Popular Annual Financial Report for the year ended June 30, 2016 2016 PAFR

PROVO CITY,

Table of Contents

To the Citizens of Provo City ...... 1 Provo at a Glance ...... 2 Meet the Elected Officials ...... 3 Key Services of Provo City ...... 4 Significant Events of Provo City ...... 5 Statement of Net Position...... 6 Statement of Activities ...... 7 Where General Fund Money Comes From ...... 8 Where General Fund Money Goes ...... 9 General Fund, Fund Balance ...... 10 Library Fund ...... 11 Property Tax Summary ...... 12 Enterprise Funds ...... 13 Debt Summary City Wide ...... 14 Top Rankings ...... 15

To the Citizens Of Provo City

e are proud to present the City of Provo’s Popular Annual Financial Report (PAFR) for the fiscal year ended June 30, 2016. This report gives readers a summary of the City’s finan- W cial standing. The purpose of the PAFR is to illustrate the City’s financial information in a clear, concise manner giving all readers, both financial and non-financial, the understanding of where the revenue comes from and where dollars are being spent. Most importantly, it is es- sential that our citizens understand the key services that the City provides to make Provo a safer and more enjoyable place in which to work, live, and play.

The PAFR summarizes the financial activities of the City and is drawn from a more detailed report called the Comprehensive Annual Financial Report (CAFR). The CAFR includes financial statements that were prepared in conformance with Generally Accepted Accounting Principles (GAAP) and audited by Hansen, Malmrose, Bradshaw and Erickson, P.C., an GFOA Outstanding Achievement Award for the 2015 PAFR independent auditing firm. The 2016 CAFR has received an unmodified (clean) opinion. The numbers contained within the CAFR were acquired by applying the basis of accounting principles as prescribed by the Governmental Accounting Standards Board (GASB).

Although the numbers used in the PAFR come from an audited source, we have presented them in a condensed, easy to understand, non-GAAP format. GAAP reports deal with the presentation of segregated funds as well as full disclosure of all material financial and non-financial events in notes to the financial statements, while non- GAAP reports do not contain such notes. Citizens who wish to review audited GAAP basis financial statements can refer to the City of Provo’s CAFR, which is available from the Finance Department or on the City of Provo’s website at provo.org.

As a municipality, we want to continue awareness, accountability, and transparency of the City’s financial infor- mation. We anticipate that after reading the PAFR, community members will be reassured that public dollars are being used to build a better, safer, and stronger Provo. With the help of all departments, the City, in 2016 has accomplished many goals set within the 2030 vision. All of these positive achievements have helped to in- crease growth and success in our City. We look forward to the future and growth of the City.

We are honored to serve the citizens of Provo and hope you enjoy reviewing the 2016 PAFR. We welcome any input, questions, and comments you may have regarding this report. You may contact the Finance Division at 801-852-6505. Sincerely,

John Curtis Mayor

1 Provo City Popular Annual Financial Report June 30, 2016

Provo At a Glance

The City of Provo was incorporated in 1851 18 public schools in Provo 23.7 Median Age in Provo and is located in a metropolitan that has a dynamic and diverse economy. The City has been given numerous awards as one of 35.4 Miles of Pathways/ 40.1% Adults over 25 the finest cities to live and do business in the Trailheads with Bachelor’s degree or higher .

The City has a diverse manufacturing and 41.1% Homeownership 55 Parks in Provo industrial base. Major industries include re- tail business, light manufacturing, software development, and a university community. 2,611 People per square 33,363 students at This diversity stabilizes the unemployment mile rate and offers a broad range of employment opportunities. Provo city estimated population in 2016 was 115,264. Top 10 Provo Employers Provo’s economy continues to recover from the great recession and continues to outperform 1) Brigham Young University the national economy. The City closely moni- tors the current economic environment and 2) Regional Medical plans and budgets for the future accordingly. Center You can view the City’s budget at provo.org. 3) , Inc.

4) Provo City

5)

6) Utah County

7) Ancestry.com Operations, Inc

8) Central Utah Medical Clinic

9) Chrysalis Utah, Inc.

10) Citizens Telecommunications

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Meet the Elected Officials

City Council Mayor

(Left to right) Gary Winterton, David Sewell (Vice– Chair), Kay Van Buren, David Knecht, George Stewart, Kim Santiago (Chair), David Harding

John Curtis

City Administration

Chief Administrative Officer ...... Wayne Parker Chief Deputy Mayor’s Office...... Corey Norman Chief Deputy Economic Development ...... Dixon Holmes City Attorney ...... Robert West Police Chief ...... John King Fire Chief...... James Miguel Parks and Recreation ...... Scott Henderson Library Services ...... Gene Nelson Energy ...... Travis Ball Community Development ...... Gary McGinn Redevelopment ...... David Walter Public Works ...... David Decker Administrative Services ...... John Borget

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Key Services

The following includes brief highlights of major departments and services within Provo City. Please Ofrefer toProvo the Provo City website City at provo.org for any additional information about departments or ser- vices described.

Mayor—The Mayor’s Office enforces laws appli- and adult recreation programs. cable to those residing or conducting business in Police—The Police Department provides re- Provo, executes policies adopted by the Munici- sponse to community initiated calls for service, pal Council, prepares and submits the annual city enforces all laws, provides proactive policing and budget, and recommends for adoption such service to the community including animal con- measures as may be deemed necessary or prop- trol, community based pollution and crime pre- er for the efficient operation of the City. vention. Community Development—Community Devel- Fire—The Fire Department is responsible for the opment is responsible for regulating land devel- delivery of emergency and support services in the opment that takes place within the city. Zoning, following areas: fire prevention and education, planning and building work together to provide inspection services, fire suppression, emergency the City with an aesthetically pleasing, clean and medical treatment and ambulance transport, res- safe environment. cue services and hazardous materials response. Economic Development—Economic Develop- Library—The provides the ment is responsible for encouraging economic community with a center for information, instruc- growth in Provo City by working hard to bring new tion, learning, leisure and cultural opportunities. businesses to Provo and encouraging growth in The library has over 259,150 items in adult and existing businesses. children’s circulation, along with access to thou- Administrative Services—Administrative Ser- sands of online eBooks and audiobooks. vices is comprised of the Finance, Human Re- Energy—The Energy Department provides relia- sources, and Information Systems divisions with- ble electricity with superior customer service at a in the General Fund. Administrative Services is competitive price to the residents and businesses also responsible for the administration of the Jus- in Provo. tice Court and for facility maintenance throughout the City of Provo. Public Works—The Public Works Department is responsible for maintaining streets in Provo, gar- Attorney’s Office—The Attorney’s Office pro- bage collection, water resources and reclamation, vides the City with a broad range of legal ser- storm drain maintenance, airport administration, vices, including criminal prosecution, litigation, and fleet management. claims and risk management, and safety. The Attorney’s Office also initiates and defends civil Redevelopment—The Redevelopment Agency lawsuits on behalf of Provo City, reviews con- undertakes programs and projects to revitalize tracts, participates in negotiations and provides Provo’s central business district and the sur- legal opinions. rounding central-city neighborhoods. Parks and Recreation—The Parks and Recrea- tion department oversees the maintenance of all parks throughout Provo. The new recreation cen- ter, the gun range and the Covey Center are also managed by this department, as well as all youth 4 Provo City Popular Annual Financial Report June 30, 2016

Significant Events of Provo City

The Utah State Court is The , the now under construction of former LDS Tabernacle, was open to a new 250,000 square foot the public with an estimated 850,000 court facility in downtown attendees. Provo.

Construction of a new 120 unit resident/retail development broke ground at 300 W and Center Street.

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Statement of Net Position

The City’s governmental activities’ increased $7.3 million in total net position which represents a 2.2% increase from the prior year’s net position. The City’s business-type activities’ increased $17.3 million in total net position which represents a 7.3% increase from the prior year’s net position. The City, as a whole, increased total net position by $24.6 million, which is a 4.3% increase from the prior year. The full, disclosed Statement of Net Position can be located in our CAFR located at provo.org.

Statement of Net Position Governmental Activities Business-Type Activities Total

2016 2015 2016 2015 2016 2015 Current assets $ 89,442,195 $ 78,034,043 $ 79,294,898 $ 97,112,772 $ 168,737,093 $ 175,146,815 Capital assets, net 343,430,242 344,576,847 231,483,643 200,756,140 574,913,885 545,332,987 Other non-current assets 22,186,841 23,247,419 7,682,323 7,063,572 29,869,164 30,310,991 Total Assets 455,059,278 445,858,309 318,460,864 304,932,484 773,520,142 750,790,793

Deferred Outflows 10,345,922 3,108,755 2,083,187 626,090 12,429,109 3,734,845

Current liabilities 19,650,961 17,262,905 15,363,620 16,367,489 35,014,581 33,630,394 Non-current liabilities 92,111,412 85,494,914 50,487,404 51,801,049 142,598,816 137,295,963 Total Liabilities 111,762,373 102,757,819 65,851,024 68,168,538 177,613,397 170,926,357

Deferred Inflows 13,974,709 13,839,424 639,144 645,525 14,613,853 14,484,949

Net Position Net investment in capital assets 297,887,366 302,153,434 206,937,602 195,162,694 504,824,968 497,316,128 Restricted 9,011,521 9,152,175 1,789,877 1,553,767 10,801,398 10,705,942 Unrestricted 32,769,231 21,064,212 45,326,404 40,028,050 78,095,635 61,092,262 Total net position $ 339,668,118 $ 332,369,821 $ 254,053,883 $ 236,744,511 $ 593,722,001 $ 569,114,332

Unrestricted net position represents the available funds the City has at a point in time to pay for emergencies, shortfalls or other unexpected needs in both the Governmental and Busi- ness-Type Activities. Unrestricted net position allows management to track the City’s financial position over time. The city’s unrestricted net position increased during this fiscal year primarily due to the lack of new debt and expenditure of funds related to restricted cash projects.

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Statement of Activities

Functions of Governmental Activities

 General Government  Housing Consortium

 Fire  Redevelopment

 Police  Community Develop- ment  Streets  Economic Develop-  Parks & Recreation ment  Engineering  Arts Council  Library  Trust & Agency  Debt Service

Functions of Business-Type Activities

 Airport  Wastewater

 Energy  Utility Transportation

 Golf  Sanitation

 Water  Storm Drain

As shown in the graphs above, both the Governmental and Business-type activities shows trend of an increase in revenues. Expenditures have been relatively stable for Governmental activities, and consistently lower than revenues for Business-type activities.

This summary excludes bond proceeds and transfers related to bond issuances. The full, disclosed Statement of Activities can be located in our CAFR located at provo.org.

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Where General Fund Money Comes From

The General Fund is the general operating fund of the City and supports day-to-day operations. By law, the City may only have one general fund. For data on all city funds, please view the CAFR at provo.org. The Gen- eral Fund is comprised of the following departments: *General City Departments *Justice Court *Emergency Response *Trust & Agency *Mtn. Vista *B&C Roads *World Family Game *Covey Center

Below is five-year comparison of the General Fund total revenues and transfers in:

As shown above, sales tax continues to increase, which is a good indicator Provo’s economy is continuing to grow. Community Development revenue increased 99%, which is due to commercial construction projects around the city. General Fund Revenues

The largest source of revenue for the General Fund is sales tax (26.8%) followed by transfers in from other funds (16.6%). 8 Provo City Popular Annual Financial Report June 30, 2016

Where General Fund Money Goes

Below is a five-year comparison of General Fund expenditures and transfers out. Expenditures in all departments increased in fiscal year 2016. The increase is due primarily to an increase in personnel and overhead costs.

General Fund Expenditures and Transfers out

General Fund Expenditures General Fund Full-Time Equivalent (FTE) Summary by Department

Police Department ...... 168 Parks and Recreation ...... 157 Fire Department ...... 80 Administrative Services ...... 35 Public Services...... 32 General Government ...... 33 Community Revitalization ...... 24 Justice Court ...... 12

The General Fund’s largest department continues to be the Police department (29.4%) followed by Parks and Recreation (18.2%), and the Fire department (15.9%).

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General Fund Fund Balance

Fund balance is the difference between the General The ratio depicted below is determined by dividing Fund’s assets and liabilities. It is the net worth of the the amount of unassigned fund balance by the budg- City. The “unassigned” fund balance is an indication eted general fund revenue. The Municipal Council of the amount of available resources the City has at a has established a goal to have unassigned general point in time to fund emergencies, shortfalls, or oth- fund balance between 20%-25%. er unexpected needs.

Unassigned fund balance increased by $2.5 million or 29%, which primarily came from revenues exceeding the budget. One of the primary sources of these increased revenues was community development fees, amounting to $1.5 million over budget. The City continues to trend toward the 25% level. See our complete disclosed in- formation in our CAFR, Basic Financial Statements located at provo.org.

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Library Fund

The Library Fund is the largest single special revenue fund within Provo City. The Provo City Library is funded primarily by property tax dollars. The Library was founded over 100 years ago with the goal of being a communi- ty center for information, instruction, leisure, and cultural opportunities. In one year, the Library checks out over 1.5 million items, and is continually growing its collections, as well as using technology in the form of down- loadable e-books and audiobooks.

*

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Property Tax Summary

The City of Provo receives a portion of the property taxes collected on all real property located within the City. These tax dollars support public safety services such as those provided by police and fire depart- ments, as well as many other critical government functions.

The majority of the real estate taxes paid by Provo Property Tax Burden for $200,000 Market Value Property City residents are allocated to the Provo School Central Utah Water $ 40.00 District. Certain rounding has occurred for ease of presentation. Provo Library Fund 66.30

Provo General Fund 91.40

Provo Debt Service Fund 66.20

Utah County 104.90

School District 788.30 Total Tax Burden $ 1,157.10 Tax Received by Provo 19.3%

Top Ten Property Taxpayers for Provo City (amounts expressed in thousands) 2016 % Total Assessed of Tax Payer Type of Business Valuations Valuation NuSkin International Inc Retail $ 67,482 1.41% SIR Properties Trust (formerly ) Technology 50,899 1.06% Central Utah Investment Company Investments 35,877 0.75% SIR Properties Trust (formerly Novell) Technology 30,416 0.63% Timpanogos Land Holdings LLC Real Estate 27,616 0.58% Provo Mall LLC Retail 27,299 0.57% Questar Gas Utilities 26,478 0.55% Union Pacific Railroad Company Transportation 22,585* 0.47% Peak Joaquin Holdings LLC Real Estate 21,318 0.44% Centurylink Inc Utilities 19,243 0.40% Subtotal 329,213 6.86% All Others 4,464,227 93.14% $ 4,793,440 100.00%

Assessed value is the portion of property value that is taxed. Amounts listed are for the collections year ending December 31, 2016. Source: Utah County Auditor 12 Provo City Popular Annual Financial Report June 30, 2016

Enterprise Funds

Enterprise funds are used to account for those City operations that are financed and operated in a manner similar to private business. Readers interested in more details should read the Comprehensive Annual Financial Report (CAFR) available at provo.org.

*

Enterprise Fund FTE Summary by Department Energy…….66 Golf…….8 Water………..37 Waste Water………….28

Sanitation…16 Airport….4 Storm Drain....12 Utility Transportation…..0 13 Provo City Popular Annual Financial Report June 30, 2016

Debt Summary City Wide

At fiscal year end, the City had $123.6 million in long-term debt outstanding which represents a 0.6% decrease from the prior year. Provo City has employed a variety of financing techniques for capital improvements, as described below:

Notes Payable: Notes are issued in anticipation of general obligations bonds and may be issued up to a maximum maturity of 20 years from the date of the issuance of the original notes (except for notes in anticipation of special assessments).

General Obligation Bonds: These bonds allow municipalities to borrow money to fund capital im- provements and infrastructure. Repayment of General Obligation Bonds is guaranteed by the “full faith and credit” of the City.

Revenue Bonds: Revenue bonds are secured by the issuer pledging specific revenues either from the projects being financed and/or other dedicated revenue sources such as franchise fees of utility

Over the course of 2016, the City issued debt of 5.5 million for the Provo360 Project. More information regarding the City’s debt can be found in the Long-Term Debt note in the CAFR located at provo.org.

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Top Rankings

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Contact Us: General - 801.852.6000 Finance - 801.852.6505

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