIAL SUMMARY ...... 3 Act 60 ...... 36 DESCRIPTION OF THE BONDS ...... 4 Property Valuation ...... 36 Authorization and Purpose ...... 4 Tax Collections ...... 39 Plan of Refunding ...... 4 Tax Rates/Levy Limits ...... 40 Security ...... 4 Principal Taxpayers ...... 41 Registration ...... 4 ECONOMIC AND DEMOGRAPHIC Interest Computation ...... 5 INFORMATION ...... 43 Redemption Provisions ...... 5 Economic Activity ...... 43 Undertaking to Provide Continuing Disclosure on Population ...... 43 the Bonds ...... 5 Employment Data ...... 43 Book Entry-Only System ...... 8 Major Employers ...... 45 THE CITY OF BURLINGTON ...... 11 Construction ...... 46 Description of the City ...... 11 Housing Market ...... 46 Form of Government ...... 11 TAX EXEMPTION ...... 47 Employee Relations ...... 11 RATING ...... 48 Retirement System ...... 12 CERTIFICATION ...... 48 Insurance ...... 13 LEGAL MATTERS ...... 48 Health Benefits ...... 14 AUDITOR ...... 49 City Services ...... 14 FINANCIAL ADVISOR ...... 49 City Enterprises ...... 17 UNDERWRITING ...... 49 Community Amenities ...... 20 VERIFICATION OF MATHEMATICAL Education ...... 21 COMPUTATIONS ...... 49 Overlapping Governmental Units ...... 22 LITIGATION ...... 50 DEBT STRUCTURE ...... 23 Debt Summary ...... 23 Appendix A City of Burlington Vermont – Authorization of Direct Debt ...... 23 Audited Financial Statements for FY Debt Limit ...... 24 2015 Authorized but Unissued Debt ...... 24 Appendix B Form of Proposed Legal Opinion General Obligation Long-Term Debt ...... 25 Appendix C Form of Continuing Disclosure Certificates of Participation...... 26 Certificate Revenue Debt ...... 27 Other Notes Payable ...... 29 Overlapping Debt ...... 30 FINANCIAL INFORMATION ...... 31 Budget Process ...... 31 Financial Reports ...... 32 Results of Operations ...... 32 Management Discussion ...... 34
CITY OF BURLINGTON, VERMONT
Initial Term Current Term Commenced Expires Miro Weinberger Mayor 2012 2018
City Council
Sharon Foley Bushor Ward 1 1987 2018 Max Tracy Ward 2 2012 2018 Sara Giannoni Ward 3 2015 2018 Kurt Wright Ward 4 2013 2018 William “Chip” Mason Ward 5 2012 2018 Karen Paul Ward 6 2008 2018 Tom Ayres Ward 7 2013 2018 Adam Roof Ward 8 2015 2018 Selene Colburn East District 2014 2017 Jane Knodell, President, City Council Central District 2013 2017 Dave Hartnett North District 2011 2017 Joan Shannon South District 2003 2017
City Administration
Bob Rusten Chief Administrative Officer Rich Goodwin Assistant Chief Administrative Officer John Vickery City Assessor Eileen Blackwood, Esq. City Attorney Ann Barton Chief Accountant
Financial Advisor
PUBLIC FINANCIAL MANAGEMENT, INC. Minneapolis, Minnesota
Bond Counsel
BURAK ANDERSON & MELLONI, PLC Burlington, Vermont
iii
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INTRODUCTION TO THE OFFICIAL STATEMENT
The following information is furnished solely to provide limited introductory information regarding the City's $16,930,000* General Obligation Refunding Bonds, Series 2016A (the “Series 2016A Bonds” or “Bonds”) and does not purport to be comprehensive. All such information is qualified in its entirety by reference to the more detailed descriptions appearing in this Official Statement, including the appendices hereto. Investors must read the entire Official Statement to obtain information essential to making an informed decision.
Issuer: City of Burlington, Vermont.
Security: General obligation, unlimited tax levy.
Purpose: The Series 2016A Bonds are issued by the City for the purposes of: (i) refunding certain outstanding debt of the City and (ii) paying certain costs of issuance of the Series 2016A Bonds.
Redemption Provisions: The Series 2016A Bonds maturing on or after November 1, 2027 are subject to optional redemption on November 1, 2026, and on any date thereafter, in whole or in part, at a price of par plus accrued interest thereon to the date of redemption. The Series 2016A Bonds maturing November 1, ____* and thereafter will be subject to mandatory redemption as set forth herein.
Denominations: $5,000 or integral multiples thereof.
Registration: The Bonds will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, which will act as securities depository for the Bonds.
Principal Payments: Annually each November 1, commencing November 1, 2016.
Interest Payments: Semiannually on each May 1 and November 1, commencing November 1, 2016.
Tax Status: Interest on the Series 2016A Bonds is generally exempt from federal and state income taxes (see “Tax Exemption” herein).
The Series 2016A Bonds will not be designated as Qualified Tax- Exempt Obligations under the Internal Revenue Code of 1986.
Professional Consultants: Financial Advisor: Public Financial Management, Inc. Minneapolis, Minnesota
Bond Counsel: Burak Anderson & Melloni, PLC Burlington, Vermont
Registrar/Paying Agent: City of Burlington, Vermont
Verification Agent: ______
* Preliminary, subject to change.
1
Legal Matters: Legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of Burak Anderson & Melloni, PLC, Bond Counsel, as to validity and tax exemption. The opinion will be substantially in the form set forth in “Appendix B – Form of Proposed Legal Opinion” attached hereto. Other than as to matters expressly set forth herein as prepared by Bond Counsel or as the opinion of Bond Counsel, Bond Counsel is not passing on and does not assume any responsibility for the accuracy or adequacy of the statements made in this Official Statement and makes no representation that it has independently verified the same.
Authority for Issuance: The Series 2016A Bonds are being issued pursuant to (i) Sections 59 and 60 of the Charter of the City and (ii) resolutions of the City Council.
Conditions Affecting Issuance: The Bonds are offered when, as and if issued, subject to the approving legal opinion of Burak Anderson & Melloni, PLC, and subject to the other conditions contained in the Bond Purchase Agreement between the City and Wells Fargo Bank, N.A. (the “Underwriter”).
Delivery: Expected on or about April __, 2016 at the Depository Trust Company, New York, New York, on behalf of the Underwriter of the Series 2016A Bonds.
Book-Entry Only: The Bonds will be issued as book-entry only securities through The Depository Trust Company, New York, New York.
Limitations on Offering or No dealer, broker, salesperson or other person has been authorized by Reoffering Securities: the City or the Financial Advisor to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the City or the Financial Advisor. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
No Litigation: There is no litigation now pending or, to the knowledge of City officials, threatened which questions the validity of the Bonds or of any proceedings of the City taken with respect to the issuance or sale thereof. See “LITIGATION” herein for further information concerning such litigation.
Continuing Disclosure: The City will covenant to provide continuing disclosure with respect to the Bonds. See “Appendix C – Form of Continuing Disclosure Certificate” for the Form of Continuing Disclosure Undertaking.
Questions regarding the Bonds or the Official Statement can be directed to and additional copies of the Official Statement, the City's audited financial reports, and the Resolution may be obtained from Public Financial Management, Inc., 800 Nicollet Mall, Suite 2710, Minneapolis, Minnesota 55402, (612/338-3535), www.pfm.com, the City's financial advisor.
2 FINANCIAL SUMMARY
(This summary is subject in all respects to more complete information contained in this Official Statement.)
ESTIMATED MARKET VALUE 2014/15 $ 4,268,806,046
ASSESSED VALUE 2014/15 $ 3,778,550,520
GRAND LIST (1% OF ASSESSED VALUATION) 2014/15 $ 37,785,505
GENERAL OBLIGATION DEBT: (Includes the Bonds) Levy Supported $ 64,689,286 Revenue Supported $ 43,770,714
SHORT-TERM: $ 10,761,613
LONG-TERM LEASE OBLIGATIONS: $ 7,025,000
REVENUE DEBT: $ 81,153,020
OVERLAPPING GENERAL OBLIGATION DEBT (As of June 30, 2015) $ --
POPULATION (2014 Estimate) 42,284
AREA 16.1 square miles
DEBT RATIOS:
% of Debt Per Capita Estimated Outstanding (42,284) Market Value
General Obligation Debt Levy Supported $ 64,689,286 $ 1,530 1.52% Revenue Supported 43,770,714 1,035 1.03% Overlapping Debt -- -- 0.00%
Total $108,460,000 $2,565 2.55%
3 DESCRIPTION OF THE BONDS
Authorization and Purpose
The Series 2016A Bonds are issued by the City for the purposes of: (i) refunding certain outstanding debt of the City and (ii) paying certain costs of issuance of the Series 2016A Bonds. The Series 2016A Bonds are being issued pursuant to (i) Sections 59 and 60 of the Charter of the City and (ii) resolutions of the City Council.
Plan of Refunding
The proceeds of the Series 2016A Bonds, along with available funds on hand, will be used to refund the 2016-2022 maturities of the City’s outstanding Series 2002A Bonds, the 2016-2018 maturities of the City’s outstanding Series 2003A Bonds, the 2016-2025 maturities of the City’s outstanding Series 2005A Bonds, the 2016-2025 maturities of the City’s outstanding Series 2005B Bonds on a current refunding basis, and to advance refund the 2017-2026 maturities of the City’s outstanding Series 2006A Bonds, the 2018-2027 maturities of the City’s outstanding Series 2007A Bonds, the 2019-2029 maturities of the City’s outstanding Series 2009A Bonds, and the 2017-2023 maturities of the City’s outstanding Series 2013B Bonds.
Following is a list of outstanding maturities and amounts of the bonds to be refunded:
Amount to be Series Refunded Maturities Amount Outstanding Call Date Call Price Refunded 2002A 2016 – 2022 $ 390,000 100% $ 390,000 2003A 2016 – 2018 630,000 100% 630,000 2005A 2016 – 2025 605,000 100% 605,000 2005B 2016 – 2025 1,060,000 100% 1,060,000 2006A 2017 – 2026 4,135,000 11/1/16 100% 3,840,000 2007A 2018 – 2027 1,915,000 11/1/17 100% 1,665,000 2009A 2019 – 2029 8,075,000 11/1/18 100% 8,075,000 2013B 2016 200,000 N/A N/A -- 2013B 2023 Term Bond 1,850,000 11/1/16 100% 1,850,000 Total $ 18,115,000
Security
The Bonds are general obligations of the City to which its full faith credit and unlimited taxing powers are pledged.
Registration
The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds purchased.
4 Interest Computation
Interest is payable semi-annually on the Bonds on May 1 and November 1, commencing November 1, 2016.
Interest on the Bonds will be computed on a 360-day year, 30-day month basis. Payments coming due on a non- business day will be paid on the next business day.
Redemption Provisions
Optional Redemption
The Bonds maturing on or after November 1, 2027 are subject to optional redemption on November 1, 2026, and on any date thereafter, in whole or in part, at a price of par plus accrued interest thereon to the date of redemption.
Mandatory Redemption
The Bonds maturing November 1, ____ are subject to redemption in part by lot on each November 1 commencing November 1, ____, at a redemption price equal to the principal amount of such Series 2016A Bonds to be redeemed plus accrued interest to the date of redemption in amounts sufficient to redeem on November 1 of each year the principal amount of such Series 2016A Bonds specified for each of the years shown below:
Year Principal Amount $
General Provisions
If redemption is in part, the Bonds to be redeemed will be selected by the City. If only part of the Bonds having a common maturity date are called for redemption, the City will notify The Depository Trust Company, New York, New York (“DTC”) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each particular participant will then select by lot the beneficial ownership interests in such maturity to be redeemed.
In the event the Bonds are called for redemption, notice will be sent by registered or certified mail not less than thirty (30) days prior to the redemption date to DTC. It will be the responsibility of DTC and its participants to give notice of the redemption to beneficial owners of the Bonds. Failure to mail notice of the redemption to the registered owner of any other Bonds, any defect in the notice to such an owner, or failure by DTC and its participants to provide notice of redemption to the beneficial owners of the Bonds will not affect the redemption of the Bonds.
Undertaking to Provide Continuing Disclosure on the Bonds
At the time of the delivery of the Series 2016A Bonds, the City will provide an executed copy of its “Undertaking to Provide Continuing Disclosure” (the “Undertaking”); see “Appendix C-Form of Continuing Disclosure Undertaking” herein. Said Undertaking will constitute a written agreement or contract of the City for the benefit of holders and/or beneficial owners of the Series 2016A Bonds, to provide, or cause to be provided to the Electronic Municipal Market Access (“EMMA”) System implemented by the Municipal Securities Rulemaking Board (“MSRB”) established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, or any successor thereto, (i) within 270 days after the fiscal year end while any of the Series 2016A Bonds are outstanding, commencing with the fiscal year ending June 30, 2015, in accordance with SEC Rule 15c2-12 and in an electronic format as prescribed by the MSRB: (A) financial information and certain operating data relating to the City, updating the financial information and operating data relating to the City presented in the final Official Statement for the Series 2016A Bonds which specifically includes updated information set forth in Tables 13, 14 and 15 therein
5 and (B) the audited financial statements of the City for the most recently ended fiscal year, prepared in accordance with generally accepted accounting principles as in effect from time to time. In each case, if then permitted by SEC Rule 15c2-12 and the requirements of the MSRB, the items referred to in this paragraph may be submitted as a single document or as separate documents comprising a package, and may cross-reference other documents that may have been filed with the MSRB or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it shall be available from the MSRB. The City shall clearly identify each such other document so incorporated by reference. Notwithstanding the foregoing, the audited financial statements of the City may be submitted separately from, and at a later date than, the balance of the items referred to in this paragraph if such audited financial statements are not available as of the date set forth above. If the City submits the audited financial statements of the City at a later date, it shall provide unaudited financial statements by the above-specified deadline and shall provide the audited financial statements as soon as practicable after the audited financial statements become available;
(ii) timely notice, not in excess of ten (10) business days after occurrence of such event, of the occurrence of any of the following events with respect to the Series 2016A Bonds:
(A) principal and interest payment delinquencies;
(B) non-payment related defaults, if material;
(C) unscheduled draws on debt service reserves reflecting financial difficulties;
(D) unscheduled draws on credit enhancements reflecting financial difficulties;
(E) substitution of credit or liquidity providers, or their failure to perform;
(F) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2016A Bonds, or other material events affecting the tax status of the Series 2016A Bonds;
(G) modification to rights of holders of the Series 2016A Bonds, if material;
(H) bond calls, if material and tender offers;
(I) defeasances;
(J) release, substitution or sale of property securing the repayment of the Series 2016A Bonds, if material;
(K) rating changes;
(L) bankruptcy, insolvency, receivership or similar event of the City;
(M) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; or
(N) appointment of a successor or additional trustee or the change of name of a trustee, if material;
(iii) in a timely manner, notice of a failure of the City to provide within 270 days after the fiscal year end the annual financial information, operating data or reports required by the Undertaking.
The City may provide notice of the occurrence of certain other events, in addition to those listed above, if it determines that any such other event is material with respect to the Series 2016A Bonds; but the City does not undertake to commit to provide any such notice of the occurrence of any event except those events listed above.
6 Failure of the City to comply with this covenant shall not constitute an event of default under the Series 2016A Bonds or under any authorizing resolution for the Series 2016A Bonds
The City’s Undertaking shall remain in full force and effect until such time as the principal of, redemption premiums, if any, and interest on the Series 2016A Bonds shall have been paid in full or in the event that those portions of SEC Rule 15c2-12 which require the Undertaking, or such provision, as the case may be, do not or no longer apply to the Series 2016A Bonds. The sole and exclusive remedy for breach or default under the Undertaking is an action to compel specific performance of the undertakings of the City, and no person or entity, including a Holder of the Series 2016A Bonds, shall be entitled to seek or recover monetary damages thereunder under any circumstances.
The City reserves the right to amend or waive the Undertaking in any way so long as such amendment or waiver would not, in and of itself, violate SEC Rule 15c2-12.
During the previous five years, the City has failed to comply with its continuing disclosure undertakings as set forth herein.
The City had not posted notice of the changes in ratings on its outstanding general obligation bonds, bond anticipation notes and tax and revenue anticipation notes by Moody’s Investors Service, Inc. (“Moody’s”), which rating changes occurred in July 2010 from A3 to A2 and in January 2011 from A2 to A3. On July 21, 2011, the City filed notice of the failure to file such rating changes as well as the rating changes on its outstanding general obligation bonds, bond anticipation notes and tax and revenue anticipation notes. Notice of the January 7, 2011 rating downgrade was also posted on October 17, 2014. Moody’s further downgraded the City’s general obligation bonds from A3 to Baa3 on June 20, 2012, notice of which was posted October 17, 2014. On August 20, 2013, Moody’s continued the rating of Baa3 for the City’s general obligation bonds, notice of which was filed on October 13, 2015.
On January 15, 2014, Moody's revised the outlook to stable from negative on the City’s airport revenue bonds, while affirming the Ba1 rating. Notice of the change was filed on February 21, 2014.
The City failed to provide timely notice for rating changes to certain of its bond insurers: notice of a Moody’s downgrade of Assured Guaranty Municipal Corp. and Assured Guaranty Corp. on January 17, 2013 was filed on January 31, 2013; notice of a Standard & Poor’s Rating Services (“S&P”) upgrade of MBIA Insurance Corp. on May 8, 2013 was filed on October 13, 2015; notice of an S&P upgrade of National Public Finance Guarantee Corp. on May 10, 2013 was filed on October 13, 2015 (notice of a previous downgrade of National Public Finance Guaranty Cap on December 19, 2011 had not been filed); notice of an S&P upgrade of MBIA Insurance Corp. on May 21, 2013 was filed on October 13, 2015; notice of an S&P upgrade of National Public Finance Guarantee Corp. on March 18, 2014 was filed on October 13, 2015; and notice of an S&P upgrade of Assured Guaranty Municipal Corp., Assured Guaranty Corp., Assured Guaranty Re Ltd, and Municipal Assurance Corp. on March 18, 2014 was filed on October 13, 2015.
Over the past several years, the City was unable to file its audited financial reports and accompanying operating data for its fiscal year ending June 30 by the November 30 filing date set forth in the then existing continuing disclosure undertaking agreements. Such inability was due, in large part, to the need to prepare a single audit that included and compiled financial statements and other information from several enterprise funds, several of which had their own audits to complete. The City failed to timely file its audited financial statements (i) for its fiscal year ending June 30, 2010, which was filed February 23, 2011 (the City’s unaudited financial statements were filed December 29, 2010, also after the deadline and the list of the top 20 taxpayers was filed November 12, 2013), (ii) for its fiscal year ending June 30, 2011, which was filed March 23, 2012, (iii) for its fiscal year ending June 30, 2012, which was filed January 30, 2013 and (iv) for its fiscal year ending June 30, 2013, which was filed February 18, 2014. The City filed notice of its failure to timely file audited financial statements (i) for the fiscal years ending in 2010 and 2011 on August 13, 2014, (ii) for the fiscal year ending in 2012 on December 3, 2012 and (iii) for the fiscal year ending in 2013 on November 21, 2013. The City filed its single audit report for fiscal year 2013 on April 1, 2014 and for fiscal year 2014 on March 27, 2015. The City did not file single audit reports for fiscal years 2010, 2011 or 2012. In November of 2014, the City amended the continuing disclosure undertaking agreements for each of its outstanding series of bonds to change the filing deadline for its audited financial reports to 270 days after the end of each fiscal
7 year. The City made a timely filing on March 27, 2015 of its audited financial statements for its fiscal year ending June 30, 2014. Additionally, the City failed to timely file the following other information: (i) operating data for fiscal year 2010, which was filed February 23, 2011 (and incorporated by reference into another official statement filed on December 30, 2011), (ii) operating data for fiscal year 2011, which was incorporated by reference to another official statement filed on December 30, 2011, (iii) operating data for fiscal year 2012, which was incorporated by reference to another official statement filed on December 3, 2012 and (iv) certain information about the City’s waterworks systems in connection with a series of public improvement bonds that have been repaid in full and no longer outstanding.
In addition, the City failed to timely file audited financial statements for the airport (i) for its fiscal year ending June 30, 2010, which was filed on February 23, 2011 (unaudited financial statements for 2010 were filed on December 29, 2010), (ii) for its fiscal year ending June 30, 2011, which was filed May 11, 2012, (iii) for its fiscal year ending June 30, 2012, which was filed December 28, 2012 and (iv) for its fiscal year ending June 30, 2013, which was filed February 21, 2014. Notice of failure to timely file audited financials was filed for fiscal year 2012 on December 3, 2012, and for fiscal year 2013 on November 21, 2013. The City timely filed the airport’s audited financials for its fiscal year ending June 30, 2014 on November 14, 2014. Additionally, the City failed to timely file the following other airport information: (i) operating data for fiscal year 2010, which was filed December 6, 2012 and December 27, 2013, (ii) operating data, aviation activity report and a consultant’s report regarding compliance with the airport’s rate covenant for fiscal year 2011, which were each filed on December 6, 2012, (iii) the operating data for fiscal year 2012, which was incorporated by reference to another official statement filed December 3, 2012 and December 6, 2012, (iv) the operating data for fiscal year 2013, which was filed initially on December 27, 2013 and then supplemented on October 23, 2014 and (v) the operating data for fiscal year 2014, which was filed on March 27, 2015. In several instances, the reports did not conform to the continuing disclosure undertakings on the initial filing date.
As a result of a review of its filings with the MSRB through EMMA, the City has identified that, when making certain filings of its financial statements and operating data, and filings of changes in ratings for its outstanding bonds, the City had not filed, on a timely basis, notices that such filings were late as described above. The City posted a notice on November 11, 2015, that those filings were not made on a timely basis.
The City expects to have its audited financial statements available within 270 days after the end of each such succeeding fiscal year in order to facilitate timely filings of certain annual financial information and operating data for the preceding fiscal year with EMMA.
Failure by the City to comply with the Undertaking could adversely affect the market price of the Series 2016A Bonds. In November 2012, the City engaged Disclosure Assurance Certification, L.L.C. (“DAC”) as a disclosure dissemination agent to assist the City in its continuing disclosure undertakings pursuant to a Disclosure Dissemination Agreement. In November 2014, the City put in place written continuing disclosure procedures that provide for a disclosure manager, appointed by the City’s Chief Administrative Officer, to coordinate with DAC to make sure all of the required filings are timely made, review filings, and monitor and maintain the efficacy of the City’s disclosure procedures on an ongoing basis. The City shall amend the Disclosure Dissemination Agreement with DAC to include assistance with respect to its disclosure undertakings with respect to the Series 2016A Bonds.
Book Entry-Only System
The information contained in the following paragraphs of this subsection “Book-Entry Only System” has been extracted from a schedule prepared by Depository Trust Company (“DTC”) entitled “SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY ONLY ISSUANCE.” The City makes no representation as to the completeness or the accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and such certificates will be deposited with DTC.
8
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants (“Participants”) deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations (“Direct Participants”). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each certificate (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC’s practice is to credit Direct Participants’ accounts on the payable date in accordance with their respective holdings shown on DTC’s records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, disbursements of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
9 DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered.
NEITHER THE CITY NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT; (2) THE PAYMENT BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF OR INTEREST ON THE BONDS; (3) ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO CERTIFICATEHOLDERS; (4) ANY CONSENT GIVEN BY DTC OR OTHER ACTION TAKEN BY DTC AS CERTIFICATEHOLDER; OR (5) THE SELECTION BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY BENEFICIAL OWNER TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF BONDS. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDOWNERS AS REGISTERED OWNERS OF THE BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.
10 THE CITY OF BURLINGTON
Description of the City
The City of Burlington, Vermont (the “City”) is the largest city in Vermont and located in northwestern Vermont on the eastern shore of Lake Champlain directly across from northern New York State. The City is the commercial center of Chittenden County and encompasses 16 square miles. The City is 90 miles south of Montreal, Quebec, 220 miles northwest of Boston, Massachusetts, and 300 miles north of New York, New York.
Highways serving Burlington include State Highways 2 and 7 and Interstates U.S. 89 and 189. The Lake Champlain Transportation Company operates ferries on Lake Champlain between Vermont and New York.
The Burlington International Airport serves over 1.2 million passengers per year and accommodates non-stop air service to all three New York City area airports, Philadelphia, both Washington D.C. airports, Chicago, Detroit and seasonally to Toronto. In addition, non-stop service to Atlanta began June of 2013, non-stop service to Orlando/Sanford FL began in February 2014, and non-stop service to Charlotte, NC began in August 2015. Passengers can reach nearly any destination world-wide with just one connection from Burlington.
Bus service is provided by Greyhound Lines, Megabus, and Vermont Trans Lines (operated by Vermont Agency of Transportation). Freight service is provided by the Vermont Railway Corporation and Rail America. The Chittenden County Transportation Authority, which represents Burlington, Essex Junction, South Burlington, Shelburne, Charlotte and Winooski, provides local bus service.
Form of Government
Burlington was incorporated as a City in 1865. On November 7, 2000, voters approved amendments to the City Charter providing for direct Mayoral appointment of department heads with City Council confirmation, clarified the Mayor’s authority as the City’s Chief Executive Officer, established the position of Chief Administrative Officer, and provided that City commissions would become advisory except when authority was re-delegated by the City Council.
Employee Relations
As of December 31, 2015, the City of Burlington employed 1,604 full time employees, including school employees. The City does not anticipate a significant increase in such staff in the foreseeable future, and believes its relations with its employees are generally good. All public employees except most supervisors, confidential employees, and certain school district employees in the State of Vermont have the right to organize and the right to bargain collectively with their public employers on matters of wages, terms and other conditions of employment other than managerial policy. The school contract for teachers with the Burlington Education Association, Inc. has been extended until August 31, 2016. The City has five separate labor associations: American Federation of State, County, & Municipal Employees, AFL-CIO, Council 93, Local 1343 (AFSCME) (the school negotiates separately for the school AFSCME employees), the International Brotherhood of Electrical Workers, AFL-CIO Local 300 (IBEW), the Burlington Police Officers’ Association (BPOA) the Burlington Firefighters Association, International Association of Fire Fighters Local 3044 (BFA), and the International Alliance of Theatrical Stage Employees, Local 919 (IATSE) . The BPOA contract expired on June 30, 2014 and negotiations are on-going. The AFSCME and BFA were recently settled and expire on June 30, 2018 and the collective bargaining contract with IBEW has been ratified by both sides and is expected to be signed shortly and will expire June 30, 2018. Prior to their expiration the City began negotiations for new contracts. The IATSE contract expired June 30, 2015, and negotiations are ongoing.
11 Retirement System
The Burlington Employees’ Retirement System became effective as of July 1, 1954, and covers virtually all City employees, except the majority of teachers who are eligible for the Vermont Teachers Retirement System. The Vermont Teachers Retirement System is funded by employee contributions of 5% of the teacher’s contract and the remainder is funded from the Annual State of Vermont budget. Membership in the Burlington Employees Retirement System (the pension plan) is divided into two classes. Class A consists of members of the Fire and Police Departments not including clerical employees. Class B represents the remainder of Burlington’s City work force.
The contribution by the City, excluding operation expenses, consists of two parts. The first is a normal contribution to cover the cost of benefits expected to accrue under the Plan during the fiscal year following the valuation date, reduced by required Class A member contributions equal to 10.8% of compensation and required Class B member contributions equal to 3.4% of compensation. The second is a past service contribution to liquidate unfunded past service costs over a 30-year period in accordance with the policy adopted by the Retirement Board. Unfunded past service costs are amortized over 30 years and per the BERS Report on the 62nd Actuarial Valuation totaled $61 million at June 30, 2015. The City’s contribution under the plan for FY 2015 totaled $9 million, and included amortization of unfunded service costs of $6 million. The pension is 75% funded on June 30, 2014 (pre GASB 67), and has enacted changes so that the plan will be 85% funded by fiscal year 2022 while meeting the additional goal of the City to keep its contribution flat for fiscal years 2016, 2017, and 2018 Plan fiduciary net position as a percentage of the total pension liability 75.31% at June 30, 2014 (measurement date for June 30, 2015 financial statements) after GASB 67.
The City’s share of the system is funded partially on an annual funding basis by a special government tax levy. This retirement portion of the tax rate is determined by the City’s Retirement Board through the yearly budget preparation process and subject to appropriation in the annual budget approved by the City Council and is not subject to limit.
Governmental Accounting Standards Board (GASB) Statement 68, approved on June 25, 2012, requires governments that provide defined pension benefits to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. GASB Statement 68 is effective for fiscal years beginning after July 1, 2014 and will impact the City’s financial statements after such date.
For further information regarding the City’s pension fund, refer to Note 24 of the Notes to Financial Statements contained in Appendix A to this Official Statement.
The following table sets forth the historical funding ratios of the Retirement System as of the actuarial valuation dates listed below including among other things, the unfunded actuarial accrued liability. The schedule below is pre GASB 67 per 61st Actuarial Valuation for June 30, 2014.
Actuarial Excess as a Valuation Accrued Funded Covered % of Date Actuarial Value Liability Excess of Assets Ration Payroll Covered (June 30) of Assets (a) (AAL)(b) over AAL (a-b) (a/b) (c) Payroll 2010 $ 130,594,539 $ 179,323,343 $ (48,728,804) 72.83% $ 41,161,578 -118.38% 2011 135,097,458 190,196,691 (55,099,233) 71.03% 42,971,870 -128.22% 2012 137,838,546 196,445,981 (58,607,435) 70.17% 43,865,945 -133.61% 2013 143,944,820 207,539,449 (63,594,629) 69.36% 45,788,173 -138.89% 2014 158,411,427 222,951,312 (64,539,885) 71.05% 47,853,353 -134.87%
12 Schedule of Net Pension Liability for June 30, 2014 (measurement date for June 30, 2015 financial statements) is as follows:
Total pension liability $ 218,004,014 Plan fiduciary net position (164,174,241) Net pension liability (asset) $ 53,829,773
Plan fiduciary net position as a percentage of the total pension liability 75.31%
The following table sets forth the historical employer contributions.
Year Ended Annual Required Actual Percentage (June 30) Contribution Contribution Contributed 2011 $6,778,735 $6,779,226 100.01% 2012 7,547,910 7,547,954 100.00% 2013 8,175,461 8,175,461 100.00% 2014 8,357,370 8,357,370 100.00% 2015 8,920,879 8,920,879 100.00%
Insurance
Effective January 1, 2007, the City entered into a comprehensive insurance program underwritten by Travelers Insurance Company for all City departments with the exception of the operating entities of the electric department, the airport, and the department providing telecom (internet, phone and television services) related services.
Travelers currently provides the following insurance for the City: Property (building and contents), Boiler and Machinery, Business Interruption, Contractors Equipment, Electronic Data Processing Equipment, Valuable Papers (i.e. library periodicals and books) and Fine Art.
Additionally, the City transfers its catastrophic risk of loss to Travelers Insurance Company in the following areas: General Liability coverage (covering negligent acts committed by the City resulting in property damage, bodily and personal injury to third parties), Sexual Abuse Liability, Auto Liability, Public Officials Liability (including coverage for employment related practices suits), Crime, Police Professional Liability as well as First Response Medical Professional coverage for EMT’s and Ambulance Attendants.
In addition to the primary liability coverages highlighted in the preceding paragraph, the City of Burlington has purchased an Excess Liability policy to a limit of $15,000,000.
All coverage provided by Travelers, with the exception of workers’ compensation, is offered on a guaranteed cost basis with deductibles ranging from $0 to $50,000. The workers’ compensation program is a “paid large deductible” structure with an each occurrence deductible of $350,000.
The City also has purchased a “pollution liability” policy from the Chubb Insurance Company protecting the City against third party suits related to certain known and unknown exposures to pollutants.
The City contracts with an external risk manager, Hickok & Boardman, Inc., to coordinate insurance coverage as well as acting as an intermediary in obtaining claims adjudication and loss prevention services through Travelers Insurance Company.
No assurance can be given that these insurance arrangements can be renewed on the same terms in the future and increases in cost and/or decreases in availability of insurance could adversely affect the City.
13 Health Benefits
In June 2004, the Governmental Accounting Standards Board (“GASB”) issued Statement No. 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions (“GASB 45”). GASB 45 establishes standards for the measurement, recognition, and display of Other Post-Employment Benefits (“OPEB”), including Post Employment healthcare and other forms of Post-Employment benefits such as life insurance. While GASB 45 requires recognition of unfunded OPEB liability, there is no requirement that such liability be funded. As of June 30, 2015, the unfunded actuarial accrued liability (AAL) was $3,778,744. See the City’s audited financial statements attached as Appendix A hereto, in particular Note 25 thereto.
Fiscal Percentage of Year Annual OPEB OPEB Cost Net OPEB Ended Cost Contributed Obligation 2015 $325,681 66.3% $1,529,910 2014 442,314 86.2% 1,420,191 2013 335,169 108.3% 1,359,145 2012 365,319 32.4% 1,387,098 2011 345,427 0.8% 1,140,113
City Services
The City provides the full range of municipal services including police and fire protection, emergency medical services, street construction and maintenance, solid waste management, traffic signalization, planning and zoning, community and economic development, parks and recreation, library services, youth services, arts programs, educational and general administrative services. The City also operates the following major enterprise funds: (1) electric, (2) water, (3) sewage collection and treatment, (4) airport facilities and (5) telecommunication services.
OSHA inquiry
The City is finishing making certain improvements and upgrades to the working conditions at several locations, including its water and wastewater treatment plants, the City fire houses, the public works and parks and recreation work facility on Pine Street, and the electric department after inspections in September by the Vermont Department of Labor, Occupational Safety and Health Administration (“VOSHA”). The City has recently received citations and notifications of penalties based on those inspections and has an informal conference scheduled with VOSHA to discuss its abatements of the conditions and possible reduction of the penalties. Before reduction, the penalties total approximately $42,000.
Public Safety
The City’s Police and Fire Departments provide crime prevention, firefighting, and fire prevention services. As of July 1, 2015 the Police Department has 97 police officers and 36 civilian personnel. The Police Department is fully staffed at 100, which is the most significant factor for delivery of police services. The Fire Department currently has 78 full-time firefighters and a Class IV fire insurance rating. The City’s Code Enforcement Office provides public health and safety regulatory enforcement and inspections, including a minimum housing inspection program. Voters approved a dedicated tax of five cents to support Police and Fire activities effective in 2003. Voters approved an additional increase of 2.5 cents in 2005. This resulted in a dedicated tax rate of almost fifteen cents per hundred of valuation for Police and Fire purposes. Subsequently after a reappraisal of all property in Burlington in 2005, this tax rate was adjusted proportionate to the reappraisal based increase in the Grand List, to 8.07 cents. The Fire Department now has Fire Alarm redundancy with their relay to an off-site Dispatch Center. The fire service insurance rating has improved to a rating of 3.
14 Department of Public Works
The Department of Public Works (DPW) consists of six divisions. The Street Maintenance Division constructs and maintains highways, sidewalks, and water and sewer distribution systems, and removes snow. A half-cent tax increase was approved in 2004 to provide additional funding for highways. The Wastewater Division manages the City’s combined sewer system. The City’s garages are also operated within the DPW. The City garage maintains the vehicles of all the divisions of the DPW as well as the vehicles of the Police, Fire and Parks and Recreation departments. The Administration and Engineering Division is responsible for all engineering work, public works, contract management, traffic engineering and the management of parking throughout the City. The Water Division manages and operates the City’s water supply and treatment facilities. The Inspection Services Division is responsible for building code inspections. Effective in fiscal year 2001, voters approved an additional five cents per hundred of valuation dedicated to street repairing, bringing the tax rate to 7.71 cents for this purpose. Subsequently, after a reappraisal of all property in the City, this tax rate was adjusted proportionate to the reappraisal based increase in the Grand List, to 4.17 cents. In November 2009, Burlington voters authorized an additional 2 cent increase for an expanded street repair program. This dedicated tax of 6.17 cents along with the Public Safety tax of 8.07 cents was expected to generate approximately $5,316,000 in property tax revenue during fiscal year 2013.
The Public Works Department’s responsibilities also include the design, construction, maintenance, and repair of the City-wide traffic signal system; all regulatory and directional right-of-way signage; all pavement markings; and the School Crossing Guard Safety program.
Libraries
The Fletcher Free Library is the City’s urban public library – the largest and busiest public library in Vermont, averaging 275,000 visits per year (or 753 visits a day), a circulation of over 375,000 per year and a total collection of over 160,000 materials. Fletcher Free contributes to community development and economic growth by facilitating universal access to knowledge, building community connections, and enhancing lifelong learning and literacy. During FY14, Fletcher Free offered more than 575 literacy programs that benefitted 10,000 preschoolers, youths, teens, adults and seniors. Fletcher Free works closely with municipal and community partners to coordinate the City’s annual Summer Reading Program, encouraging children (Pre-K through 12) to read and maintain their reading achievement over the summer months. During FY14, over 70% of all 1st through 4th graders participated in this program. The Fletcher Free provides all library services and programming universally and publicly to the greater Burlington community.
Recreation
In November 2009, the City voters authorized an additional 1 cent increase in the Parks tax rate for Parks capital projects called Penny for Parks. The dedicated tax supports ongoing work to maintain and improve assets in the Burlington Parks System. In November 2012, the City voters approved a half cent increase in the general city tax rate to provide funds for bike path maintenance, which was effective for fiscal year 2014.
Burlington City Arts
Since 1983, the City has partially funded the Burlington City Arts Department (“BCA”), which was established to make arts more accessible to all segments of the population. The arts council brings a broad spectrum of arts programming to the City and encourages partnerships between business, educational, artistic and governmental organizations in the production of cultural events. Over the course of its 30-year history, BCA’s programs and goals still reflect its original objectives for accessibility while also expanding opportunities for an ever-growing and diverse population of artists, community members and region-wide visitors seeking a cultural environment. Its renovation of the old firehouse on Church Street into a five-floor arts center and management of clay and print studios at Memorial Auditorium provide resources for arts experiences, learning, and exhibition that have a positive impact on the local economy and quality of life. Since opening all five floors in 2004, the BCA Center has blossomed into Vermont’s premiere location for contemporary art. Securing and exhibiting national-level artists from Vermont and elsewhere, the Center’s mission is to bring a unique arts experience to the public that will challenge, teach and engage. The BCA Center features two floors of Contemporary art exhibition, the Art Lab artist-
15 in-residence studio on the fourth floor, and numerous contemporary events throughout the year including music, film and performance. Last year, BCA’s programs served approximately 6,500 adults and young people, and visitors enjoyed a large variety of exhibitions at the BCA Center, as well as free concerts in Battery Park, and performances such as the Festival of Fools.
Community Development
The development and implementation of a comprehensive community development strategy for the City and the maintenance of new development within the City’s Municipal Development Plan falls under the direction of the Community and Economic Development Office (CEDO), the Department of Planning and Zoning and the Burlington Housing Authority.
CEDO provides funding for community development programs primarily financed by federal grants. The Burlington Housing Authority administers housing assistance programs with the use of federal funds and rental payments. The Department of Planning and Zoning develops and enforces zoning ordinances designed to maintain City development within the standards of the Department’s development plan.
Church Street Marketplace District
Established in 1981, the Church Street Marketplace District is a four-block pedestrian mall and business improvement district located in the heart of Burlington’s downtown. The Marketplace Department (City of Burlington) manages the public right of way on Church Street by providing maintenance, marketing and administrative services. Because no city tax dollars may fund operations of the Marketplace District, the Marketplace Department’s operating budget must be funded entirely through fees and sponsorships. The majority of operating revenues are derived from a “common area fee” charged to all properties in the District. The Church Street Marketplace District Commission consists of nine members appointed by City Council to three-year terms. Their role is to set policy for the district, and recommend the annual common area fee. Church Street has received the Great American Main Street Award from the National Trust for Historic Preservation and been recognized as one of America’s “Great Public Spaces” by the American Planning Association.
City Parking System
The Department of Public Works Traffic Division is currently responsible for the management, operation, and maintenance of three (3) multi-level parking structures totaling approximately 1,600 spaces; five metered surface lots totaling 188 spaces; one 77 space leased surface lot; and 1,076 on-street parking meters; all within the downtown business district.
These operations are organized within the Traffic Fund, a Special Revenue Fund. By City Charter, all revenues generated by the Fund are restricted for traffic-related expenditures. The bulk of the Fund’s revenues are generated by monthly lease holders and transient parkers utilizing the parking system. A portion of these revenues supports two free hours of parking by visitors to the Church Street Marketplace.
Additionally, Public Works is the contract operator of a 2,000 space parking structure at the Burlington International Airport. After deducting the costs of operating the airport garage, the net parking fees collected are remitted to the Airport.
The Department of Public Works provides these identified traffic services within an annual budget of $4.3 million. Capital expenditures are preprogrammed into the operating budget as either cash expenses or in the case of some equipment, lease purchased over a five-year term.
The City is currently considering additional financing for the construction of renovations and improvements to the City owned parking garages.
16 City Enterprises
Burlington International Airport – Airport Commission
The Burlington International Airport has been in operation for over 90 years and has been the site of significant military and general aviation along with scheduled commercial service since 1932. Passenger enplanements for calendar year 2014 totaled approximately 612,000 passengers, a decrease of less than 1% from calendar year 2013. The Burlington International Airport serves over 1.2 million passengers per year and accommodates non-stop air service to all three New York City area airports, Philadelphia, both Washington D.C. airports, Chicago, Detroit and Toronto. In addition, non-stop services to Atlanta began in June of 2013, non-stop service to Orlando/Sanford, FL began in February 2014, and non-stop service to Charlotte, NC began in August 2015. Passengers can reach nearly any destination world-wide with one stop from Burlington.
In December 2014, the City issued $15,660,000 of Airport Revenue Refunding bonds secured by a pledge of the revenues of the Airport. This bond issue refunded the 2003 Revenue Bond issue. As of March 1, 2016, $37,040,000 of airport revenue bonds were outstanding under the general bond resolution authorizing the issuance of Airport Revenue Bonds (the “Airport Resolution”). See Table 9, Revenue Debt.
The Airport Resolution contains a rate covenant. The City’s airport did not meet such rate covenant for Fiscal Years 2008, 2009, and 2010, resulting in a downgrade in 2011 by Moody’s Investors Service on the Airport Revenue Bonds. The City implemented changes in the Airport’s operations and met the Airport resolution rate covenant for Fiscal Years 2011, 2012, 2013, 2014 and 2015.
The City may issue Airport Revenue Bonds from time to time, payable from a pledge of airport revenues. See “Revenue Debt” herein.
Income from landing fees, terminal rents, concession fees and more than 60 businesses on and around the airfield allows the airport to be self-supporting. More than 1,000 people work at the airport which has an estimated $350 million positive economic impact on the region.
Electric Department
During fiscal year 2015, Burlington's 50% ownership in the McNeil Generating Station together with its 100% ownership in Winooski One Hydro Facility, provided approximately 48% of the City's energy needs. Burlington’s 100% ownership of its Gas Turbine peaking facility provided a very small (less than 0.1%) proportion of the City’s energy needs. Of the balance, 48% was supplied through long-term arrangements for energy from the Vermont Electric Power Producers, Inc., the New York Power Authority Nextera, Vermont Wind, and Georgia Mountain Community Wind, as well as several smaller resource arrangements. The 4.0% of the City's energy needs were met with a number of shorter term (1 year or less) arrangements with various energy suppliers, including net exchange (purchases and sales) with the New England Independent System Operator (ISO-NE).
The City has issued on behalf of the Electric Department (the “Department”), a $5,000,000 General Obligation Revenue Anticipation Note (Line of Credit) with a local bank, placing the Line of Credit directly with the Department. In March 2015 that Line of Credit was renewed. Through fiscal year 2015, the Department had that entire line of credit balance of $5,000,000 available for use. The Line of Credit is due to mature in March 2017.
As of March 1, 2016, $28,345,000 of Electric System Revenue Bonds was outstanding under the Electric Resolution.
On August 29, 2014 the Department executed a purchase and sale agreement to purchase the Winooski One Hydro Facility. The Project’s owners and the Department participated in binding arbitration to determine the facility’s fair market value, and in December 2013 an arbitration decision determined the fair market value to be $16,000,000. The Project is a 7.4 MW hydroelectric generating facility with three turbines located on the Winooski River between the Cities of Burlington and Winooski, Vermont. The facility is Low Impact Hydro Institute (LIHI) certified and is qualified to sell RECs in New England. Annual output is expected to be approximately 30,000,000 kWH, which is 8-9% of the Department’s annual load.
17
The Department sought voter approval in March 2014 to issue bonds for a portion of the final purchase price. The bond issuance was approved by approximately 80% of voters. On August 28, 2014, the Department issued $12,000,000 of 2014 Series A electric system revenue bonds to cover the majority portion of the purchase price for the hydro facility. The Department financed the balance of the purchase price from operating funds.
On August 28, 2014, the Department, through the City, also issued $5,820,000 of new Electric System Revenue Bonds 2014 Series B, for the purpose of refinancing its outstanding 2004 Series A bonds. These new Revenue Bonds 2014 Series A and Series B have an average coupon rate of 3.78% and 3.36%, respectively.
In July 2014, the Department, through the City, issued $3,000,000 in general obligation public improvement bonds for the purpose of capital improvements to the electric infrastructure of the Department. These bonds have an average coupon rate of 2.778%.
For the Fiscal Year ending June 30, 2014, the Burlington Electric Department (BED) had an audited debt service coverage ratio under its Electric Resolution of 7.4 to 1, in excess of the 1.25 to 1 ratio required. Net position at June 30, 2015 decreased $5,605,609 when compared to net position at June 30, 2014. This resulted primarily from the adoption of GASB 68 and the Department reporting of deferred outflows of resources pertaining to its proportionate share of pension plan funding and other post-employment benefits. In addition, the change reflects the termination of a previous agreement with a utility for the funding of a portion of expired bonds of the McNeil Station.
Water Division
The Water Division of the Department of Public Works provides potable water, distribution and metering through approximately 9,800 connections. During the calendar year 2014, an average of 3.92 million gallons per day (MGD) was produced at the water treatment plant. The plant is staffed 24/7 and water is pumped through 121 miles of water mains in the City. Storage of 7 million gallons is provided in the two covered reservoirs and pressure is provided to the high service area by two elevated storage tanks that contain a combined capacity of 650,000 gallons. Water is also provided to Colchester Fire District #2 (CFD#2) through a connection off Plattsburgh Avenue. CFD#2 has been a customer since 1965 and is the largest user. The next largest users within the City limits are the University of Vermont and Fletcher Allen Hospital.
Wastewater Division
The Wastewater Division of the Department of Public Works provides Wastewater Treatment through three different Treatment Plants located in the City. Some of the flow is transported to the plants via gravity, but there are 25 pump stations located throughout the City in areas where flow must be pushed or boosted. There is a network of over 100 miles of pipe collection system that in some cases carries wastewater only, and in other areas of the City transports wastewater and storm water in one pipe. The largest plant, Main Wastewater serves the part of the City with the largest combined flow and this often treats storm events in excess of a flow rate of 100 MGD. The three plants Main, East, and North are permitted for flows of 5.3, 1.2 and 2.0 million gallons per day respectively.
Operating and debt service expenses are supported by the retail wastewater rate. Services such as sludge dewatering, seepage and landfill leachate treatment, as well as wastewater treatment, are also provided for a small section of South Burlington.
Stormwater Division
The Stormwater Division of the Department of Public Works provides for the operation and maintenance of the City’s separate stormwater system (approximately 37 miles of pipe, over 2000 storm drains and 102 outfalls) in compliance with the City’s Municipal Separate Stormwater Sewer System (MS4) permit as well as improvements in the management of stormwater runoff quantity and quality to both the separate and combined stormwater sewer systems. The Stormwater Division also administers the stormwater management and erosion prevention and sediment control regulations under Chapter 26 of the Burlington Code of Ordinances.
18 Operating and debt service expenses are supported by the stormwater user fee, which is based on impervious surface. Single family, duplex and triplex properties are assessed flat fees, which are based on the average amount of impervious associated with those types of properties. All other properties are directly assessed and pay according to the amount of impervious measured on their individual properties.
Burlington Telecom
Burlington Telecom (“BT”) was formed under the City’s Charter as an enterprise of the City to provide internet, phone and cable television services over a “fiber to the premises” network to customers in the City. Burlington Telecom also provides various telecommunications services to the City and its departments. In September of 2005, BT received its Certificate of Public Good from the Vermont Public Service Board to provide cable services in the City. The Certificate of Public Good contained various obligations of and restrictions on the City, particularly concerning the build-out of the system, and restrictions on the City’s subsidizing of the telecom enterprise.
In August 2007, the City entered into a Master State and Municipal Lease/Purchase Agreement (the “Master Lease”) with Municipal Leasing Consultants, pursuant to which the City refinanced earlier leases for a total of approximately $33 million. Municipal Leasing Consultants assigned the Master Lease to CitiCapital Municipal Finance (“CitiCapital”). The obligation of the City to make lease or “rental payments” under the Master Lease was subject to annual appropriation by the City Council. There was no pledge of the revenues of any City enterprise, nor was the Master Lease supported by the full faith and credit of the City. The Master Lease provided that its term would end in the event the City does not make an annual appropriation of rental payments.
Up until 2010, the City also used its own resources to fund BT and advanced approximately $16.9 million to support BT’s operations. However, following the report of a City Council-appointed Blue Ribbon Committee, which concluded that BT was not viable with the current fixed costs, in March 2010, the City hired Dorman and Fawcett to undertake a financial and operational restructuring of BT. In September 2010, Dorman and Fawcett assumed an interim General Manager role at BT.
At the same time, pursuant to the terms of the Master Lease, the City notified CitiCapital that the City would likely not make an appropriation for payments for the next fiscal year and the City Council did not make an appropriation for BT in its budget for the 2010-2011 fiscal year. Accordingly, under the terms of the Master Lease, the Master Lease terminated.
On or about September 2, 2011, Citibank, NA, as purported assignee of CitiCapital, commenced litigation against the City and its attorneys in connection with the Master Lease. On January 29, 2014, the parties reached a mediated settlement agreement, which called for a payment of $10.5 million to Citibank, along with some additional compensation as the settlement was perfected. That payment consisted of amounts already held in escrow by the court, monthly payments from BT during the pendency of the settlement, $1.47 million from the City’s attorneys, $500,000 from insurance, about $1.3 million from the City, and about $6 million in financing (described below). The settlement was contingent on approval by the Public Service Board of the new financing arrangement and closing on the financing.
The Public Service Board approved the financing arrangement on November 3, 2014. It then granted de minimis regulation of Blue Water Holdings, LLC, a Vermont limited liability company (BWH) and continued the City’s responsibility to operate BT under its Certificate of Public Good on December 18, 2014. Following that decision, the financing arrangement closed resulting in final settlement and dismissal of the lawsuit on January 2, 2015.
The financing arrangement is designed as a bridge to an eventual arm’s-length sale of the BT system, so is intended as a limited-time arrangement. At the closing, the City transferred all of the assets of BT to BWH, and then leased those assets back from BWH so that the City continues to operate BT. In return, BWH provided $6,000,000 to complete the settlement of the Citibank lawsuit. The parties entered into a Lease Agreement and a Management and Sale Agreement that govern the continuing operation of BT with Dorman & Fawcett as its financial manager and provides for the eventual sale of the BT system to a qualified purchaser. If the system is sold within 36 months, the City receives 50% of the net sales proceeds, with the percentage diminishing incrementally in stages to 10% over the following years after such initial 36 month period. As part of the settlement with Citibank, 50% of the City’s proceeds is then payable to Citibank. The financial manager’s fees are deferred until a sale occurs.
19 Winooski Valley Park District
The Winooski Valley Park District was formed in 1967 to conserve natural areas and provide recreation in the Winooski River Valley. Approximately one quarter of the District’s land is located within the City of Burlington.
Solid Waste
The City’s solid waste program consisted of landfill operations and recycling until December, 1992. At that point, these functions were transferred to the Chittenden Solid Waste District. The lined landfill which had operated in conjunction with five other communities was then closed. Landfill post closure costs are being funded by wastewater revenues.
Community Amenities
The City is regularly recognized in nationally published periodicals as one of the best places to live and receives frequent awards from these national publications.
The City’s location, economic climate, and abundance of community resources contributed to its award as the most livable city in America for cities of less than 100,000 people by the U.S. Conference of Mayors in 1989. Located between the highest section of the Green Mountains and the widest part of Lake Champlain, the City of Burlington enjoys superb scenery and outstanding year-round recreational opportunities.
In 2008, the City was named America’s healthiest city according to a report from the U.S. Centers for Disease Control and Prevention.
In May 2010, the City was named “prettiest town in America” and “one of the best cities for new jobs this spring” by Forbes.com.
In June 2010, Kiplinger’s recognized Burlington as “one of the 10 best cities in the United States for the decade.”
In December 2010, the City received a Home Depot Foundation Award of “Excellence for Sustainable Community Development.”
In March 2011, Gallup-Healthways Poll listed the City as #1 of the top 10 small cities for well-being.
In October 2011, Livability.com Magazine listed the City as #3 in its top 10 downtowns ranking.
In 2012, Gallup-Healthways Poll ranked the City #3 of the top 10 cities in the nation for well-being.
Cheapflights.com ranked the Burlington International Airport 4th in the United States for airport affordability based on August 2013 prices. The Airport is leading the industry with its continued amenity upgrades, such as the Mamava nursing mothers’ pod, green roof which includes solar panels and a garden, as well as free wifi and convenient access.
In Kiplinger’s September 2013 issue, the City ranked #2 on their “Great Places to Live” list.
In August 2014, the City was ranked #10 among top 12 college towns for commuting by The SpareFoot Blog.
In 2015, Men’s Health Magazine named the City as “Top 10 Places to Live Now.”
Cultural activities abound and are encouraged by the participation of businesses, educational institutions, and government. Several theaters for the performing arts, theater troupes, museums, fairs, and festivals fill the City’s cultural calendar, while Burlington City Arts, a City Department, provides a well-known gallery for the display of contemporary art, as well as events including music, film, and performance.
20 The University of Vermont Medical Center is the state’s academic medical center and serves approximately one million people in Vermont and New York. UVM Medical Center includes three founding organizations – Medical Center Hospital of Vermont, Fanny Allen Hospital, and University Health Center – and the UVM College of Medicine. The Vermont Regional Cancer Center and the Vermont-New Hampshire Regional Red Cross Blood Center are also located in Greater Burlington.
Education
Burlington Schools
The school system of the City consists of one senior high school, two middle schools and six elementary schools. There are also three parochial elementary schools and one parochial secondary school in Burlington. For the 2015/16 academic year, there are approximately 891 public school employees plus a variable number of seasonal or part-time employees. The public school system prepares its own budget and authorizes its own expenditures. The City issues debt secured by a dedicated tax to support its public school system. Enrollment figures for Burlington Public Schools as of September of each of the last ten years are presented in Table 1.
Table 1 Burlington Public School District Enrollment
Elementary Secondary Schools(1) Schools
2006/07 2,121 1,737 2007/08 2,229 1,708 2008/09 2,178 1,759 2009/10 2,210 1,585 2010/11 1,792 1,890 2011/12 2,051 1,870 2012/13 2,158 1,859 2013/14 2,076 1,864 2014/15 2,411 1,562 2015/16 2,408 1,597
(1) Includes students enrolled in preschool partner programs.
Higher Education
The graduation rate for Burlington High School for 2013-2014 (the most recent year for which data is available) was 83.39%. In 2015, 60% of Burlington High School’s 248 graduating seniors went on to four-year colleges and another 18% went on to two-year colleges. The University of Vermont, Champlain College, Burlington College, and St. Michael’s College offer continuing education for day, evening and weekend programs. The Vermont Technical College is also located in nearby Randolph. The approximate enrollment of area colleges is presented below:
Table 2 University Undergraduate Full time Student Enrollment (as per current data from each institution or its website)
Institution Enrollment University of Vermont 11,329 St. Michael’s College 2,750 Champlain College 2,000 Vermont Technical College 1,658 Burlington College 225
21 Overlapping Governmental Units
Governmental entities which overlap the City of Burlington but which are not under the authority of the City Council are Chittenden County, the Chittenden County Transportation Agency, the Chittenden Solid Waste District and the Winooski Valley Park District.
Chittenden County
Chittenden County is primarily responsible for the operation of the court system and the sheriff’s department for the County.
Chittenden County Transportation Agency (CCTA)
The Chittenden County Transportation Agency operates the public transit system within the County. The CCTA is funded through rider fees, state and federal funding programs and contributions from underlying governmental units.
The charter of CCTA authorizes CCTA to borrow money. The obligation to repay such borrowing is the joint and several obligation of the CCTA and each member municipality of CCTA, which obligation is allocated among such member municipalities as determined by CCTA’s annual budget; provided that, the formula for such allocation may only be changed by CCTA with the consent of at least 75% of its member municipalities.
Chittenden Solid Waste District (CSWD)
The Chittenden Solid Waste District (CSWD) is a union municipal district organized and established under Vermont law in 1987. The District’s overall purpose is to manage solid waste generated by CSWD member municipalities and their residents. CSWD serves a population of approximately 157,000 consisting of the Cities of Burlington, South Burlington, and Winooski and the Towns of Bolton, Charlotte, Colchester, Essex, Hinesburg, Huntington, Jericho, Milton, Richmond, St. George, Shelburne, Underhill, Westford, Williston and the Village of Essex Junction.
CSWD commenced operation of the Interim Phase III Landfill on December 22, 1992. This landfill reached capacity and was closed on August 19, 1995. CSWD has reserved funds for the estimated costs of all necessary closure and post-closure activities for such landfill. While CSWD continues to pursue permitting of additional landfill sites, municipal solid waste is transported to privately owned waste disposal facilities.
A public/private partnership, the Materials Recovery Facility (MRF), located in Williston, opened in April 1993. The MRF is owned by CSWD and operated by a private business. This facility is capable of accepting commingled recyclable materials for sorting and baling prior to shipping to markets. Proceeds from the sale of recycled materials defray a portion of the operating costs of the facility.
CSWD owns and operates the Hazardous Waste Depot in Burlington and The Rover. The Rover is a mobile household hazardous waste collection unit that travels around Chittenden County between the months of April and October. CSWD’s Unregulated Hazardous Waste Program has been nationally recognized as one of the most cost effective programs that collects hazardous waste materials from households and businesses.
CSWD owns and operates seven Drop-Off Centers located throughout Chittenden County. The Drop-off Centers are intended to be self-supporting and accept solid waste generated by households and small businesses from within Chittenden County.
CSWD processes a variety of special waste materials. The Wood and Yard Waste Depot accepts organic materials. The Intervale Compost Project, a partnership between the non-profit Intervale Foundation and CSWD, diverts compostable materials from the landfill waste stream and redirects it to the composting facility located in the Intervale area of Burlington.
The CSWD Charter provides that, should anticipated user fees and revenues from CSWD services and facilities not be sufficient to pay for any obligations or liabilities of CSWD, each member municipality of CSWD shall be assessed a percentage of the sum of CSWD obligations and liabilities equal to the ratio which the solid waste
22 generated by such member municipality bears to the total solid waste generated within the Chittenden Solid Waste District. The board of commissioners of CSWD may annually determine the percentage of solid waste generation attributed to each member municipality of CSWD, which determination shall be based on waste generation information for the most recent 12-month period for which information is available. The amount of solid waste generation allocated to the City may vary from time to time. CSWD may also incur short term indebtedness or, with a vote of the voters within the Chittenden Solid Waste District, bonded indebtedness for capital projects. The amount of such debt service shall be allocated as a joint obligation of the City and the other member municipalities of CSWD based upon such ratio.
DEBT STRUCTURE
Debt Summary
Table 3 presents a summary of the City’s outstanding debt as of June 30 for the last ten years.
Table 3 Historical Summary of Outstanding Debt
General Obligation Bonds Certificates of Participation and June 30 General Enterprise Revenue Bonds Capital Lease Debt 2006 $15,790,000 $26,921,359 $122,760,000 $39,731,015 2007 18,762,305 26,706,009 114,315,000 40,493,825 2008 18,067,175 29,907,217 105,440,000 49,120,000 2009 15,897,809 49,820,434 96,125,000 48,353,667 2010 20,757,499 43,948,084 108,637,954 50,511,857 2011 30,753,333 42,413,105 93,648,092 15,431,790(1) 2012 37,605,000 41,385,000 95,204,432 14,151,866 2013 51,505,000 44,685,000 94,863,082 12,253,572 2014 53,150,000 45,810,000 85,630,970 10,753,739 2015 55,092,130 46,770,714 85,117,803 7,840,000
(1) Reflects the termination of the City’s lease for the Burlington Telecom assets with CitiCapital.
Source: Compiled from annual audited financial statements.
The City entered into a Lease Purchase Agreement with CitiCapital for the leasing of equipment used for the Burlington Telecom (BT) system. The lease payments were subject to annual appropriation. The lease agreement terminated in accordance with its terms when the City Council did not appropriate moneys to make payments under the lease in Fiscal Year 2011. See “City Enterprise – Burlington Telecom” and “LITIGATION” for more information concerning BT.
Authorization of Direct Debt
Pursuant to the City Charter, the City’s general obligation debt is generally authorized by a two-thirds vote of the legal voters in the City or, for school purposes, by a majority of the electorate. Urban Renewal Debt is authorized pursuant to provisions of the Vermont Statutes, which authorization generally provides for general obligation debt to be issued for urban renewal projects by a majority vote. Revenue debt is authorized by a majority vote. Tax increment financing debt is also authorized by a majority vote. The City Charter also authorizes the City to borrow in anticipation of taxes an amount not exceeding during any quarter of any fiscal year twenty-five (25%) percent of the annual tax assessment.
23 The City Charter allows the City Council to pledge the credit of the City by temporary loans in anticipation of the receipt of revenue from the airport department, or the traffic division, wastewater or water divisions of the public works department during any fiscal year. The City issued a Grant Anticipation Note in Fiscal Year 2016 for the Airport Department in an amount of $7,000,000, which has a current maturity date of September 20, 2016.
The City Charter further provides that the City Council may authorize the pledging of the credit of the City by temporary loans in anticipation of the receipt of revenue from the electric department in an aggregate amount not to exceed $5,000,000 and for up to a two year period. The City has established a $5,000,000 revenue anticipation line of credit for the electric department, which matures March 30, 2017. The City has currently not drawn any funds from such line of credit.
For capital improvements of the City during any fiscal year, an amount not to exceed $2,000,000 is authorized for both capital improvements for the City in general, an amount not to exceed $2,000,000 is authorized for the City’s school department and an amount not to exceed $3,000,000 is authorized for the City’s electric department, without requiring a vote of the legal voters of the City pursuant to the City Charter.
The City issued a Tax Anticipation Note (TAN) under a drawdown line of credit in the amount of $10,000,000, $9,000,000, and $5,000,000 to finance working capital in anticipation of the receipt of tax revenues for fiscal years 2014, 2015, and 2016 respectively. The City has not drawn on the TANs in the past three years.
In July 2015 the City established a $5,000,000 revolving tax anticipation line of credit with KeyBank National Association. The proceeds of the line of credit shall be used solely as a short-term financing in anticipation of the collection of taxes assessed upon the entire grand list of the City and other revenues of the City for the fiscal year ending June 30, 2016. The line of credit constitutes a general obligation of the City that is secured by the full faith and credit of the City.
Debt Limit
The debt limit provided by Vermont law is ten times the amount of the last Grand List, or approximately 10% of the assessed value of real and personal property in the City. Tax anticipation bonds and most revenue-supported debt are outside the limit. A computation of the City’s general obligation borrowing limit is presented below.
Table 4 Debt Limit Computation (June 30, 2015)
June 30, 2015 Computation of Borrowing Capacity – Debt Limit(1) (10% of $3,778,550,520) $377,855,052 Less: Outstanding Bonds and Bonds Subject to Limit 55,092,130 Net Borrowing Capacity (85.4%) $322,762,922
(1) The Grand List is equal to 1% of the assessed value of property in the City after deduction of the Veteran’s exemption.
Authorized but Unissued Debt
General Obligation Debt
In November 2012, the City voters approved the issuance of up to $6,050,000 of general obligation bonds or notes in order to finance public improvements that serve the City’s Waterfront Tax Increment Financing (TIF) district, specifically for the Waterfront Access North Project and for Bike Path improvements. It is expected that tax increments from properties within the TIF district shall be pledged and appropriated for the payment of principal and interest on any bonds or notes issued for such purpose.
In July 2014, the City voters approved the issuance of $7,800,000 of special obligation tax increment financing bonds in order to finance public improvements that serve the City’s Waterfront Tax Increment Financing (TIF)
24 district. It is expected that tax increments from properties within the TIF district shall be pledged and appropriated for the payment of principal and interest on any bonds or notes issued for such purpose. In the event that the TIF revenues are insufficient, the City’s full faith and credit remains liable.
General Obligation Long-Term Debt
The following table summarizes the City’s general obligation debt outstanding as of March 1, 2016. The City issues general obligation debt paid from two sources: tax levies and enterprise fund revenues. A portion of the City’s general obligation debt is issued from certain enterprises, such as the electric department and the water department, and is expected to be repaid from the associated enterprise fund revenues.
Table 5 General Obligation Long-Term Debt by Issue
Principal Principal Maturity Maturities Outstanding Issue Dated Interest Rate Date Original Issue 3/1/2016 G.O. Bonds, Series A 7/15/2002 4.250%-4.75% 9/1/2022 $ 1,610,000 $ --(1) G.O. Bonds, Series A 4/1/2003 4.00% 11/1/2018 2,500,000 --(1) G.O. Refunding Bonds, Series B 7/15/2004 3.80% 12/1/2016 3,410,000 275,000 G.O. Bonds, Series A 6/28/2005 3.60%-4.20% 11/1/2025 1,250,000 --(1) G.O. Bonds, Series B 7/6/2005 3.50%-4.20% 11/1/2025 2,750,000 --(1) G.O. Bonds, Series A 10/10/2006 3.75%-4.00% 11/1/2026 6,365,000 295,000(2) G.O. Bonds, Series A 12/20/2007 3.75%-4.25% 11/1/2027 2,750,000 250,000(3) G.O. Bonds 4/20/2009 3.00%-4.375% 11/1/2029 12,750,000 1,670,000(4) G.O. Bonds 4/20/2009 4.125%-6.00% 11/1/2029 8,250,000 6,600,000 G.O. Bonds, Series C 8/18/2009 2.50%-4.125% 11/1/2029 19,985,000 15,295,000 G.O. Bonds, Series D 8/18/2009 4.40%-5.60% 11/1/2029 4,615,000 3,690,000 G.O. Bonds, Series A (QSCBs) 7/21/2010 6.50% 11/1/2026 9,700,000 9,700,000 G.O. Bonds, Series B (QZABs) 7/21/2010 6.50% 11/1/2026 2,000,000 2,000,000 G.O. Bonds 8/8/2011 3.00%-4.75% 11/1/2031 6,575,000 5,650,000 G.O. Bonds 8/25/2011 3.00%-4.75% 11/1/2031 4,000,000 3,420,000 G.O. Bonds 10/10/2012 5.00% 11/1/2032 10,000,000 9,070,000 G.O. Bonds 10/10/2012 6.00% 11/1/2032 1,250,000 1,145,000 G.O. Bonds (Taxable) 4/25/2013 3.50%-5.25% 11/1/2028 9,000,000 7,960,000 G.O. Bonds 9/19/2013 5.00%-6.75% 11/1/2033 7,000,000 4,775,000(5) G.O. Bonds 7/31/2014 0.913%-3.993% 11/15/2034 7,000,000 6,650,000 G.O. Bonds 12/4/2015 5.00% 11/1/2035 7,000,000 7,000,000 G.O. Refunding Bonds 4/__/2016 2016A 11/1/2033 16,930,000(6) 16,930,000 (6)
Total $102,375,000 (1) To be refunded by the Series 2016A Bonds (2) Maturities 2017-2026 to be refunded by the Series 2016A Bonds (3) Maturities 2018-2027 to be refunded by the Series 2016A Bonds (4) Maturities 2019-2029 to be refunded by the Series 2016A Bonds (5) Maturities 2017-2023 to be refunded by the Series 2016A Bonds (6) Preliminary, subject to change
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25 Future general obligation debt requirements as of March 1, 2016 are presented in the following table.
Table 6 Future General Obligation Payments as of March 1, 2016 (Principal and Interest)
Fiscal Year Levy Revenue Series 2016A (June 30) Supported Supported Bonds Total 2016 $ 1,151,128 $ 697,495 2017 4,851,301 3,530,283 2018 4,252,338 3,359,009 2019 4,161,360 3,331,521 2020 3,997,391 2,748,503 2021 3,988,625 2,739,845 2022 3,974,511 2,746,015 2023 3,974,794 2,752,082 2024 3,955,236 2,752,755 2025 4,051,463 2,777,258 2026 4,032,803 2,779,359 2027 15,328,051 2,793,626 2028 3,247,279 2,791,241 2029 3,235,392 2,817,003 2030 2,355,122 2,814,375 2031 1,847,546 786,175 2032 1,831,288 781,350 2033 1,187,071 638,275 2034 687,876 237,750 2035 669,738 237,000 2036 317,750 235,750
Total $ 73,098,062 $ 44,346,669
Certificates of Participation
The City has entered into capital leases for property and equipment for various purposes. The following table summarizes the City’s certificates of participation outstanding as of March 1, 2016.
Table 7 Certificates of Participation by Issue
Principal Principal Maturity Maturities Outstanding Issue Dated Interest Rate Date Original Issue March 1, 2016(1) COPs, Parking Facility Project 01/01/99 4.75%-4.80% 12/01/2018 $ 5,500,000 $ --(2) COPs, Series 2000 06/01/00 5.50%-5.75% 12/01/2020 4,100,000 --(3) COPs, Parking Facility Projects 06/01/05 4.25%-4.375% 05/01/2025 7,870,000 415,000(2) COPs, Series 2016A 04/__/16 Series 2016A 12/01/2024 5,160,000(4) 5,160,000(4) COPs, Series 2016B 04/__/16 Series 2016B 12/01/2020 1,450,000(4) 1,450,000(4) Subtotal $7,025,000(4)
(1) Reflects the termination of the City’s lease for the Burlington Telecom assets with CitiCapital. (2) To be refunded by the Series 2016A Certificates of Participation, which are expected to be executed and delivered contemporaneously with the Bonds. (3) To be refunded by the Series 2016B Certificate of Participation, which are expected to be executed and delivered contemporaneously with the Bonds. (4) Preliminary, subject to change
26 Future minimum payments under capital leases as of March 1, 2016 are presented in the table below.
Table 8 Future Lease Payments as of March 1, 2016 (Principal and Interest)
Total Total Enterprise Total Governmental/ Governmental Enterprise 2016 $ 1,286,522 $ 776,873 $ 509,649 2017 1,068,310 767,991 300,319 2018 902,537 753,619 148,918 2019 897,366 749,853 147,513 2020 785,402 738,742 46,660 Thereafter 8,098,713 8,098,713 -- $ 13,038,850 $ 11,885,791 $ 1,153,059
Revenue Debt
Table 9 presents gross revenue debt of the City’s enterprise funds which were outstanding on March 1, 2016. Not included are Revenue Bonds of the Water Division of the City’s Public Works Department and the Electric Department which have been advance refunded, and for which funds for the payment of principal and interest have been placed in escrow.
Table 9 Revenue Debt
Principal Original Maturity Outstanding Issue Dated Amount Interest Rate Date 3/1/2016 Electric Revenue Debt Series A Revenue Bonds 10/13/2011 $ 8,775,000 4.375%-5.75% 7/1/2031 $ 8,430,000 Series B Revenue Bonds 10/13/2011 3,135,000 7.25%-8.25% 7/1/2031 3,040,000 Series A Revenue Bonds 8/28/2014 12,000,000 2.00%-5.00% 7/1/2034 11,565,000 Series B Refunding Revenue Bonds 8/28/2014 5,820,000 3.00%-4.00% 7/1/2024 5,310,000 Total Electric Revenue Debt $28,345,000
Wastewater Revenue Debt State Wastewater Loan 7/1/2000 $ 1,614,835 0.00% 8/1/2027 $ 1,044,000 State Wastewater Loan 9/6/2006 1,650,000 0.00% 5/1/2027 993,258 State Wastewater Loan 2/9/2010 662,000 0.00% 10/1/2031 549,704 Wastewater Revenue Refunding Bond 1/7/2014 14,645,620 1.033%-4.723% 11/15/2033 13,181,058 Total Wastewater Revenue Debt $15,768,020
Airport Revenue Debt Airport, Series 2012A 12/6/2012 $ 17,670,000 4.00-5.00% 7/1/2028 $17,670,000 Airport, Series 2012B 12/6/2012 7,130,000 3.50% 7/1/2018 4,085,000 Airport, Series 2014A 12/17/2014 15,660,000 4.00%-5.00% 7/1/2030 15,285,000 Total Airport Revenue Debt $37,040,000
Total All Revenue Debt $81,153,020
27 Table 10 presents the annual principal and interest outstanding for the City’s Revenue Debt as of March 1, 2016.
Table 10 Revenue Debt
Fiscal Electric Wastewater Airport Year Principal & Interest Principal & Interest Principal & Interest (June 30) Total Total(1) Total 2016 $ -- $ 299,138 $ -- 2017 2,666,238 1,361,560 3,646,388 2018 2,662,519 1,356,372 3,661,838 2019 2,654,456 1,348,365 3,660,063 2020 2,661,781 1,337,247 3,609,675 2021 2,666,431 1,322,873 3,604,675 2022 2,664,756 1,305,538 3,608,800 2023 2,653,681 1,286,158 3,606,675 2024 2,662,525 1,265,285 3,602,075 2025 2,653,431 1,243,103 3,610,275 2026 1,976,006 1,219,760 3,607,850 2027 1,972,725 1,195,477 3,604,775 2028 1,976,800 1,076,555 3,600,850 2029 1,975,156 950,201 3,590,950 2030 1,972,941 919,879 1,438,625 2031 1,973,697 888,802 1,440,125 2032 1,976,756 856,642 -- 2033 856,100 783,500 -- 2034 854,500 749,574 -- 2035 851,700 -- -- Total $40,332,200 $18,178,678 $49,893,638
(1) Does not include $260,000 Revenue Note with the Vermont State Revolving Loan Fund for the City’s Water Division which is not fully drawn.
In September 2015 the City established a $7,000,000 grant anticipation note payable from FAA grants for various airport improvement projects. The grants for such projects are pledged to payment of such line of credit. Such line of credit matures September 20, 2016.
In December 2015, the City established a $2,200,000 Parking Revenue non-revolving line of credit payable from the net revenues of the City’s municipal parking system, excluding the parking lots at the City’s airports. Such revenue debt is not included in the table 10. The Parking Revenue debt matures on December 3, 2016.
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28 Other Notes Payable
The principal amounts of bond anticipation notes and other notes payable outstanding on March 1, 2016 are presented below. Table 11 Other Notes Payable
Maturity Original Principal Outstanding Other Notes Payable Issue Date Interest Rate Date Amount 3/1/2016 HUD Section 108-US Guaranteed Notes 4/28/1999 6.05-6.20% 8/1/2017 $ 1,930,000 $ 220,000 HUD Section 108-US Guaranteed Notes 2/12/2003 3.25% 8/1/2022 3,602,000 495,000 HUD Section 108-US Guaranteed Notes 1/23/2009 variable 8/1/2018 1,827,000 800,000 Storm Water Loan 2/9/2010 0.00% 10/1/2031 1,204,000 325,704 Special Obligation TIF Bonds(1) 7/31/2014 0.513%-4.283% 11/15/2024 7,800,000 7,020,000 HUD Section 108-US Guaranteed Notes 9/11/2014 5.00% 9/11/2024 2,091,000 1,900,909
Total $10,761,613
(1) In the event that the TIF revenues are insufficient, the City’s full faith and credit remains liable.
Waterfront TIF District
In 1996, the City established a Tax Increment Financing (TIF) district known as the "Waterfront TIF District" along the central and northern end of the Lake Champlain waterfront in the City. The district was established to promote redevelopment and reclaim the post-industrial nearby waterfront area focusing on investment in public infrastructure and facilities that support economic development and public access. In 1997, the City expanded the Waterfront TIF District with a sliver of property extending from the lakefront to Church Street along Cherry Street to facilitate increasing the housing supply and parking garage additions to help stimulate a market for commercial, retail stores and business offices.
Under state law, when a municipality creates a tax increment district, the existing property values for properties within the district are recorded. This is called the Original Taxable Value (OTV). Revenues generated based upon the OTV will continue to go to the taxing entities (the City for its municipal share and the State for the portion attributable to the state education property tax). As property values increase within the tax increment financing district, the tax revenues generated increase. The tax increment is the additional new property taxes generated within the TIF district above the OTV. A portion of the incremental education property tax and the municipal property tax generated are set aside by the City and used to pay debt service on TIF related debt and also to pay related costs associated with the TIF District. The TIF District allows the City to use a portion of the incremental tax revenues derived from growth in the assessed value of properties within the TIF District to pay for the costs of improvements and infrastructure that serve the TIF district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economic vitality of the municipality, the region, or the State.
In 2012, the voters of the City authorized the issuance of general obligation bonds or notes for the Waterfront TIF District of up to $6,050,000 in order to finance public improvements that serve the Waterfront TIF District. In 2014, through the City's Public Investment Action Plan (PIAP), and solicitation of proposals for infrastructure improvements on the waterfront, the voters of the City authorized an additional amount of general obligation bonds and notes of up to $9,600,000.
The purpose of these Waterfront TIF district investments is designed to further a number of the City’s waterfront goals, without impacting municipal property tax rates: • Strengthen existing waterfront resources, including investments in the City’s waterfront; • Resolve the use of the abandoned Moran site, a former electric generating facility; • Increase public access and use of the waterfront and Lake Champlain; • Protect Lake Champlain and continue the City’s efforts in improving water quality; and • Leverage additional investment designed to further economic opportunity and grow City revenues.
29 Through June 2014, the value of the property in the Waterfront TIF District has increased from the 1997 OTV level by approximately $94,000,000, generating, over the period of time since the district was created, about $16,400,000 in incremental revenues as estimated by the State of Vermont Department of Taxes. Under state law, a portion of such incremental property tax revenue is paid to the State Education Fund and the remainder is to be used by the City to pay debt service on TIF related indebtedness and related costs.
The City has incurred indebtedness under HUD Section 108 Loans, certificates of participation and lease financing for the TIF District. In July 2014, the City incurred $7,800,000 of special obligation tax increment bonded debt intended to be repaid from the Waterfront TIF District tax incremental revenues. While such bonds and notes are expected to be fully repaid with the available tax increment revenues, the City remains liable for payment in the event such incremental tax revenues are not sufficient to pay debt service.
Under current law, the use of such tax increment funds for the TIF related indebtedness is set to expire in 2025.
Downtown TIF District
In 2011, the City Council of Burlington created a separate Downtown TIF District. As required by state law, the Vermont Economic Progress Council (VEPC) approved the Downtown TIF District Plan. In March, 2015, the voters of the City authorized the City Council to pledge the credit of the City to secure indebtedness or make direct payments for the purpose of funding one or more public improvements and related costs attributable to projects serving the Downtown Tax Increment Financing (TIF) District, in a principal amount not to exceed $10,000,000. The purpose of such financing is for the following projects:
(a) Main Street Streetscape Upgrades, to include streetscape, stormwater, utility, lighting and transportation upgrades;
(b) St. Paul Street Streetscape Upgrades, to include streetscape, stormwater, utility, lighting and transportation upgrades;
(c) Brownfields Remediation/Brown’s Court, relating to preparation of site for redevelopment;
(d) Marketplace Garage Improvements and Repair, as a supplement to other funding for this project; and
(e) Related Costs for the creation, implementation and administration of the Downtown TIF District.
The City has not yet issued any notes or bonds for such Downtown TIF District. Under current law, the City may retain up to 75% of the incremental property tax revenues to pay for TIF infrastructure debt and related costs for a period of 20 years beginning with the year in which the first Downtown TIF District debt is incurred. In March 2016, the City activated the Downtown TIF District when it made an inter-fund loan in the amount of $200,000 to the department of Public Works to fund some improvements within the Downtown TIF District.
Overlapping Debt
In addition to the indebtedness described above, the City is indirectly liable for a portion of the debt and other expenses incurred by Chittenden County and the Chittenden County Transit Authority (CCTA), the Chittenden Solid Waste District and the Winooski Valley Park District. See “Overlapping Governmental Units” for additional information.
30 FINANCIAL INFORMATION
Budget Process
The budget process in the City of Burlington normally commences with a request by the Mayor that all Departments submit, in writing, a detailed estimate of the appropriations required for the efficient and proper conduct of their respective Departments during the next fiscal year. On or before the fifteenth day of June, the Mayor must submit to the City Council a copy of the Budget for the ensuing fiscal year which contains a clear general summary of its contents, and in detail, all estimated income, the proposed property tax levy and all proposed expenditures, including debt service.
The City Council shall adopt the budget by resolution no later than June 30 of each year. The Council may reduce the submitted appropriations by a majority vote, but may not increase the appropriations without an approving two- thirds vote of the Council. The City has never failed to adopt a budget.
Table 12 General Fund Budget
2015 2016
PROJECTED REVENUES: General Administration & Taxes(1) $ 41,225,256 $ 45,271,903 Safety Services 6,277,694 5,531,650 Culture & Recreation 4,577,719 4,891,351 Public Works 4,827,537 4,685,706 Grants & Capital Projects 3,132,775 4,508,161 Total Projected Revenues $ 60,040,981 $ 64,888,771
PROJECTED EXPENDITURES: General Administration & Taxes(1) $ 13,597,101 $ 15,540,340 Safety Services 25,571,250 25,295,763 Culture & Recreation 10,437,923 10,821,945 Public Works Function 7,422,677 7,716,815 Operating Transfers Out Subtotal Operating Expenditures 57,028,951 59,374,863 Infrastructure & Capital Improvements 3,132,775 4,508,161 Total Projected Expenditures $ 60,161,726 $ 63,883,024
(1) General Administration is composed of A. General Departments (i.e. Clerk, Treasurer, etc.) B. Administrative Expense consisting of employee benefits (health, dental, life insurance, etc.) C. General Governmental consisting of payments for municipal transit service, county taxes etc. and D. Operating Transfers to the Retirement, Debt Service, Housing Trust, CEDO, and Marketplace Funds.
Source: City of Burlington.
31 Financial Reports
The City’s financial statements have been audited by an independent accountant. The City of Burlington financial statement was audited by Melanson & Heath. The Burlington School District was audited by R &H Smith, LLP. The Burlington Electric Department was audited by KPMG. See Appendix A for the audited financial statements for the fiscal year ended June 30, 2015.
Results of Operations
Statements of revenues and expenditures of the General Fund and of the Special Revenue Funds of the City have been compiled from the City’s financial statements. They have been organized in such a manner as to facilitate year-to-year comparison. Tables 13 and 14 present statements of revenues and expenditures of the City’s General Fund and the City’s School Fund, respectively, for fiscal years 2011 through 2015.
Table 13 Combined Statement of Revenues and Expenditures and Changes in Fund Balance General Fund (For the Years Ended June 30)
2011 2012 2013 2014 2015(1) Revenues: Taxes $31,390,109 $31,848,679 $28,873,069 $30,430,765 $32,911,176 Payments in Lieu of Taxes 2,115,482 2,068,995 2,168,816 2,257,824 2,395,762 Licenses and Permits 5,133,300 5,046,372 3,963,253 4,247,198 3,739,704 Intergovernmental Revenues 1,877,142 1,618,401 2,107,986 2,249,370 2,173,036 Charges for Services 8,531,502 9,439,689 12,710,746 14,219,394 14,811,677 Fines and Forfeits 1,609,974 1,572,016 ------Investment Income 877,829 631,422 25,627 13,464 93,192 Miscellaneous Revenues-Other 2,450,862 2,634,712 106,122 77,980 153,629 Total Revenues $53,986,200 $54,860,286 $49,955,619 $53,495,995 $56,278,176 Expenditures: General Administration $12,944,358 $13,311,627 $13,694,272 $13,449,222 $10,916,573 Safety Services 21,075,037 21,768,729 23,500,466 22,548,367 24,650,066 Public Works 2,749,601 3,172,083 1,058,061 2,307,826 4,093,595 Capital Outlay 4,840,253 4,548,455 ------Culture and Recreation 8,148,833 8,263,436 7,337,775 8,852,580 9,727,811 Community Development ------2,316 Debt Service 4,108,219 3,250,690 3,092,991 3,428,819 3,628,566 Total Expenditures $53,866,301 $54,315,020 $48,683,565 $50,586,814 $53,018,927 Excess of Revenues Over (Under) Expenditures $ 119,899 $ 545,266 $ 1,272,054 $ 2,909,181 $ 3,259,249 Other Financing Sources (Uses): Operating Transfers In $ 219,747 $ 272,226 $ 23,750 $ 35,688 $ 151,768 Operating Transfers Out (1,965,602) (1,589,225) (641,475) (1,439,857) (635,911) Proceeds from Long-Term Debt 5,015,000 3,092,703 9,139,140 1,000,000 -- Proceeds from Capital Lease ------483,768 Net Premium/(Discount) on Debt -- -- 213,165 -- -- Other Financing Sources (Uses) $ 3,269,145 $ 1,775,704 $ 8,734,580 $ (404,169) $ (375) Special item ------(16,936,492) -- Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses $ 3,389,044 $ 2,320,970 $10,006,634 $(14,431,480) $ 3,258,874 Fund Balance Beginning 9,915,766 13,304,810 9,417,469 19,424,103 4,992,623 Fund Balance End of Year $13,304,810 $15,625,780 $19,424,103 $ 4,992,623 $ 8,251,497
(1) The Notes to the Financial Statements for Fiscal Year 2015 contained in Appendix A herein are an integral part of this summary. Source: Compiled from the City’s audited financial statements.
32 Table 14 Combined Statement of Revenues and Expenditures and Changes in Fund Balance School General Fund (For the Years Ended June 30)
2011 2012 2013 2014 2015(1) Revenues: Taxes $ -- $ -- $ -- $ -- $ -- Payments in Lieu of Taxes 1,322,698 1,322,723 1,365,420 -- -- General State Support ------55,356,925 Intergovernmental Revenues 62,728,215 63,645,258 61,611,987 69,886,591 15,884,236 Charges for Services 3,097,778 3,112,442 2,650,479 959,733 560,191 Licenses and Permits ------Investment Income 12,968 5,513 15,540 606,783 584,344 Other Revenue 1,584,993 2,582,456 103,850 291,803 1,335,473 Total Revenues $68,746,652 $70,668,392 $65,747,276 $71,744,910 $73,721,169 Expenditures: Education $66,139,968 $70,387,936 $65,412,426 $66,407,815 $67,609,977 Capital Outlay ------Debt Service 1,221,565 1,279,097 1,405,871 $ 2,324,354 $ 2,397,093 Total Expenditures $67,361,533 $71,667,033 $66,818,297 $68,732,169 $70,007,070 Excess of Revenues Over (Under) Expenditures $ 1,385,119 $ (998,641) $ (1,071,021 $ 3,012,741 $ 3,714,099 Other Financing Sources (Uses): Operating Transfers In $ 305,038 $ 62,926 $ -- $ 1,193,306 $ -- Operating Transfers Out (209,044) (1,067,281) (825,525) (1,928,098) (638,097) Net Sources (Uses) Related to ------Bonding Other Financing Sources (Uses) $ 95,994 $(1,004,355) $ 825,525 $ (734,792) $ (638,097) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses $ 1,481,113 $(2,002,996) $( 1,896,546) $ 2,277,949 $ 3,076,002 Fund Balance Beginning 10,158 $ 1,491,271 $ (683,999) $(2,580,545) $ (302,596) Fund Balance End of Year $ 1,491,271 $ (511,725) $ (2,580,545) $ (302,596) $ 2,773,406
(1) The Notes to the Financial Statements for Fiscal Year 2015 contained in Appendix A herein are an integral part of this summary.
Source: Compiled from the City’s audited financial statements.
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33 Table 15 Balance Sheet General Fund and School General Fund(1) (For the Year Ended June 30, 2015)
School General Fund General Fund Assets Cash & cash equivalents $ 6,546,406 $ 5,795,610 Investments 2,106,063 -- Receivables, net of allowance for uncollectibles: Property & other taxes 1,888,502 -- City of Burlington -- 107,895 Departmental & other 1,945,719 190,944 Intergovernmental 87,708 1,547,590 Due from other funds -- 850,378 Advances to other funds 1,983,605 -- Inventory 191,525 -- Prepaid expenditures 146,774 8,250 Other current assets 316,607 -- Due from component unit -- -- Total Assets $15,212,909 $8,500,667
Liabilities & Fund Balances Liabilities: Accounts payable $1,327,096 $1,679,067 Accrued payroll & benefits payable 1,043,743 -- Accrued liabilities 336,379 -- Accrued expenses -- 1,187,915 Unearned revenues 1,770,061 -- Due to other funds 107,895 2,860,279 Insurance reserve 500,000 -- Other liabilities 50,579 -- Total Liabilities $5,135,753 $5,727,261
Deferred Inflows of Resources $1,825,659 $ -- Fund Balances: Nonspendable $2,321,904 $ 8,250 Restricted 17,265 -- Committed 1,624,950 1,104,785 Unassigned 4,287,378 1,660,371
Total Fund Balances 8,251,497 2,773,406 Total Liabilities & Fund Balances $15,212,909 $8,500,667
(1) The Notes to the Financial Statements for Fiscal Year 2015 contained in Appendix A herein are an integral part of this summary.
Source: Compiled from the City’s audited financial statements.
Management Discussion
The City is a complex financial entity involving numerous enterprise funds, many revenue streams, and nearly $185 million (excluding the School District) in total expenditures. When creating budgets, the City strives to treat all stakeholders and constituencies fairly when determining how to allocate expenses and revenues. The budget consists of over 3,600 line items and shows comparisons to spending in previous years. The City has implemented a new accounting systems which has allowed the City budget and spending information to be available online and updated daily. Because of these measures, budget accuracy has and are expected to continue to improve.
34 Within the City Council-approved FY 15 Annual Financial Statements (Audit) the auditors identify a General Fund unassigned fund balance of over $4.2 million. Essentially the unassigned fund balance is the year-over-year accumulated surplus within the General Fund. In FY 14 the unassigned balance was approximately $70,000, and that was the first year that there was a positive balance since 2010. This was a positive improvement in the City’s fund balance, something that Moody’s identified as a key step before the rating agency would upgrade the City’s credit rating. In March 2016, Moody’s did upgrade the City’s credit rating for its general obligation bonds from a Baa2 rating to an A3 rating. This surplus was due to many factors. The FY 15 audit showed a “surplus”, actual revenues over actual expenditures, for all General Fund accounts totaling around $3.3 million. This surplus was primarily due to actual expenditures being below budget by almost $2.5 million and revenues coming in above budget by approximately $800,000. This positive unassigned fund balance, which is a significant step towards our achieving the Council-approved Fund Balance Policy, stabilizes city finances, allows us to make targeted investments to improve the City’s future, will be viewed favorably by credit rating agencies and investors, and provides us with a “rainy day fund” in case of emergencies or a downturn in the economy.
* The FY 15 Auditor’s Management letter, approved and accepted by the City Council, shows significant improvement over FY 14, and even more so from FY 12.
The FY 12 Management Letter listed 27 findings of which twelve were identified as a “Material Weakness”, and one was a “Significant Deficiency.
The FY 13 Management Letter listed 17 findings of which ten were identified as a “Material Weakness”, and one was a “Significant Deficiency.
The FY 14 Management Letter, listed nine findings of which four were identified as a “Material Weakness” and none listed as a “Significant Deficiency”.
The draft FY 15 Management Letter identifies four findings with two identified as a “Material Weakness”.
So, from Fiscal Year 12 to 15 the Management Letter shows a decrease of 85% in the number of findings (27 to 4), and a decrease of 85% (13 to 2) in findings identified as material or significant.
Several measures were taken to improve finances, including:
* Implementing Central Purchasing that has already reduced purchasing costs and identified possible new revenues sources such as rebates.
* Collaborating with the Human Resources Department to hire a new third party administrator for the City’s health insurance plan to reduce administrative costs and improve monitoring of expenses.
* Collaborating with all City departments’ in developing the 10-year Capital Plan to have a planned, proactive, and cost efficient approach to address long-standing city infrastructure needs.
* Implementing of Agency of Education requirement of financial fire wall between the City and the School District.
* Presenting FY 14 Audit to City Council at the earliest date in over 10 years.
* Refinancing of airport debt service that significantly reduced the airports interest payments towards its current debt.
* Achieving a clean Federal Audit report.
* Conducting, with Collaboration with City Attorney’s Office, March 2015 Town Meeting election without any significant issues even with implementation of reapportionment changes to City’s Council and Schoolboard wards.
35 * Burlington Employees Retirement System Board voting to make changes in actuary methods and funding, the result of which was to see an increase in the retirement fund’s funding level while level funding the City’s contribution amount.
The City of Burlington is in the final stages of resolving a matter with the Internal Revenue Service over the timing of remittance of tax withholdings for employees of the City’s School department and for certain City W-2 forms. The City had been making the payments of payroll taxes withheld for school district employees on behalf of the School District, which for school administrative reasons were often made one or more days after such withholdings were required to be paid to the Internal Revenue Service. Remittance of such payments to the Internal Revenue Service is now being handled directly by the school department, which the City believes will resolve the issues of making timely payments. The City has re-sent W-2 forms to the IRS in relation to that inquiry. The City expects to resolve the matter with the Internal Revenue Service waiving any interest and penalties.
PROPERTY VALUATIONS AND TAXES
Property Taxation
The principal tax of the City of Burlington is the tax on real and personal property. The tax is assessed by the City Council after the adoption of the budget for a fiscal year. Separate amounts are assessed for county taxes, city purposes, redemption of bonds, and payment of debt service, library book fund, schools, the police, street repairs, highways, parks and the retirement system.
Act 60
The Vermont General Assembly passed Act 60, also known as the Equal Educational Opportunity Act, in June 1997. The first full year of implementation of Act 60 was the 2000-2001 school year. Pursuant to Act 60, rather than funding education at the municipal level, through the assessment of a local property tax, Vermont has a statewide educational property tax. Such educational property tax revenues inure to the benefit of the State of Vermont, not the City, and are not available for debt service on the Series 2016A Bonds.
Property Valuation
The City determines property valuations as of April 1 of each year according to the law. The current base period for establishing assessments at 100% of the fair market value is April 1, 2005. Beginning with the fiscal year 2006, all residential property has been assessed at 100% of the fair market value and all nonresidential real and personal property has been assessed at 120% of the fair market value with the exceptions of farm land, land zoned RCO (recreation, conservation and open space), and regulated utilities.
For municipal taxing purposes the tax classification system described above remains in effect. The voters approved in November 1998 the imposition of a special property tax assessment of valuation on properties in a newly designated downtown district. Commercial residents of the City’s Downtown Improvement District (bounded by properties fronted on Pearl Street to the North, South Winooski Avenue to the East, Main Street from South Winooski Avenue to Battery Street and then Maple Street to the South, and Lake Champlain to the West) pay a tax of $.09 per $100 of appraised valuation of their property. This special tax assessment is devoted to the parking system. Beginning in April 1, 1998 and as a result of Act 60, personal property taxation for school purposes was eliminated. As of April 1, 1999 the 120% assessment tax classification has been eliminated on the school tax rate.
A single tax rate applies to the assessed value of all taxable real and personal property. The tax is applied to the Grand List (equal to 1% of the assessed value of the City after the deduction of the veteran’s exemption) in order to determine the tax levy. Accordingly, a tax rate of $1 on the Grand List represents $10 per $1,000 of assessed
36 valuation. Table 16 sets forth the trend in the City’s valuations for the last ten years. Table 17 presents the Grand List for the last ten years.
A City-wide reappraisal of all property was completed on April 1, 2005. In all Vermont communities, the point at which a municipality must appraise is determined by the State of Vermont. Act 60 and Act 68, which is the primary State legislation for funding public education, drives the timing of an appraisal process. This state funding mechanism, described in the Acts, speaks to the fact that public education is funded through a tax on property value and a distinction of whether the property is a homestead or non-homestead. For this reason, the State has mandated that once a municipality’s overall appraised values drop below 80% of the estimated fair market value then the municipality must conduct a reappraisal. The measure of listed appraised value to market value is expressed in the common level of appraisal (CLA). The City’s CLA for FY14 is 89.69%, FY15 is 88.15% and FY16 is 87.54%.
For the fiscal year 2015, the City has received from the State of Vermont the final total Equalized Education Property Value of $4,026,124,000, and the final Grand List total of $36,469,219. This does not include property assessment of $155,617,500 which is the 120% assessment on non-residential properties.
Table 16 Assessed and Estimated Actual Value of Taxable Property
Real Property Personal Property Total Property Fiscal Estimated Estimated Estimated Year Assessed Fair Market Assessed Fair Market Assessed Fair Market Ending Value(1) Value(2) Value(1) Value Value(1) (100%) Value 2004 $ 1,738,130,902 $ 2,259,570,173 $ 153,590,520 $ 153,590,520 $ 1,891,751,422 $ 2,413,160,693 2005 1,748,640,126 2,630,397,155 151,966,452 151,966,452 1,900,606,578 2,782,363,607 2006 (3) 3,279,767,848 3,279,767,848 128,955,204 128,955,204 3,408,723,052 3,408,723,052 2007 3,280,619,721 3,333,963,131 120,396,098 120,396,098 3,401,015,819 3,454,359,229 2008 3,300,620,527 3,534,611,830 133,175,304 133,175,304 3,433,795,831 3,667,787,134 2009 3,332,911,500 3,785,678,669 139,806,696 139,806,696 3,472,718,196 3,925,485,365 2010 3,364,949,900 3,792,774,910 140,861,850 140,861,850 3,505,811,750 3,933,636,760 2011 3,393,140,000 3,770,155,556 137,113,980 137,113,980 3,530,253,980 3,907,269,536 2012 3,431,440,600 3,825,900,000 131,700,400 131,700,400 3,563,141,000 3,957,600,400 2013 3,463,420,400 3,936,152,290 123,656,600 123,656,600 3,587,077,000 4,056,808,890 2014 3,492,997,900 3,894,523,247 124,872,230 124,872,230 3,617,870,130 4,019,395,477 2015 3,646,921,910 4,137,177,436 131,628,610 131,628,610 3,778,550,520 4,268,806,046
(1) The appraisal does not include the 120% classification portion on real non-residential property and business personal property. As of April 1, 2005, a general reappraisal updated all assessments to 100% of actual value. (2) The estimated fair market value of real property is calculated by the assessed value divided by the Common Level of Appraisal (CLA). The State Tax Department has determined the final CLA for 2015 to be 88.15%. (3) A city wide reappraisal was completed for Fiscal Year 2006.
Source: City of Burlington Assessor’s Office.
37 Table 17 Assessed Value - Real and Personal Property (120% Included)
Fiscal Real Non- Year Residential Personal Total 120% Ending Property Property Included 2004 $ 73,694,202 $ 25,598,420 $ 99,292,622 2005 85,117,021 25,327,742 110,444,763 2006 129,057,627 25,791,040 154,848,667 2007 130,131,480 24,079,219 154,210,700 2008 129,081,067 26,635,061 155,716,128 2009 130,600,288 27,961,339 158,561,627 2010 134,314,346 26,961,654 161,276,000 2011 128,272,411 26,936,700 155,209,111 2012 123,626,500 25,820,100 149,446,600 2013 125,682,854 24,242,300 149,925,154 2014 128,026,597 24,974,446 153,001,043 2015 130,374,432 25,243,068 155,617,500
Table 18 Grand List
Assessed Value Fiscal 120% With 120% Year Assessed Value Classification(1) Classification Grand List(2) 2004 $ 1,792,458,800 $ 99,292,622 $ 1,891,751,422 $ 18,917,514 2005 1,790,161,815 110,444,763 1,900,606,578 19,006,065 2006(3) 3,408,723,052 154,848,667 3,563,571,719 35,635,717 2007 3,401,015,819 154,210,700 3,555,226,519 35,552,265 2008 3,433,795,831 155,716,128 3,589,511,959 35,895,119 2009 3,472,718,196 158,561,627 3,631,279,823 36,312,798 2010 3,504,214,610 161,276,000 3,665,490,610 36,654,906 2011 3,527,823,500 155,209,111 3,683,032,611 36,830,326 2012 3,553,485,600 149,446,600 3,702,932,200 37,029,322 2013 3,577,511,000 149,925,154 3,727,436,154 37,274,361 2014 3,617,870,130 153,001,043 3,770,871,173 37,708,711 2015 3,646,921,910 155,617,500 3,802,539,410 38,025,394
(1) Nonresidential real and personal property is assessed at 120% of fair market value with certain exceptions. See “Property Valuation.” City Charter Section 81 (2) The tax rate is applied to the Grand List to determine the tax levy. The Grand List is equal to 1% of the assessed valuation. (3) A city wide reappraisal was completed for Fiscal Year 2006.
38 Table 19 Assessed Value of Real Property by Property Type(1)
2012/13 2013/2014 2014/15 Category Value % of Total Value % of Total Value % of Total Residential $2,372,845,900 68.51% $2,372,845,900 68.51% $2,391,164,100 67.84% Mobile Homes 3,405,100 0.10% 3,405,100 0.10% 3,498,600 0.10% Commercial 967,328,300 27.93% 967,328,300 27.93% 1,008,252,400 28.60% Industrial 42,938,500 1.24% 42,938,500 1.24% 42,938,500 1.22% Utilities 41,797,200 1.21% 41,797,200 1.21% 41,740,700 1.18% Farms 449,000 0.01% 449,000 0.01% 449,000 0.01% Miscellaneous 34,828,000 1.00% 34,828,000 1.00% 36,901,100 1.05% Total $3,463,592,600 100.00% $3,463,592,600 100.00% $3,524,945,200 100.00%
(1) After deduction of veteran’s exemptions.
A group of property owners owning certain rental properties in the City are appealing the tax appraisals of their properties by challenging the City’s right to make those assessments without a general city reassessment. The City is defending its tax assessments as ongoing maintenance of its grand list. The appeal was initially made to the Board of Tax Appeals, a quasi-judicial panel that hears challenges to the City tax assessor’s determinations. The panel upheld the assessment and the claimants have appealed the ruling to the Vermont Superior Court.
Tax Collections
The City of Burlington levies taxes for the City, County, School District and the Chittenden County Transportation Authority (CCTA). Tax bills are sent out in July and taxes are due quarterly on the 12th of August, November March and June. After the 12th day of the month in which a quarter’s taxes are due, a 1% penalty is levied for the first week of delinquency and thereafter a 4% penalty is levied and an additional 1% interest charge is added each month thereafter. On June 23, an additional 8% collection fee and a $1 warrant fee are charged to delinquent accounts by the City. The following table compares Burlington’s net tax collections with its gross tax levies for the fiscal years ended June 30, 2011, through June 30, 2015.
Table 20 Tax Collections
2011 2012 2013 2014 2015 Tax Rate Per $100 of Assessed Valuation $2.00 $2.03 $2.15 $2.29 $2.44 Total Property Tax Levy(1) $74,818,352 $76,089,194 $78,862,874 $83,526,157 $89,907,261 Current Levy Collected End of Each Fiscal Year(1) $74,276,290 $75,617,383 $78,330,310 $82,869,824.00 $89,275,258 % of Current Gross Tax Levy Collected 99.30% 99.40% 99.33% 99.30% 99.29% Total Collections $74,758,954 $75,968,657 $78,338,310 $83,393,681 $89,719,767 % of Current Gross Levy 99.95% 99.80% 99.33% $99.90% 99.79%
(1) Includes City, School, County and CCTA.
39 Tax Rates/Levy Limits
Taxes are applied to the Grand List (1% of assessed value) in order to determine the tax rate per $100 of assessed value. The City Charter prescribes limits on the rate of taxes assessable by the City Council for certain purposes. These limits may be exceeded in a particular year if authorized by the voters.
Other taxes, including the tax prescribed by the Charter for the payment of general obligation debt service and retirement benefits, are not subject to such limits. The City’s Charter requires the City Council to annually assess a tax upon the City’s Grand List in an amount sufficient to pay debt service on outstanding bonds of the City to the extent that funds are not otherwise available therefor.
Tax rate limits per $100 of assessed value are presented in Table 21. Table 22 presents the tax rates per $100 of assessed value for collection years 2012 through 2015.
Table 21 Tax Rate Limitation
Charter Limit(3) General City .2329 Police and Fire .0807 Highways(1) .0312 Parks(1) .0350 Streets Special(2) .0617 Housing Trust Fund .0100 Library .0050 Open Space .0100
(1) These tax rate items have charter prescribed minimum tax rates. (2) Voter approved tax of up to 2¢ to be used for the Street Special tax within the City. (3) The charter limit was adjusted to produce revenue neutrality for the General City, Police/Fire and Streets Special taxes as the result of the City-wide reappraisal. Effective July 1, 2013, there will be a $0.005 increase in the general city tax rate to provide for maintenance of the City’s Bike Path.
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40 Table 22 Tax Rates Per $100 of Assessed Value
2012/13 2013/14 2014/15 2015/16 City General 0.2329 0.2379 0.2604 0.2604 Highway 0.0312 0.0312 0.3120 0.0312 Parks – General 0.0250 0.0250 0.2500 0.0250 Penny for Parks 0.0100 0.0100 0.0100 0.0100 CCTA 0.0390 0.0422 0.4320 0.0429 County 0.0050 0.0050 0.0051 0.0052 Debt Service 0.0462 0.0641 0.0817 0.0800 Police and Fire Special 0.0807 0.0807 0.0807 0.0807 Retirement 0.1678 0.1848 0.1810 0.1797 Streets – Special(2) 0.0617 0.0617 0.0617 0.0617 Housing Trust Fund 0.0054 0.0054 0.0054 0.0054 Library Book Tax 0.0050 0.0050 0.0050 0.0050 Open Space(2) 0.0054 0.0054 0.0054 0.0054 City Tax 0.7153 0.7584 0.7958 0.7926 Local Agreement - - 0.0039 0.0038
School(1) 1.4302 1.5257 1.6358 1.6544
Total Tax Rate 2.1455 2.2841 2.4355 2.4470
(1) Beginning in fiscal year ending June 30, 2004, the School tax represents the State Education Tax Rate for which a homestead rate and a non-residential rate are set by the State of Vermont. The rates included are for homestead properties. For non-residential properties the rates were 1.5390, 1.5441, 1.5684, 1.6055, and 1.7187 for 2010/2011, 2011/2012, 2012/2013, 2013/2014, and 2014/2015 respectively. (2) Voter approved tax of up to 1¢ to be used for the preservation of open space within the City became effective for fiscal year ending June 30, 2005. Voters approved an increase for Street special tax for June 30, 2009.
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41 Principal Taxpayers
A list of the taxpayers in the City with the twenty highest assessed valuations on the 2015 assessment is presented in Table 23. No single taxpayer is assessed more than .75% of the City’s Grand List, and all twenty taxpayers represent under 7% of the Grand List. Table 23 Top Twenty Taxpayers
% Assessed Value to Owner Assessed Value total Grand List Value Diamondrock Burlington Owner LLC $25,933,400 0.72% UVM/Redstone Lofts LLC 24,820,000 0.49% Burlington Town Center LLC 20,837,900 0.58% Fortieth Burlington LLC 18,785,200 0.52% Burlington Harbor Hotel Group LLC 16,833,400 0.47% Burlington Electric Dept./CVPS 14,902,723 0.41% Antonio B Pomerleau LLC 14,649,300 0.41% Vermont Electric Power 13,197,200 0.37% May Department Stores Co. 11,123,400 0.31% New Northgate Housing LLC 11,089,000 0.31% Howard Opera House Assoc LLC 9,001,300 0.20% Champlain Housing Trust Inc. 8,728,800 0.24% Vermont Gas Systems Inc. 7,910,200 0.22% MP Vermont LLC 7,882,300 0.22% UVM/Catamount Redstone Apts LLC 7,830,000 0.22% Lake and College LLC 7,754,500 0.21% Investors Corporation of Vermont 7,721,200 0.21% Investors Corporation of Vermont 7,649,000 0.21% Courthouse Plaza LLC 7,060,000 0.20% UVM/Centennial Court LP 6,679,600 0.19%
TOTAL $250,388,423 6.72%
Source: City Assessor’s Office.
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42 ECONOMIC AND DEMOGRAPHIC INFORMATION
Economic Activity
The Greater Burlington area, which includes the City of Burlington and all of Chittenden County, is Vermont’s major economic area. Most of the County’s nonfarm employment lies within the three-community region of Burlington, Essex and South Burlington. Manufacturing employment represents approximately 10% of the nonagricultural employment in the Burlington area labor market. Non-manufacturing employment accounts for approximately 90% of employment. Education and health services, government and trade are principal areas of non-manufacturing employment in the Greater Burlington area.
Chittenden County has provided the bulk of the State’s economic growth over the past ten years, which is reflected in the area’s employment statistics. The Burlington Labor Market Area had an annual unemployment rate of 2.9% in June 2015. The State’s unemployment rate was 3.6% as of June 2015.
Population
Population statistics for the City, Chittenden County and the State of Vermont are shown in the following table.
Table 24 Population Statistics
City of Burlington Chittenden County State of Vermont Change From Change From Change From Previous Previous Previous Total Census Total Census Total Census 1960 35,531 7.17% 74,425 18.95% 389,881 3.21% 1970 38,633 8.73% 99,131 13.20 % 444,330 13.97% 1980 37,712 (2.38%) 115,534 16.55% 511,456 15.11% 1990 39,127 3.78% 131,765 14.05% 562,758 10.03% 2000 38,889 (0.61%) 146,571 11.24% 608,827 8.19% 2010 42,417 9.10% 156,545 6.80% 625,741 2.80% 2014(1) 42,284 (0.3%) 160,531 2.5% 626,562 0.1%
Source: U.S. Census Bureau. (1) Estimate
Employment Data
The Greater Burlington area possesses a growing, educated work force with skills in a variety of areas. To keep a supply of workers skilled to meet the needs of new and existing business and industry, the State of Vermont assists with tuition-free training of new Vermont employees. Educational institutions, such as the University of Vermont, provide customized training programs and continuing education required by technicians and others in rapidly changing technological fields.
Employment opportunities in Burlington and Chittenden County have grown to more than match growth in the area’s work force. The following table presents average annual nonagricultural employment figures for the years 2005 through June 2015 for the Burlington Labor Market Area, the State of Vermont and the United States.
43 Table 25 Employment
State Burlington Labor Market Area of Vermont United States Unemployment Unemployment Unemployment Year Labor Force Rate Rate Rate(1) 2005 113,350 3.2% 3.5% 5.1% 2006 114,250 3.3% 3.6% 4.6% 2007 112,750 3.4% 4.0% 4.6% 2008 113,200 4.1% 4.8% 5.8% 2009 114,750 6.0% 6.7% 9.3% 2010 113,700 5.3% 6.7% 9.6% 2011 117,400 3.5% 5.6% 8.9% 2012 117,300 4.0% 5.0% 8.1% 2013 124,400 3.5% 4.4% 7.4% 2014 124,000 3.3% 4.1% 6.2% 2015 125,050 2.4%(2) 3.1%(2) 5.0%(2)
(1) Seasonally Adjusted. (2) December only. Source: Vermont Department of Labor.
Employment opportunities in the City of Burlington are distributed among manufacturing, government, service, and commercial enterprises. The following is a table of average nonagricultural employment by industry as of June 2015 in the Burlington Labor Market Area.
Table 26 Employment by Industry As of December 2015
Number of % of Total Employees Employment Goods-Producing/Manufacturing 18,800 14.70% Trade, Transportation and Utilities 23,900 18.69% Information 2,400 1.88% Finance 4,800 3.75% Professional and Business Services 14,600 11.42% Educational and Health Services 22,600 17.67% Leisure and Hospitality 12,000 9.38% Other Services 4,200 3.28% Government 24,600 19.23% Total 127,900 100.00%
Source: Vermont Department of Labor.
44 Major Employers
The largest employers in and near the City of Burlington (Chittenden County) are presented in Table 27.
Table 27 Burlington Area Largest Employers
Approximate Number of Full-Time Name Employees University of Vermont Medical Center 5,383 International Business Machines (IBM) 4,000 University of Vermont 3,446 City of Burlington/Burlington School District 1,612 People’s United Bank 1,000 Howard Center for Human Services 998 Adecco 775 Ben & Jerry’s Homemade 735 GE Healthcare 700 Dealer.com 675 Green Mountain Power Corp 615 Fairpoint Communications 545 Saint Michael’s College 489 Mount Family Group, LTD (Westaff) 450 Burton Snowboards 375 VNA of Chittenden & Grand Isle Counties 412 SD Ireland Concrete Construction Corp 400 Manpower of Vermont 375 Crystal Rock Holdings, Inc. 350 Husky Injection Molding System 350 Sodexho 350 Champlain College 310
Source: Vermont Business Magazine 2014/2015 Vermont Business & Manufacturing Directory, except for the City and the Burlington City Schools.
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45 Construction
The following table sets forth information with respect to building permits and property value for the City from 2007 through 2014 and the most recent data available for 2015.
Table 28 Property Value and Building Permits
Commercial Residential Construction Construction Total Property Value(1)(2) Fiscal No. No. Year Of of Ending Permits Value Permits Value Commercial Residential Total 2007 271 $29,597,016 734 $26,702,234 $995,547,950 $2,244,574,702 $3,240,122,652 2008 272 22,089,243 773 $23,111,581 1,017,637,193 2,267,867,953 3,285,505,146 2009 316 48,544,419 837 $14,132,849 1,066,198,821 2,281,968,102 3,348,166,923 2010 392 22,518,890 1,074 $21,626,106 1,088,789,887 2,303,659,107 3,392,448,994 2011 514 54,657,163 1,122 $32,822,076 1,146,797,979 2,341,552,873 3,488,350,852 2012 484 33,114,527 1,170 $23,699,481 1,179,923,153 2,365,040,959 3,544,964,112 2013 468 38,114,527 1,232 $25,071,633 1,221,633,086 2,386,552,899 3,608,185,985 2014 518 55,205,320 1,391 $21,088,576 1,198,902,730 2,418,967,400 3,617,870,130 2015 409 30,867,585 1,396 $24,884,493 2,432,013,600 1,224,560,210 3,656,560,210
(1) Estimated fair market value - real property. (2) Final 411 for PV&R Source: City of Burlington.
Housing Market
The median price for primary residences under six acres sold in the City as of August 2015 was $259,500, a 5% decrease in median sale price from the 2014 figure of $273,250. The City contains approximately 6,649 owner- occupied housing units, accounting for 16% of Chittenden County’s 41,083 owner-occupied units. The City’s share of Chittenden County’s home sales as of August 2015 is 26%. According to Zillow, the median sales price for a residential condominium in Burlington as of August 2015 is $235,100, a 2.6% increase from the August 2014 median price of $229,200. The number of single family primary residences sold in Burlington has remained relatively stable since tracking of this data began in 1988. Based on the December 2014 Allen & Brooks Report, the number of Chittenden County single family home sales in 2013 was 1,646.
A number of homes sold in Burlington that fall below the median sale price are purchased through Champlain Housing Trust (CHT) or Green Mountain Habitat for Humanity. CHT and Green Mountain Habitat for Humanity have placed resale restriction covenants on over 220 homes in Burlington. These organizations receive operating or development grants from the City in order to ensure an adequate supply of homes for low and moderate income residents.
The rental housing market in Burlington remains very strong, though low vacancy rates pose a challenge for prospective renters. According to the 2009-2013 American Community Survey 5-Year Estimate, Burlington’s rental vacancy rate is 1.6%. The low vacancy rate pushes demand for rental housing up which results in increased rental rates. Various forms of rental housing assistance for low to moderate-income households are provided by the Burlington Housing Authority, Champlain Housing Trust and several other nonprofit housing corporations.
Vermont enjoys a low foreclosure rate relative to the national average, but saw an increase in foreclosures throughout the summer of 2015 for a foreclosure rate of 1 in every 4,363 homes; Chittenden County enjoys a slightly lower rate of 1 in every 6,000. Burlington has seen a steady decline in foreclosures since 2009, when 40 homes went into foreclosure in the wake of the economic recession. In 2014, eight Burlington homes went into foreclosure, the lowest number in 11 years.
46
TAX EXEMPTION
In the opinion of Burak Anderson & Melloni, PLC, Bond Counsel, under existing law, rules and regulations, and assuming (among other things) the accuracy of certain representations of the City and the compliance by the City with certain covenants, the interest on the Series 2016A Bonds will be excluded from gross income for federal income tax purposes and will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. Interest on the Series 2016A Bonds will be taken into account in determining adjusted current earnings of certain corporations (as defined for federal income tax purposes) for purposes of calculating the alternative minimum tax imposed on such corporations. Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the Series 2016A Bonds.
The Internal Revenue Code of 1986, as amended (the “Code”) establishes certain requirements that must be continuously satisfied subsequent to the issuance of the Series 2016A Bonds in order for interest on the Series 2016A Bonds to remain excluded from gross income for federal income tax purposes. These requirements include restrictions on the use, expenditure and investment of bond proceeds and also include the payment of rebates or penalties in lieu of rebates to the United States of America. Failure to comply with these requirements may cause inclusion of interest on the Series 2016A Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2016A Bonds. The City will covenant to take all lawful action necessary to comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2016A Bonds in order that interest on the Series 2016A Bonds be or continue to be excluded from gross income for federal income tax purposes. The opinion of Bond Counsel assumes compliance with such covenants.
It should also be noted that the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Series 2016A Bonds or, in the case of a financial institution, for that portion of the holder's interest expense allocated to interest on the Series 2016A Bonds and, for insurance companies subject to the tax imposed by Section 831 of the Code, the amount of certain deductions is reduced by a specific percentage of, among other things, interest on the Series 2016A Bonds. In addition, interest on the Series 2016A Bonds earned by certain corporations could be subject to the environmental tax or the foreign branch profits tax imposed by the Code, and may be included in passive investment income subject to federal income taxation under provisions of the Code applicable to certain S corporations. The Code also requires recipients of certain social security and certain railroad retirement benefits to take into account receipts or accruals of interest on the Series 2016A Bonds in determining the portion of such benefits that are included in gross income. No assurance can be given that future legislation will not have adverse tax consequences for holders of the Series 2016A Bonds.
The Series 2016A Bonds will not be designated as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code.
Bond Counsel is also of the opinion that, under existing law, interest on the Series 2016A Bonds is exempt from State of Vermont personal income taxes and State of Vermont corporate income taxes to the extent interest on the Series 2016A Bonds is excluded from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any other State of Vermont tax consequences arising with respect to the Series 2016A Bonds. Bond Counsel also has not opined as to the taxability of the Series 2016A Bonds or the income therefrom under the laws of any state other than the State of Vermont.
Although Bond Counsel is of the opinion that interest on the Series 2016A Bonds is excluded from gross income for federal income tax purposes and is exempt from state of Vermont personal income taxes and State of Vermont corporate income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2016A Bonds may otherwise affect a Bondholder’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences, and Bondholders should consult with their own tax advisors with respect to such consequences
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2016A Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or
47 exempted from state income taxation, or otherwise prevent beneficial owners of the Series 2016A Bonds from realizing the full current benefit of the exclusion from gross income of such interest for tax purposes. The introduction or enactment of any future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Series 2016A Bonds. Prospective purchasers of the Series 2016A Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Series 2016A Bonds may affect the tax exempt status of interest on the Series 2016A Bonds or the tax consequences of ownership of the Series 2016A Bonds. No assurance can be given that future legislation, if enacted into law, will not contain provisions which could directly or indirectly affect the exclusion of the interest on the Series 2016A Bonds from gross income for federal income tax purposes.
Interest paid on tax-exempt obligations such as the Series 2016A Bonds is now generally required to be reported by payors to the Internal Revenue Service (“IRS”) and to recipients in the same manner as interest on taxable obligations. In addition, such interest may be subject to “backup withholding” if the bond owner fails to provide the information required on IRS Form W-9, Request for Taxpayer Identification Number and Certification, or the IRS has identified the bond owner as being subject to backup withholding.
RATING
Moody’s Investors Service (“Moody’s) assigned an underlying rating of “A3” to the Series 2016A Bonds. A rating is subject to withdrawal at any time; withdrawal of a rating may have an adverse effect on the marketability of the Bonds. For an explanation of the significance of the rating, an investor should communicate with the rating agency. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2016A Bonds.
CERTIFICATION
An officer of the City will furnish a certificate to the effect that this Official Statement, to the best of such officer’s knowledge and belief as of the date of sale and the date of delivery, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading.
LEGAL MATTERS
Legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of Burak Anderson & Melloni, PLC, Burlington, Vermont, Bond Counsel to the City, as to validity and tax exemption. The opinion will be substantially in the forms set forth in Appendix B attached hereto. Certain legal matters with respect to the Bonds will be passed upon for the Underwriter by its counsel, Primmer Piper Eggleston & Cramer PC, Montpelier, Vermont. Other than as to matters expressly set forth herein as prepared by Bond Counsel or as the opinion of Bond Counsel, Bond Counsel is not passing on and does not assume any responsibility for the accuracy or adequacy of the statements made in this Official Statement and makes no representation that it has independently verified the same.
48 AUDITOR
The firm of Melanson Heath & Company, PC has agreed to the inclusion in this Official Statement of its report, dated January 27, 2016, on the audit of the financial statements of the City of Burlington, Vermont. Such report is included herein as pages 5-7 of Appendix A. Melanson Heath & Company, PC did not perform the audit of the City’s financial statements for any year prior to Fiscal Year 2011.
FINANCIAL ADVISOR
The City retained Public Financial Management, Inc., of Minneapolis, Minnesota, as financial advisor (the “Financial Advisor”) in connection with the issuance of the Bonds. In preparing the Official Statement, the Financial Advisor has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for the Official Statement, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the City to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds.
Requests for information concerning the City should be addressed to Public Financial Management, Inc., 800 Nicollet Mall, Suite 2710, Minneapolis, Minnesota 55402 (612/338-3535), www.pfm.com.
UNDERWRITING
Wells Fargo Securities (the “Underwriter”) has agreed to purchase the Series 2016A Bonds from the City pursuant to a bond purchase agreement by and between the City and the Underwriter (the “Bond Purchase Agreement”) at a purchase price of $______, equal to the principal amount of the Series 2016A Bonds, less an underwriter’s discount of $______plus a net original issue premium of $______. The Bond Purchase Agreement provides that the Underwriter will purchase all of the Series 2016A Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth therein. The Underwriter may offer and sell the Series 2016A Bonds to certain dealers and others (including dealers depositing the Series 2016A Bonds into investment trusts) a prices lower than the public offering prices stated in the inside cover hereof.
Wells Fargo Bank, National Association ("WFBNA"), the sole underwriter of the 2016A Bonds, has entered into an agreement (the "Distribution Agreement") with its affiliate, Wells Fargo Advisors, LLC ("WFA"), for the distribution of certain municipal securities offerings, including the 2016A Bonds. Pursuant to the Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the 2016A Bonds with WFA. WFBNA also utilizes the distribution capabilities of its affiliate Wells Fargo Securities, LLC (“WFSLLC”), for the distribution of municipal securities offerings, including the 2016A Bonds. In connection with utilizing the distribution capabilities of WFSLLC, WFBNA pays a portion of WFSLLC’s expenses based on its municipal securities transactions. WFBNA, WFSLLC, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company. Wells Fargo Securities is the trade name for certain securities-related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
______(the “Verification Agent”), at the time of issuance of the Series 2016A Bonds, will verify from the information provided to it the mathematical accuracy as of the date of the closing on the Series 2016A Bonds of the computations contained in such information to determine that the securities and cash deposits listed in the applicable schedules, to be deposited in the escrow trust fund established in connection with the Bonds to be Refunded, will be sufficient to pay, when due, the principal, interest and call premium payment requirements, if any, of the Bonds to
49 be Refunded, which report will be relied upon by Bond Counsel to the City. The Verification Agent will express no opinion on the assumptions provided to it, nor as to the exemption from taxation of the interest on the Series 2016A Bonds.
LITIGATION
There is no litigation now pending or, to the knowledge of City officials, threatened which restrains or enjoins the issuance of the Series 2016A Bonds or questions or affects the validity of the Series 2016A Bonds, any proceeding of the City taken with respect to the sale thereof or the pledge of the full faith and credit of the City for the benefit of the Series 2016A Bonds. Neither the creation, organization, nor existence of the City, nor title of the Mayor or present members of the City Council or other officers of the City in their respective offices is being contested.
The City experiences routine litigation and claims incidental to the conduct of its affairs. In the opinion of the City Attorney, there are no actions presently pending or threatened, the adverse outcome of which would have a material adverse effect on the financial condition of the City except as provided herein.
In connection with the enterprise of Burlington Telecom, certain taxpayers within the City initiated a lawsuit against the City and its former Chief Administrative Officer alleging that the City did not fully reimburse the City's general fund for expenditures made to the City’s telecom enterprise within the requirements of the City Charter and the City’s operating license from the Vermont Public Service Board (Osier vs. Burlington Telecom, an enterprise of The City of Burlington and Jonathan Leopold in Docket No. S1588-09, Chittenden Unit, Superior Court). The trial court dismissed the plaintiffs’ claims against the City, and following a trial on the claims against Mr. Leopold, found a breach of fiduciary duty but awarded no damages. In June 2014 the plaintiffs appealed both the dismissal of the City and the trial court decision on the claims against Mr. Leopold to the Vermont Supreme Court. That case has been fully briefed, oral arguments were held on March 16, 2015, and a decision is pending. See also “City Enterprises – Burlington Telecom” herein for additional information.
THERE ARE VARIOUS OTHER SUITS AND CLAIMS PENDING AGAINST THE CITY OF BURLINGTON. THE CITY BELIEVES THAT SUCH OTHER MATTERS ARE COVERED BY NOT HAVE A MATERIAL IMPACT ON THE CITY.
IT SHOULD BE NOTED THAT ADVERSE DEVELOPMENTS IN PENDING OR FUTURE LITIGATION COULD HAVE A MATERIAL IMPACT ON THE CITY AND ITS FINANCIAL CONDITION TO THE EXTENT SUCH CLAIMS ARE NOT COVERED BY THE CITY’S INSURANCE POLICIES.
CITY OF BURLINGTON, VERMONT
By:______Bob Rusten Chief Administrative Officer
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APPENDIX A
City of Burlington, Vermont 2015 Financial Statements
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CITY OF BURLINGTON, VERMONT
Annual Financial Statements
For the Year Ended June 30, 2015
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CITY OF BURLINGTON, VERMONT
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 9
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements:
Statement of Net Position 22
Statement of Activities 24
Fund Financial Statements:
Governmental Funds:
Balance Sheet 26
Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities in the Statement of Net Position 27
Statement of Revenues, Expenditures, and Changes of Net Position 28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 29
Statement of Revenues and Other Sources, and Expenditures and Other Uses - Budget and Actual - General and School funds 30
Proprietary Funds:
Statement of Net Position 31
Statement of Revenues, Expenses, and Changes in Fund Net Position 33
Statement of Cash Flows 34
Fiduciary Funds:
Statement of Fiduciary Net Position 36
Statement of Changes in Fiduciary Net Position 37
Component Units:
Statement of Net Position 38
Statement of Activities 40
Notes to Financial Statements 41
PAGE
REQUIRED SUPPLEMENTARY INFORMATION:
Schedule of Funding Progress 105
Pension Schedule 106
SUPPLEMENTARY STATEMENTS AND SCHEDULES:
Combining Financial Statements:
Governmental Funds:
Combining Balance Sheet – Nonmajor Governmental Funds 108
Combining Statement of Revenues, Expenditures, and Changes in Fund Equity – Nonmajor Governmental Funds 114
Proprietary Funds:
Combining Statement of Net Position – Nonmajor Proprietary Funds 119
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Nonmajor Proprietary Funds 120
Combining Statement of Cash Flows – Nonmajor Proprietary Funds 121
Fiduciary Funds:
Combing Statement of Fiduciary Net Position – Private Purpose Trust Funds 122
Combing Statement of Change in Fiduciary Net Position – Private Purpose Trust Funds 123
102 Perimeter Road Nashua, NH 03063 (603)882-1111 melansonheath.com INDEPENDENT AUDITORS’ REPORT
Additional Offices: To the Honorable Mayor and City Council Andover, MA Greenfield, MA City of Burlington, Vermont Manchester, NH Ellsworth, ME
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 (except the Burlington School District and the Burlington Electric Enterprise Fund), and the aggregate remaining fund information of the City of Burlington, Vermont (the City), as of and for the year ended June 30, 2015, 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
The City’s 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 the Burlington Electric Enterprise Fund, a major enterprise fund, which represents 41 percent, 28 percent and 61 percent, respectively, of the assets, net position and revenues of the business-type activities. 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 the Burlington Electric Enterprise Fund and its effects on the business-type activities, is based solely on the report of the other auditors. Also, we did not audit the financial statements of the Burlington School District, a major discretely presented component unit. The financial statements of Burlington School District 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 the entity and its effects on the discretely presented component units is based solely 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 Auditing Standards, issued by the Comptroller General of the United States. Those standards 5
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of the Burlington Electric Department, a major proprietary fund, were not audited in accordance with Government Auditing Standards.
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 circum- stances, 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 reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, the aggregate discretely presented component units, and the aggregate remaining fund information of the City, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General fund for the year then ended in 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 Management’s Discussion and Analysis, the Schedule of Funding Progress, the Schedule of Changes in Net Pension Liability, and the Schedules of Net Pension Liability, Contributions, and Investment Returns 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 6
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 evidence sufficient to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2016 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
January 27, 2016
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Burlington, we offer readers this narrative overview and analysis of the financial activities of the City of Burlington for the fiscal year ended June 30, 2015. Unless otherwise noted, all amounts are expressed in thousands.
A. OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the basic financial statements. The basic financial statements comprise three components: (1) government- wide financial statements, (2) fund financial statements, and (3) notes to financial state- ments. 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 our finances in a manner similar to a private-sector business.
The Statement of Net Position presents information on all assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position is improving or deteriorating.
The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes, earned but unused vacation leave, and net pension liability).
Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, public works, culture and recreation, and com- munity development. The business-type activities include the operation of the Airport, Electric, Water, Wastewater, and Stormwater Utilities, Telecommunications (including cable television, internet access, and telephone service).
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance- related legal requirements. All of the funds 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 state- ments. However, unlike the government-wide financial statements, governmental fund
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financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources measurable and available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
An annual appropriated budget is adopted for the general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget.
Proprietary funds. Proprietary funds are maintained as follows:
Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Specifically, enterprise funds are used to account for Airport, Electric, Telecom, Wastewater, Water, and Stormwater.
Proprietary funds provide the same type of information as the business-type activities reported in the government-wide financial statements, only in more detail. The proprie- tary fund financial statements provide separate information for the Airport and Electric which are considered to be major funds.
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.
Notes to 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.
Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information which is required to be disclosed by accounting principles generally accepted in the United States of America.
B. FINANCIAL HIGHLIGHTS
As of the close of the current fiscal year, the total of assets exceeded liabilities by $288,553 (i.e., net position), a change of $17,658 in comparison to the prior year. As of the close of the current fiscal year, governmental funds reported combined ending fund balances of $19,532, a change of $8,222 in comparison to the prior year.
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At the end of the current fiscal year, unassigned fund balance for the general fund was $4,287, a change of $4,215 in comparison to the prior year. Total long-term liabilities at the close of the current fiscal year were $251,418, a change of $32,361 in comparison to the prior year. Total net position of the City’s component units, the Burlington Community Development Corporation and the Burlington School District, amounted to $12,180, an increase of $5,398 for the year. There is a significant change in presentation for the year ending June 30, 2015 in the financial statements due to reclassifying School funds from governmental funds and activities to a discretely presented component unit. The school’s legal structure changed effective July 1, 2014 resulting in this change in presentation. The nonspendable portion of the governmental funds balance was $3,486 which consists of inventories, prepaid assets, and permanent funds, as well as general fund advances to other funds not expected to be repaid within a short period of time. $9,526 is restricted for specific purposes. In addition, $4,134 is committed for purposes funded by dedicated revenue. This leaves the City with an unassigned fund balance of $2,386.
C. GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of condensed government-wide financial data for the current and prior fiscal years. NET POSITION (000s) Governmental Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014 Current and other assets $ 44,199 $ 36,837 $ 91,045 $ 102,751 $ 135,244 $ 139,588 Capital assets 126,353 166,462 297,193 277,925 423,546 444,387 Total assets 170,552 203,299 388,238 380,676 558,790 583,975 Deferred outflows of resources 5,485 - 3,504 6 8,989 6 Total assets and deferred outflows $ 176,037 $ 203,299 $ 391,742 $ 380,682 $ 567,779 $ 583,981
Long-term liabilities outstanding $ 89,212 $ 77,391 $ 162,206 $ 141,666 $ 251,418 $ 219,057 Other liabilities 8,366 11,540 13,529 21,502 21,895 33,042 Total liabilities 97,578 88,931 175,735 163,168 273,313 252,099 Deferred inflows of resources 4,122 - 1,791 - 5,913 - Net position: Net investment in capital assets 82,986 104,389 172,630 156,804 255,616 261,193 Restricted 16,800 15,286 19,319 32,018 36,119 47,304 Unrestricted (25,449) (5,307) 22,267 28,692 (3,182) 23,385 Total net position 74,337 114,368 214,216 217,514 288,553 331,882 Total liabilities, deferred inflows of resources and net position $ 176,037 $ 203,299 * $ 391,742 $ 380,682 * $ 567,779 $ 583,981
*Due to fiscal year 2015 being the first year of implementation of GASB 68, prior periods have not been restated in accordance with standards. Refer to Note 29.
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CHANGES IN NET POSITION (000s) Governmental Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014 Revenues: Program revenues: Charges for services $ 23,141 $ 24,368 $ 103,117 $ 106,092 $ 126,258 $ 130,460 Operating grants and contributions 5,922 84,298 - - 5,922 84,298 Capital grants and contributions 3,113 2,340 7,432 7,723 10,545 10,063 General revenues: Property taxes 33,054 29,495 - - 33,054 29,495 Rooms and meals tax 3,665 3,190 - - 3,665 3,190 Local sales option tax 2,180 2,125 - - 2,180 2,125 Payment in lieu of tax 2,396 2,258 - - 2,396 2,258 Franchise fees 2,128 2,193 - - 2,128 2,193 Impact fees 350 82 - - 350 82 Interest and penalties on delinquent taxes 356 369 - - 356 369 Investment income 101 634 127 291 228 925 Dividends from associated companies - - 3,129 2,908 3,129 2,908 Other revenue 1,175 1,048 429 (368) 1,604 680 Total revenues 77,581 152,400 114,234 116,646 191,815 269,046 Expenses: Governmental activities: General government 14,068 12,702 - - 14,068 12,702 Public safety 23,820 22,693 - - 23,820 22,693 Education - 77,471 - - - 77,471 Public works 16,811 14,172 - - 16,811 14,172 Culture and recreation 10,422 9,966 - - 10,422 9,966 Community development 4,892 4,069 - - 4,892 4,069 Interest on long-term debt 1,582 3,087 - - 1,582 3,087 Business-type activities: Electric - - 62,409 65,062 62,409 65,062 Airport - - 20,289 20,773 20,289 20,773 Non-major - - 19,931 22,384 19,931 22,384 Total expenses 71,595 144,160 102,629 108,219 174,224 252,379 Change in net position before transfers, additions to permanent fund principal, and special items 5,986 8,240 11,605 8,427 17,591 16,667 Additions to permanent fund principal 67 26 - - 67 26 Special item - (16,936) - 16,936 - - Transfers in (out) 29 (98) (29) 98 - - Change in net position 6,082 (8,768) 11,576 25,461 17,658 16,693 Net position - beginning of year, as restated 68,255 123,136 202,640 192,053 270,895 315,189 Net position - end of year $ 74,337 $ 114,368 * $ 214,216 $ 217,514 * $ 288,553 $ 331,882
* July 1, 2014 net position was restated for GASB 68, while prior periods were not restated.
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As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. At the close of the most recent fiscal year, total net position was $288,553, a change of $17,658 from the prior year.
The largest portion of net position $255,616 reflects our investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that is still outstanding. These capital assets are used to pro- vide services to citizens; consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of net position of $30,840 represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position is a deficit of $3,182. The significant decrease from the previous year in the unrestricted net positon resulted from the implementation of a new accounting principle – Governmental Accounting Standards Board (GASB) Statement Number 68, Accounting and Financial Reporting for Pensions, which required the recognition of the net pension liability on the City’s statement of net position. See financial statement footnotes for additional information.
Governmental activities. Governmental activities for the year resulted in a change in net position of $6,082. Key elements of this change are as follows:
City general fund budget versus actual results $ 3,385 Special revenue funds revenues over expenditures 1,753 Capital assets from current year revenues 4,768 Depreciation in excess of principal debt service expense (3,067) Other (757) Total $ 6,082
Business-type activities. Business-type activities for the year resulted in a change in net position of $11,577. Key elements of this change are as follows:
Electric $ 4,450 Airport 5,554 Telecom 864 Wastewater 115 Water 147 Stormwater 447 Total $ 11,577
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D. FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, governmental funds reported combined ending fund balances of $19,532, a change of $8,222 in comparison to the prior year. Key elements of this change are as follows:
General fund revenues and transfers in, in excess of expenditures and other financing uses $ 3,259 Special revenue fund revenues, transfers in and issuance of debt in excess of expenditures and transfers out (mostly CEDO, Traffic Commission and TIF) 4,505 Capital project fund revenues and other financing sources in excess of expenditures and transfers out 388 Permanent fund revenues 70
Total $ 8,222
The general fund is the chief operating fund. At the end of the current fiscal year, unassigned fund balance of the general fund was $4,287, while total fund balance was $8,251.
As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Refer to the table below, and also Note 2A. % of Total General City General Fund 6/30/15 6/30/14 Change Fund Expenditures Unassigned fund balance $ 4,287 $ 72 $ 4,215 8.1% Total fund balance $ 8,251 $ 4,993 $ 3,258 15.6%
The general fund unassigned fund balance positive increase of $4,215 results from the positive operating results reported in the budget and actual comparative schedule and a reduction in the advances to other funds (primarily certain capital project funds).
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The following table summarizes the activity in the general fund unassigned fund balance:
Unassigned fund balance, June 30, 2014 $ 72 Actual revenues in excess of budget 815 Actual expenditures less than budgeted 2,570 Decrease in advances to capital project and special revenue funds 1,199 Other (369) Unassigned fund balance, June 30, 2015 $ 4,287
The City issued $9,000 in Fiscal Stability Bonds in fiscal year 2013 to reduce reliance on tax anticipation notes. In accordance with the Governmental Accounting Standards Board’s Statement 54, the City has classified the $9,000 as a component of unassigned fund balance because the authorized Stability Bonds do not contain any specific spending purpose constraints. In fact, the Bonds were issued as taxable bonds since the purpose was not to finance specific capital governmental projects for the City as is customarily financed by tax-exempt bonds.
Without the issues of the Stability Bonds, the City’s unassigned fund balance would have been $(4,203). In accordance with the bond resolution, as stated by Bond Council; the City can use the proceeds for working capital, and cash flow needs.
Proprietary funds. Proprietary funds provide the same type of information found in the business-type activities reported in the government-wide financial statements, but in more detail.
A comparison of the unrestricted net position of each enterprise compared to the prior year is show below: Unrestricted Net Position 6/30/15 6/30/14 Change Electric $ 15,918 $ 21,710 $ (5,792) Airport 2,805 947 1,858 Nonmajor funds: Telecom (48) 617 (665) Wastewater 1,929 2,948 (1,019) Water 1,102 966 136 Stormwater 560 101 459
Specific factors concerning the finances of each proprietary fund are discussed below:
The City of Burlington, Vermont Electric Department (BED) reported a decrease in the unrestricted net position primarily resulting from the adoption of GASB 68, requiring the Department to record its share of the City’s unfunded net pension liability for the year ended June 30, 2015 (the implementation year), while prior
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periods were not restated. For additional information, please refer the separate finan- cial statements issued for the BED. The Burlington International Airport’s unrestricted net position increased from the previous year due to a variety of factors, including the Debt Service Reserve Fund requirements, which reduced the restricted net position, and the asset depreciation exceeding the principal debt service payments, which reduced the investment in capital assets. The reductions in the other two categories of net position resulted in the increase of unrestricted net position. For additional information, please refer the separate financial statements issued for the City of Burlington, Vermont Airport Enterprise Fund. The Burlington Telecom’s unrestricted net position decreased from the previous year primarily resulting from the adoption of GASB 68. Prior period was not restated for the GASB 68 liability. However, due to other restatements, unrestricted net position reported in prior year financial statements as $1,111 has been restated to $617 as of June 30, 2014. See the restatement footnote for additional information. The Wastewater Fund’s unrestricted net position decreased primarily as a result of the contingency reserve restriction on the net position. The net improvement in the Water and Stormwater Funds (which are managed on a combined basis with the Wastewater Fund), is primarily the result of operations. The Stormwater Fund’s unrestricted net position for the previous year was restated, as the fund was reported as a governmental fund in years prior to fiscal year 2015.
E. GENERAL FUND BUDGETARY HIGHLIGHTS
The City approved a fiscal year 2015 budget of $64,325 including dedicated taxes, tax increment financing and interdepartmental charges that were netted against appropriations for the presentation on the budget and actual statement in the financial statements. The following is a reconciliation of the approved fiscal year 2015 appropriation with the amounts reported on the General fund budget and actual comparison statement:
City approved appropriation $ 64,325 Less dedicated taxes: Capital streets program (1,983) Open space (190) Greenbelt (190) Housing Trust (190) Pennies for parks (352) Less tax increment (2,662) Less interdepartmental charges (2,971) Less other charges (45) Appropriation reported on page 30 $ 55,742
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The City’s adopted general fund budget for fiscal year 2015 after budgetary amendments resulted in a deficit of $(126). The adjusted actual performance (budgetary basis) resulted in revenues and other sources exceeding expenditures and other uses by $2,901. This variance is primarily attributable to:
Revenue from housing and development licenses and certificates exceeded budget expectations by $558 due to several large projects requiring additional permitting including, but not limited to, the Hospital, Grove Street and University Place. This revenue is included in charges for services category. Various departments had significant turnbacks in the general administration and safety services functions. Debt principal budget significantly exceeded payments.
F. CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. Total investment in capital assets for governmental activities at year-end amounted to $126,353 (net of accumulated depreciation), a change of $2,252 from the prior year. Total investment in capital assets for business-type activities at year-end amounted to $297,193 (net of accumulated depreciation), a change of $18,321 from the prior year. This investment in capital assets includes land, buildings and system, improvements, and machinery and equipment.
Major capital asset events during the current fiscal year for Governmental Activities included the following: Governmental Activities Infrastructure improvements $ 1,196 Vehicles, machinery, equipment and furniture 1,082 Buildings and improvements 45 Other capital projects 275 Construction in progress 6,027 Depreciation expense (6,304) Effect on disposal of assets (69) Total $ 2,252
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Change in capital assets, net of accumulated depreciation for Business-Type Activities are as follows: Business-type Activities Electric $ 20,872 Airport 1,017 Telecom (1,983) Wastewater (1,466) Water (157) Stormwater 38 Total $ 18,321
Additional information on capital assets can be found in the notes to the financial statements.
Change in credit rating. The City’s Baa3 credit rating from Moody’s Investor Service (Moody’s) on the general obligation with a negative outlook was upgraded to Baa2 with positive outlook on March 3, 2015. The rating for the City’s certificates of participation is Ba1, with a stable outlook. Moody’s upgraded Burlington International Airport’s rating from Ba1 to Baa3 on November 12, 2014 with stable outlook reflecting an improvement of financial metrics including debt service coverage and liquidity as well as other factors. Moody’s upgraded BED credit rating from Baa2 to Baa1 with stable outlook subsequent to year end, on November 9, 2015.
Long-term debt. At the end of the current fiscal year, total outstanding general obligation bonds payable, revenue bonds payable (excluding premiums and discounts) and other long term notes payable outstanding were $131,889, all of which was backed by the full faith and credit of the government.
Bonds Payable 6/30/15 6/30/14 Change Governmental Activities: City (excludes school) $ 46,423 $ 37,459 $ 8,964 Total $ 46,423 $ 37,459 $ 8,964
Business-Type Activities: Electric $ 76,501 $ 71,720 $ 4,781 Airport 38,690 42,770 (4,080) Wastewater 16,076 16,951 (875) Water 228 - 228 Stormwater 394 344 50 Total $ 131,889 $ 131,785 $ 104
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Additional information on long-term debt can be found in the Notes to the Financial Statements.
G. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The FY16 General Fund budget continues to make progress toward goal of increased financial stability and responsibility.
The proposed FY16 General Fund budget includes $1 million to fund the City’s new unassigned fund balance policy. In FY11 audited financial report, the City’s unassigned fund balance was negative $16.8 million, a figure that, according to the FY11 manage- ment letter, place the City’s “at risk, as it is overly reliant on borrowing from financial institutions.” After several years of focus, the voter approval of the Fiscal Stability Bond, the repayment of large deficits by the Water and Sewer enterprise funds, and emphasis on securing reimbursement for Champlain Parkway expenditures, our audited FY14 unassigned fund balance improved to a positive $71.8 thousand, the City’s first positive unassigned fund balance since the Burlington Telecom (BT) deficits began in 2009. Now, with the FY16 budget before you, the City projects to increase the fund balance to over $1 million, which would represent solid progress towards the goal of our new Fund Balance Policy, which commits the City to increasing the balance to a minimum of five percent of the annual General Fund operating spending (approximately $3 million currently) by the end of FY19.
Also, the City similarly is making great strides with its days cash on hand (COH) both at the Burlington International Airport (BTV) and Burlington Electric Department (BED) in its effort to improve the credit ratings of both BTV and BED by increasing the liquidity of these enterprises. Moody’s Investors Service has indicated the BTV’s reaching 200 days COH will be significant factor as Moody’s considers the Airport for another credit ratings upgrade. At the end of FY14, BTV had accumulated 145 days COH, and it is targeting 175 days COH as its FY16 goal. BED has reached 73 days COH by the end of FY14, and now has set its sights on reaching 93 days COH in FY16.
The FY16 budget includes modest revenue and expense growth.
The proposed FY16 General Fund budget includes a revenue increase of 7.5 percent, which is 1.7 percent greater than the 5.8 percent growth in expenditures. Some of these increases are the result of shifts in how the City accounts for certain revenue and expense items, not true increases. Two examples of how expenses now included in the FY16 budget that previously were not shown in the General Fund budget are:
$625,000 for the City streetlights- in the years past, BED was netting the street- lights against the PILOT. Going forward, the General Fund will pay BED for City streetlights, and General Fund revenues will increase because BED will be paying its full PILOT. $768,090 for part of the Community and Economic Development Office (CEDO) - going forward, pursuant to Government Accounting Standards Board (GASB)
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procedures, CEDO administrative, neighborhood support, and sustainability functions will be paid for by the General Fund, instead of being organized as an outside special revenue fund.
Excluding the above two examples that collectively total $1.39 million, FY16 expendi- ture would increase by 3.6 percent (rather than 5.8 percent). For purposes of comparison, revenues would increase by an appropriate corresponding percentage.
The changes in tax rates are shown in the table below:
Approved Tax Rate, per $100 Fiscal Year Fiscal Year Tax Rate Item 2015 2016 Change Revenue Neutral Rates: General City $ 0.26040 $ 0.26040 $- Streets 0.06170 0.06170 - Police/Fire 0.08070 0.08070 - Open Space 0.00540 0.00540 - Housing Trust 0.00540 0.00540 - Fixed Rates: Parks - General 0.02500 0.02500 - Penny for Parks 0.01000 0.01000 - Highway 0.03120 0.03120 - Library 0.00500 0.00500 - Budget Driven Rates: CCTA 0.04320 0.04290 (0.00030) County Tax 0.00510 0.00520 0.00010 Retirement 0.18100 0.17970 (0.00130) Debt Service 0.08170 0.08000 (0.00170) Local Exemption 0.00390 0.00380 (0.00010) Total $ 0.79970 $ 0.79640 $ (0.00330)
20
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Burlington’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 can be found on the City’s web page at www.burlingtonvt.gov or should be addressed to:
Clerk/Treasurer’s Office City Hall 149 Church Street Burlington, Vermont 05401
21
CITY OF BURLINGTON, VERMONT
STATEMENT OF NET POSITION
JUNE 30, 2015
Primary Government Governmental Business-Type Component Activities Activities Total Units ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS: Current: Cash and cash equivalents $ 21,035,509 $ 18,752,033 $ 39,787,542 $ 8,489,714 Investments 2,206,063 - 2,206,063 200,938 Restricted investments - 650,256 650,256 - Receivables, net of allowance for uncollectibles: Property taxes 1,888,502 - 1,888,502 - User fees - 8,846,134 8,846,134 - Departmental and other 3,483,397 - 3,483,397 283,919 Intergovernmental 8,481,146 2,752,761 11,233,907 3,406,668 Estimated unbilled revenues - 3,429,150 3,429,150 - Capital lease receivable - - - 94,256 Due from component unit 65,413 67,941 133,354 - Due from primary government - - - 107,895 Inventory 446,681 6,237,265 6,683,946 21,753 Prepaid expenses 146,971 76,399 223,370 8,250 Other assets 316,607 1,030,705 1,347,312 3,758 Total current assets 38,070,289 41,842,644 79,912,933 12,617,151
Noncurrent: Restricted cash - 11,817,383 11,817,383 - Restricted investments - 7,502,127 7,502,127 - Due from component unit 288,328 804,091 1,092,419 - Notes and loans receivable 4,785,455 - 4,785,455 - Capital lease receivable - - - 1,553,608 Accrued interest receivable 1,054,720 - 1,054,720 - Investment in associated companies - 25,990,556 25,990,556 - Regulatory assets and other prepaid charges - 3,089,081 3,089,081 - Capital assets: Land and construction in progress 29,849,653 61,499,726 91,349,379 2,792,396 Intangible asset - 6,549,636 6,549,636 - Other capital assets, net of accumulated depreciation 96,503,490 229,143,142 325,646,632 43,874,430 Total noncurrent assets 132,481,646 346,395,742 478,877,388 48,220,434 TOTAL ASSETS 170,551,935 388,238,386 558,790,321 60,837,585 Deferred Outflows of Resources 5,484,769 3,503,533 8,988,302 1,436,817 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 176,036,704 $ 391,741,919 $ 567,778,623 $ 62,274,402
(continued)
22
(continued) Primary Government Governmental Business-Type Component Activities Activities Total Units LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION LIABILITIES: Current: Accounts payable $ 4,451,150 $ 5,527,104 $ 9,978,254 $ 1,945,581 Accrued payroll and benefits payable 1,128,799 157,498 1,286,297 - Accrued liabilities 451,311 - 451,311 1,213,936 Accrued interest payable 280,002 897,879 1,177,881 - Unearned revenue 1,795,061 1,776,943 3,572,004 191,784 Due to component unit 107,895 - 107,895 - Due to primary government - - - 133,354 Other liabilities 151,369 4,519,324 4,670,693 3,753 Payable from restricted assets - 650,256 650,256 - Current portion of long-term liabilities: General obligation bonds and other debt payable 3,685,802 2,256,428 5,942,230 1,187,357 Revenue bonds payable - 4,130,422 4,130,422 - Note payable - 8,485 8,485 - Capital lease payable 478,131 333,579 811,710 50,735 Compensated absences 204,715 - 204,715 250,000 Insurance reserves 500,000 - 500,000 - Total current liabilities 13,234,235 20,257,918 33,492,153 4,976,500 Noncurrent: Due to primary government - - - 1,092,419 General obligation bonds and other debt payable 43,045,169 44,913,785 87,958,954 30,903,229 Revenue bonds payable - 83,234,045 83,234,045 - Long term note payable - 219,521 219,521 - Capital lease payable 608,187 6,500,718 7,108,905 26,626 Compensated absences 1,842,436 1,684,129 3,526,565 2,375,334 Insurance reserves 3,287,037 - 3,287,037 - Net OPEB obligation 963,051 566,859 1,529,910 2,018,658 Net pension liability 34,597,295 12,774,362 47,371,657 6,458,116 Regulatory liabilities - 5,466,563 5,466,563 - Other liabilities - 117,250 117,250 426,476 Total noncurrent liabilities 84,343,175 155,477,232 239,820,407 43,300,858 TOTAL LIABILITIES 97,577,410 175,735,150 273,312,560 48,277,358
Deferred Inflows of Resources 4,121,967 1,790,537 5,912,504 1,816,589
NET POSITION: Net investment in capital assets 82,986,888 172,629,734 255,616,622 25,111,075 Restricted externally or constitutionally for: Education - - - 646,896 Community development 8,437,252 - 8,437,252 - Debt service/renewal and replacements/capital projects 4,899,664 12,243,299 17,142,963 - Contingency reserve - 1,433,426 1,433,426 - Revenue fund - 364,186 364,186 - Deposits with bond trustees - 5,278,599 5,278,599 - Permanent funds: Nonspendable 909,230 - 909,230 - Spendable 361,434 - 361,434 - Restricted by enabling legislation 2,192,357 - 2,192,357 - Unrestricted (25,449,498) 22,266,988 (3,182,510) (13,577,516) TOTAL NET POSITION 74,337,327 214,216,232 288,553,559 12,180,455 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 176,036,704 $ 391,741,919 $ 567,778,623 $ 62,274,402 The accompanying notes are an integral part of these financial statements. 23
CITY OF BURLINGTON, VERMONT
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015
Program Revenues Operating Capital Charges for Grants and Grants and Net (Expenses) Expenses Services Contributions Contributions Revenue
Primary Government: Governmental Activities: General government $ 14,068,127 $ 5,289,088 $ 543,786 $ - $ (8,235,253) Public safety 23,820,259 5,587,200 423,423 289,321 (17,520,315) Public works 16,811,137 7,475,742 513,288 2,823,405 (5,998,702) Culture and recreation 10,422,351 4,074,232 624,415 - (5,723,704) Community development 4,891,704 714,715 3,817,253 - (359,736) Interest on long-term debt 1,581,846 - - - (1,581,846)
Total Governmental Activities 71,595,424 23,140,977 5,922,165 3,112,726 (39,419,556)
Business-Type Activities: Electric 62,408,788 62,622,315 - 833,098 1,046,625 Airport 20,288,983 19,030,728 - 6,508,327 5,250,072 Nonmajor 19,931,149 21,464,113 - 90,077 1,623,041
Total Business-Type Activities 102,628,920 103,117,156 - 7,431,502 7,919,738
Total Primary Government $ 174,224,344 $ 126,258,133 $ 5,922,165 $ 10,544,228 (31,499,818)
Component Units: Burlington School District $ 85,982,558 $ 1,184,805 $ 31,326,772 $ - $ (53,470,981) Burlington Community - Development Corporation 349,284 364,000 - - 14,716
Total component units $ 86,331,842 $ 1,548,805 $ 31,326,772 $- $ (53,456,265)
The accompanying notes are an integral part of these financial statements. (continued)
24
CITY OF BURLINGTON, VERMONT
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015
(continued)
Primary Government Business- Governmental Type Component Activities Activities Total Units
Change in Net Position Net (expenses) revenue from previous page $ (39,419,556) $ 7,919,738 $ (31,499,818) $ (53,456,265)
General Revenues: Property taxes 33,054,429 - 33,054,429 - Gross receipts taxes 3,665,158 - 3,665,158 - Local option sales tax 2,179,587 - 2,179,587 - Payments in lieu of taxes 2,395,762 - 2,395,762 - Franchise fees 2,128,227 - 2,128,227 - Impact fees 349,714 - 349,714 - Interest and penalties on delinquent taxes 356,550 - 356,550 - General state support - - - 55,356,925 Unrestricted investment earnings 100,725 127,214 227,939 654,321 Dividends from associated companies - 3,128,753 3,128,753 - Other revenues 1,175,521 429,794 1,605,315 2,842,573 Additions to permanent funds 67,115 - 67,115 - Transfers, net 28,921 (28,921) - -
Total general revenues, additions to permanent funds and transfers 45,501,709 3,656,840 49,158,549 58,853,819
Change in Net Position 6,082,153 11,576,578 17,658,731 5,397,554
Net Position: Beginning of year, as restated 68,255,174 202,639,654 270,894,828 6,782,901
End of year $ 74,337,327 $ 214,216,232 $ 288,553,559 $ 12,180,455
25
CITY OF BURLINGTON, VERMONT
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2015
Nonmajor Total Governmental Governmental General Funds Funds ASSETS Cash and cash equivalents $ 6,546,406 $ 14,489,104 $ 21,035,510 Investments 2,106,063 100,000 2,206,063 Receivables, net of allowance for uncollectibles: Property and other taxes 1,888,502 - 1,888,502 Departmental and other 1,945,719 1,537,678 3,483,397 Intergovernmental 87,708 2,437,245 2,524,953 Notes and loans receivable - 4,785,455 4,785,455 Accrued interest receivable - 1,054,720 1,054,720 Advances to other funds 1,983,605 - 1,983,605 Inventory 191,525 255,156 446,681 Prepaid expenditures 146,774 197 146,971 Other current assets 316,607 - 316,607 Due from component unit - 353,741 353,741 TOTAL ASSETS $ 15,212,909 $ 25,013,296 $ 40,226,205
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 1,327,096 $ 3,124,056 $ 4,451,152 Accrued payroll and benefits payable 1,043,743 85,056 1,128,799 Accrued liabilities 336,379 114,931 451,310 Unearned revenue 1,770,061 25,000 1,795,061 Due to component unit 107,895 - 107,895 Advances from other funds - 1,983,605 1,983,605 Insurance reserve 500,000 - 500,000 Other liabilities 50,579 100,790 151,369 TOTAL LIABILITIES 5,135,753 5,433,438 10,569,191 Deferred Inflows of Resources 1,825,659 8,299,792 10,125,451 Fund Balances: Nonspendable 2,321,904 1,164,508 3,486,412 Restricted 17,265 9,508,362 9,525,627 Committed 1,624,950 2,508,603 4,133,553 Unassigned 4,287,378 (1,901,407) 2,385,971 TOTAL FUND BALANCES 8,251,497 11,280,066 19,531,563 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 15,212,909 $ 25,013,296 $ 40,226,205
The accompanying notes are an integral part of these financial statements.
26
CITY OF BURLINGTON, VERMONT
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET POSITION
JUNE 30, 2015
Total governmental fund balances $ 19,531,563
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 126,353,143
Revenues are reported on the accrual basis of accounting and are not deferred until collection. 10,125,451
Long-term receivable from Vermont Municipal Bond Bank for general obligation bond drawdowns. 5,956,193
Long-term liabilities, including bonds and other debt payable and net pension obligation, are not due and payable in the current period and, therefore, are not reported in the governmental funds. General obligation bonds and other debt payable, net of related unamortized premiums and loss on refunding (46,712,573) Capital lease payable (1,086,318) Compensated absenses payable (2,047,151) Insurance reserves, long-term (3,287,037) Net other post-employment benefits payable (963,051) Net pension obligation, net of related deferred outflows and inflows (33,252,891) Accrued interest on long-term obligations (280,002)
Net position of governmental activities $ 74,337,327
The accompanying notes are an integral part of these financial statements.
27
CITY OF BURLINGTON, VERMONT
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2015
Nonmajor Total Governmental Governmental General Funds Funds Revenues: Taxes $ 32,911,176 $ 5,859,283 $ 38,770,459 Payments in lieu of taxes 2,395,762 - 2,395,762 Licenses and permits 3,739,704 127,229 3,866,933 Intergovernmental 2,173,036 6,544,775 8,717,811 Charges for services 14,811,677 6,970,253 21,781,930 Investment income 93,192 7,533 100,725 Loan repayments - 122,544 122,544 Other 153,629 1,076,783 1,230,412 Total Revenues 56,278,176 20,708,400 76,986,576
Expenditures: Current: General government 10,916,573 241,632 11,158,205 Public safety 24,650,066 18,129 24,668,195 Public works 4,093,595 5,361,855 9,455,450 Culture and recreation 9,727,811 1,896,287 11,624,098 Community development 2,316 4,078,807 4,081,123 Capital outlay - 9,483,616 9,483,616 Debt service: Principal 2,424,319 948,783 3,373,102 Interest and bond issue costs 1,204,247 364,022 1,568,269 Total Expenditures 53,018,927 22,393,131 75,412,058 Excess (deficiency) of revenues over (under) expenditures 3,259,249 (1,684,731) 1,574,518
Other Financing Sources (Uses): Issuance of bonds and loans - 5,934,807 5,934,807 Proceeds from capital lease 483,768 199,950 683,718 Transfers in 151,768 4,211,782 4,363,550 Transfers out (635,911) (3,698,718) (4,334,629) Total Other Financing Sources (Uses) (375) 6,647,821 6,647,446 Net change in fund balances 3,258,874 4,963,090 8,221,964 Fund Balances, at Beginning of Year, as reclassified 4,992,623 6,316,976 11,309,599 Fund Balances, at End of Year $ 8,251,497 $ 11,280,066 $ 19,531,563
The accompanying notes are an integral part of these financial statements. 28
CITY OF BURLINGTON, VERMONT
RECONCILIATION OF THE STATEMENT OF REVENUES EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015
NET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 8,221,964
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay purchases 8,625,809 Depreciation (6,304,472) Loss on disposal of capital assets (69,320) Revenues in the Statement of Activities that do not provide current financial resources are fully deferred in the Statement of Revenues, Expenditures and Changes in Fund Balances. Therefore, the recognition of revenue for various types of accounts receivable (i.e., real estate and personal property, etc.) differ between the two statements. This amount represents the net change in deferred inflows. (632,881) The issuance of long-term debt (e.g., bonds and leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the financial resources of governmental funds. Neither transaction, however, has any effect on net position: Issuance of debt (5,934,807) Issuance of capital leases (683,718) Repayments of debt 3,237,646 Bond premium, discount, and other adjustments 12,223 In the statement of activities, interest is accrued on outstanding long-term debt, whereas in governmental funds interest is not reported until due. (13,581) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in the governmental funds. Net pension obligation, net of related deferred outflows & inflows 895,933 Compensated absences (59,044) Net OPEB obligation (87,930) Insurance reserves (1,125,669)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 6,082,153
The accompanying notes are an integral part of these financial statements.
29
CITY OF BURLINGTON, VERMONT
GENERAL FUND
STATEMENT OF REVENUES AND OTHER SOURCES, AND EXPENDITURES AND OTHER USES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2015
Budgeted Amounts Adjusted Original Final Actual Variance With Budget Budget Amounts Final Budget Revenues and other sources: Taxes and special assessments $ 30,200,738 $ 30,200,738 $ 30,731,589 $ 530,851 Local option sales tax 2,100,000 2,100,000 2,179,587 79,587 Payments in lieu of taxes 2,205,375 2,205,375 2,395,762 190,387 Licenses and permits 4,117,000 4,117,000 3,739,704 (377,296) Intergovernmental 1,836,338 2,865,319 2,173,036 (692,283) Charges for services 13,740,036 13,842,069 14,811,677 969,608 Investment income 60,000 60,000 93,192 33,192 Transfers in (50,000) 74,745 151,768 77,023 Other 125,500 150,040 153,629 3,589 Total Revenues and Other Sources 54,334,987 55,615,286 56,429,944 814,658
Expenditures and other uses: General administration 11,275,801 11,587,475 10,916,577 670,898 Safety services 24,450,767 25,320,128 24,650,066 670,062 Public works 3,756,950 3,751,950 3,609,827 142,123 Culture and recreation 9,915,953 10,138,542 9,727,811 410,731 Community development - - 2,316 (2,316) Debt service 4,221,011 4,238,748 3,628,562 610,186 Transfers out 704,688 704,688 635,911 68,777 Total Expenditures and Other Uses 54,325,170 55,741,531 53,171,070 2,570,461 Excess (deficiency) of revenues and other sources over expenditures and other uses $ 9,817 $ (126,245) $ 3,258,874 $ 3,385,119
The accompanying notes are an integral part of these financial statements.
30
CITY OF BURLINGTON, VERMONT
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
JUNE 30, 2015
Business-Type Activities Enterprise Funds Nonmajor Enterprise Electric Airport Funds Total ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS: Current: Cash and cash equivalents $ 13,424,653 $ 2,442,260 $ 2,885,120 $ 18,752,033 Restricted investments 650,256 - - 650,256 Receivables, net of allowance for uncollectibles: User fees 5,081,316 1,217,605 2,547,213 8,846,134 Intergovernmental - 2,543,938 208,823 2,752,761 Estimated unbilled revenues 2,051,877 322,534 1,054,739 3,429,150 Due from Burlington Community Development Corporation - current - 67,941 - 67,941 Inventory 5,354,448 266,194 616,623 6,237,265 Prepaid expenses - - 76,399 76,399 Other current assets 1,025,690 15 5,000 1,030,705 Total current assets 27,588,240 6,860,487 7,393,917 41,842,644
Noncurrent: Restricted cash - 10,019,771 1,797,612 11,817,383 Restricted investments 5,278,599 2,223,528 - 7,502,127 Due from Burlington Community Development Corporation - long-term - 804,091 - 804,091 Investment in associated companies 25,990,556 - - 25,990,556 Regulatory assets and other prepaid charges 3,089,081 - - 3,089,081 Capital assets: Land and construction in progress 2,140,679 58,087,086 1,271,961 61,499,726 Intangible asset - - 6,549,636 6,549,636 Capital assets, net of accumulated depreciation 96,790,316 92,694,374 39,658,452 229,143,142 Total noncurrent assets 133,289,231 163,828,850 49,277,661 346,395,742 TOTAL ASSETS 160,877,471 170,689,337 56,671,578 388,238,386
Deferred Outflow of Resources 1,648,091 802,967 1,052,475 3,503,533 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 162,525,562 $ 171,492,304 $ 57,724,053 $ 391,741,919
(continued)
31
(continued) Business-Type Activities Enterprise Funds Nonmajor Enterprise Electric Airport Funds Total
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION LIABILITIES: Current: Accounts payable $ 2,892,529 $ 1,587,993 $ 1,046,582 $ 5,527,104 Accrued payroll and benefits payable - 74,146 83,352 157,498 Accrued interest - 897,879 - 897,879 Unearned revenue - 1,331,516 445,427 1,776,943 Other current liabilities 4,076,975 13,415 428,934 4,519,324 Payable from restricted assets: Deposits with bond trustees 650,256 - - 650,256 Current portion of long-term liabilities: General obligation bonds payable 2,256,428 - - 2,256,428 Revenue bonds payable 1,385,000 1,842,077 903,345 4,130,422 Note payable - - 8,485 8,485 Capital leases payable - 150,798 182,781 333,579 Total current liabilities 11,261,188 5,897,824 3,098,906 20,257,918
Noncurrent: General obligation bonds payable 44,913,785 - - 44,913,785 Revenue bonds payable 29,109,822 38,557,770 15,566,453 83,234,045 Long term note payable - - 219,521 219,521 Capital leases payable - 647,110 5,853,608 6,500,718 Compensated absences payable 1,176,301 200,047 307,781 1,684,129 Net OPEB obligation 224,099 126,442 216,318 566,859 Net pension liability 9,427,247 1,278,506 2,068,609 12,774,362 Regulatory liabilities 5,466,563 - - 5,466,563 Other noncurrent liabilities 117,250 - - 117,250 Total noncurrent liabilities 90,435,067 40,809,875 24,232,290 155,477,232 TOTAL LIABILITIES 101,696,255 46,707,699 27,331,196 175,735,150
Deferred Inflows of Resources 1,391,757 152,323 246,457 1,790,537
NET POSITION: Net investment in capital assets 38,240,833 109,583,705 24,805,196 172,629,734 Restricted: For debt service/renewal and replacements/capital projects - 12,243,299 - 12,243,299 For contingency reserve - - 1,433,426 1,433,426 For revenue fund - 364,186 364,186 Deposits with bond trustees 5,278,599 - - 5,278,599 Unrestricted 15,918,118 2,805,278 3,543,592 22,266,988 TOTAL NET POSITION 59,437,550 124,632,282 30,146,400 214,216,232 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 162,525,562 $ 171,492,304 $ 57,724,053 $ 391,741,919
The accompanying notes are an integral part of these financial statements.
32
CITY OF BURLINGTON, VERMONT
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2015
Business-Type Activities Enterprise Funds Nonmajor Enterprise Electric Airport Funds Total Operating Revenues: Charges for services $ 47,726,819 $ 16,494,977 $ 21,920,695 $ 86,142,491 Intergovernmental - 144,871 23,553 168,424 Miscellaneous 14,895,496 - 249,873 15,145,369 Total Operating Revenues 62,622,315 16,639,848 22,194,121 101,456,284
Operating Expenses: Personnel - 3,677,473 5,953,479 9,630,952 Nonpersonnel - 8,323,633 9,831,015 18,154,648 Electric department 52,411,282 - - 52,411,282 Depreciation and amortization 4,608,670 5,809,621 2,742,850 13,161,141 Payments in lieu of taxes - - 1,403,805 1,403,805 Total Operating Expenses 57,019,952 17,810,727 19,931,149 94,761,828 Operating Income (Loss) 5,602,363 (1,170,879) 2,262,972 6,694,456
Nonoperating Revenues (Expenses): Dividends from associated companies 3,128,753 - - 3,128,753 Passenger facility charges - 2,390,880 - 2,390,880 Investment income 72,899 54,186 129 127,214 Other income/expense - net 201,265 249,261 (20,732) 429,794 Interest income/expense - net (3,218,784) (2,478,256) (730,008) (6,427,048) Gain/loss on disposal of capital assets (233,469) - - (233,469) Total Nonoperating Revenues (Expenses) (49,336) 216,071 (750,611) (583,876) Income Before Contributions and Transfers 5,553,027 (954,808) 1,512,361 6,110,580 Capital contributions 833,098 6,508,327 90,077 7,431,502 Payment in lieu of taxes (1,936,583) - - (1,936,583) Transfers out - - (28,921) (28,921) Change in Net Position 4,449,542 5,553,519 1,573,517 11,576,578 Net Position at Beginning of Year, as restated 54,988,008 119,078,763 28,572,883 202,639,654 Net Position at End of Year $ 59,437,550 $ 124,632,282 $ 30,146,400 $ 214,216,232
The accompanying notes are an integral part of these financial statements.
33
CITY OF BURLINGTON, VERMONT PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015
Nonmajor Enterprise Electric Airport Funds Total Cash Flows From Operating Activities: Receipts from customers and users $ 47,245,968 $ 16,433,013 $ 21,622,870 $ 85,301,851 Receipts of operating grants - 144,871 23,553 168,424 Receipts for interfund services - 242,617 242,617 Other receipts 16,198,822 327,614 - 16,526,436 Payments to suppliers (40,211,890) (8,574,044) (9,708,171) (58,494,105) Payments for wages and benefits - (3,564,240) (5,841,425) (9,405,665) Payment in lieu of taxes - - (1,403,805) (1,403,805) Payments for other expenses (11,734,130) (488,206) - (12,222,336) Net Cash Provided by Operating Activities 11,498,770 4,279,008 4,935,639 20,713,417 Cash Flows From Noncapital Financing Activities: Other income, net 201,265 - 135,970 337,235 Payment in lieu of taxes (1,936,583) - - (1,936,583) Receipt from loan receivable from BCDC - 65,941 - 65,941 Decrease in advances from other funds - - (163,169) (163,169) Receipt/(payment) of interfund transfers - - (28,921) (28,921) Interest paid on cash deficit to general fund - (21,979) - (21,979) Net Cash Provided/(Used) by Noncapital Financing Activities (1,735,318) 43,962 (56,120) (1,747,476) Cash Flows From Capital and Related Financing Activities: Proceeds from bonds, notes & leases payable 20,820,000 - 112,713 20,932,713 Proceeds from issuance of refunding debt - 15,660,000 - 15,660,000 Proceeds from premium - 1,906,637 - 1,906,637 Payment to defease revenue bond - (17,580,000) - (17,580,000) Acquisition and construction of capital assets (24,732,961) (6,826,833) (1,695,744) (33,255,538) Proceeds from sale of capital assets 16,031 - - 16,031 Capital grants/contributions 833,098 5,290,570 90,077 6,213,745 Passenger facility charges - 2,390,880 - 2,390,880 Payments to CitiCapital - - (163,354) (163,354) Settlement charges - - (1,000,000) (1,000,000) Principal Paid on: General obligation bonds (16,039,287) - - (16,039,287) Revenue bonds (2,160,000) (893,109) (3,053,109) Capital lease obligations - (280,521) (120,702) (401,223) Interest paid on outstanding debt, including issue costs (3,772,548) (2,475,762) (731,141) (6,979,451) Net Cash Used by Capital and Related Financing Activities (22,875,667) (4,075,029) (4,401,260) (31,351,956)
Cash Flows From Investing Activities: Net (additions)/reductions to restricted cash and investments 13,181,604 700,306 (1,439,257) 12,442,653 Purchase of investment in associated companies (1,717,200) - - (1,717,200) Receipt of interest & dividends 3,636,343 54,186 694 3,691,223 Net Cash Provided/(Used) by Investing Activities 15,100,747 754,492 (1,438,563) 14,416,676 Net Increase/(Decrease) in Cash 1,988,532 1,002,433 (960,304) 2,030,661
Cash and cash equivalents at beginning of year 11,436,121 1,439,827 3,845,424 16,721,372
Cash and cash equivalents at end of year $ 13,424,653 $ 2,442,260 $ 2,885,120 $ 18,752,033
(continued)
34
(continued)
Nonmajor Enterprise Electric Airport Funds Total Adjustments to Reconcile Operating Income/(Loss) to Net Cash Provided by Operating Activities: Operating income/(loss) $ 5,602,363 $ (1,170,879) $ 2,262,972 $ 6,694,456 Depreciation and amortization 4,917,644 5,809,621 2,742,850 13,470,115 Other operating net revenues and expenses - (101,161) - (101,161) (Increase)/decrease in receivables (757,991) (161,947) (314,512) (1,234,450) (Increase)/decrease in unbilled revenues 361,848 32,283 (19,339) 374,792 (Increase)/decrease in inventory (581,383) (15,656) (27,642) (624,681) (Increase)/decrease in prepaids - 4,583 - 4,583 (Increase)/decrease in notes receivable 1,070,000 - - 1,070,000 Increase/(decrease) in accounts payable (1,846,706) (236,730) (90,967) (2,174,403) Increase/(decrease) in customer deposits - - 10,699 10,699 Increase/(decrease) in accrued payroll and benefits - 32,505 34,185 66,690 Increase/(decrease) in accrued liabilities - (2,608) 256,281 253,673 Increase/(decrease) in deferred charges 891,690 18,074 909,764 Increase/(decrease) in compensated absences - 3,746 (5,098) (1,352) Increase/(decrease) in other post employment benefits liability - 23,000 15,600 38,600 Increase/(decrease) in net pension liability and related deferred inflow/outflow (542,501) 53,982 67,367 (421,152) Increase/(decrease) in unearned revenue - 8,269 - 8,269 Increase/(decrease) in other operating assets/liabilities 2,383,806 - (14,831) 2,368,975 Net Cash Provided by Operating Activities $ 11,498,770 $ 4,279,008 $ 4,935,639 $ 20,713,417
Statement of noncash transactions: Sale-leaseback financing of settlement liability $ - $ - $ 6,000,000 $ 6,000,000 Vehicles acquired under capital lease financing $ - $ - $ 83,378 $ 83,378
The accompanying notes are an integral part of these financial statements.
35
CITY OF BURLINGTON, VERMONT
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2015
Private Pension Purpose Trust Trust Fund Funds ASSETS
Cash and cash equivalents $ 1,309,836 $ 37,818 Investments 160,078,935 - Reimbursement receivable 399,890 -
Total Assets 161,788,661 37,818
LIABILITIES
Accounts payable 70,736 - Accrued payroll 820 - Compensated absences 1,116 - Due to primary government 132 -
Total Liabilities 72,804 -
NET POSITION
Held in trust for: Employees' pension benefits 161,715,857 - Individuals and organizations - 37,818
Total Net Position $ 161,715,857 $37,818
The accompanying notes are an integral part of these financial statements.
36
CITY OF BURLINGTON, VERMONT
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2015
Pension Private Trust Purpose Fund Trust Funds
Additions: Contributions: Employer - pension $ 8,840,768 $ - Plan members 2,167,652 - Total Contributions 11,008,420 -
Investment earnings: Interest and dividends 5,358,291 - Net increase in the fair value of investments (5,206,163) 5 Total Investment Earnings 152,128 5 Less Investment Expenses (709,485) - Net Investment Earnings (557,357) 5 Total Additions 10,451,063 5
Deductions: Benefits - pension 12,686,561 - Benefits - FICA (5,579) - Benefits - post employment health (78,330) - Administrative expenses 306,795 - Total deductions 12,909,447 - Change in net position (2,458,384) 5
Net position: Beginning of year 164,174,241 37,813 End of year $ 161,715,857 $ 37,818
The accompanying notes are an integral part of these financial statements.
37
CITY OF BURLINGTON, VERMONT
COMPONENT UNITS
STATEMENT OF NET POSITION
JUNE 30, 2015 Burlington Burlington Community School Development District Corporation Total ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS: Current: Cash and cash equivalents $ 8,472,568 $ 17,146 $ 8,489,714 Investments 200,938 - 200,938 Receivables, net of allowance for uncollectibles: Intergovernmental 3,406,668 - 3,406,668 Other 283,919 283,919 Capital lease receivable - 94,256 94,256 Due from primary government 107,895 - 107,895 Inventory 21,753 - 21,753 Prepaid expenses 8,250 - 8,250 Other current assets - 3,758 3,758 Total current assets 12,501,991 115,160 12,617,151 Noncurrent: Capital lease receivable - 1,553,608 1,553,608 Capital assets: Land and construction in progress 2,299,751 492,645 2,792,396 Capital assets, net of accumulated depreciation 39,756,957 4,117,473 43,874,430 Total noncurrent assets 42,056,708 6,163,726 48,220,434 TOTAL ASSETS 54,558,699 6,278,886 60,837,585 Deferred Outflows of Resources 1,190,910 245,907 1,436,817 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 55,749,609 $ 6,524,793 $ 62,274,402
(continued)
38 (continued)
Burlington Burlington Community School Development District Corporation Total LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION LIABILITIES: Current: Accounts payable $ 1,945,581 $ - $ 1,945,581 Accrued expenses 1,213,936 - 1,213,936 Accrued interest payable 191,784 - 191,784 Due to primary government - 133,354 133,354 Other liabilities - 3,753 3,753 Current portion of long-term liabilities: General obligation bonds payable 954,286 233,071 1,187,357 Capital leases payable 50,735 - 50,735 Compensated absences 250,000 - 250,000 Total current liabilities 4,606,322 370,178 4,976,500 Noncurrent: Due to primary government - 1,092,419 1,092,419 General obligation bonds and other debt payable 27,055,701 3,847,528 30,903,229 Revenue bonds payable - - - Capital leases payable 26,626 - 26,626 Compensated absences payable 2,375,334 - 2,375,334 Net OPEB obligation 2,018,658 - 2,018,658 Net pension liability 6,458,116 - 6,458,116 Other 426,476 - 426,476 Total noncurrent liabilities 38,360,911 4,939,947 43,300,858 TOTAL LIABILITIES 42,967,233 5,310,125 48,277,358 Deferred Inflows of Resources 1,816,589 - 1,816,589 NET POSITION: Net investment in capital assets 13,969,360 11,141,715 25,111,075 Restricted: For education 646,896 - 646,896 Unrestricted (3,650,469) (9,927,047) (13,577,516) TOTAL NET POSITION 10,965,787 1,214,668 12,180,455 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 55,749,609 $ 6,524,793 $ 62,274,402
The accompanying notes are an integral part of these financial statements.