AGENDA Committee of the Whole January 9, 2017 5:00 p.m.

A. Roll Call B. Items Also on the Regular Agenda C. Considerations C.1. Egyptian Theatre Business Planning Feasibility Assessment. Documents:

Egyptian Theatre Feasibility Study.pdf

C.2. FY2016 Management Letter and Comprehensive Annual Financial Report (CAFR). Documents:

FY2016 CAFR Presentation.pdf

D. Public Participation E. Recess for Executive Session of the City Council E.1. Approval to Hold an Executive Session to Discuss Personnel as Provided for in 5 ILCS 120/2(c)(1). E.2. Approval to Hold an Executive Session to Discuss Pending or Imminent Litigation as Provided for in 5 ILCS 120/2(c)(11). F. Adjournment

Assistive services available upon request. DATE: January 4, 2017

TO: Honorable Mayor John Rey City Council

FROM: Anne Marie Gaura, City Manager Patty Hoppenstedt, Assistant City Manager Jason Michnick, Economic Development Planner Lauren Stott, Management Analyst

SUBJECT: Egyptian Theatre Business Planning Feasibility Assessment.

I. Summary

On January 25, 2016, the City Council approved an agreement with Janis A. Barlow & Associates to complete a feasibility study for the Egyptian Theatre. This study, which aligns with the DeKalb 2025 Strategic Plan, represents months of research and results in recommended actions developed to increase the operating potential of the Theatre. This feasibility study is presented for the consideration and discussion of the Mayor and Council.

II. Background

Increasing the operating potential of the Theatre has been identified as a transformational project for Downtown DeKalb. Both the Downtown Revitalization Plan of 2007 and the City Center Plan of 2013 reference the value of the Theatre to the overall economic viability of the Downtown, recognizing its benefits as a significant cultural and entertainment draw to the Downtown and as a major asset in attracting patrons to the area. The City further indicated its intent for strategic investment in the future of the Theatre in the DeKalb 2025 Strategic Plan, which includes the following vision, goal, strategy and action related to the Theatre:

Vision of Community Vitality and a Vibrant Downtown Goal: Position downtown DeKalb for long-term success. Strategy: Support enterprises that enhance the vitality of the downtown. Action: Consider a range of strategic investment options for the Egyptian Theatre to maximize its impact as a driving force of downtown commerce. At Council’s direction, staff initiated a feasibility study process with Janis A. Barlow & Associates, a firm with extensive background and expertise in the realm of the historic theatre community, as well as proven ability to identify the cultural impacts of historical theatres within their communities.

The purpose of the operations feasibility study was to identify a sustainable operating model that achieves the mission, cultural, programming and financial goals of the organization. As discussed with City Council in January 2016, performing a study to determine how to profitably operate the Theatre would answer many of the questions that occur regularly when the Theatre’s annual funding request is considered by Council. Questions raised by Council have included: “Why are we putting so much money into a building we don’t own?” or “Why isn’t the Theatre profitable?” and “What is the plan for the Theatre moving forward?”

Throughout 2016, consultants from Janis A. Barlow & Associates worked with City staff and staff/Board members for the Theatre to learn about the Theatre, its effects on the community and its current relationship with the City. The full Feasibility Study report is included with this memo as Appendix A. The report includes the following elements which serve to inform the recommendations from Janis A. Barlow & Associates to the Mayor and City Council:

⋅ Facility review ⋅ Optimum Theatre programming and design ⋅ Egyptian Theatre operating history ⋅ Community demographics ⋅ Community needs assessment ⋅ Operating potential and programming plan ⋅ Ownership and governance options and recommendation ⋅ Sample operating budget

The Feasibility Study, completed by Janis A. Barlow & Associates, identifies recommendations for the Theatre to achieve a sustainable operating model. Those recommendations include a continuation of the service to local resident theatre companies utilizing the Theatre, preservation of the historic elements of the Theatre and identification of ways to leverage its significance nationally and regionally. In order to better leverage the 1,397 seating capacity of the Theatre and its potential to generate income for the community, a plan needs to be developed for the Theatre to become a professional performing arts center that will attract audiences from throughout the region and beyond. This will require a cost-effective retrofit design and upgrade from theatre experts to turn the Egyptian vaudeville facility into a regional performing arts center that has greater programming flexibility and income potential. The recommended governance model is to transfer the ownership responsibility to secure it as a prominent public asset and icon of the community, which has the professional capacity to supervise significant capital upgrades and secure public funding for a major public project. This would require an expansion of the governing structure of the Theatre from a community-based volunteer

Page | 2 board of directors to a broader-based public-private governance structure. Finally, an expansion of the management structure to assume full professional responsibility for the development and execution of an expanded programming and operating structure is recommended. Janis A. Barlow & Associates identifies the next steps to be a planning study requiring a stakeholder review of the future mission of the Egyptian Theatre, confirmation of the long term activity program, a building program that will sustain programming and services, an architectural concept to realize the building program, a capital cost estimate, a financing plan and an action plan. During the next year, the planning study can be complemented by transition work implementing the change in the Preservation of Egyptian Theatre, Inc. to focus on ownership, governance and management to a public ownership, a public-private governance and a highly professional, specialized management structure. In order to better understand the impact that the Theatre has on the downtown, the Community Development Department partnered with volunteers at the Theatre to conduct surveys of patrons and performers in an effort to measure the economic value provided to surrounding businesses. Intended to be supplementary information to the work done by Janis A. Barlow & Associates, this report aims to provide a “snapshot” of the economic impact of the Theatre as a foot-traffic driver. Anecdotally, downtown merchants have always said that the “downtown is a different place when there is an event at the Egyptian.” The findings from the survey indicate that the estimated direct impact that the Theatre currently has is somewhere between $1.35 million and $2.7 million annually. These figures represent money spent by visitors to the Theatre on surrounding businesses. The largest impact was on the restaurant industry, which accounted for 40% of the total dollars spent by those visiting the Theatre. The strong impact that the Theatre has on the food and beverage industry indicates what the “Egyptian Experience” might be, which is to have dinner and drinks and then see a show. In order to calculate the potential impact that the Theatre would have if it were to successfully evolve into a regional performing arts center, the projections provided by Janis A. Barlow & Associates were used. This projected an additional 49,298 visitors to the Theatre over 2016 figures. Using this figure, the potential additional revenue that could be brought to surrounding businesses ranged from $2.34 million to $4.67 million, with a midpoint of $3.5 million. This would bring the total potential direct impact to somewhere between $3.69 million and $7.38 million. The actual impact on the DeKalb economy would likely be significantly higher, once the multiplier effect was considered. Based on the results of the survey, evidence supports that the Theatre is indeed a primary economic driver for the downtown.

Page | 3 III. Community Groups/Interested Parties Contacted

More than 50 community stakeholders participated in interviews, workshops and/or group meetings with staff from Janis A. Barlow & Associates. Participants included members of the Preservation of the Egyptian Theatre Board of Directors, Egyptian Theatre patrons and volunteers, NIU faculty/administration, and members of the local business community. The full list of participants can be found in the attached report.

Additionally, Janis A. Barlow & Associates and City staff worked to develop and distribute a community survey seeking input from community members and Theatre users. Nearly 500 responses were captured by the survey, and the full results are included in the attached report.

Finally, supplemental research was conducted by the Community Development Department. In an attempt to better understand the current and potential economic impact of the Theatre, Economic Development Planner Jason Michnick and Egyptian Theatre volunteers surveyed more than 80 patrons who attended events at the Theatre in November and December 2016. This research, which is included with this memo as Appendix B.

IV. Legal Impact

The Egyptian Theatre Feasibility Study was completed pursuant to Council direction. The attached report contemplates three distinct governance models to be considered, which will each require a separate legal consideration. For the purpose of the City Council Committee of the Whole discussion on January 9, City Attorney Dean Frieders will be available to answer questions regarding specific City obligations.

V. Financial Impact

The business assessment of the Egyptian Theatre has established that, with greater and more strategic support from the City of DeKalb, it has the potential to significantly increase its socio-economic impact on the community. The recommended next step for City Council is to approve in principal the directions implied in the business planning assessment study for the Egyptian Theatre.

VI. Options

The City Council may review the attached report and make recommendations prior to further action being brought forth.

Page | 4 VII. Recommendation

It is recommended that City Council members consider the included information and discuss the options presented with the representative from Janis A. Barlow & Associates. Additional information or clarification may be requested.

Page | 5 Exhibit A

A BUSINESS PLANNING FEASIBILITY ASSESSMENT FOR THE EGYPTIAN THEATRE CITY OF DEKALB

Janis Barlow for Janis A. Barlow & Associates Dulcie Gilmore Associates Killis Almond FAIA Architects December 2016 TABLE OF CONTENTS

1.0 INTRODUCTION ...... 1 1.1. DeKalb ...... 1 1.2. Understanding of the Assignment ...... 2 1.3. Acknowledgements ...... 3 1.4. Definitions ...... 4 1.5. Preliminary As-Built Facility Review by Killis Almond, FAIA, NCARB ...... 5 1.5.1. Introduction ...... 5 1.5.2. General Information ...... 6 1.5.3. Investigation of the Exterior ...... 8 1.5.4. Architectural Summary ...... 11 1.6. Theatre Programming and Design ...... 13 1.6.1. Optimum Contemporary Theatre Plan (1,000 seat theatre) ...... 13 1.6.2. Optimum Theatre Section (1,000 seat theatre) ...... 13 1.6.3. Egyptian Theatre Compared to Optimum Plan ...... 14 1.6.4. Programming Options ...... 15 1.6.5. Proposed Rehabilitation Criteria ...... 16 1.7. Egyptian Theatres Operating History ...... 17 1.7.1. History (excerpt from the Egyptian website) ...... 17 1.7.2. Mission ...... 18 1.7.3. Current Constitution and Bylaw Analysis ...... 19 1.7.4. Board Composition, Responsibilities and Expectations ...... 20 1.7.5. Evolution of Egyptian Theatre Personnel ...... 21 1.8. Measurable Variables for Assessing Financial Sustainability ...... 22 2.0 MARKETING AND PROGRAM REVIEW ...... 25 2.1. Community Demographics and Programming Assessment ...... 25 2.1.1. Community Profile and Market Assessment ...... 25 2.1.2. History ...... 25 2.1.3. Socio-Demographic Characteristics ...... 25 2.1.3. Economic Activity ...... 27 2.1.4. Egyptian Theatre Audience by Geographic Placement ...... 29 2.1.5. Current Culture Market ...... 30 2.1.6. Regional Inventory of Facilities ...... 32 2.1.6.1. Theatre Ownership/Operations ...... 33 2.1.6.2. Business Model Comparison ...... 34 2.1.6.3. Theatre Staffing ...... 35 2.1.6.4. Budgeting Comparisons ...... 36 2.1.6.5. Summary of Observations ...... 37

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY December 2016 3.0 COMMUNITY NEEDS ASSESSMENT ...... 38 3.1. Summary of Stakeholders Interviews and Egyptian Board Workshop Findings ...... 38 3.2. Public Survey ...... 39 3.2.1. Summary ...... 39 3.3. The City 2015 Strategic Plan Goals ...... 41 3.4. Potential Users and Programming Survey ...... 43 4.0 OPERATING POTENTIAL AND PROGRAMMING PLAN ...... 45 4.1. Introduction ...... 45 4.2. Programming Models ...... 46 4.2.1. Presented Programs and Commercial Rentals (Touring Artists and Attractions) ...... 47 4.2.2. Young Audiences Performing Arts and Touring Programming ...... 47 4.2.3. Film Programming ...... 47 4.2.4. Collaborative Programming with Northern Illinois University ...... 48 4.2.5. Community Rentals ...... 48 4.3. Potential Audiences ...... 49 4.3.1. Defining the Potential Market Areas for the Egyptian Theatre ...... 49 4.3.2. Demographic Indicators of an Affinity for the Arts ...... 52 4.3.3. Audiences for Exurban Locations ...... 52 4.3.4. Attracting Arts Tourists From Around the Country ...... 53 4.4. Marketing ...... 54 4.4.1. Positioning Concept ...... 54 4.4.2. Values ...... 54 4.4.3. Developing Audiences and Clients ...... 54 4.4.4. Senior Management and Advisory Groups ...... 56 4.5. Budget Preparation ...... 57 4.5.1. Egyptian Theatre Presentations ...... 57 4.5.2. Programming with Northern Illinois University ...... 58 4.5.3. Community Usage, Commercial Rentals and Co-Presentations ...... 59 4.5.4. Theatre Usage – Summary ...... 60 4.5.5. Sample Ticket Prices ...... 60 4.5.6. Sample Operating Budget ...... 61 4.5.7. Staffing Assumptions ...... 62 4.5.8. Egyptian Theatre Program Growth Projections ...... 64 5.0 OWNERSHIP AND GOVERNANCE ...... 65 5.1. Review of Ownership, Governance and Management ...... 65 5.1.1. Proposed Ownership, Governance and Management ...... 65 5.1.2. Ownership, Governance and Management Objectives ...... 66 5.1.3. Ownership, Governance and Management Recommendation ...... 68

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY December 2016 6.0 SUMMARY OF OPERATING RESOURCES ...... 70 6.1. Future Staff Organization ...... 71 6.2. Policy and Governance Changes ...... 71 6.3. Necessary Equipment ...... 72 6.4. Facility and Amenities ...... 72 6.5. External Resources ...... 73 6.6. Resource Identification ...... 74 7.0 FINANCIAL AND CULTURAL IMPACT ...... 75 8.0 FINAL CONCLUSIONS AND RECOMMENDATIONS/EXECUTIVE SUMMARY ...... 78 9.0 APPENDIX – AVAILABLE SEPERATELY ...... 86

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY December 2016 1.0 INTRODUCTION

1.1. DeKalb The area today known as DeKalb has a long, colorful history that began to unfold in the early 1800s. Settlers from the east coast were attracted to the area by the rich farmland and abundant natural resources. Agriculture was the primary economic activity as the 63 mile Kishwaukee River flows northward through the city and its watershed serves primarily as agricultural lands. The area began to grow and develop with the arrival of the Chicago and North Western railroad in the mid- 1800s. The area’s prime location brought easier shipping of local crops to larger markets such as Chicago.

In 1873, local farmer Joseph Glidden developed barbed wire and began commercial mass production of his “new invention” designed to manage animals in large pastures. However, another entrepreneur later claimed to invent barbed wire. After 18 years of legal wrangling, Glidden’s patent was declared the “winner,” thereby assuring DeKalb a place in history and the nickname “Barb City.” The DeKalb County Farm Bureau, the first organization of its kind, was established in 1912. In the 1930s, the DeKalb AgResearch Corporation marketed its first hybrid seed corn.

The founding of Northern Illinois State Normal School in 1895 permanently changed DeKalb’s landscape by adding education, cultural and sporting events to complement and enhance the lifestyle of DeKalb residents and visitors. The 756-acre campus became known as Northern Illinois University (NIU) in 1957. Today, NIU is one of the largest universities in the State of Illinois system, with over 19,000 students and is the largest employer in DeKalb.

The community has an outstanding school system. In 2013, U.S. News and World Report ranked DeKalb High School District 428 among the best in Illinois. The DeKalb Public Library has served the community for more than 100 years and completed an extensive, $25.3M expansion project in August 2016.

The DeKalb County Forest Preserve District operates a number of forest preserves along the Kishwaukee River and the river offers recreational opportunities such as canoeing and fishing.

With its culture of innovation, DeKalb has evolved from primarily an agri-business and manufacturing town, into a regional economic engine with its access to the I-88 and I-39 corridors. Whether as a small town charm or a progressive area, DeKalb is a unique city, which takes pride in its farming roots, is embracing growth, celebrating its diversity and is advancing the abundant opportunities that have been brought its way.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 1 December 2016 1.2. Understanding of the Assignment

DeKalb finalized a ten-year strategic plan for the city in February of 2016. Several of its goals are particularly relevant to this proposal: positioning the city for long-term success, supporting enterprises that enhance the vitality of the downtown, and facilitating a business-friendly environment that supports existing merchants while attracting new investment to the area. These are all goals that will guide the continued development and growth of the Egyptian Theatre and the city’s entire cultural life. The city’s population experienced a 12.4% growth between 2000 and 2010, but has potentially declined since then. With a new strategic plan in place the City is looking towards its future cultural life and the ways in which the Egyptian Theatre could be a positive asset in recruitment and retention of students and new residents.

To that end, the City of DeKalb is examining the future business and programming model for the theatre, and an ownership, governance and management model that will ensure that the theatre provides the optimum contribution to DeKalb’s quality of life on a sustainable platform and remains an asset to the community. The guiding principles for any development are found in the City’s Vision:

DeKalb is proudly known as a welcoming, safe, and vibrant city offering economic, educational, social, cultural, and recreational opportunities for everyone. DeKalb’s neighborhoods, the downtown, and NIU’s campus are interconnected in a dynamic interplay of energy and creativity that retains and attracts businesses with living-wage jobs. Diversity is valued and celebrated, with all people treated with dignity, equity, and respect. DeKalb’s diverse and integrated transportation network provides a wide variety of local and regional transportation options in an efficient and user friendly manner. Through sound fiscal stewardship and collaboration with community stakeholders, City government identifies and coordinates the resources needed to sustain a vibrant DeKalb.

DeKalb is the cultural hub of the county. Art galleries, Kishwaukee Symphony Orchestra, the Municipal Band, live theater, dance, arena concerts, independent films and championship sports are all in DeKalb’s back yard. DeKalb has 44 area parks and 3 major bike trails. In January, 2016, the City of DeKalb advanced to the semifinals in the America’s Best Communities competition as one of the 15 communities nationwide and the only community in Illinois. Most recently DeKalb received the designation of “Bicycle Friendly Community” by the League of American Bicyclists.

The Egyptian Theatre, opened in 1929, is one of the finest examples of this style of vaudeville theater in the United States and a national historic treasure. In considering future funding needs for the 1,397-seat Egyptian Theatre’s capital and operations, a rigorously conducted, professional, objective analysis and demonstration of possible programming, ownership and operating models is a vital first step. A unique business-operating model must be developed that responds to the conditions and opportunities in the DeKalb market before a new programming model is provided. The successful business model is derived from a clear understanding of the market area – the supply and demand for programs and facilities, the community’s perceived needs and aspirations, theatre operations, trends in those fields and the conditions, objectives and measures of success for a new programming model.

Barlow & Associates is one of North America’s most respected arts consulting firms, offering a range of research, planning and management services to clients in the cultural and non-profit sector. The firm is committed to assisting clients in their quest for custom-tailored solutions and the wisest allocation of limited resources. Janis Barlow has spent 35 years focused on creative and practical business planning solutions for historic theatres with more than a thousand seats serving communities often with far less than 150,000 citizens.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 2 December 2016 1.3. Acknowledgements

The consultants are grateful to all the interview, workshop and survey participants who contributed their valuable insights to this study.

The consultants would like to acknowledge the support of the City of DeKalb and the management of the Egyptian Theatre in providing background for this report.

The consultants would like to thank the individuals who responded to questions based on the roles listed below, although they may be engaged in other organizations.

Community Members Northern Illinois University

Debbie Armstrong, DeKalb County Convention & Doug Baker, President Visitors Bureau Jennifer Groce, Director of Community Affairs Cohen Barnes, #ProudlyDeKalb Committee Chair Alex Gelman, Director, School of Theatre & Dance Planner John Siblik, Director, School of Art & Design Ben Bingle, DeKalb County Community Foundation Tracy Nunnally,Theatre & Dance Tech Director Rosa Balli, Owner Eduardo’s Restaurant Billie Giese, Art Dept., Area Arts Council Orion Carey, Wurlitzer Theatre Organ, Committee Chair Alicia Schatteman, GOLD Program Bessie Chronopoulos Paul Bauer, Professor Emeritus School of Music Matt Duffy, DeKalb Area Chamber of Commerce Betsy Hendry, Owner, The Confectionary Theatre Professionals Bill McMahon, Owner, The Lincoln Inn & Faranda’s Steve Duchrow Beth Fowler, Beth Fowler School of Dance Michael & Misty Haji-Sheikh Jodi Riley, Sycamore/Rochelle Performing Arts Matt Duffy, DeKalb Area Chamber of Commerce Academy Ron & Nancy Proesel, Donors Ray Binkowski, Fitworkz & OCB Midwest States Frank Roberts, ABC Local Grant Team Chair Shawn Lowe, Prosound Productions Jerry Smith Michael Embrey, FunMe Events Dan Templin, DeKalb County Community Foundation Mary Supple, DeKalb County Economic Development City of DeKalb Vicky Torres, Red Roof Inn DeKalb General Manager Chris Wallace John Rey, Mayor Anita Zurburgg, DeKalb County Community Anne Marie Gaura, City Manager Foundation Jennifer Jeep Johnson, City Clerk, and Vice President DeKalb Area Arts Council Egyptian Theatre Patty Hoppensted, Assistant City Manager Jo Ellen Charlton, Community Development Director Alex Nerad – Executive Director Jason Michnick, Economic Development Planner Patrick Mlady – Custodian/Maintenance Lauren Stott, Management Analyst Nora Reeves – Box Office Manager Kody Williams – Venue Technician

In addition, Janis Barlow and Dulcie Gilmore had group meetings with Preservation Egyptian Theatre, Inc. board members including: Jeff Keppler, President Jim Mizgalski, Director Dan Schewe, Vice-President Tim Rice, Director Kay Riley, Treasurer Kathy Love, Director Brian Scholle, Secretary Denise Weinmann, Director Nancy Proesel, Director Jason Mangum, Director

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 3 December 2016 1.4. Definitions Vaudeville Theatre - A type of theatre and entertainment popular between 1900 and 1930 which featured a series of light, unrelated touring acts and a photoplay. The acts played in front of stock two-dimensional scenery on shallow stages and the theatres were built on properties to maximize seating capacity and minimize backstage and front of house audience services. Movie Palace - An evolution of the vaudeville theatre that emerged in 1913-14 which featured one large balcony, exotic ornamentation and 2,000 seats or more. Performing Arts - A term that usually embraces theatre and musical theatre, classical and contemporary music, classical and modern dance, opera and variety acts. Performing Arts Center - Typically used to describe a modern (post World War II), not-for-profit public theatre complex which has more than one venue purpose-built to accommodate performing arts. Community-Based Organizations - Not-for-profit incorporations without share capital guided by a volunteer, “working” board of directors whose President is the Chief Executive Officer and who retain employees to assist them. Professional-Based Organizations - Not-for-profit incorporations without share capital guided by a volunteer, “policy” board of directors who retain a professional Chief Executive Officer to assume responsibility for successful programming and operations. Public-Private Partnership - A government or private service that is funded and operated through a partnership between government and the private sector. In complex projects, it provides access to the expertise and efficiencies of the private sector, optimal risk allocation and transparency to deliver a valued public service.

Charitable Status - Known as a 501 (c) 3, where a not-for-profit organization is awarded a federally designed tax status due to the nature of their public service and their board of trustees are held to a higher standard of accountability.

Earned Income - Income earned by a theatre through rentals, ticket sales, concessions, merchandizing, advertising, sponsorships, tuitions, parking and other ancillary income. Contributed Income - Income contributed to the theatre through donors, governments, foundations and other charitable giving sources.

Cultural Institutions - Public libraries, museums, theatres, galleries and archives.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 4 December 2016 1.5. Preliminary As-Built Facility Review by Killis Almond, FAIA, NCARB

The findings contained in the following facility review were gathered during a walk-through of the Egyptian Theatre in January, 2016. These are not thorough and more analysis will be needed during further architectural planning.

1.5.1. Introduction

DeKalb, Illinois is the home of the Egyptian Theatre, which is one of only a handful of atmospheric theatres designed around an ancient Egyptian theme. Following the discovery of King Tut's tomb in 1922, architectural references to the discoveries were used throughout the United States to create thematic designs for commercial buildings, theatres and even residences. Constructed in 1929 DeKalb’s Egyptian Theatre was designed to create an atmosphere reflecting this fascination with Ancient Egyptian design.

The exterior and the interior of the theatre reflect details associated with Egyptian traditions and the "atmospheric" theatrical design style prevalent throughout the United States in the 1920s and 1930s. This style typically featured eastern or Middle Eastern exteriors on the interior walls of the theatre auditorium while rendering the ceiling as a night sky that displayed or projected stars and clouds. Vaudeville productions and silent films were the programming that dominated between 1913 and 1928 when the “talkies” were introduced. The tradition of vaudeville focused around traveling performers who went from theatre to theatre utilizing basic stage drops. This equipment was designed for each theatre constructed at this time. Today the theatrical requirements of the simple shows that formed the vaudeville circuit until the early 1930s no longer apply to modern performing arts presentations.

Vaudeville theatres also were designed with minimum lobby space, minimum restrooms and a maximum of seating. Vaudeville theatres such as the Egyptian were not designed for modern presentations with a planned intermission. Therefore, the Egyptian must address the inherent limitations associated with the original design and function. This assessment will identify the challenges in design and maintenance issues, and recommend an approach to reaching design compromises to improve the function of the public spaces and the backstage support areas.

Because of the beauty and design of their facades and auditoria as well as the historic importance to their communities and the economy of upgrading an existing well built building, vaudeville theatres have often been selected for contemporary transition into a performing arts centre. Inevitably, to serve current The front façade greets the patrons with the and future performing arts needs, a vaudeville house vision that this is a special place. The show really requires expansion to its entry lobbies (or front of does start on the sidewalk. house) and backstage loading and service areas.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 5 December 2016 The Egyptian Theatre has an overall design that is typical of atmospheric theatres at the time of its construction. The front façade, which is an excellent example of Egyptian Revival, is very narrow compared to the full width of the property being developed. The large auditorium building is at the rear of the property because theatres did not require storefronts that could be rented for retail income. The façade of the Egyptian speaks forcefully to the public that this building is exceptional and that this is the entry to the theatre. The adjacent commercial spaces were constructed along the street with storefront windows and public entries separate from the Egyptian. Traditionally these spaces would have been occupied by retail businesses such as a barbershop, confectionery, smoke shop or bakery. Originally, the vaudeville theatre did not provide concessions for the patrons. These would have been purchased outside the theatre prior to entering for a performance. Current professional theatre operators try to control all retail sales within the footprint of the theatre. However, vaudeville theatres never had space allocated for these functions. This lack of space has been problematic for every vaudeville theatre that has ever been rehabilitated.

Design priorities for any rehabilitation include the following: • Patron Safety • Performer/Staff Safety • Audience Comfort • Functional Space • Quality Finishes and Historic Preservation • Ease of Use and Circulation • Cost and Cost Effectiveness

1.5.2. General Information

The Egyptian Theatre was designed by Elmer F. Behrns who was influenced to create an atmospheric theatre that used Egyptian symbols and details to create a sense of arrival for each patron. His attention to detail still gives each 21st century patron a feeling they are entering an amazing structure where something special will be presented. The highly-decorated front façade is constructed of terra-cotta veneer suspended over masonry backing. The terra-cotta façade is highly detailed with depictions of King Ramessess looking down on those who enter. The magnificent stained-glass window depicts a scarab centered in radiating patterns of golds holding up the Egyptian Sun God Ra. The interior continues the Egyptian themes with the sculpture of Egyptian Pharaoh Ramessess II again reflecting King Tut’s influence. The highly-detailed entry hall greets patrons and removes them physically from their daily concerns through a passageway taking them deep into the Egyptian décor. They would then sit amongst other patrons surrounded by the details and sculptures of this atmospheric environment to enjoy the The Egyptian Scarab Beatle is the performance. This feeling is retained to this day. prominent feature of the lobby and front façade. It is a design relating to the discovery of King Tut’s tomb.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 6 December 2016 The original working drawings clearly show that the Egyptian was designed as a modern fireproof structure based on building codes at that time. The theatre has a steel structural column and beam design with large bridge trusses spanning the auditorium spaces. The steel structural system was wrapped with masonry construction to provide a fire rating to the steel. This construction is typical of all atmospheric theatres this firm has investigated over the last 35 years. This is quality construction; however, it does have inherent flaws in the design if water penetrates the masonry surrounding the steel.

The Egyptian opened its doors as the stock market crashed in 1929, which affected finances, the finishes to the theatre and potential plans to develop This reproduction of the original blueprints for construction the surrounding area with a hotel. The clearly shows the structural steel beams which span across the two adjacent retail spaces were added front entry façade. The upper arrow points to the steel beam, later along the sidewalk (approximately which appears to be causing the majority of forces pushing against the front façade. Proper repair requires the removal of 100 by 75 feet deep), and have been the façade and surrounding masonry to inspect the condition heavily remodeled over the years. The of this beam and the amount of rust spalling. It should be third retail space on the corner to the done under the supervision of an historic theatre architectural North is an existing confectionery of specialist and structural engineers. quality sweets.

The historic Egyptian was designed for live vaudeville performance and silent movie projection. The stage was adequate for vaudeville presentations with small dressing rooms located in the basement of the stage. Existing wing space was minimal and there are no scenic bays or loading docks that would meet current presentation and touring requirements.

The auditorium has received excellent repair and restoration work. Its seating and sightlines appeared to be well maintained and in excellent condition.

The public entry and lobby space is drastically limited. In its current configuration, there is no way to meet current building codes or to provide proper front of house (FOH) support areas for ticketing, concessions and administration. If additional space is constructed to the current property line, the Egyptian will still be limited in the areas to which it can expand The photo shows the two commercial building attached to FOH support and lobby space for the the Egyptian just north of the lobby entry. patrons.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 7 December 2016 The stage house sits directly adjacent to the sidewalk on the north side of the theatre. Expansion of the stage to the north is extremely difficult or impossible based on the current street right-of- way. However, the large park area to the west of the stage is ideal for stage support expansion. Stage support would include ADA dressing rooms, chorus dressing rooms, loading docks, technical storage and maintenance areas together with essential space for This view of the stage house is looking toward the southeast. This adjacent HVAC equipment to service property is an ideal location for expansion to the stage and to provide areas additions. This area is also ideal for for stage support spaces and loading dock facilities. theatre expansion because it allows for phased construction during ongoing operations.

1.5.3. Investigation of the Exterior The following is a list of existing conditions and an assessment in relationship to the Egyptian Theatre and expansion or maintenance of the historic structure:

1. Foundation movement – the original foundation and masonry walls appear to be well constructed and retain the majority of their waterproofing capabilities. It also appears that a damp proof course of liquid tar was poured through the masonry walls just above ground level. Historically this was used as a damp proof course to help prevent rising damp from The arrows are pointing to indicators of major movement in the terra cotta on the front façade. The damaging the masonry. Masonry walls do have straight line on the upper right is an indication of how indications of deteriorated mortar; however, much the upper portion of the parapet wall is leaning spot pointing of the mortar can be handled in outward over the sidewalk. The other arrows indicate the course of maintenance. Executive Director movement in the terra-cotta which is being pushed Alex Nerad notes that the mechanical basement away from the internal structural system by rusting steel and freezing water which is trapped behind the experiences ground water coming into the façade. building through the foundation.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 8 December 2016 2. Terra-cotta masonry veneer on the front façade is in fair condition on the lower portions of the entry façade to the Egyptian. The upper portion of the wall and parapet are faced with terra- cotta “faux cotta” that was used in 1983. This type of repair has not addressed the root of the deterioration in the upper third of the front façade. Currently terra-cotta movement, improper repair and misalignment of the terra-cotta indicate significant moisture deterioration of the steel structure behind the masonry veneer. As the terra-cotta extends over a public walkway routine patches and inspections are required, the most recent of which was done in November, 2016. There are no immediate concerns and a longer term solution is under consideration.

A proper repair of this terra-cotta façade involves the complete disassembly of the terra-cotta façade down a level approximately shoulder height of the King Ramessess elements. It is likely, the terra-cotta will need new replacement pieces for those that have been improperly repaired or deteriorated beyond repair. Terra-cotta with clean cracks can be glued together with masonry epoxy and reinstalled. The backup masonry will need to be removed and a complete inspection made of the structural steel and steel elements and relief angles behind the terra- cotta. Based on façade restorations of terra-cotta façades built during this time, it can be assumed that improper relief angles and improper wall flashing are contributing to the moisture gaining access to the raw steel buried inside the wall. New repairs will also involve removal of roofing and installation of new flashing relating to the roof behind the parapet.

It is recommended that all work on the façade should be completed with the highest quality materials including terra-cotta duplication by one of the five terra-cotta manufacturers still

operating in the United States.

The above photograph has two arrows to the right that are The photograph above has arrows indicating showing the direction of forces within the masonry. The structural movement cracks since the last time this upward thrust is caused by rusting steel which is spalling portion of the façade had new pointing applied. and generating forces strong enough to move solid The lower arrow is showing frozen moisture in masonry walls. The left arrow shows a non-terra-cotta the brick structure which is adding to the stresses patch used to repair a corner. and movement of the parapet above.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 9 December 2016 3. Concrete and fire exit platforms – it should be understood that concrete is not a waterproofing material. Exterior flat work and elevated concrete landings absorb moisture and transmit moisture to reinforcing steel buried within the concrete slab. Also, embedded anchors for the attachment of handrails are ferrous metal and will rust over time even if painted. This is caused by moisture accessing the non-painted steel elements buried within the concrete. While this is a lower priority, all future fire exits should be designed with landings constructed with open grating systems that allow snow to pass This corner detail of the fire escape landing from through the openings. Exterior traffic and the balcony left exit doors shows that unprotected corrosion caused by salt will also accelerate concrete is susceptible to the forces of rusting steel. penetration of moisture and should be monitored.

4. Foundation drainage – generally speaking, the areas around the foundation are covered with cementitious flat work in most locations. The south façade opens to a green space connecting two adjacent buildings toward the west. This area is very flat and should be modified to create positive drainage away from the masonry wall. Parts of the groundwater infiltration into the basement have been addressed but there are still issues with major storm events leading to sewage backups and storm water getting into the boiler room on the south side of the building. Ongoing monitoring of the below-grade areas such as the basement mechanical area should be done on a regular scheduled basis.

5. Deterioration of the fenestration – in general, the building has very few windows and the doors and fire exits appeared to be well maintained. Blockage of exterior fire doors should never occur and following each snowfall the exterior fire doors should be cleaned of snow and the pathway cleared for proper exiting of the public. This photograph shows the negative slope along the southern edge of the Egyptian. Positive drainage away from the building is mandatory to 6. Roof conditions – the roof was not accessible reduce the amount of moisture gaining access to for inspection and was not part of this report’s the masonry walls. scope. Information provided to the consultants shows the roofs were replaced in these years: Stage (2006), Lobby (2007), Marquee (2008), Auditorium (2010).

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 10 December 2016 1.5.4. Architectural Summary It is important in the planning process to consider issues such as safety and future needs of the building. While working on the assessment of the building it is very clear that the current square footage in the historic building will not meet the requirements of a contemporary performing arts center. The vaudeville theatre required much less space and current codes require changes to the space and the added safety requirements of a modern theatrical venues.

Safety for the patrons and the public are a priority in any public building. The Egyptian Theatre must focus immediately on issues relating to the deterioration of the front façade. There is no question that the ongoing repairs to the front façade and the roofing projects have helped to protect the building and to slow the deterioration of the terra-cotta and structural steel backing to the terra-cotta. Recent tuckpointing and recent repairs recommended by a local architect and mason should secure the facade through winter until a longer term, more comprehensive plan can be developed. It is still recommended that a properly installed net across the front facade and extending down the sides to mitigate a sudden failure of overstressed terra-cotta elements especially in inclement weather. The netting buys time and safety. Time to raise money for a new façade, time to produce terra-cotta restoration documents and time to ensure public safety without entirely obscuring the full view of the work that needs to be done.

Planning and fabrication of structural framing steel and terra-cotta replacement pieces should be timed for the actual construction to occur during the summer months. It is not uncommon for the timeline of a terra-cotta façade restoration to span two summers and two winters. For this reason the temporary installation of protective netting is considered a small cost for the protection provided.

In fact, integrating an ongoing and future concern for safety will influence a great deal of decision-making on the rehabilitation planning of the Egyptian Theatre from an historic vaudeville to a contemporary performing arts center. It will also be impossible to create the programmatic spaces required to move the Egyptian into the 21st century without expanding the square footage available to incorporate the space as dictated by the program.

The quality of the interior maintenance and the effort put forth by the Egyptian Staff is to be commended. The continuing maintenance of a historic building is considered ongoing restoration and as such becomes extremely important to reducing repairs to the finishes and to extend the life of historic materials that are susceptible to wear and tear. Efficiency in operations is critical in any theater rehabilitation. However, looking at new solutions and considering options should be ongoing and every year a commitment should be made to continuing the high level of maintenance and repair required on the building of this significance. It is difficult to put a value on the Egyptian as it currently sits. It is safe to say that to reconstruct the Egyptian with its current volume and decoration would cost at least $30 million dollars not including the necessary front of house and backstage additions required to meet contemporary codes.

The Egyptian Theatre is one of the finest examples of this style of vaudeville theater in the United States. The theatre’s basic design reflects the function and efficiency of vaudeville theater and film performances of the theatres contemporary with its construction. Because of the quality of work and the amazing design of this structure is the reason the Egyptian is still available today for rehabilitation and programming to serve the next 100 years as a performing arts center. The basic bones of the structure are excellent. It only needs mechanical and electrical upgrades and additions with contemporary programmatic functioning required to give the Egyptian Theatre the prominence in performance that it currently holds in the architectural field.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 11 December 2016

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 12 December 2016 1.6. Theatre Programming and Design 1.6.1. Optimum Contemporary Theatre Plan (1,000 seat theatre)

The schematic plan and section below illustrate the typical components of a contemporary theatre for the performing arts: • Front-of-house facilities • Auditorium and circulation space • Stage and backstage facilities • Administrative services

1.6.2. Optimum Theatre Section (1,000 seat theatre)

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 13 December 2016 1.6.3. Egyptian Theatre Compared to Optimum Plan

These images illustrate the comparison between an optimum contemporary theatre plan and the Egyptian vaudeville house with sections shaded in blue comparing stage size.

Images provided by Killis Almond, FAIA and show a comparison between the Egyptian Theatre ground floor plan and two other historic theatre floor plans by Killis Almond, FAIA where contemporary programmatic elements have been added.

(1,397 SEATS)

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 14 December 2016 1.6.4. Programming Options Stage size and shape, equipment available, loading and seating capacity have the greatest influence over the types of programming which a theatre can sustain physically and financially. At 1,397 seats, the Egyptian Theatre is the size of a contemporary presenting facility for its regional market. A vaudeville theatre generally had stock 2-dimensional scenery in every theatre and vaudeville made very limited production or presentation demands in an era where skilled theatre labour was abundant at a reasonable cost. Successful conversions of vaudeville theatres to contemporary theatres require a conversion to meet public expectations, professional expectations and the law. The functional requirements of the vaudeville and contemporary theatres are very different as illustrated by this comparative chart below.

Vaudeville Era Contemporary Theatre Front-of-House Minimal foyer, lobby sufficient to shelter lines Foyer, lobby, lounge for licensed operation Hard, printed tickets at the door Advance, electronic ticketing and readers Earned income sufficed, little or no concessions Earned income – concessions, merch, raffles etc. Minimal audience services (washrooms) Building, health and safety codes in effect Auditorium or House Low tech, no mikes, P.A. or hearing systems High tech, sound, p.a. hearing systems Open or single door between FOH and House Light and sound lock required One set of adult services Services for children and the disabled General admission Designated seating Relatively flat rake (film sightline to mid-screen) Performing arts sightlines – feet to full height Stage Playing Area Vaudeville 2D standard 35-40’ wide, 29’ deep Performing Arts – 40’ wide, 40’ deep Height to grid 50’ to 70’ Height to grid 70’ to 90’ Small film screen on a line set and film speakers Manual rigging Motorized rigging Outdoor sidewalk Upstage crossover Minimal wing space – total of 20’ Total of at least 40’ Backstage Minimal loading for 2-dimensional scenery Efficient multiple truck bays Load onto stage Load into storage and assembly areas Stage door for performers Stage door/security office for performers etc. Dressing rooms with limited toilets and sinks Dressing rooms with showers (& toilets & sinks) Mechanical space used for crew areas Crew offices - Green room - Production repair areas - Costume maintenance with washer/dryers - Rehearsal space Administration One theatre office Theatre offices for the whole staff Janitorial closet Janitorial closets to code requirements - Computers and wireless systems Ancillary Program and/or Income Space Street front retail, offices Street front rental, offices Second and Third Stages Studios, Classrooms

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 15 December 2016 In addition to the Egyptian’s functional limitations, it (unlike most vaudeville houses) was not originally equipped with air conditioning, thus rendering it virtually unusable during the summer months. Effectively, the Egyptian can only plan for a full-time 8-month season and limit itself to film, community theatre or special events, comedy, and musical acts.

Unfortunately, nor neither film or community theatre are sufficient to sustain the theatre even if combined with a part-time year of comedy and musical acts. To accommodate the broader range of touring professional work that is available to the Egyptian by virtue of its seating capacity – such as theatre, musical theatre, dance, specific events and variety - a number of improvements to the theatre are required as noted on the previous page. The following provides a basic guideline that will fluctuate with the particular show:

Genre Audience Draw Current Egyptian Capacity

Film 10-15 minutes Yes Community Theatre 15 minutes Yes Touring Plays 30 minutes Not Adequate Touring Bands, Music 45 minutes Yes Touring Comedy 45 minutes Yes Touring Dance and Ballet 1 hour Not Adequate Touring Musical Comedy 1 hour Not Adequate Touring Broadway 1 hour Not Adequate Touring National Artists 2 hours Not Adequate

1.6.5. Proposed Rehabilitation Criteria Transforming a vaudeville theatre into a performing arts center (PAC) requires the development of a building program which understands the business and responds to a future plan. In the meantime, the chart below summarizes the differences between a vaudeville theatre and a PAC:

Functional Vaudeville PAC Optimum Total Current Area Optimum S.F. Egyptian S.F. At 1,397 seats At 1,397 seats Auditorium 8-9 sf per person 10 sf per person 14,000 11,133 Front of House 1-2 sf per person 8-10 sf per person 14,000 2,950 Stage 29’9” deep x 60-70’ 44’ deep x 90’ wide 4,000 2,000 Proscenium 35’ w x 22’ h 40-46’ w x 26-32’h - - Backstage Stage Basement 50’ x 90’ 4,500 2,000 Administration 0- 200 sf 800+ 100sf per 2,000 0 staff

In assessing the improvements required for the Egyptian, the following criteria are proposed: • Safety and Code Compliance • Variable Function for Performing Arts and Film • Operating Efficiencies to Minimize Overhead • Historic Preservation • Patron Comfort and Convenience • Cost and Cost Effectiveness

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 16 December 2016 1.7. Egyptian Theatres Operating History 1.7.1. History (excerpt from the Egyptian website) As noted in the architectural report, the Egyptian Theatre owes its architecture to the famed discovery of the tomb of King Tut and a subsequent nationwide interest in everything Egyptian. In 1928, the DeKalb Theatre Company needed a new combination motion picture house and vaudeville theatre and retained Chicago theatre architect Elmer F. Behrens. Contracts for the new theatre were awarded in 1928, but construction, other than a foundation excavation, did not start until Spring of 1929. It is believed that the initial construction cost roughly $250,000. The theatre served a population of approximately 8,545 in the city of DeKalb and 32,644 in DeKalb County.

The stock market crash in October 1929 reduced the scope of the original project and resulted in some design compromises with, for example, the broken-tile main lobby floor substituting for marble. The theatre opened on December 10, 1929. The first film on the Egyptian’s giant screen was “The Hottentot,” an “all talking” film about horse racing. Live vaudeville acts generally were reserved for weekends between movie showings.

By the late 1930’s, the theatre was one of over 100 theatres across the country to decorate itself in an Egyptian style. Of all the Egyptian theatres, the DeKalb theatre is now one of only 6 remaining open and is the only Egyptian Theatre east of the Rocky Mountains.

In the forties and fifties, the Egyptian concentrated mostly on movies, with an occasional live event. On October 25, 1959 Senator John F. Kennedy made an appearance to a packed house at the Egyptian. Three months later he would announce his candidacy for president. The Egyptian Ownership of the Egyptian changed hands over the years, but for a majority of its commercial life, the building was owned and operated by the Thomas Valos family, who ran a chain of Midwest motion-picture houses.

In the early 70’s the aging theatre continued to show movies and sometimes hosted concerts by popular up and coming rock bands such as Journey and Heart. By the mid-seventies, the Egyptian was crumbling away, the seats were in disrepair, the plumbing rarely worked, the boiler was no longer functioning, and there were holes in the ceiling letting in both rain water and wild animals. In 1977, the Egyptian Theatre was closed and the property given over to the City of DeKalb.

With the theatre on the verge of being condemned in 1978, a group of citizens banded together to restore and save the Egyptian. The Egyptian was listed on the National Register of Historic Places in 1978. In 1982, Preservation of the Egyptian Theatre, Inc. (P.E.T.) qualified for a $2.3 million grant from the state of Illinois. This money allowed the repair and restoration of the theatre to begin. Renovations were started in 1982 and finished by the fall of 1983.

When the theatre opened again in 1983, it was host to dozens of events a year. The Egyptian season hosted live events, weddings, receptions, community meetings, and movies. Today, the theatre is utilized by the community for a wide variety of events and also attracts national touring acts. From 2006 – 2016 over $2 million was invested in restoration, maintenance and upgrades to the Egyptian Theatre. In the summer of 2011, the seats were replaced with brand new seats matching the originals, through a community fundraising campaign that was the largest since 1983. Through the continued support of the community the Egyptian Theatre is able to not only keep the doors of the theatre open but continue to improve the theatre for all to use and enjoy.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 17 December 2016 1.7.2. Mission P.E.T.’s vision for the Egyptian Theatre since the beginning has been a community-based one. The success of the Egyptian Theatre has continually been embraced by both the arts community and by the people of DeKalb County. The vision of P.E.T. has grown from just keeping the doors open to opening new doors. The mission has evolved and grown more succinct over the years.

Preservation of the Egyptian Theatre, Inc.’s Mission Statement: To share and protect the historical integrity of the theatre as a regional arts center for entertainment and community involvement.

Vision Statement: The historic Egyptian Theatre is recognized as a center for the arts and entertainment in the region, enriching the community culturally and economically. The Theatre is a beloved gathering place and source of pride, providing programming and excitement now and for future generations.

The path of the Egyptian Theatre has been similar to many of America’s more fortunate historic movie palace treasures. A group of concerned citizens saved a community’s historic asset and undertook stabilization and restoration work. The theatre has filled a niche for community-based programming and touring activity and has helped to stimulate downtown economic activity. It is now at a crossroads where it has plateaued and requires investment to grow.

Depending upon their seating capacity, market environment and programming vision, some theatres stay on the trajectory of ongoing theatre preservation and marginal programming growth, some theatres get rehabilitated by a principal tenant like a symphony. Many communities, however, often with leadership and investment facilitated by their municipal governments, explore the potential of creating 21st century performing arts institutions from their vaudeville houses, building on their unique historic assets and expanding their capacity to present and produce a greater range of work for a much broader audience.

At this stage in the history of the theatre the mission statement is usually transformed from a “preserve and protect” orientation to a theatre business mission which serves audiences and/or performing arts organizations by hosting, presenting and/or producing certain arts. The historic theatre has been saved and the focus has to shift to what it has been saved to do. Preservation becomes a condition of the operation not the goal of the business.

The exploration of a future sustainable business model is usually framed as a feasibility assessment and is undertaken by independent, objective and experienced theatre consultants. Typically, a business feasibility is followed by an architectural feasibility study (not a part of this scope).

Feasibility Premise DeKalb Request for Proposals Consultant’s Proposal Executive Summary Executive Summary Existing Conditions, Assumptions Context Market and Programming Review Market and Demographics Clients and Customers Community Needs Operating Potential and Services Operating Potential Programming Plan Resource Requirements Operating Resources Operations and Budgeting Financial and Cultural Impact Economic and Cultural Impact Ownership and Management Ownership, Gov. and Mgt. Findings Conclusions, Recommendations Summary of Findings

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 18 December 2016 1.7.3. Current Constitution and Bylaw Analysis The constitution and bylaws of Preservation of Egyptian Theatre, Inc. are a straight-forward set of policies typical of their time (1978) for a community-based organization (with amendments in 2006). They call for an executive of four and seven directors for a board of 11.

The board president is the chief executive of the corporation, the vice president can fill in for the president, the secretary records the minutes and files official documents and the treasurer has the care and custody of all the funds of the corporation. In this scenario, the volunteer board executive is in charge of the organization. It is essentially what is characterized as a “working board” or “a volunteer, community-based board.”

The P.E.T. bylaws call for any employee hired as full-time, operating head of the theatre to be an ex-officio member of the board without voting privileges. This full-time head, according to the constitution and by-laws is not authorized to be the professional chief executive of the corporation responsible for the care and custody of all the funds of the corporation. If P.E.T. operated with a paid chief executive officer responsible for the funds, it would be considered a “policy board” or “a volunteer governed, professionally operated” organization. It has nothing to do with how competent the paid staff is, it is a matter of authority and responsibility.

Unlike many organizations, the Egyptian does not appear to have bylaw provisions for standing or ad hoc committees or task forces appointed by the Board. The Board has developed useful operating policies, are conscientiously holding monthly meetings and maintaining minutes and are eager to learn and adopt theatrical business practices. Board engagement and responsibility for the organization is as strong as it has ever been and there are about 100 volunteers currently supporting their work. In recent years, the Egyptian has reduced exceptionally volunteer-heavy events.

The stated purposes of the organization again reflect the time in which the constitution was established:

A. To purchase, repair, maintain, restore and operate the Egyptian Theatre… B. To operate, arrange and hold amateur and professional performances… C. To raise funds by… D. To maintain and eventually to restore the original Art Deco-Egyptian Revival décor…

These purposes reflect a focus on saving and making use of the Egyptian Theatre. They are not so far sighted as to stipulate a future where the Egyptian Theatre is all that one might wish it could be and what it would be engaged in doing if it were so.

A new model would shift the community-based organization to a professional-based organization and from a “working” board to a “policy” board which retains a professional Chief Executive Officer (instead of appointing the volunteer President as CEO). The professional CEO would be granted the legal authority to administer all corporate responsibilities and prepare and maintain budgets for board and audit scrutiny. The board would be conscripted from among its current leadership and those among the private and public sectors with financial, legal, property, educational and political acumen relevant to the new model and they would work with the professional staff to further develop policies to guide the operation of the theatre.

The professional regional performing arts center is a leap from where the Egyptian is now but it should be remembered that the work of a handful of dedicated staff and countless volunteers saved the theatre, operated it to professional standards and made this opportunity a possibility. It is also a leap that requires public sector investment.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 19 December 2016 1.7.4. Board Composition, Responsibilities and Expectations The Egyptian Board manual has a list of seven basic Board responsibilities. The source of this list is the National Center of Nonprofit Boards which currently advocates ten basic responsibilities. The basic expectations, reprinted below, are comprehensive and may seem like a long list to volunteer board members. It is very difficult in this day to fully engage a volunteer board of directors, indeed a “working” board, in so many responsibilities and tasks for an increasingly complex business.

BASIC EXPECTATIONS

The following expectations help ensure that the Board of the Egyptian Theatre is working in a manner that advances PET’s mission, vision, and strategic plans. 1. Establish as a high priority attendance at meetings and be a member of at least one standing committee. The full board meets once a month on the 4th Wednesday of the month at 5:00 PM at the Egyptian Theatre. 2. Come prepared to discuss the issues and business to be addressed at scheduled meetings, having read the agenda and all background materials relevant to the topics at hand. 3. Participate in the annual strategic planning retreat, board self-evaluation programs, and other educational events that enhance board member skills. 4. Be informed about the Egyptian Theatre’s mission, services, policies and programs. 5. Seek diligently to understand the Egyptian Theatre’s budget and finances. 6. Promote the Egyptian Theatre by attending and supporting events. 7. Be a member of the Friends of the Egyptian Theatre membership program. 8. Contribute annually to the Egyptian Theatre an amount that is personally meaningful and significant. 9. Respect the confidentiality of privileged information both during and after serving on the board of the Egyptian Theatre. 10. Follow board policies and maintain honest and ethical standards. 11. Provide support and advice to the staff but avoid interfering in administrative activities or making special requests of the staff. 12. Recognize that decisions of the board can be made only by a majority vote at a board meeting after constructive deliberation and representation of all facts and viewpoints. Respect and support the majority decisions of the Board of the Egyptian Theatre, even when in a minority position on such actions, while retaining the right to seek changes through ethical and constructive channels. 13. Cultivate potential donors, volunteers, sponsors, committee members, and future board members. 14. Be an ambassador for the Egyptian Theatre in the community. Help spread the mission and vision of the organization. 15. Participate in development and fundraising activities throughout the year.

We would recommend a shift to a professional Chief Executive Officer and a review of expectations from the Board that maximizes their valuable time.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 20 December 2016 1.7.5. Evolution of Egyptian Theatre Personnel Ten years ago, in 2006, the Egyptian was operating purely as a rental theatre and had identified the need to undertake a facility, equipment and staffing upgrade to expand its services. The Board was comprised of six directors and one staff member with the provision to have nine Board members each heading a volunteer committee. Constitutional amendments abolished the antiquated membership structure and the Board of Directors became self-sustaining. Volunteers assisted with concessions, box office, ushering, maintenance, office work and committee work. Staffing needs were identified as: • Operations Director – full time • Administrative Assistance – part time • Maintenance and Janitorial Supervisor – full time • Technical Director – part time • Projectionist – part time

In three to five years, the theatre expected to increase its staff by adding part time staff: • Special Projects Coordinator • House Manager • Janitor (2) • Assistant Technical Director

It is not clear what provisions were made for box office staff but in a professionally operated theatre that is a house responsibility – as it is currently.

Ten years later in 2016, the Board has successfully expanded to an 11-member Board and staff is comprised of two full-time and two part-time individuals. Its job descriptions and personnel manual is thoughtful and comprehensive. Its annual budgets have risen from less than $100,000 per year to over $300,000 per year.

P.E.T. Board of Directors

Executive Director Full-Time

Custodian/ Front of House Box Office Manager Venue Technician Maintenance Manager Part Time Part-Time Part-Time Full-Time Hourly

The current staff complement is extremely modest and does not permit any further extension of activities even if the facility were to be upgraded or opened during the summer months. In both cases the staff would have to be increased.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 21 December 2016 1.8. Measurable Variables for Assessing Financial Sustainability

Ownership: P.E.T. Inc. Governance Structure Governance: P.E.T. Not-for-Profit Management: President/Executive Director Programming Model & Lines of Business: Rental and Presenting Genre(s) Genres: Touring Variety, Local Variety, Performing Arts, Film Egyptian: 1,397 seats Revenue Units Studio Theatre/Rehearsal Halls: 0 Monday-Thursday 5 hour flat rate $900 / NFP $550

Friday-Saturday 5 hour flat rate $1,500 / NFP $900

Licensing or “Rental” Rates Sunday 5 hour flat rate $1,100 / NFP $700 Monday-Thursday Hourly (additional) $120 / NFP $75 Friday-Sunday Hourly (additional) $130 / NFP $85 Stage depth: 29’9” plus 9’ apron (60-70’) Staging Capacity Proscenium width: 35’ Urban Population: 44,092 Market CMA: 105,462 # of theatres available with larger capacity: 2 Competitive Environment Rental rates: $440-$550/hour | $1,600-$2,000/night # of other theatres hosting musical theatre tours: 3 Current community pricing 0-$25 Ticket Pricing Current presented pricing: $15-35 Scale of Operations 2015 Operating Expenses: $304,270 # of Resident Companies: 0 Segmentation of Client Groups # of Shows Presented: 6 Total (2015) # of Films Presented: 15 Total # of Rental Use Days: 76 Earned to Contributed Income 91:9 Risk Tolerance Risk adverse Permanent Staff: 2 Staffing Level and Part-time FOH Staff: 3 Organizational Structure Staff Charged Back to Client: House Manager, Venue Tech Heritage Designation National Register of Historic Places

Current licensing fees or “rental” rates as they are colloquially known, are well below average for a theatre of the Egyptian’s potential quality. Many of its community user groups do not require the full seating capacity nor can they afford a higher rental rate because their ticket pricing and sales would not sustain it. The Egyptian is subsidizing the use of the theatre by community groups without receiving a subsidy to do so.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 22 December 2016 Egyptian’s Previous 5 Year Benchmark and Budget Analysis

FYE FYE FYE FYE FYE 5 Year Budget Analysis 6/30/12 6/30/13 6/30/14 6/30/15 6/30/16 BENCHMARKS 2012 2013 2014 2015 2016 FULL TIME STAFF (EQUIV.) 2.5 3.5 2.5 2.5 3.0 VOLUNTEERS 250.0 250.0 250.0 100.01 100.0 SHOWS PRESENTED 3.0 5.0 6.0 3.0 8.0 FILMS PRESENTED 22.0 28.0 32.0 16.0 25.0 RENTAL USE DAYS 82.0 63.0 70.0 76.0 88.0 PUBLIC PERFORMANCES 76.0 80.0 81.0 72.0 77.0 Rental Performances #/%sold 36/30% 31/24% 30/26% 37/28% 38/26% Film Screenings #/% sold 22/7% 28/9% 32/6% 16/11% 25/10% Presented Performances #/% 3/57% 5/34% 6/45% 3/61% 8/43% Total Paid Attendance 18,214 17,842 17,666 18,847 17,004 Total Unpaid Attendance 9,152 6,498 9,204 10,079 11,548 TOTAL % CAPACITY SOLD 21% 21% 20% 25% 25% TOTAL ATTENDANCE to all events 27,366 24,340 26,870 28,926 28,552 REVENUES CONTRIBUTED INCOME

Grants & Donations2 73,750 52,141 45,436 22,785 22,255 Individuals/Memberships 1,380 13,021 7,350 5,200 2,525 SUBTOTAL 75,130 65,162 52,786 27,985 24,780

EARNED INCOME Admissions4 265,774 241,957 294,614 250,730 307,082 Concessions 20,654 21,373 24,338 28,156 31,989 Interest & Other Earned 3,663 803 843 1,464 6,184 SUBTOTAL 290,091 264,133 319,795 280,350 345,255 TOTAL REVENUES 365,221 329,295 372,581 308,335 370,035

EXPENSES Staff Salaries & Benefits 71,214 103,173 102,416 90,024 107,962 Taxes & Insurance 21,182 22,760 24,286 20,726 24,040 Production3 116,395 139,943 182,998 129,315 161,576 Special Projects 53,803 57,509 Administration 34,792 21,708 22,598 18,396 32,376 Occupancy 45,046 41,852 42,195 45,809 42,111 TOTAL EXPENSES 342,432 386,945 374,493 304,270 368,065

SURPLUS/DEFICIT 22,789 (57,650) (1,912) 4,065 1,970

1 Decline in 2015 due to the cancellation of the Haunted Halloween event. 2 Grants & Donations include fundraising for the seating campaign and dressing room remodel in FY 2012/13 3 Production expenses include Marketing costs. 4 Admissions includes Sponsorship funding.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 23 December 2016 CAPITAL ITEMS 2012 2013 2014 2015 2016 Depreciation

Capital Grants 72,276 48,411 9,254 6,569 6,100

Borrowings Loan Principal Repayments Capital Expenditures 54,303 61,009 3,500 6,569 6,100 NET CAPITAL ITEMS 17,973 (12,598) 5,754 0 0

CASH SURPLUS/DEFICIT 22,289 (61,150) (5,412) (2,504) 3,600 CASH RESERVE FUNDS 25,000 CASH R TIF 905,961 100,000 100,000 330,000

TIF 2015/16 $50,000

Budget Analysis Budgets can only be analyzed by reviewing the sources of expenses and revenue. In the not-for- profit world we look at the expense of the service or program we want to provide our community and then consider ways of financing it. It is a departure from a commercial approach to budgeting.

The benchmarks demonstrate normal fluctuations and consistency over the years. There is a very modest staff complement. Programming numbers are very consistent. Film attendance appears to have seen a modest increase. Presentation attendance has fluctuated as it is likely to do. A stronger program and marketing plan might bring average attendance up to 50-60% of capacity sales more consistently.

The total capacity numbers indicate two things. The Egyptian is large for its local market - its size is good for mid-sized, popular touring acts which appeal to the region. Further study is required to determine whether a smaller theatre would be sustainable with local bookings and programs.

The total amount of activity in the Egyptian is nowhere near its optimum threshold of over 200 uses per year but the theatre would require a significant financial investment, larger staff, renovation, expansion and air conditioning to sustain more use, in addition to audience development and community relations programs. Over five years of actuals and next year’s projections, the Egyptian average annual expenses are $337,000 per year. This is less than half what the lowest funded theatre of this scale should be spending.

To increase staff support this year, it appears that the Egyptian is prepared to keep its costs down, raise more sponsorship revenue.

2016 has been the Egyptian’s second best year for contributed income in five years. Its earned to contributed ratio was 91/9% or $341,223/$32,876. Next year it is expected to return to 82/18%. Across America, not-for-profit theatre companies average 50/50 on their earned to contributed income ratios.

The fact that the Egyptian raises so little operating money through public and private fundraising sources means that it hasn’t reached a tipping point – a level of sustainability where its audience is fully engaged and supportive, the public sector is investing appropriately and its message is filling donors with confidence. The true potential as a socio-economic catalyst is yet to be realized. In short, the Egyptian is significantly underfunded.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 24 December 2016 2.0 MARKETING AND PROGRAM REVIEW

2.1. Community Demographics and Programming Assessment to identify the supply and demand factors within the primary, secondary and tertiary market programming areas for various types of film, performing arts and assembly uses of the Egyptian through primary and existing research sources.

2.1.1. Community Profile and Market Assessment County: DeKalb County Location: The City of DeKalb covers 14.81 sq. miles and DeKalb County covers 635 sq. miles. It is located on the Kishwaukee River, which flows through the city, and is approximately 60 miles west of Chicago in Northern Illinois. City Population: 44,092 (2014 estimate – United States Census Bureau)

Local State National Growth Rate (2010 – 14) .052% 1.00% 3.00% Median Resident Age (2014) 23.7 37.0 37.2 Males 23.5 / Males 35.7 / Males 35.8 / Females 23.6 Females 38.4 Females 38.5 Median Household Income (2014) $38,357 $57,166 $53,482 Average (Mean) Individual income (2014) $20, 528 $30,019 $28,555

The local growth rate indicates a need for more stimulus to growth. The median age ranges in DeKalb are lower no doubt to the high student population which would also affect lower local household and individual incomes to a degree. Lower incomes indicate the need to provide a balance of affordable entertainment at the Egyptian.

2.1.2. History Founded in 1856, the City of DeKalb was named after Baron Johann de Kalb, a major general in the American Revolutionary War. DeKalb is also known as “Barb City” as a DeKalb farmer John Glidden is mainly attributed with inventing barbed wire. The City is host to Northern Illinois University.

2.1.3. Socio-Demographic Characteristics

Population According to the 2014 US Census, the estimated population of DeKalb was 44,092. This represented a 0.52% increase since 2010. The gender ratio in DeKalb is 50.3% males to 49.7% females.

Since 2010, the estimated annual population growth rate for the City of DeKalb has been slowly declining, and for the years 2013 – 2014 the growth rate was -0.43%. DeKalb’s population growth for the past decade has been consistently lower than that of DeKalb County and lower than the overall population growth in Illinois, which is also in a low growth state.

Region Population: 2014 est. Change: 2010 to 2014 Change: 2006 to 2010 Illinois 12,868,747 0.4% 1.46% DeKalb County 105,462 0.85% 1.22% City of DeKalb 44,092 0.5% -1.21% Source: US Census Bureau, Census 2006 and 2010, 2014 Population Estimates

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 25 December 2016 Educational Attainment • The number of people who Educational Attainment: Population 25 Years And have completed university Over degrees is slightly higher DeKalb State National than the state average (19.7%) Less Than 9th Grade 3.4% 5.5% 5.8% • The average number of 9th To 12th Grade, No Diploma 4.8% 6.9% 7.8% residents who have trades High School Graduate certificates and college 22.6% 27.0% 28.0% (Includes Equivalency) diplomas tends to be higher than the state average Some College, No Degree 23.8% 21.2% 21.2% (7.5%). Associate Degree 10.5% 7.5% 7.9% • The percentages for DeKalb City and for DeKalb County Bachelor's Degree 21.9% 19.7% 18.3% tend to be quite closely Graduate or Professional 13.1% 12.2% 11.0% linked. Degree • Northern Illinois University has a total population of 20,130 enrolled students. Source: 2014 DeKalb Census Information

Ethnic Origin • The Hispanic population of DeKalb County is 10.5% of the population in 2014. The Hispanic segment is shrinking faster than the general population, having diminished by -2.2% since 2010, compared to +2.2% for the county. • The percentage of DeKalb City residents who reported English as their native language (83.4%) was only slightly lower than the DeKalb County average of 87.8%, but higher than the state average of 77.5%. • Spanish is the next most common language in DeKalb households, with 9.2% of the population reporting it as their native language. • The vast majority of DeKalb City’s population (90.3%) was born in the United States. • The percentage of visible minorities in DeKalb City’s population (27.1%) is higher than that of DeKalb County in general (16.6%), and slightly lower than the state average (27.5%).

A cultural resource with the potential of the Egyptian Theatre in an historic downtown setting has the power to attract relocators to DeKalb who are independent creative class workers, among the higher educated and attached to the liberal arts at NIU. Those with higher levels of education such as DeKalb residents will tend to be audiences for the performing arts.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 26 December 2016 2.1.3. Economic Activity Labor Force Primary occupation groupings in DeKalb according to the City of DeKalb’s Location Quotient and Employment Statistics analysis of jobs in DeKalb by industry are: • Educational Services – 31% • Retail Trade – 16% • Health Care and Social Assistance – 13%

According to the United States Census, the majority of DeKalb residents work in professional and service occupations. The high percentage of managerial, professional and related occupations may bode well for a population that has an affinity for the performing arts. The City of DeKalb’s Location Quotient and Employment Statistics notes that the majority of industries present in the City require mostly low-skill and low-wage jobs. The report emphasizes that efforts to recruit higher-paid and higher-skilled jobs should be made.

Industries and Major Employers The primary industries in DeKalb are educational, health and social services (32.0%), retail trade (13.0%), recreation, culture, accommodation and food services (17.4%), and manufacturing (8.8%).

Major Employers in DeKalb County Firm Name DeKalb County Industry / Product Employees Northern Illinois University 3,523* Education - University KishHealth System 1,573 Hospital Education - Elementary and DeKalb School District 885 Secondary Kishwaukee College 550 Education – College 3M 538 Distribution Center County Government and DeKalb County Government 525 Nursing Home Education – Elementary and Sycamore School District 515 Secondary Target Distribution Center 539 Distribution Center Retail, General Merchandise Wal-Mart Super Center 400 and Groceries Electrical Contractor Tools and IDEAL INDUSTRIES 335 Wire Connectors Source: DeKalb County Economic Development Corporation – 2014 *Total number of NIU employees is 7,395 which includes 3,523 full-time employees and 3,872 part-time employees.

The employment spectrum suggests that performing arts programming should make a special effort to build relationships with government, education and services personnel. It is in the Egyptian Theatre’s and NIU’s mutual interest to form partnerships.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 27 December 2016 Employment Rates and Income Historically, DeKalb’s labor force participation rates have been slightly lower than those of the state and the country as a whole. In 2010, it was estimated that 67.5% of the population was part of the labor force, compared with 66.8% for all of Illinois and 63.9% for the entire country.

DeKalb’s unemployment rate as of October 2016 is 4.8%. The employment and economic situation for the city has improved since 1914 when this research was first undertaken in early 2015. Wages in DeKalb and the surrounding county reflect the mix of mid- and high-skilled jobs in the region. The median per capita income in DeKalb was estimated to be $23,903 in 2014 by the United States Census Bureau. Estimates of DeKalb Residents’ Household Income (2014), where household means any group of people sharing a residence (e.g. core families, roommates) and earning one or more incomes, show that there is a large percentage of the population with limited earnings.

• Median Household Income: $38,357 (26.1% below the national average) • 7.1% of households have incomes at or below $14,999 (nationally – 9.1%) • 13.7% of households have incomes at or below $24,999 (nationally – 7.6%)

DeKalb’s private resources are likely to be a limited source of contributed income and, given the size of the Egyptian Theatre it should develop a program that appeals to a regional audience and donor base while maintaining affordable programming for local residents.

Potential Target Markets The local target market for cultural activities in DeKalb is its population, 44,092 (2014 estimate).

Primary Market A primary market around DeKalb is likely to be comprised of the population beyond DeKalb with ready access to city center. This greater market area encompasses 175,381 people.

Secondary Market A secondary market area is likely to be comprised of the population living in a 25-mile radius of DeKalb, a total of 440,364 people.

The geographic radius is a general visual measure and translates to approximate travel times of 45 minutes to an hour.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 28 December 2016 2.1.4. Egyptian Theatre Audience by Geographic Placement

The mapping of Egyptian Theatre audiences demonstrates a high density of audiences from east of DeKalb, despite the competition from Chicago theatres, extending all the way to Lake Michigan. From the west, there are small concentrations of patrons coming from Davenport and Iowa, from the south from the Peoria area and from the north, Madison.

The extensive outreach of the Egyptian is an important factor in calculating its economic import. Attracting visitors from a distance increases the likelihood that these visitors are dining and shopping in DeKalb at the very least. Future audience surveys should inquire about reasons for travelling to the Egyptian by geographic origin and leverage these advantages in marketing to those regions. More data may reveal a trend of growing audiences from Chicago.

Top Selling Cities 2013 2014 2015 City Tickets City Tickets City Tickets Sold Sold Sold Unknown 7,884 Unknown 8,197 Unknown 6,057 DeKalb 1,686 DeKalb 2,825 DeKalb 2,836 Sycamore 1,019 Sycamore 1,950 Sycamore 1,932 Genoa 458 Genoa 680 Genoa 613 Saint Charles 410 Saint Charles 438 Saint Charles 433 Geneva 203 Rochelle 301 Rochelle 378 Rochelle 192 Cortland 282 Cortland 255 Rockford 151 Geneva 178 Geneva 188 Aurora 129 Rockford 176 Rockford 182 Cortland 127 Chicago 133 Chicago 172

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 29 December 2016 2.1.5. Current Culture Market Current Cultural Activities DeKalb has a range of strong arts organizations: a museum, a symphony and theater and ballet companies. The Ellwood House Museum, Northern Illinois University’s Art and Anthropology Museums, and Kishwaukee Symphony Orchestra contribute to the cultural environment and venues for the arts. The newly organized DeKalb Area Arts Council has established an Arts, Culture, and Entertainment Corridor (ACE) along Lincoln Highway in early 2016. There are also a number of arts organizations in DeKalb County, and in close proximity to the City of DeKalb, that enrich the cultural environment, such as The Kishwaukee Valley Art League and Midwest Museum of Natural History located in Sycamore. The City hosts special events and festivals throughout the year, celebrating its culture. Leveraging all of the DeKalb area resources led by a unique national historic treasure such as the Egyptian Theatre would be a powerful attraction to cultural tourists. Performing Arts Venues Any number of places of public assembly may be used for recreational, amateur and semi- professional performing arts activities including churches, community halls, park band shells and school auditoria. These kinds of facilities are rarely suitable for professional or professional caliber work. Professional caliber, purpose-built or renovated theatre spaces are often distinguished by their programming focus, their style of architecture and their seating capacity. The following seating capacity categories are a starting point for evaluating the space’s ticket income potential.

0 – 249 seats Incubators These are typically flexible studios, “black box” theatres or halls for rehearsal and small audiences where programming is experimental, audiences are being developed, or the work is best suited to an intimate environment.

250 – 399 seats Community Theatres and Venue-Based Professional Companies Amateur work is typically presented in spaces with fewer than 400 seats due to a royalty expense threshold and the performance prowess of the amateur artist.

400-799 seats Resident Company or Special Purpose Typically, a theatre in this seating capacity is designed for a particular company or purpose or was generated by a municipality. The “multi-purpose” 500 seat theatre was a popular concept for small communities in the late 20th century.

800- 1,199 seats Small Presenting Theatre, Festival Mainstage or Recital Hall This seating capacity is generally considered optimum for intimacy of experience (every seat can be with 75 feet of the stage) and minimal for generating revenue required for touring presentations. On Broadway this seating capacity category is considered a small “legit” drama house.

1,200-1,799 seats Mid-Sized Presenting Theatre or Concert Hall Considered by presenters as a kind of “in-between” size, this seating capacity is often adequate for financing the presentation of recognizable artist or smaller bus and truck tours in smaller markets. The Egyptian falls into this category.

1,800 seats+ Large Presenting Theatre or Opera House This is the minimum size for a Broadway tour in most secondary markets or for the presentation of a star attraction.

A healthy theatre inventory in a community has a range of facilities in different seating capacities and type – more facilities with smaller seating capacities and fewer with larger numbers.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 30 December 2016 County Theatre Facility Inventory

Theatre seating capacity is one of the ways of looking at an inventory of public theatres in a community. Typically, a well-balanced community will have a multitude of smaller theatres and a selection of theatres in each seating capacity noted above.

DeKalb has a very limited inventory of theaters for the performing arts. It has the Stagecoach Theatre, a renovated space for community theatre and the Egyptian Theatre which has not been significantly upgraded since it was a vaudeville house. Due to its staging limitations the Egyptian can rarely offer programming that sells out which is fortunate in that it rarely overtaxes its very limited front of house space, but sales don't serve its bottom line.

Performing Arts Theatres in DeKalb

Number of Seats Name of Facility Type of Space/Comments < 250 250-799 800-1,799 Converted church, requires Stage Coach Players 164 renovations; community theatre group Egyptian Theatre 1,397 Cinema and Live Performance Space

A number of alternative seasonal, academic or multi-purpose facilities are sometimes used for performing arts presentations, under less than ideal circumstances for public uses.

Other Facilities Used for the Performing Arts

Number of Seats Name of Facility 250- 800- Over Type of Space/Comments <250 799 1,799 1,800

NIU – Corner’s Theatre 150 Open stage workshop space, under renovation

NIU - Recital Hall 175 Recital hall

NIU – Players’ Theatre 220 Black box. under renovation

NIU - O’ Connell Theatre 440 Currently under renovation

Sycamore High School 622 High school auditorium NIU - Boutell Memorial 750 Concert hall Concert Hall DeKalb High School 800 High school auditorium Auditorium Circular roofed arena for NIU Convocation Center 10,000 basket-ball, events, concerts, etc

.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 31 December 2016 2.1.6. Regional Inventory of Facilities

Coronado Theatre 2,300-seats

The Hemmens 1,200-seats Community College Arts Center (2 theatres)

DEKALB Egyptian, 1,397-seats

Paramount Theatre 173-seats & 1,888-seats

Theatres that are potentially competitive to the Egyptian by virtue of their seating capacity, 1,200 seats or more, are the Hemmens Cultural Center, the Paramount and the Coronado. Only two of those are within a competitive, 30-mile radius of the Egyptian.

Name Incubator Community Resident Small Mid- Size Large 99-249 250-399 400-799 800-1199 1200-1799 1800+ Sandwich Opera House 310 Metropolis Theatre 350 Normal Theatre 385 Woodstock Opera House 420 The Grand Theatre 676 Elgin Community College 168 662 Arts Center Raue Center 780 Batavia Fine Arts Center 245 890 Arcada Center 900 Norris Cultural Arts Center 1,000 Hemmens Cultural Center 1,200 Egyptian Theatre 1,397 Paramount Theatre 173 1,888 Coronado Theatre 2,200

Among the public theatres in the region, the Egyptian Theatre has a unique seating capacity size advantage as a mid-sized presenting house. Its character and relatively viable size make it a desirable theatre location for rentals and presentation packages especially with the Paramount’s bold move into producing four Broadway musical revivals for seven to ten week runs each year. There are other venues such as schools, halls and churches that may be used for performance rentals but have limited availability, technical and hospitality capacities for professional use.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 32 December 2016 2.1.6.1. Theatre Ownership/Operations

Year Commercial or Theatre Name Location Ownership Operation Built Not-For-Profit Sandwich Opera House Sandwich 1878 City of Sandwich ARCH NFP Arlington Village of Arlington Metropolis Performing Metropolis Theatre NFP Heights Heights Arts Centre Normal Theatre Normal 1937 City of Normal City of Normal NFP Woodstock Opera House Woodstock 1890 City of Woodstock City of Woodstock NFP Elgin Community College Elgin Community Elgin Community Elgin 1991 NFP Arts Center College College Raue Center for the Raue Center for the Raue Center for the Arts Crystal Lake 1929 NFP Arts Inc. Arts Inc Batavia Fine Arts Batavia Fine Arts Center Batavia 2011 Batavia School District NFP Center Onesti Entertainment Onesti Entertainment Arcada Theatre St. Charles 1926 Commercial Corporation Corporation Norris Cultural Arts Norris Cultural Arts Norris Cultural Arts Center St. Charles 1978 NFP Center Center Hemmens Cultural Center Elgin 1969 City of Elgin City of Elgin NFP Egyptian Theatre DeKalb 1929 P.E.T. Inc. P.E.T. Inc. NFP Aurora Civic Center Aurora Civic Center Paramount Theatre Aurora 1931 NFP Authority Authority Coronado Performing Arts Rockford 1927 City of Rockford SMG NFP Center

Most of the theatres in the DeKalb region with the exception of the two cultural centers, the Batavia Fine Arts Center and the college theatre are over twenty-five years old. There is one commercial theatre, one College Theatre, two cultural centers and one community-based not for profit (the Egyptian Theatre), and the remaining seven theatres are owned by their municipalities or municipal agencies. The two smallest and the largest city-owned theatres are operated by agencies while the rest are managed directly by their owners.

As is typical, most theatres are not for profit cultural institutions like libraries, museums and art galleries. Only about 6% of all America’s theatres are commercially owned and operated. Most commercial live theatres are part of a chain of theatres such as those owned or controlled by the Schubert, Nederlander or Jujamcyn operations which also invest in Broadway production or Live Nation which is the largest entertainment company in the U.S. focusing on concerts. These operations are focused on large theatres in large markets. A few commercial theatres succeed as dinner theatres in smaller market.

The following tables of information on the regional theatres have been assembled by Egyptian staff to better understand their competitive advantages and disadvantages. The theatre from which there may be most to learn is the Paramount in Aurora which has the closest seating capacity (but somewhat larger), is closest geographically and has been been most successful in its development.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 33 December 2016 2.1.6.2. Business Model Comparison

Screen Annual Annual # Theatre Name Seating Present Rental Produce Film Attendance Events Sandwich Opera House 310 Y Y N N 10,500 48 Metropolis Theatre 329 Y Y Y N 70,000 300 Normal Theatre 385 N Y N Y Woodstock Opera House 420 Y Y Y N 180,000 5560 Elgin Community College 662 34,000 150 Y Y Y N Arts Center 168 Raue Center for the Arts 750 Y Y N N 245 Batavia Fine Arts Center Y Y N N 890 Arcada Theatre 900 Y Y N Y 150,000 200 Norris Cultural Arts Center 1,000 Y N N 30 Hemmens Cultural Center 1,200 N Y Y N Egyptian Theatre 1,397 Y Y N Y 30,000 130 1,888 Paramount Theatre Y Y Y Y 300,000 300 173 Coronado Performing Arts 2,200 Y Y N N 77,412 72 Center

• “Rental” of Facilities – the facility operator licenses the use of facilities at a flat rate or flat rate plus a percentage of the net or gross ticket sales

• “Presenting” of Shows – the facility operator pays a promoter or artist for a product, and markets the show

• “Producing” of Shows – the facility operator underwrites the creation of a show and markets the show

• “Screening” Movies – because of their history exhibiting films, many historic movie palaces show classic movies on their big screens at a low price as a popular attraction. Some historic theatres have gone into the business of film screening, which inevitably requires the screening of first run art film and an additional screen or more.

• “thresholds” - event and attendance thresholds can be evaluated on a number of factors beginning with seating capacity but also considering market area, (populations, demographics and competition), physical capacity, mission and programming choices. Annual event thresholds typically range between 140 and 240 use days but there are many exceptions. On the whole, average attendance thresholds are expected to be at least 50% of capacity. • “venues” - in terms of physical capacity, most performing arts centers have flexible lobby/lounges for public use, rehearsal rooms and secondary and tertiary performance spaces to increase their service to their public and their artists as well as increasing their economic impact, cost effectiveness and economies of scale. Three of the above centers have more than one performance venue.

In terms of events and attendance, it is clear that the Paramount Theatre is meeting thresholds.

5 Woodstock Opera House rents out its Café space for events in addition to its theatre.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 34 December 2016 2.1.6.3. Theatre Staffing

Union Theatre Name Full Time Part Time Volunteers Stagehands

*Woodstock Opera House 5 27 Yes No

Elgin Community College Arts Center 6 25 Yes Raue Center for the Arts 11 10 Yes No Batavia Fine Arts Center 1 12 Yes No

Arcada Theatre 20 50 Yes No

Norris Cultural Arts Center 1 Unavailable Yes No Hemmens Cultural Center 3 31 Yes No Egyptian Theatre 2 3 Yes No

Paramount Theatre 29 100 Yes Yes

Coronado Performing Arts Center 1 80 6 Yes Yes

*Theatres of less than 399 seats were removed.

The Egyptian Theatre has the lowest number of staff members in theatres with more than 400 seats in its region.

Theatres are places of public assembly and, as such, have a significant obligation to be shepherds of public safety. In addition, they are technically sophisticated to operate and require professional experts to manage and program their facilities and skilled personnel to operate the business, hospitality and technical aspects of the operations.

The Egyptian Theatre is unquestionably understaffed for a theatre of its size and potential capacity.

6 Coronado Theatre shares full time staff with BMO Harris Bank Center (arena)

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 35 December 2016

2.1.6.4. Budgeting Comparisons

Annual Annual Annual Capital Theatre Name Operating Budget Support Support City pays $12,000 and City covers Sandwich Opera House $165,500 utilities repairs over $50 Metropolis Theatre $2,300,000 $300,000 Normal Theatre Unavailable City Paid Woodstock Opera House $660,000 $300,000 City Paid Elgin Community College Arts Elgin Community $500,000 Elgin Community Center College College Raue Center for the Arts $1,397,000 Batavia Fine Arts Center Unavailable School District School District Arcada Theatre Unavailable None None Norris Cultural Arts Center $150,000 None None City covers Hemmens Cultural Center $600,000 City Paid maintenance $100,000 - City of Egyptian Theatre $350,000 None DeKalb $510,000 - Casino Head Paramount Theatre $14,000,000 Tax No

Coronado Performing Arts Center Unavailable $500,000 $373,000 (in 2012)

It is beyond the scope of this study, but it might be of interest to compare regional budgets on the basis of earned to contributed income ratios. Most not-for-profit organizational budgets are filed on line.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 36 December 2016 .

2.1.6.5. Summary of Observations Of all the theatres in the region, the Paramount in Aurora represents the best model to note in terms of the growth of an outstanding mid-sized historic theatre.

The Paramount virtually doubled its square footage from a 36,700s.f. vaudeville theatre to a 66,000 s.f. performing arts center in 1978 on a rehabilitation budget of over $3 million. It rents, presents and produces performing arts and screens films successfully to an audience of 300,000 per year, hosting over 300 events in two venues. It employs 29 full-time and 100 part-time staff, sustains a $14,000,000 annual budget and is supported with over $500,000 per year in casino head tax.

The Paramount has grown into a major cultural, social and economic institution for the City of Aurora.

Interior of the Paramount’s Copley Theatre

Exterior of the Paramount Theatre

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 37 December 2016 3.0 COMMUNITY NEEDS ASSESSMENT Community consultations were undertaken in three ways through one on one interviews and workshops, a public survey, a review of approved City of DeKalb 2025 Strategic Plan and a theatre facility user group needs survey. Finally, a review of the Egyptian’s recent operational history and current needs was undertaken.

3.1. Summary of Stakeholders Interviews and Egyptian Board Workshop Findings In interviews between the Consultants, key stakeholders, City staff, the board of directors and staff, an initial brainstorming of the City of DeKalb’s Advantages and Needs, and the Egyptian Theatre’s Proudest Achievements and Greatest Concerns was drawn up.

DeKalb Advantages The Egyptian can be a business catalyst, • University Town attracting a creative workforce and address • The University is diverse social issues. • The Town is homogenous Egyptian Theatre Proudest Achievement • Closeness among community leaders working together, large core

• Family friendly • Rocking downtown when events occur

• NFP Agencies do well here • Being economic catalyst

• Multi-generational • Home to local community groups • Active and vibrant from transitory • First Priority - bring national quality community of teachers and • Only theatre restored/maintained a students national historic site • Interstates and access • Strongest identifier – iconic to DeKalb • Access local theatre, bands – • Character / Logo of the town long- standing • 87-year legacy of story-making in the • Sense of pride lives of residents th • developing #ProudlyDeKalb • Survived the history of the 20 century • Diverse taxing base • P.E.T. owns it and has no debts • Culturally diverse • 42 different native languages – Egyptian Theatre Greatest Concerns good for kids • Deferred maintenance DeKalb Needs • Reliant on the City TIF Funds • Reinvestment • Limited donor base • More business • Patron services • Creative, innovative work force • Bathrooms • Students to stay – link them to • Concessions infrastructure • Box office • More here for students • Air conditioning • Transportation / accessibility / bike • Loading, Backstage trails • Accessibility • Improve quality of housing stock • Sustainability of operation • Raise assessed value and lower taxes • Sources of ancillary and contributed • Welcome newcomers income • Increasing quality of life • Staffing – no bench depth • Poverty issues / low income • Cultural clashes

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 38 December 2016 3.2. Public Survey

A public survey of perceptions of the Egyptian Theatre was issued from April 4 to April 15, which resulted in a remarkable 482 responses – reportedly the strongest response to any City survey undertaken.

The data for the survey analysis has been divided into two populations: those who completed only the first page and those who completed the entire survey. There are 44 respondents in the first page group, and 438 in the full survey group.

This report covers the data provided by the full survey group. Respondents provided answers to all 14 questions on the survey. 438 responses to the survey is considered sufficient that the answers should be considered representative of the surveyed population.

Several of the questions on the survey were pure textual responses, while most of the others had a textual response element. This qualitative data can be found in the appended Text Answers reports. This report is concerned only with the quantitative analysis of the responses.

The responses to eleven questions are reviewed in the appendices under the categories of “Respondent Involvement with the Egyptian Theatre” and “Respondent Perception of the Egyptian Theatre.”

3.2.1. Summary

The bulk of respondents had attended a performance at the Egyptian Theatre as an audience member, half of which had been to the theatre five times or more in their history of going. The high number of respondents who had been to the website suggests that the audience or potential ticket-buying audience want to interact with the theatre. The perception of the Egyptian in regards to its general price point, box office, and all around hospitality was considered to be very good. While the respondents perception of the backstage areas was generally considered to be “good.”

Perhaps what is most telling about the respondents’ perception of the Egyptian as a whole was in the answers to Question 10) What do you consider the value of the Egyptian Theatre? A high number of respondents selected Entertainment and Recreation, Tourism, and Community Identity. The Egyptian Theatre appears to be viewed by the respondents as an important element to the community and culture of DeKalb while also recognizing its importance as an economic driver. The text answers were by and large positive and thoughtful, with some respondents voicing concerns around tax dollars being spent on the arts and management. However, the text answers also illustrated the pride and enjoyment that the respondents felt when considering the Egyptian Theatre as part of DeKalb.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 39 December 2016

Do you think the Egyptian Theatre warrants municipal support?

57

Yes

No

380

General perception of the Egyptian Theatre's pricing competitiveness

6 48 34

Poor Fair 103 Good 98 Very Good Excellent Don't Know

149

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 40 December 2016 3.3. The DeKalb 2025 Strategic Plan Goals

The City of DeKalb adopted the 2025 Strategic Plan, which outlines several goals, strategies, and actions that were developed in collaboration with the City and members of the community. One of the key elements of the 2025 Strategic Plan is the vision of Community Vitality and a Vibrant Downtown. Recognizing the importance of the Central Business District as both the center of the community, and also a key economic driver, continued reinvestment in the downtown is critical. Although the face and character of the downtown has changed with the ebbs and flows of the economy over time, it has managed to maintain a distinct historic charm that is both an asset and opportunity. Through the series of strategic planning workshops that were conducted, a primary goal that was identified was the creation of an Arts, Entertainment, and Cultural (ACE) corridor. The use of arts and culture to evolve struggling downtowns into thriving commercial districts is a successful model that has been utilized across the nation.

The historic Egyptian Theatre embodies both the vision of a vibrant downtown and of place- making in the community. The 1400 seat theatre has been an anchor in the downtown and a regional draw since it opened its doors in the 1920’s. With the goal of, “Creating destination events and gathering places that draw people from DeKalb and throughout the region,” the theatre is a critical asset in achieving this initiative.

Additionally, the foot traffic generated by events at the theatre help to support the surrounding businesses, and increasing programming and events would help to strengthen local demand for goods and services in the area. The 2025 Strategic Plan also identifies, “…strategic investment options for the Egyptian Theatre to maximize its impact as a driving force of downtown commerce,” as a key element for enhancing the vitality of the Central Business District. The Egyptian Theatre also supports the goal to, “Create and support existing gathering places throughout the City that draw people to local merchants while strengthening place-making.”

The Egyptian theatre is an economic driver for businesses in the downtown, a major part of the community’s cultural arts identity, and cornerstone in the process of place-making. Therefore, continued and increased investment in the Egyptian Theatre is a key strategy in accomplishing multiple goals of the 2025 Strategic plan.

It should be noted that cultural diversity in a population has been leveraged by performing arts organizations all over the United States and drama programs result in a population that is four times less likely to be racially biased.

------Vision DeKalb is recognized as a 21st century community with a thriving university and a vibrant downtown. DeKalb’s residents, businesses, government, and university community are engaged in a dynamic interplay of energy and creativity that retains and attracts businesses with living-wage jobs.

DeKalb’s leaders are diverse, visionary, and adaptable, and work together to continue to grow the city.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 41 December 2016 Thirteen specific goals support the vision: 1. Support continued place making in downtown through business, residential, and institutional development. 2. Create destination gathering places that serve the community and draw people from throughout the region to DeKalb. 3. Collaborate with NIU and City of DeKalb to create an attractive university town for students, faculty, staff, and residents. 4. Foster economic, educational, social, cultural, and recreational opportunities for everyone. 5. Encourage activities and events that showcase DeKalb’s diverse population and cultures. 6. Create a vibrant business environment that supports existing enterprises while attracting new investment and entrepreneurs citywide. 7. Build on DeKalb’s strengths in education, high technology, local foods, and the arts. 8. Increase residents’ access to living-wage jobs. 9. Create an attractive climate for new residents and residential investment. 10. Identify and recruit a diverse cadre of community-based leaders. 11. Coordinate and facilitate the projects initiated by various community interests and organizations. 12. Train and place community leaders in project and organization management. 13. Create a positive image of DeKalb through internal and external marketing efforts.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 42 December 2016 3.4. Potential Users and Programming Survey Introduction

The following report is an initial summary of data collected from a survey conducted of groups in the DeKalb area to determine the needs of the current and prospective users of the Egyptian Theatre.

In a small community like DeKalb, it is important to consider how economies of scale can be applied and a balance of interests can be served. By understanding the needs and desires for facilities among various local groups from DeKalb and the surrounding area, this survey takes the first step in considering options for a viable development.

Respondent Profile

40 surveys were distributed to potential user groups, 16 surveys were received, 2 of which were semi-incomplete (Venue Use not completed), and 2 fully incomplete (only 1 question completed) surveys removed from the analysis.

All respondents provided contact information:

• United Elite Mixed Martial Arts and • *†Stage Coach Players Fitness • *†Children’s Community Theatre • †Independent Contractor • †DeKalb Public Library • Sycamore CUSD #427 – Sycamore • †Performing Arts Academy High School Auditorium • †Northern Illinois University • †Kishwaukee Symphony Orchestra • †DeKalb High School Music Program • †Christ Community Church • Beth Fowler Dance Company

*Two representatives from each of these organizations responded to the survey. Their responses are different so they are both included in the analysis until a consensus can be achieved on their projections. †Organizations that are previous users of the Egyptian Theatre.

Summary A diverse range of potential user groups responded to the survey. The highest number of respondents indicated a local need for spaces for plays/drama, concerts that are classical in nature and contemporary, and dance events.

Current Venues used range in capacity from small intimate spaces to a 1,500-seat mainstage; eleven respondents reported using two venues, 4 respondents reported using three venues. The majority of respondents are looking for a seating capacity between 300 and 599 seats.

The most significant qualities which influence the respondents in choosing a performance space are the size of the stage, the sound/amplification system, parking, air conditioning and the in- house theatre lighting system.

A majority of the respondents indicated that they required an orchestra pit.

58% of respondents indicated that they required 1 loading bay, while 33% of respondents indicated that they would require 2 loading bays.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 43 December 2016 A majority of respondents indicated the desire for additional Rehearsal or Dance Studios on site in the venue. Interestingly two of the respondents indicated a desire for green room space without any prompting.

An overwhelming majority of respondents indicated that they would rent the Egyptian if it met their organization’s needs. 70% of respondents are prepared to pay $1.00 per seat in rental. For example, rent could be set at $500 for a 500 seat theatre. There were strong indicators of use for eight months of the year, while the summer months of June, July and August as well as February had lighter demands which is typical. It should be noted that the Egyptian does not have air conditioning and is virtually unusable for at least three months. With air conditioning, programs like children's summer camps and movies become possible.

Almost 58% of respondents offer events for free or a nominal charge under $20.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 44 December 2016 4.0 OPERATING POTENTIAL AND PROGRAMMING PLAN

By Dulcie Gilmore, Dulcie Gilmore Associates

4.1. Introduction The Egyptian Theatre is envisioned to be a state-of-the art regional facility that presents touring artists and attractions, serves as a home for community organizations, has an educational component, and hosts community events and activities.

The objectives of the plan include:

• Clarifying the artistic and economic objectives of the project • Developing a positioning strategy to suggest how the facility should be programmed and promoted to compete successfully in the region • Reviewing potential types of performing arts attractions for the proposed facility • Developing an activity profile, listing types of use • Proposing a programming model that addresses community usage, scheduling, presenting and educational programming • Constructing a pro-forma programming budget. The Programming Plan incorporates the research provided in that document, and should be considered a part thereof. Dulcie C. Gilmore visited DeKalb in the spring of 2016, and was involved in the research phase of the study.

This study refers to the Egyptian Theatre as a facility and as an operating company. It assumes that an entity called the Egyptian Theatre is a nonprofit company with operating authority (or ownership) of the building.

The theatre has a total of 1,397 seats, including 847 on the main floor and 550 in the balcony. This plan assumes that adequate production space, along with updated heating, ventilating and air- conditioning will be added. The theatre will be managed professionally, and be suitable for national-caliber touring artists.

The concept of a DeKalb regional performing arts center is supported by regional demographics, as presented in the Business Planning Outline.

This study assumes 169 annual use days. Typically, it takes a minimum of 140 use days per year to sustain building operations for a performing arts center. The community survey conducted in the spring of 2016 indicated that potential rental use will range from 35 to 83 days. This study assumes 55 community use days. (Some companies have indicated that they may be better served by a 500-seat theatre.) Egyptian Theatre presentations include 31 live performances and 40 film presentations. The NIU Collaborative has 24 performances. Commercial rentals are estimated at 12 use days. The special attraction is 7 performances.

The key to a successful facility in this marketplace will be versatility. The building should be multi- purpose. The operating premise is one of community and professional use. Community use should be as broad as possible within the scope of the project. The theatre should be fully equipped with state-of-the-art production facilities. It should be managed professionally, and be suitable for national-caliber touring artists as well as local companies.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 45 December 2016 4.2. Programming Models

The Egyptian Theatre will host a blend of presented programs, community events and commercial usage. There are four basic business relationships that are relevant to programming a facility. They are presented here in order of relative risk:

A. Rentals: The facility management reacts to a demand for space and provides a basic infrastructure for public and nonpublic performance or assembly use. The facility charges user groups (or clients) a fixed fee or a fixed fee plus a percentage of box office. There is little or no risk for the facility management, but there is also little control over programming and audience size. While these events are typically referred to as “rentals”, they are actually license agreements. Space is licensed for a defined period of time for a specific activity, i.e., from 8:00AM to 11:59PM on one day for the purpose of presenting a concert. Rentals usually book no longer than six months from the date of the engagement. This is a short-range strategy.

B. Co-Presenting: The facility management is more proactive in soliciting and/or supporting a prospective rental user (or client) than in the straight rental scenario. The risk involved in this type of arrangement varies based on the deal terms. In the nonprofit world, the ideal co- promotion fulfills a programming need based on program policy, and is not commercially motivated. The facility typically waives the rental fee and does not get reimbursed for its production costs, such as front-of-house labor, production personnel, etc. The producer/promoter (outside client) provides the attraction or artists, and marketing costs come off the top. Net adjusted gross box office receipts are split based on percentage basis determined by each party’s risk. Co-presentations (also called co-promotions or co-pros) can be as simple as a modified short-term rental booking, or as complex as a long-run presentation.

C. Presenting: The theatre management chooses programming (usually touring acts) for an intended audience (or customer). The facility pays for the artist’s fees and expenses, assumes the promotion costs, and owns the resulting deficit or surplus. This method of programming allows the theatre to control its image, and offers the greatest reward and the highest risk. A full season of events is carefully planned according to the programming mission of the theatre. Artists’ contracts are usually signed four to twelve months in advance. This is a long-range strategy.

D. Producing: The facility management creates and finances programming. This includes hiring actors, singers, or dancers, building scenery, etc. Examples of producing entities include the Paramount Theater in Aurora, Lyric Opera of Chicago, Steppenwolf, and The Joffrey Ballet. Presenting companies generally do not engage in producing. This is the most risky approach, but allows for complete control over artistic product.

The success of the Egyptian Theatre depends upon a balance of professional programming, collaboration with Northern Illinois University, and community participation.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 46 December 2016 4.2.1. Presented Programs and Commercial Rentals (Touring Artists and Attractions)

The principal programs will include theatre, dance, music and variety attractions. Examples of these kinds of programs appear in the Appendix.

Vision: To become a regional leader in the presentation of professional theatre, music, dance and entertainment events.

Goals and Objectives: To book a diverse selection of professional talent that appeals to the citizens of DeKalb and the surrounding area. The quality of bookings will be maximized with regard to staging capabilities, seating capacity and financial outcome. These programs will have the first booking priority, meaning they take precedence over all other theatre usage. They can be a combination of rentals and Egyptian Theatre presentations. Typically, rentals will be of a commercial nature (bands and comedians) and presentations will usually be cultural (theatre, dance and music). The Egyptian will be defined by the events it offers. The best opportunity to control the image of the theatre is through presentations. This will require artistic vision, booking savvy and financial acumen.

Programming will appeal to a wide range of ages, ethnicities and interests. Film will play a secondary role in booking the season. The objective is to offer popular, quality attractions that have the marketability to succeed at the box office. An annual season of events should not end with a deficit (after planned contributed income); although some events throughout the year will have a surplus and others will not. Maximizing the number of bookings is key to increasing overall attendance. This will produce economic benefits such as increased restaurant and hotel use.

4.2.2. Young Audiences Performing Arts and Touring Programming

A variety of popular children’s programs will be geared to school performances. These programs will provide creative learning opportunities for area schoolchildren. Larger scale shows aimed at young audiences will also be booked under the category of variety shows.

4.2.3. Film Programming

Film offers an opportunity to provide diversified programs at a low cost. Subjects can include a wide range of topics and cultures. Film presentations are secondary to live performances.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 47 December 2016 4.2.4. Collaborative Programming with Northern Illinois University Vision: To create a vibrant partnership between NIU and the Egyptian Theatre that will provide new creative and learning opportunities.

Goals and Objectives: To establish an ongoing collaboration between the University and the Theatre that will open up avenues of talent coming to DeKalb. NIU can provide access to performing artists not available through traditional sources. The offerings can be academically advantageous to NIU by exposing students to performing artists not readily accessible, and through interaction between students and artists. The programs will be developed jointly between the Egyptian and the University. Ideas include: • Bringing Chicago artists and companies to the Egyptian • Hosting one dance company and one theatre company residency per year, including regular and school performances, workshops and audience discussions • Booking run-outs of artists and companies for individual performances • Presenting staged readings of productions when sets are not available • Hosting improvisational theatre • Student performances

Some NIU events at the Convocation Center might be better served at the Egyptian. Recent examples include Second City and A Prairie Home Companion. The conversion cost of the arena may make the Egyptian more financially desirable. It is likely that the aesthetics of the presentations would be enhanced.

Involving students in the operations of the theatre would create new learning opportunities while reducing labor costs. Graduate assistant positions in marketing, house management (box office, ushers, concessions and security) and production could be offered.

4.2.5. Community Rentals Vision: To be a welcoming and supportive presentation home for a wide array of community arts and artists.

Goals and Objectives: To encourage community participation while maintaining professional standards and the efficient use of space. Professional bookings and NIU collaborative programs should have priority on the calendar. While the need for rehearsals is acknowledged, the number of rehearsal days should be kept to a minimum (no more than one or two days). It is understood that community events often need to be planned a year in advance; however, no community group should be led to believe that they have certain dates in perpetuity.

Community arts organizations Beth Fowler Dance Company, Stage Coach Players, Sycamore/Rochelle Performing Arts Academy, Kishwaukee Symphony Orchestra, and Children’s Community Theatre, among others have indicated an interest in continued or expanded use.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 48 December 2016 4.3. Potential Audiences 4.3.1. Defining the Potential Market Areas for the Egyptian Theatre The Egyptian Theatre has already demonstrated its market reach by virtue of the audiences it is currently attracting to its somewhat limited programming.

Typically, audiences travel various distances to a theatre because they are a fan of the particular programming or they like the theatre or have a connection to the location.

Normally, we look carefully at geographic segments of the audience around a theatre to develop marketing plans and understand potential thresholds for certain kinds of programming. For example, the commercial movie audience typically drives no more than 10 to 12 minutes to the theatre while a local theatre audience or art film audience may drive 30 minutes or more and a music audience will drive over an hour.

The local population around DeKalb, within about 8 miles is 62,001. The map below reflects an 8- mile radius.

The population within this parameter should be considered the local market.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 49 December 2016 Normally, depending on programming and it uniqueness, a theatre’s basic primary market is considered to be within a 30-mile radius around the theatre. In this case, because of the high concentration of theatres in the Chicago area, the primary market has been defined as within 20 miles around the theatre, and the second market is 25 miles around the theatre. The existing audience mapping has already demonstrated that the Egyptian penetrates further than this but this is a conservative measurement.

The Local Market Area population is currently comprised of about 44,092 people. The Primary Market Area population is currently comprised of about 175,381 people. The Secondary Market for unique programming is within a 25-mile radius or 440,364 people. The Tertiary Market7 is made of the surrounding counties or about 991,616 people.

Other measures for market area include considering drive time. The population living within a 0-30 minute drive from DeKalb was 105,870 in 2015 and estimates this number to grow to 108,155 by 2020. The estimate of the regional market area is 2,000,000 people based on driving times.

The highest percentage income groups ($75,000-$200,00/year) live a 30-60 minute drive from DeKalb, while the highest percentage groups living a 0-30 minute drive from DeKalb range from $50,000-$150,000/year (with another high percentage with those earning below $15,000/year).

7 The Tertiary Market’s surrounding counties include DeKalb County, Boone County, Ogle County, Lee County, LaSalle County, Kendall County, and Kane County.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 50 December 2016 Calculations of Demand by Potential Audiences

The size of the primary market for a professional performing arts center is normally considered to be an average radius of about 30 to 60 miles from the center depending upon the uniqueness of the programming. Film and community theatre will draw from a closer proximity, drama and comedy from a mid-range proximity, while nationally known stars, niche artists, festivals and opera performances can draw from a much further radius of 45 miles or more. Due to competition from specific Chicago area theatres, minimal market radii have been initially defined for DeKalb.

There are a number of traditional formulas for establishing the potential audience for a performing arts program.

A conservative estimator of audience potential is the Ford Foundation for the Arts (FFA), which suggests 3% of the primary market area as a formula to assess the pool of potential ticket buyers in a community on any given Thursday, Friday or Saturday evening. The pool of potential ticket buyers in DeKalb’s local market area of 8 miles would be 1,860. The primary market area at a population of 175,381 contains a pool of 5,261ticket buyers. The secondary market area at a population of 440,364 contains a pool of 13,211 ticket buyers. The pool of potential ticket buyers on any given Thursday, Friday or Saturday in all the neighboring counties, the tertiary market, at a population of 991,616 would be 29,748 people. The distance audiences’ travel will depend on the nature of the program.

The American National Theater Association (ANTA) suggests the “third of a third of a third” formula, derived by: • 1/3 of the local population = the number of people who would be interested in a single event • 1/3 of those interested will be reached by advertising, social media, word of mouth, etc. • 1/3 of those reached will actually purchase tickets for a single event

The pool of potential ticket buyers in DeKalb’s market areas according to this calculation would be the following: • 2,228 ticket buyers in the local market area • 6,303 ticket buyers in the primary market area • 15,825 ticket buyers in the secondary market area

Other audience studies imply the following: • The majority of the DeKalb County area population will attend programming at a cultural center at least once per year. 8 • 15.6 million American adults are performing arts tourism enthusiasts; 34.5M are heritage tourism enthusiasts, and; 27.6M are visual arts enthusiasts. 9

8. Extrapolated from multiple studies beginning with the 2002 Survey of Public Participation in the Arts by the NEA 9. Source: U.S. Performing Arts Tourism Enthusiasts: A Special Analysis of the Travel Activities and Motivation Survey Prepared for the Canadian Tourism Commission (CTC)

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 51 December 2016 4.3.2. Demographic Indicators of an Affinity for the Arts

While demographics are one measure of a community’s likelihood of cultural activity participation, arts research demonstrates that other important indicators of attendance, and frequency of attendance, include previous cultural experiences. The best indicators may be the quality and quantity of an individual’s cultural exposure and arts education experiences.

People who attend one kind of cultural event are likely to participate in various kinds of cultural activities. Similarly, the cultural exposure a person has early in life often affects the frequency with which that person will attend further cultural activities throughout the course of their life.

Demographic factors can be used to predict cultural attendance. Traditionally, level of education has been the most important demographic indicator of cultural participation. Income, urban residence, physical capacity, gender and age can be other factors in predicting performing arts attendance.

All three of these factors indicate a population with an affinity for the arts:

• Education – the more educated a populace, the more likely they will be theater-goers, and seek arts experiences for their children.

• Age – the performing arts audience tends to be over 45, although music and film can attract a younger audience.

• Affluence – a more affluent audience is likely to be attracted to the classical performing arts and contemporary visual arts; a less affluent audience is likely to be attracted to a popular music and film. An affluent region can be a source of generous providers of contributed income.

4.3.3. Audiences for Exurban Locations

Research has demonstrated that 65% of commuters and suburban audiences are disinclined to make a trip to an urban downtown to see professional performing arts as frequently as they would like. Suburban or exurban audiences prefer the perceived convenience of driving to a suburban destination with free or cheaper parking and greater ease of accessibility.

Urban audiences can also be drawn to suburban or exurban locations, especially if they have personal ties or experience of a particular community or they are attracted by a new first-class theatre, a genre, company or artist. Performing arts patrons also can be extremely loyal if they are treated right, regardless of the location of the theatre or even the consistency of the work, provided the nature of the presentation is made clear. They must be engaged intellectually, emotionally and personally.

Certain types of star vehicles, Broadway, classics and specialty programming will draw a fan base from within a two to three-hour drive, many of whom, if they have the affluence turn such trips into an overnight or weekend excursion.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 52 December 2016 4.3.4. Attracting Arts Tourists From Around the Country In 2014 and 2015 Americans for the Arts released Cultural Tourism: Attracting Visitors and Their Spending and Arts Facts…Cultural Tourism respectively. Both reports feature data on the cultural tourism industry in the United States and on the tourism habits of national and international travelers. The reports demonstrate the growth of an already strong and vital industry. Below is information that is most pertinent to viewing the Egyptian as a cultural destination:

United States Tourists • 76% of all U.S. leisure travelers, 129.6 million adults, engage in a cultural, arts, heritage or historic activity while on a trip. • This market is estimated to annually earn $171 billion. • Americans for the Arts notes that just over a quarter of the group will add time to trips over 50 miles or more in order to experience cultural, arts, heritage or historic activities. • 40% of those who add time to their trip (13 million individuals) stay one or more additional nights and spends 60% more than domestic leisure travelers. • The cultural traveler takes more trips than general U.S. travelers (3.6 vs 3.4)10 • Cultural tourism in the United States is the most frequently used marketing strategy by national tourism organizations, accounting for 26% of marketing expenditures. • The majority of three major leisure traveler demographics, Millennials, Baby Boomers, and Gen Xers, all rate wanting “to engage a destination’s arts and cultural assets”11 as the highest activity of importance while on a trip.

International Tourists • The percentage of international visitors participating in arts and culture while in the United States has increased steadily, from 2002 (12.9%) to 2012 (18.4%), a 29.9% increase. • The arts attract foreign visitor spending, especially that of cultural tourists. • The length of stay of international cultural tourists was 3 nights longer than the general international visitor and report visiting more states.

10 Source: Mandala Research, LLC 2013 11 “State of the American Traveler” from Destination Analytics Inc.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 53 December 2016 4.4. Marketing 4.4.1. Positioning Concept The Egyptian Theatre exists to enrich the quality of life in the region by providing 1) a diverse selection of regional, national and international performing arts events for the enjoyment of the area residents, 2) arts and education programming through a collaboration with Northern Illinois University, and 3) a quality performance home for community arts companies.

4.4.2. Values • Be community-based and nonprofit • Be available for use by the entire region • Be of a scope and scale appropriate to the region • Ensure that all citizens of the region have access to a variety of diverse arts experiences • Create an environment where artistic skills and production capabilities of arts organizations and artists are strengthened • Provide a showcase for the area’s talented youth and adults • Enable professional artists and attractions to appear at the facility for the inspiration and enjoyment of citizens • Include an educational component for all ages, from youth to seniors • Offer an alternative to going to Chicago or other cities for high quality entertainment • Provide responsible financial management for the ongoing viability of the facility

4.4.3. Developing Audiences and Clients The Egyptian Theatre will be the regional showcase for the performing arts. The success of the project depends upon a successful audience development plan. New audiences will come from within the community, the region and beyond.

The programming of the theatre should reflect the interests of the entire community. It must be diverse and appeal to residents of the city, DeKalb County, nearby Rockford and the Fox Valley area, and visitors from outside the region. A range of attractions, including comedy, theatre, popular music and dance should be offered.

The attractions presented at the theatre will establish the strongest image in the marketplace, i.e., what you program is who you are. However, there is much that can be done in making audiences (ticket buyers), community arts groups (producers using the space) and corporate clients (non- entertainment users) feel comfortable with the facility. An image can be established by the friendliness of the box office, the accessibility of management, and the tone set by the front of house and backstage staff.

The Egyptian Theatre is uniquely positioned to become a regional center for the performing arts. The current operation of the facility is that of a community theatre that occasionally hosts a commercial booking. This management model will not allow the theatre to achieve its potential. In addition to upgrades to the physical structure, a complete operational overhaul is necessary. The current management has done its best to work with extremely limited resources, but this model does not maximize the potential of one of the community’s greatest assets. The Egyptian is the symbol of the city of DeKalb. City leaders, government, arts community and Northern Illinois University must work together to make the most of this asset. The result will be a better quality of life for residents and students, as well as a powerful economic catalyst.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 54 December 2016 A niche exists for the Egyptian in the regional arts scene. Rockford’s 2,310-seat Coronado presents Broadway touring shows and other large-scale entertainment. Aurora’s 1,888-seat Paramount is primarily a producing house, a programming format not contemplated for the Egyptian. The 900- seat Arcada in St. Charles is a commercial concert venue. While there will be concerts at the Egyptian, this is not the primary type of booking. One of the proposed distinguishing features of the Egyptian will be a truly collaborative relationship with Northern Illinois University. It is envisioned that NIU’s relationship with theatre and dance companies in Chicago will produce a collaboration worthy of national attention.

Far enough away from Chicago, yet close enough for easy travel, the opportunity exists to bring Chicago artists to DeKalb. By way of example, this report incorporates the concept of a theatre company and a dance company annual residency. The programming concept also includes two theatre and two dance presentations each season. However, this is a concept that should be explored by NIU and theatre management. The collaboration may produce a different programming outcome. The objective is to develop a sustainable program of visiting Chicago artists that enriches the offerings at the Egyptian, while creating interactive opportunities for NIU students and audiences. The program should be self-sustaining through ticket sales, grants and contributions.

The Egyptian should be woven into the fabric of the community. The theatre should be proactive in planning events that involve the ACE Corridor and STEAM Learning Center Project. It may be advisable to have the theatre be the home of cultural marketing for the community. This office would incorporate Egyptian, NIU and community arts into its annual campaign.

The objective is to position the city of DeKalb as a destination location. DeKalb offers a “day-in- the-country” experience for the one million people living in the Fox Valley region, and five million people east of that area. There is a quaint charm to the downtown that should be developed and promoted. The architecturally unique Egyptian, world-class university, Ellwood House and other community assets combine to create a desirable visitor experience. Seasonal celebrations could be developed, such as summer (separate from Corn Fest), autumn/Halloween and December holidays. Arts and culture, as well as shopping and dining, should be promoted.

A special event attraction is contemplated within the context of one of these types of celebrations. A week (or two consecutive weekends) booking of a popular family attraction would be ideal for this type of program. An acrobatic circus, such as Navy Pier’s 2006-2014 booking of the highly acclaimed Cirque Shanghai, or a nationally-acclaimed magic show are examples of this type of booking. The attraction would be high profile and different from what other theatres in the area are presenting. The length of the booking could be expanded in subsequent years if demand warranted.

A professional level of marketing should be employed for all Egyptian events. NIU collaborative events should be jointly marketed by the theatre and NIU. Assistance should be given to community arts organization to ensure that they are marketed successfully. It is in the theatre’s best interest to maximize audiences for every event.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 55 December 2016 4.4.4. Senior Management and Advisory Groups Management and community involvement is crucial to the success of the programming plan. The board of directors should include ex officio positions from local government and Northern Illinois University. The foundation of the board should be civic leaders with the capability and desire to contribute to the theatre, as well as possess the motivation to seek contributions from other interested parties.

The Executive Director is responsible for overseeing the management of the performing arts center. This individual will be integral to the success of the Egyptian Theatre. It is important that the position be given the authority to manage the organization. Key areas of responsibility include:

• Conceiving, developing and implementing the programming of the performing arts center • Implementing professional standards of marketing, facility management and technical production for all events at the center • Developing budgets, meeting financial goals and maintaining fiscal integrity

It is recommended that the qualifications of this individual include at least ten years of senior management experience with a mid-size or large arts presenter. High-level administrative skills, coupled with an understanding of programming, community arts organizations and facility management, are ideal. An alternative is to hire a professional, outside booking agency. The executive director position is replaced by a general manager. The general manager position does not require booking or fundraising experience. A thorough understanding of theatre and box office operations is required.

Owner

C.E.O. Board of Executive Governors Director

General Manager

Programming Marketing Fundraising Operations Staff Staff Staff Staff

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 56 December 2016 4.5. Budget Preparation 4.5.1. Egyptian Theatre Presentations

Average Average Concessions Number of Net Type of Use Number of Presentation Ticket Sales & Ticket Performances Revenue Tickets Sold Cost Fees* Theatre 65% $70 average Play/Show 1 4 3,600 200,000 252,000 18,000 70,000 Play/Show 2 4 3,600 200,000 252,000 18,000 70,000 8 7,200 $400,000 $504,000 $36,000 $140,000

Dance 60% $45 average Company 1 3 2,520 100,000 113,400 12,600 26,000 Company 2 3 2,520 100,000 113,400 12,600 26,000 6 5,040 $200,000 $226,800 $25,200 $52,000

Music 65% $70 average Concert 1 1 900 50,000 63,000 4,500 17,500 Concert 2 1 900 50,000 63,000 4,500 17,500 Concert 3 1 900 50,000 63,000 4,500 17,500 Concert 4 1 900 50,000 63,000 4,500 17,500 4 3,600 $200,000 $252,000 $18,000 $70,000

Variety 70% $60 average Show 1 1 980 55,000 58,800 4,900 8,700 Show 2 1 980 55,000 58,800 4,900 8,700 Show 3 1 980 55,000 58,800 4,900 8,700 Show 4 1 980 55,000 58,800 4,900 8,700 4 3,920 $220,000 $235,200 $19,600 $34,800

Young Audiences 75% $8 average Show 1 3 1,050 20,000 25,200 - 5,200 Show 2 3 1,050 20,000 25,200 - 5,200 Show 3 3 1,050 20,000 25,200 - 5,200 9 3,150 $60,000 $75,600 - $15,600

35 percent of Film 75 ticketed $6 average $2 per cap gross receipts Screenings 40 3,000 $6,300 $18,000 $6,000 $17,700

Total Presentations 71 25,910 $1,086,300 $1,311,600 $104,800 $330,100

*Concessions $1.00, Ticketing fees, $2.00, Restoration fee, $2.00

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 57 December 2016 4.5.2. Programming with Northern Illinois University

Average Average Concessions Number of Net Type of Use Number of Presentation Ticket Sales & Ticket Performances Revenue Tickets Sold Cost Fees* Theatre Residency 55% $45 average Regular Performances 4 3,080 130,000 138,600 15,400 24,000 85% $8 average Student Performances 2 2,400 20,000 19,200 - (800) 6 5,480 $150,000 $157,800 $15,400 $23,200

Chicago Companies 55% $35 average Play/Show 1 3 2,300 75,000 80,500 11,500 17,000 Play/Show 2 3 2,300 75,000 80,500 11,500 17,000 6 4,600 $150,000 $161,000 $23,000 $34,000

Dance Residency 55% $35 average Regular Performances 4 3,080 100,000 107,800 15,400 23,200 85% $8 average Student Performances 2 2,400 20,000 19,200 - (800) 6 5,480 $120,000 $127,000 $15,400 $22,400

Chicago Companies 55% $25 average Company 1 3 2,300 75,000 57,500 11,500 (6,000) Company 2 3 2,300 75,000 57,500 11,500 (6,000) 6 4,600 $150,000 $115,000 $23,000 $(12,000)

Total Presentations 24 20,160 $570,000 $560,800 $76,800 $67,600

*Concessions $1.00, Ticketing fees, $2.00, Restoration fee, $2.00

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 58 December 2016 4.5.3. Community Usage, Commercial Rentals and Co-Presentations

Cost Average Concessions Number of Rental Fees / (services Net Type of Rental Number of & Ticket Performances Ticket Sales included in Revenue Tickets Sold Fees* rent) Community 25% Performing Arts 50 17,500 50,000 10,000 87,500 127,500 Civic & Other 5 - 7,000 1,000 - 6,000 55 17,500 $57,000 $11,000 $87,500 $133,500

Commercial 60% Concerts 10 8,400 20,000 2,000 42,000 60,000 Industrials** 2 - 2,800 400 - 2,400 12 8,400 $22,800 $2,400 $42,000 $62,400

Special Attraction 65% $25 Co- Presentation 7 5,880 147,000 $75,000 29,400 101,397 7 5,880 $147,000 $75,000 $29,400 $101,397

Total Presentations 74 31,780 $226,800 $88,400 $158,900 $297,300

*Concessions $1.00, Ticketing fees, $2.00, Restoration fee, $2.00 **Industrials are private rentals hosted by corporations to sell products

The average rental fees are estimated at $1,000 for community groups and $2,000 for all other users. The special attraction assumes it is a co-presentation. The total cost of the presentation is $100,000, half of which ($50,000) is the theatre’s responsibility. If the production has net sales of approximately $150,000, half of the profit ($25,000) is due to the partner.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 59 December 2016 4.5.4. Theatre Usage – Summary

Summary of Use Estimated Net Estimated Number of Events Days Revenue Attendance ET Presentations 31 $376,400 22,910 Film 40 $17,700 3,000 NIU Collaborative 24 $67,600 20,160 Rentals 67 $195,900 25,900 Special Attraction 7 $101,397 5,880 TOTAL 169 $759,000 77,850

4.5.5. Sample Ticket Prices

The programming proposal for the Egyptian Theatre represents a complete range of offerings from accessible film, and family fare to national acts and touring companies. Rental programming by local community groups will vary with the group and reflect local expectations.

Sample ticket prices for several mid-sized venues similar to the Egyptian Theatre. If no price is listed, that category is filled by a local theatre or dance company (not a touring show).

Young Theatre Dance Music Variety Audiences Flynn Center Burlington, VT – Pop. 42,284 $70 $40 $70 $40 $15 Seating Capacity: 1,411 The Grand 1894 Opera House Galveston, TX – Pop. 48,733 $70 $70 $70 $15 Seating Capacity: 1,040 Ritz Theatre Tiffin, OH – Pop. 17,832 $50 $70 $50 $4 Seating Capacity: 1,260 Bardavon 1869 Opera House & Ulster Performing Arts Center (under same management) Poughkeepsie, NY – Pop. 30,639 $60 $85 $59 $6 Kingston, NY – Pop. 23,557 Seating Capacity: 944 & 1,510

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 60 December 2016

4.5.6. Sample Operating Budget The following table incorporates and modifies the usage data with general assumptions of other income and operating costs. This is a snapshot of a minimum annual operating budget typical for this type of facility. It should be considered a starting budget.

Program Income – Net Amount Egyptian Theatre Presentations and Film including concessions 330,000 NIU Collaborative 67,600 Rentals 195,900 Special Attraction 101,500 $695,000

Contribution and Sponsorship Income Operational Financing from the City 250,000 Private Donations, Sponsorships, and Other Contributions 55,000 $205,000 Total Income $1,000,000

Expenses Full Time Payroll/Professional Services (including benefits) 340,000 Part Time Payroll/Fees (including benefits) 100,000 Marketing and Development 320,000 Occupancy Costs, Utilities, Supplies 100,000 General, Administrative Costs and 5% Contingency 100,000 $1,000,000

Net $0

Services Provided by City Insurance Matches for Capital Depreciation/Maintenance/Improvements Snow Removal Initial Program Reserve and Start Up for Year One $400,000

These recommendations for City contributions are the minimum recommended for a successful growth model. With potential seed funding for the conversion of the facility from a community- based operation to public-private sector professional performing arts center, and annual operating support of $250,000 from the City, an annual budget of $1,000,000 is achievable and is likely to grow relatively quickly to a $2 million operation with a much greater impact on DeKalb and the region.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 61 December 2016 4.5.7. Staffing Assumptions

Full time payroll assumptions include Directors and Managers:

Executive Director or General Manager & Professional Booker Chief Executive Officer, Responsibility for the day-to-day management of the Center, including management of surplus and deficits, board development, staffing, property management, programming, booking, media relations, policy development, annual budgets, contracts and advocacy. Estimated compensation range: $80,000 to $125,000.

Development and Marketing Director Responsible for positioning the Center in a manner consistent with the goals of the management, as well as managing internal board, staff and volunteer communications, community relations, messaging, media relations, publicity, advertising and fund raising, coordinating market research, merchandizing and the development of educational programs. Estimated salary range: $55,000 to $75,000.

Operations Manager Responsible for courteous and efficient customer (audience) services and policies, the financial integrity of box office systems, safety of front-of-house management and hospitality and earned revenue of concessions, catering and event management. Maintain daily show reports, time sheets, sales reports and ticket/patron counts. Estimated salary range: $35,000 to $50,000.

Technical Director Responsible for courteous and efficient rental and presented client (artist) services and oversight of mechanical and electrical systems, lighting, sound, rigging, stage maintenance, projection, security, and stage crews. Estimated salary range: $35,000 to $50,000.

These basic salary ranges include benefit packages which will be negotiated with each of the staff together with their compensating time off, vacation time and professional development, but it is estimated that benefits will be no more than15-20% within these allowances.

As the amount of programming, audiences and sales in the Egyptian Theatre grow, more full time staff should be the first priority to shepherd audiences and generate more earned and contributed revenue.

There will always be a considerable complement of part time, hourly staff due to the nature of the work accompanying the services to the audiences and artists when they are in the theatre. The booking schedule and seasonal patterns also effect staffing schedules, as well as the need for part time support to the Directors and Managers. At some point, the activity levels and operating revenues may support certain part time positions becoming full time.

Theatres require a great deal of flexibility in their management of personnel and contractors and, as such, it is often better to have a scenario where they are governed and managed by private or public-private sector not-for-profit entities rather than public sector entities.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 62 December 2016 Part-Time budget allowances and services include:

Administrator Provide contract management support to the Executive Director, maintain the master calendar of events, develop and maintain a comprehensive licensee/patron/stakeholder/volunteer CRM database, develop all internal office procedures, supervise office volunteers, monitor office equipment and coordinate the acquisition of all equipment and office supplies. Estimated salary range: $20,000 to $30,000.

Box Office Staff Provide courteous and efficient sales and processing of public tickets, accurate and enthusiastic programming information, daily sales reports, reconciliation of cash receipts and electronic sales, scanning of admission documentation, liaison with front-of-house to coordinate cues, monitoring and reporting sales levels and audience demographics. Estimated salary range: $20,000 to $30,000.

Concession Staff Provide courteous and efficient food and beverage hospitality services, and helpful programming discourse, daily sales reports, reconciliation of cash receipts and electronic sales, observance of health and safety codes, control of inventory and receipts for concessions and boutique sales. Provide event management support and provide a clean, safe and tidy environment at all times. Estimated salary range: $20,000 to $30,000.

Front-of-House Staff Under the Operations Manager, the Front-of-House staff are responsible for building security and the safety, and comfort of patrons at any time the public is in the building. Coordinate seating and performance cues with the Box Office, ensure the smooth and efficient seating (and orderly departure) of all patrons, maintain crowd control, a tidy theatre, emergency procedures and security policies as well as helpful programming discourse. Estimated salary range: $18,000 to $25,000

Custodial Support Ensure a clean, safe and tidy public environment. Annual Allowance: $16,000 to $20,000.

Technical Crew Support Sound, lighting, carpentry or stage crew as required to support the Technical Director in maintenance or upgrades to the theatre, not to be confused with crew retained and charged back to shows renting the theatre or presented programming budget. Annual Allowance: $8,000

Ushers – Volunteers trained by the Operations Manager or Front-of-House Staff.

Docents – Volunteers trained by the Development and Marketing Director.

Office Support – Volunteers trained by the Administrator.

Marketing Support – Volunteer contractors recruited by the Development and Marketing Director.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 63 December 2016 4.5.8. Egyptian Theatre Program Growth Projections

Program Current 5 Yr. Average Minimum Projections Maximum Threshold ET Presentations of P.A. 7 31 55 E.T. Film Screenings 25 40 52 NIU Collaborative - 24 28 Rental Days* 75 67 90 Special Attractions 8 7 10 Total Events 115 169 235 Total Paid Attendance 18,000 77,000 140,000

*Rental days represent the Egyptian Theatre auditorium only at the present time. Currently, and in the minimum scenario, rental days are primarily community user groups rentals. With a rehabilitated theatre, it is expected that there may be more private, corporate and commercial rentals of the theatre.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 64 December 2016 5.0 OWNERSHIP AND GOVERNANCE

5.1 Review of Ownership, Governance and Management to review typical ownership, governance and management options for the Egyptian and analyze the pros and cons based on programming and operations. This analysis focuses on three different governance models

5.1.1. Proposed Ownership, Governance and Management The chart below identifies the accountability relationships between the proposed ownership, governance and management roles in the Arts Center.

OWNERSHIP City of DeKalb assets remain in the public trust

GOVERNANCE Board of Directors an arms-length Evolution of P.E.T. into NFP Corporation a public-private Committees performing arts centre Advisory Council (volunteers) (donors)

Executive MANAGEMENT Director/Chief a partnership of Executive Officer programming and facility management

Artist Relations - Audience Relations – Resource Mgt. – Programs and Sales, Hospitality Human, Financial, Marketing and Community Facility, Equipment Relations

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 65 December 2016 5.1.2. Ownership, Governance and Management Objectives Ownership, governance and management may be handled together or separately, but it is important to consider the different objectives of each:

1. Ownership requires a competence in the protection of property. The owner's primary objectives related to the Arts Center should be the long-term public interest, rather than a profit motive.

2. Governance requires a competence in public service and cultural institutions. The governance objectives of the Arts Center are to fulfill community and cultural goals.

3. Management requires competencies in the management of places of public assembly, cultural property and presentation of performing and possibly visual arts. The objectives are to interpret governance policies and offer client and customer satisfaction in the use of the building.

Ownership Ownership of the Performing Arts Center should be in the public trust. Given the scale of the project and its deep significance to the City’s economic, cultural and social well-being, it is appropriate that the City own the asset. The City is also in the best position to facilitate development issues for sites within its jurisdiction.

Governance Governance is the legal operating entity that is responsible for the transparent and accountable oversight of the property and fulfillment of its mission. Standard governance responsibilities include: • Mission and strategic planning • Transparency and communication • Organizational structures • Board’s understanding of its role • Fiscal responsibility • Oversight of human resources • Assessment and control systems • Planning for succession and diversity

Traditionally, governance involves three key activities: hiring the Chief Executive Officer, approving the annual budget and assuming financial leadership by securing the majority of the contributed income required by the Arts Center. The three most common governance scenarios relevant to the Egyptian are: • Community Governance • A Public-Private Partnership • Municipal or County Government Governance

Community Governance: is the governance by a not-for-profit, incorporated, community board, where the board executive has significant responsibility for professional management roles and the President is often the Chief Executive Officer. The board is responsible for providing strategic direction, managing the assets, significant fund-raising and establishing policy. The Executive Director is an employee of the Board. This is the current model.

Public-Private Governance: is an extension of community governance. This model is recommended in light of the potential significance of the property to a number of public

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 66 December 2016 institutions such as the City, the County, the University, the Library and the Historic Museums of DeKalb. In this particular scenario it is recommended that 50% of the board represent public interests and be appointed ex officio and 50% of the board be leaders of the private sector in DeKalb. An independent Chair would be elected by the board and roles and responsibilities would be clearly articulated to maintain a balance of public and private sector interests.

If the facility is owned by the City, City policies could, but do not have to be adopted. Under City ownership, the City could make a specific annual financial contribution, pay a management fee or offset losses to the operation of the facility and could have ex officio, voting representation on the Board. The board would submit a budget annually as a condition of securing the City’s operating subsidy to City Council. The City would ensure that its programming and operating conditions are met in a facility management agreement with the board of directors. The City may also provide some facility services that it is able to do economically – such as maintenance, landscaping, janitorial and insurance.

Municipal Governance: generally implies ownership, governance and management by the municipal or government in question. In this scenario, all staff, policies and practices would be municipal or county, although policies could and should be designed specifically for the facility. The facility should be a line item operation. There could be a community advisory committee that provides input (advisory only) on strategic directions, new capital items, fund-raising and the specifics of governing a cultural institution. While there could be fund-raising programs, but it is assumed that the financial commitment to maintain stability of the facility is the government’s responsibility. This scenario places the greatest financial burden on the City and is not recommended because of these typical differences:

Municipalities are: Cultural Institutions are: Risk Averse Risk Embracing Bureaucratic Entrepreneurial Tax-Based Fund Raisers Securely Financed Insecurely Financed Hierarchies Collaborative Formal Informal

The combination can represent a good balance. While a good municipal facility may be defined as on-time, on-budget and low cost, a good theatre facility is defined as: • respectful of the artist, creative teams and theatre professionals • considerate of its audience • appreciative of its community advocates • cost-effective for its administrators and resource managers A “great” facility has a spirit, a style or an aesthetic that celebrates its core purpose and its community character. It should be where everyone wants to be.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 67 December 2016 Management This kind of performing arts center project requires the development of particular and highly specialized cultural businesses as well as the development of the facility that will deliver those businesses. Both program and project development should be handled by a professional manager with a clear vision of how the business and the facility will be programmed and operate.

Ideally, the efforts of design and project architects, technical consultants and fund-raising consultants will be coordinated by professional management who also will be responsible for implementing the programming and operating plans of the theatre. In this way, the form of the project will follow a good understanding of its prospective function.

In a not-for-profit corporation operating with professional staff, the governing body hires an Executive Director responsible for operations to liaise with the Board of Directors. The Executive Director’s responsibility is, in turn, to hire staff, coordinate volunteer efforts and implement programs according to budgets approved by the Board of Directors. Current staff of the Egyptian have institutional memory and have the kind of dedication and experience that will be important to the development of a future expanded staff.

5.1.3. Ownership, Governance and Management Recommendation To meet the respective ownership and governance objectives, it is recommended that a combination of City ownership for stability, public-private community governance for growth, stability and arm’s length accountability, and professional staff under an experienced Executive Director would be ideal complement for the DeKalb Performing Arts Center.

A truly passionate governing body can be indispensable to making the center successful. With support from the City and under the leadership of a strong Chair and experienced Executive Director, the DeKalb Performing Arts Center can become a much more powerful feature of DeKalb and be singularly focused on ensuring that it serves the community interest and meets its mandate. As well, the independent board governance model presents the best opportunities for private sector fund-raising.

Proposed Mission Elements 1. To present performing arts for the benefit of audiences and communities in DeKalb county and beyond. 2. To rent professional caliber venues to local performing arts groups and promoters. 3. To curate/present exhibitions of art and artifacts for the benefit of the community and visitors. 4. To offer performing arts training and educational programs to the community. 5. To develop ancillary revenue generating arts space and compatible cultural activities to balance the budget.

Business Planning Assumptions • There will be differential licensing fees for commercial, not-for-profit and public sector client groups. • “Presenting” expectations will be based on industry standards. “Rental” uses and rates will be based on the user survey and market values. • Ancillary revenue-generating spaces may be recommended to the extent that they are compatible with the performing arts center, serve the community and are likely to offset operating costs.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 68 December 2016 Core Programming

City of DeKalb

Performing Arts Center Facility Governance and Management

Center Resident Exhibitions Educational Presentations / Companies (Curated Programs Productions (and Rental Installations) (Classes) Users)

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 69 December 2016 6.0 SUMMARY OF OPERATING RESOURCES

The plan in section 3 identifies staff roles, brief job descriptions, full-time and part-time jobs and salary plus benefit ranges for a minimum upgrade to the Egyptian operations.

The analysis of operating resources should follow a review of the vision, mission, values and programming goals of the future Egyptian Performing Arts Center by all of the public and private leaders who should be engaged in a project so important to the future identity, culture and economy of DeKalb.

A new strategic orientation to the performing arts center will put the relationship between artists and audiences at the core of the business. The operating plan identified a preliminary approach to the budget and staffing with roles, brief job descriptions and budget allowances but a long term strategic planning process is necessary. A long term operations model will respond to the various strategic functions of the strategic arts management cycle:

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 70 December 2016 6.1. Future Staff Organization

Rather than operating with a small staff responding to a list of tasks that pushes them beyond their capacity, the new operating model positions a larger staff assigned to strategic goal oriented functions. It is oriented, for the most part, to human relations so instead of a house manager or box office manager there are audience relations personnel. The functional goals provide clear direction for setting measurable annual objectives and strategies for achieving those goals.

The organizational structure would support the functions of the arts management cycle:

Owner

Governance

Executive

Audience Community Resource Artist Relations Relations Relations Management Mgt. & Staff Mgt. & Staff Mgt. & Staff Mgt. & Staff

To translate this strategic goal orientation to the organization structure:

• Artist (or Client) Relations – All Production and Technical Staff • Audience (or Customer) Relations – All Publicity, Box Office and Front-of-House Staff • Community Relations – All Corporate Marketing and Development Staff • Resource Management – All Asset Management – Building and Financial

6.2. Policy and Governance Changes

Policy and governance changes should be driven by a new, collectively determined mission, vision, values and program goals. With the advice of legal specialists, the Constitution and By- laws of Preservation Egyptian Theatre, Inc. should be modernized to professionalize the performing arts center and consolidate it as a regional institution. The Chief Executive Officer would be the paid Executive Director rather than the volunteer Board President – a shift from a community operated organization to a professionally operated cultural institution. This will involve reviewing the roles of ex officio public sector trustees on the board of directors, a template for private recruitment, the professionalization of the Chief Executive position(s), standing committees and expectations of executive and board trustees. This would be a next step once this report is reviewed and accepted.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 71 December 2016 6.3. Necessary Equipment

The upgrading of equipment in the Egyptian Theatre should be considered together with a full-scale rehabilitation of the Egyptian into a contemporary, versatile performing arts center. Responding to the new mission, the theatre will require upgrades related to:

• building and fire codes; • public health and safety; • electrical and mechanical systems (including HVAC) to facilitate preservation and year- round use; • stage, backstage and projection systems; • energy and environmental efficiencies; • ticketing and business management systems; • internet, web site, links, social media and communication systems (phones) • CRM data management and theatre management software; • office systems, equipment and furniture for staff work places.

6.4. Facility and Amenities

Again, a new mission and adoption of a new business model and organizational structure, together with a review of market conditions will drive the fine-tuning of the rehabilitation and expansion of the Egyptian into a performing arts center. It has been proposed that the following criteria govern the restoration and adaptive reuse choices.

• Safety and Code Compliance • Variable Function for Performing Arts and Film • Operating Efficiencies to Minimize Overhead • Historic Preservation • Patron Comfort and Convenience • Cost and Cost Effectiveness

To upgrade the Egyptian Theatre to contemporary use and maximize the versatility, utility, efficiency and safety of the center, the following areas will have to be examined:

• Front of House – foyer, lobby, lounge – square footage and circulation are public safety issues; adequate washrooms is a code issue; improved concessions is a hospitality and earned revenue issue • Auditorium – adequate barrier-free provisions and historically compatible technical positions are required • Stage – must maximize playing space and circulation with a crossover and wings, rigging updates should be considered • Backstage – loading docks and barrier-free artist security and services are required • Secondary Venues – provision of secondary venues such rehearsal, studio, screening and/or event space must be considered in response to serving a new mission and business and earned revenue opportunities • Administration – accommodation must be developed for staff offices

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 72 December 2016 6.5. External Resources

The conversion of the Egyptian Theatre into the Egyptian Performing Arts Center must involve leadership from the City of DeKalb, the University, the DeKalb Arts Community Stakeholders, Downtown Stakeholders, the County and the State Historic Preservation Organization.

The performing arts center will be serving a broader constituency than performing arts audiences and artists. It will be a major icon and catalyst for economic impact within the City and should be treated as such.

Factors which may have to be addressed through the planning process include

• city transit and shuttles between the University and downtown, • street directions and street widths, • parking options, • collective marketing, • incentives for the development of downtown visitor lodging.

DeKalb currently has a fine selection of downtown restaurants but the development of a theatre inevitably brings greater commercial interest in hotel, restaurant and boutique retail development.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 73 December 2016 6.6. Resource Identification As a small, volunteer-led theatre organization operating a mid-sized theatre with a budget of less than $500,000, the Egyptian is extremely vulnerable. With a budget of less than $1 million it would also be vulnerable. We believe it will start to become more stable and sustainable as its annual budget starts to exceed $1 million with annual operating grants from the City of $250,000 that can leverage matching private contributed revenues. Annual budgets ultimately will reflect the range of programming, audience and donor support the organization has attracted.

The Egyptian Theatre as currently managed is not likely to achieve significant and sustainable increases in operating resources, through no fault of its current ownership, governance or management. The theatre needs greater subsidy and to be reconceived as the Egyptian Center for the Performing Arts to stand a good chance of growing into a $2 million per year operation within the next seven years.

This route requires an investment of leadership and facilitation of professional resources and financing by the City government. Recruitment of leadership from the University, the County and the Historic resources community and highly experienced historic theatre architectural and management consultants are necessary to shepherd local theatres projects skillfully and cost effectively.

The next step requires an architectural feasibility study to determine what is required to preserve the Egyptian Theatre and adapt it into a performing arts center. A detailed building program, architectural concept, capital cost estimate, schedule and project plan is the next step. A theatre is a major cultural institution not unlike a library with the bonus of having a greater measurable economic impact.

In addition, a project management budget is required that may include maintenance of theatre staff throughout the rehabilitation period or support for the operations through the construction period. Ideally, the future staff leadership would be in place throughout the transition and construction. All other management staff should be engaged at least a year before opening and part-time staff trained and ready several months in advance. The project management budget can be 25% to 50% of the construction budget and requires careful management to maximize potential services in kind and seconded services.

Finally, a consistent operational investment facilitated by City, State and/or Foundation resources is an important investment into public oriented programming. It has also proven to leverage private sector investment, providing confidence in the community that the center is a worthwhile and stable institution worthy of charitable support. People understand the difference between a book store and a library and contribute accordingly. People don’t necessarily understand the difference between a commercial theatre and a public performing arts center and some work has to be done to make the potential and the benefits clearer. Creating a programming reserve and annual maintenance and operating support will be necessary. A $500,000 programming reserve and annual operating support makes it possible for the theatre to absorb risks and make the facility available at affordable rates to community user groups.

Given the significant investment of expertise and financing the City will have in this project, it only makes sense that the future asset be owned and controlled by the City. As the DeKalb public have declared, the Egyptian is a major icon and puts the city on the map nationally. Its future and development are synonymous with the future of DeKalb.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 74 December 2016 7.0 FINANCIAL AND CULTURAL IMPACT

Measuring the economic impact of the arts and, particularly, the performing arts, has been the subject of numerous tests and studies since 1966. While the intrinsic benefits of the arts have been reason enough to justify public investment in the arts for several thousand years, there has been a 20th century trend toward rationalizing this investment through economic impact multipliers. These estimates go beyond the simple yet profound observation that where there is interaction, there will be trade.

Before starting down this slippery slope of economic multipliers, it is important to remember that cultural pursuits, like education, return rewards far greater than their costs and are just as difficult to accurately evaluate. The “conventionalist” definition of economic impact relates to the contribution of the arts to the level of economic activity in a community, region or nation. In this respect the objective of an economic impact study is to demonstrate the “dollar and cents” contribution of the arts.

Economic impact is best measured with actual figures after at least one full year of operation, however, once a pro forma operating scenario is generated, estimates can be provided accordingly. In general terms, the economic impact of this type of theatre would normally encompass the following:

1. generate ancillary spectator expenditures on restaurants, babysitters, parking, dry cleaning, gasoline 2. deposit circulating income on the community’s local economy 3. contribute to the national economy 4. extend the 9 to 5 business hours of the downtown core and act as a catalyst for ancillary services 5. extend the length of stay and expenditures of visitors who patronize the theatre 6. attract new visitors to DeKalb who are oriented to cultural vacations 7. complement the local museums to create a destination package which will increase traffic to all local attractions 8. reassert the viability of downtown locations for small business enterprises which cannot compete in malls 9. increase the attractiveness of the city to prospective residents such as corporate employees, professionals, educators, high tech consultants and all other members of the “creative class.” 10. Help to attract and retain students at Northern Illinois University and Kishwaukee College.

The League of Historic American Theatres has borrowed research from Americans for the Arts to calculate the impact of a single historic theatre on a small community (of less than 50,000): • Sustain 27 full-time equivalent jobs • Create $950,000 in total expenditures • Generate $84,000 in revenue for state and local governments • Add $568,000 to household incomes in your community

Illinois estimates a $27 of economic impact on each dollar of culture spending: • Current average Egyptian budget $337,000 x 27 = $9,099,000 • Recommended starting annual budget scenario $1,000,000 x 27 = $27,000,000 • Optimum annual budget scenario $1,900,000 x 27 = $51,300,000

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 75 December 2016 Current (2014-15) Minimum Recommended Optimal Budget 304,000 1,000,000 1,000,000 1,900,000 Paid Attendance 18,000 95,000 95,000 150,000 Seed Funds (One Time Only) n/a 500,000 500,000 500,000 Annual Subsidy 0 200,000 200,000 250,000 Capital Investment 100,000 annually 15,000,000 15,000,000 15,000,000 State and Local Tax Revenue 84,000 84,000 168,140 FTE 4 should be 8 27 27 47 Household Income Impact 182,240 568,000 568,000 1,200,000

The Value of the Arts and Culture Field in Illinois: A Social Return on Investment Analysis, March, 2015 Key Findings

Almost $1.9 billion is invested in over 1,397 Illinois nonprofits that do arts and culture work, and those groups engage individuals over 38 million times each year. Only 7% of that investment is from public sources, and the remainder is from private sources like foundations as well as earned income from ticket sales, membership dues, and the like. What does this investment in Illinois’s arts and culture field yield? • Every dollar invested into the Illinois nonprofit arts and culture field generates an estimated $27 in socio-economic value. • $23 of this socio-economic value accrues to individuals participating in nonprofit arts and culture programs, events, and activities. • $4 of this socio-economic value accrues to society through increased tax revenue, increased spending in the state due to arts and culture jobs, and the ripple effect of audience spending in Illinois. The real utility of an SROI lies in its ability to reveal if and how our investments into programs pay off. And on that, this SROI of the nonprofit arts and culture field in Illinois is clear: investing in arts and culture yields dividends.

Americans for the Arts have done extensive research on the impact of the arts and find: • Arts Drive Tourism – cultural tourism is a growth industry • Arts Mean Business – second only to jobs in education in Illinois and growing • Arts Have Social Impact – they lower crime and poverty rates • Arts Improve Healthcare – shorter hospital stays, lower medication • Arts Promote True Prosperity – they bring us together to share • Arts Strengthen the Economy - $704 billion of US economy, 4.2% of US GDP, per 2013 AFTA • Arts Are Good for Local Merchants – the multiplier effect • Arts Are An Export Industry – movies, theatre, art, jewelry • Arts Spark Creativity and Innovation – a top five skill set sought • Arts Improve Academic Performance – and lower drop-out rates

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 76 December 2016

Utah’s Earnings and Employment Multipliers

Several economic and employment multipliers were developed for Utah’s nonprofit cultural sector by the Western States Arts Foundation: The Economic Impact of Utah’s Cultural Sector.

The study used an earnings multiplier of 2.2641 on wages and benefits and an employment multiplier of 2.0098 to calculate the number of subsidiary jobs that are created in support of the cultural sector’s business activities.

The multiplier calculating the indirect and induced economic impact of a capital campaign is a final-demand earnings multiplier of .7512, and the multiplier calculating the employment impact of construction jobs is 30.3/1,000,000.

According to multipliers identified by the Western States Arts Federation and based on the

Minimum budget scenarios:

• The total direct, indirect and induced economic impact of the Egyptian’s wages is likely to be $750,000.

• The number of subsidiary jobs that would be created in support of the Egyptian’s activities would be up to 40 jobs. • The economic and employment benefit of construction due to a capital campaign would be between $11,250,000 and $14,270,000. • The total employment impact would be between 450 and 570 jobs.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 77 December 2016 8.0 FINAL CONCLUSIONS AND RECOMMENDATIONS/EXECUTIVE SUMMARY

Egyptian Theatre, City of DeKalb, Business Feasibility Study Executive Summary Draft of Key Findings and Conclusions by Janis Barlow

From the Introduction: DeKalb is the cultural hub of DeKalb County. Art galleries, Kishwaukee Symphony Orchestra, the Municipal Band, live theater, dance, arena concerts, independent films and championship sports are all in DeKalb’s back yard. DeKalb has 44 area parks and 3 major bike trails. In January, 2016, the City of DeKalb advanced to the semifinals in the America’s Best Communities competition as one of 15 communities nationwide chosen out of 135, and the only community in Illinois.

Opened in December, 1929, the Egyptian Theatre is a national historic treasure and one of the finest historic theatres and regional movie palaces remaining in America. It is potentially a significant architectural and program attraction for the City of DeKalb. In considering future funding needs for the 1,397-seat theatre’s preservation, capital development needs and operations, a rigorously conducted, professional, objective analysis and demonstration of possible programming and operating models is a vital first step.

A unique, not-for-profit business model responds to the community demands and conditions and opportunities in the greater DeKalb market. The successful program is derived from a clear understanding of the market area – the supply and demand for services and facilities, the community’s perceived needs and aspirations, trends in the theatre fields and the conditions, objectives and measures of success for a new programming, operations and ownership model.

Architectural Summary The Egyptian Theatre’s basic design reflects the function and efficiency of early 20th century vaudeville theater which featured two-dimensional stock scenery and “photoplays.” The quality of the building and the amazing design of the structure is the reason the Egyptian is still available today for rehabilitation and programming to serve the next 100 years as a contemporary performing arts center.

The façade, entryway and auditorium are the superb, character defining elements of this iconic building. It is time for some structural repair to the façade, but the basic bones of the load bearing masonry wall structure are excellent. It now requires mechanical and electrical upgrades to preserve its architecture, upgrades to the health, safety and hospitality functions for its audiences and efficient contemporary backstage and loading dock additions to give the Egyptian Theatre the prominence in the performance field that it currently holds in the architectural field.

Programming Options At 1,397 seats, the Egyptian Theatre is the size of a contemporary presenting facility for its regional market. It is too large for most film and community theatre programming even if combined with a part-time year of comedy and musical acts. To accommodate a broader range of touring professional work that is available to the Egyptian such as touring theatre, musical theatre, contemporary dance and variety, a number of improvements to the theatre are required.

In addition to the Egyptian’s functional limitations in its front of house and backstage areas, the theatre (unlike most vaudeville houses of its period) was not originally equipped with air conditioning as a result of cuts made to its building plan during the stock market crash of 1929. In today’s market and climate, the lack of air conditioning renders it virtually unusable during the summer months. The Egyptian can only plan for an eight-month season and limit itself to film,

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 78 December 2016 community theatre or special events, comedy, and musical acts. This current program is unsustainable.

Current Operations The Egyptian Theatre was saved from becoming a parking lot and partially restored between 1978 and 1983 by a local group of citizens who formed Preservation of the Egyptian Theatre, Inc. (P.E.T.) and received a grant from the state. The ownership, governance, management and vision of the Egyptian Theatre has continued to be a community-based one under P.E.T. The board president is the chief executive of the corporation; the secretary records the minutes; and the treasurer has the care and custody of all the funds of the organization. It is essentially what is characterized as “a working board.” The employee hired as full-time, operating head of the theatre is an ex-officio member of the board without voting privileges. Currently, there is a board of eleven and a staff of three and a half full-time equivalents.

P. E.T. Boa rd of Directors

Executive Director Full-Time

Box Office Custodian / House Manager Venue Technician Manager Maintenance Part-Time Part-Time Part-Time Full-Time Hourly

P.E.T. Mission and Bylaws The purposes of P.E.T. are to purchase, repair, maintain, restore, operate and program the Egyptian Theatre, to raise funds and “to maintain and eventually to restore the original Art Deco-Egyptian Revival décor.” This is typical of the initial community-based “preserve and protect” orientation and goal of the stewards to these prized historic treasures in our communities. Eventually, as the scale and potential of the programming, operations and maintenance in a contemporary context becomes clear and a full rehabilitation is contemplated, the orientation shifts to a business mission. The business mission serves audiences and/or performing arts organizations and preservation of the building becomes a continuing condition of the operation. A rare exception occurred in Columbus, Ohio in 1977 when a local group seeking to save the splendid Ohio Theater chose a business mission rather than simply a preservation mission. They called themselves the Columbus Association for the Performing Arts. That focus has allowed them to grow to acquire and restore two other historic theatres and operate six more.

Often these theatre buildings have been saved by the work of dedicated community volunteers and extraordinary staff members doing multiple jobs who are virtually irreplaceable under the conditions under which they work. These citizens have created this opportunity to transform this building into a future cultural institution for DeKalb.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 79 December 2016 Current Programming The Egyptian provides an important service to local arts organizations that rent the theatre between 66 and 88 days of the year, primarily on weekends during the school year, selling 24-30% of the house. The Egyptian itself has presented or co-presented performances between 3 and 8 times per year, selling between 31-61% of the house, and screened 16 to 32 films per year usually selling less than 10% of the house. The Egyptian works mainly with a local presenter and has had no risk capital to select and promote the ideal programming to brand the Egyptian and DeKalb.

The Egyptian’s seating capacity is too large for most of its current uses. In theatre, there is no such thing as one-size-fits-all. The cost-efficient trend in contemporary movie theatre and performing arts centre management is to have one staff managing multiple venues of different sizes. The Egyptian Theatre’s audience services cannot currently safely and effectively accommodate sold- out audiences in such a large theatre.

Budget Analysis Not for profit theatre budgets and community impact are a function of the theatre seating capacity, programming capacity, the business model, the market area, audience hospitality capacity, ticket pricing, backstage capacity and efficiency, ancillary income, and private and public operating financing.

The Egyptian’s annual budget in the last five years has ranged between $280,000 and $375,000. This is extraordinarily low for a professional operation in a 1,397-seat theatre. After 30 years of operation, one would expect to see a $1 million a year operation at least. The theatre maintains very modest ticket pricing and a low percentage of capacity sales and consistently earns over 90% of its budget through earned income. The average not-for-profit theatre in America operates on a 50/50 earned to contributed income ratio (Contributed income includes private fundraising and public grants). Earned to contributed income can fluctuate widely from 30/70 for symphony orchestras to 80/20 for presenting theatres. The Egyptian receives no annual operating income from any government sources or arts councils and has limited resources from which to fundraise. A capital maintenance grant from the City of up to $100,000 per year allows Band-Aid work on repairs, this funding from TIF will expire in 2021. For the most part, the Egyptian is stuck in a cycle of poverty which is slowly eroding the asset.

The DeKalb and Egyptian Market While the population of DeKalb County is over 100,000, the market area for theatre activity in a facility as unique as the Egyptian Theatre should be at least an hour’s drive, provided the facility is up to contemporary theatre standards. That market area encompasses two million people. If a unique program is developed the market area can be far larger. As it is with its limited program, the Egyptian is attracting a strong audience from DeKalb and Sycamore and well beyond. Visitors from a distance increases the likelihood that these people are shopping, dining, buying gas and staying overnight in DeKalb hotels. Despite the limited programming, DeKalb is already drawing significant audiences from the east.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 80 December 2016

DeKalb’s local growth rate indicates a need for more stimulus to grow. Performing arts centers have traditionally been unrivalled catalysts for economic development and employment, and draw relocation among those with higher levels of educational achievement, those in managerial, professional and creative occupations. Performing arts are also a powerful tool for encouraging inter-racial cooperation.

Current Cultural Activities DeKalb has a range of cultural institutions: a beautiful new library, a heritage museum, a symphony and theater and ballet companies. The Ellwood House Museum, Northern Illinois University’s Art and Anthropology Museums, and Kishwaukee Symphony Orchestra contribute to the cultural environment and the potential for cultural tourism. The newly organized DeKalb Area Arts Council established an Arts, Culture, and Entertainment Corridor (ACE) along Lincoln Highway in early 2016. There are also a number of arts organizations in DeKalb County, and in close proximity to the City of DeKalb, that enrich the cultural environment, such as The Kishwaukee Valley Art League and Midwest Museum of Natural History located in Sycamore. The City hosts special events and festivals throughout the year, celebrating its culture. Leveraging all of the DeKalb area resources led by a unique national historic treasure such as the Egyptian Theatre would be a powerful attraction to cultural tourists.

Performing Arts Venues Other than the 1,397 seat Egyptian Theatre, the only other public theatre in DeKalb is the 164 seat Stage Coach Players. Academic facilities include venues at Northern Illinois University, DeKalb High School and Sycamore High School which have limited availability. The Egyptian Theatre has a

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 81 December 2016 unique seating capacity size advantage as a mid-sized presenting house throughout its region as illustrated by the following inventory of theatres by category:

Name Incubator Community Resident Small Mid- Size Large 99-249 250-399 400-799 800-1199 1200-1799 1800+ Sandwich Opera House 310 Metropolis Theatre 329 Normal Theatre 385 Woodstock Opera House 420 The Grand Theatre 676 Elgin Community College Arts 168 662 Center Raue Center 780 Batavia Fine Arts Center 245 890 Arcada Theatre 900 Norris Cultural Arts Center 1,000 Hemmens Cultural Center 1,200 Egyptian Theatre 1,397 Paramount Theatre 173 1,888 Coronado Theatre 2,200

The Paramount in Aurora is an excellent local example of the growth potential of an historic theatre project. In 1978, the Paramount virtually doubled its square footage from a 36,700s.f. vaudeville theatre to a 66,000 s.f. performing arts center on a rehabilitation budget of over $3 million. It now rents, presents and produces performing arts and screens films to an audience of 300,000 per year, hosting over 300 events in two venues. It employs 29 full-time and 100 part- time staff, sustains a $14,000,000 annual budget and is supported with over $500,000 per year in casino head tax. The Paramount has grown into a major cultural, social and economic institution for the City of Aurora.

Public Survey Summary A public survey of perceptions of the Egyptian Theatres was issued to citizens of DeKalb from April 4 to 15, 2016, which resulted in a remarkable 482 responses.

96% of the respondents identified as audience members, 46% as taxpayers and 20% as volunteers. About half of those surveyed had been to the theatre five times or more. The most frequent “first words that come to your mind when someone mentions the Egyptian Theatres” were: • Historic • Beautiful • Historical • DeKalb The Egyptian is indelibly linked with the identity of DeKalb to the extent that 76% of respondents considered community identity as the value of the Egyptian, ahead of economic impact which 53% considered its value. The value of the Egyptian Theatres was primarily seen as entertainment, recreation and tourism. As a result of the value placed on the Egyptian Theatre, 88% of respondents thought that the theatre warranted municipal support.

Potential User Survey Summary Forty surveys were provided to potential or current user groups and sixteen groups responded with two groups submitting two surveys each and eleven of which are currently using the Egyptian Theatre. Most of the groups are producing plays/drama, classical and contemporary music

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 82 December 2016 concerts and dance events. Six of the groups noted a need for a theatre in DeKalb between 300 and 599 seats.

The respondents indicated that theatre design issues include the size of the stage, the sound amplification system, the in-house theatre lighting system, loading bay access, stage tower rigging, number of dressing rooms, parking, air conditioning and handicapped accessibility. Nine respondents indicated they required rehearsal or dance studio space on site. All respondents indicated that they would be a prospective user of the Egyptian if it met their organization’s needs.

Operating Potential and Programming Plan Summary The future success of the Egyptian Theatre as a performing arts center will require a rehabilitation, a new program, operating financing and an experienced, professional theatre program designer/booker. Its future program will be a balance of increased professional programming, collaboration with Northern Illinois University, and community participation. In a rehabilitated facility, the Egyptian will be able to present professional theatre, dance, music, variety and family programming with ticket pricing averaging between $10 and $75 and attracting houses of 60% to 75% capacity or more. In addition to Egyptian presentations, the basic program anticipates film exhibition, NIU collaborations, community rentals and special attractions. The number of ticketed events will rise from 80 per year to at least 160 and attendance from 28,000 to at least 75,000.

A minimum annual budget was developed, indicating that it could start as low $100,000 and eight FTEs. The budget would also require a cash reserve maintained at $500,000 to secure bookings. With an annual operating investment of $250,000 from the City of DeKalb and a $1million annual operating budget to start, the theatre will be in a better position to finance programming and marketing that could swiftly grow it to a $2 million annual operation and a staff of 16 FTEs.

Egyptian Theatre Growth Projections

Current 5 Yr. Average Minimum Projections Maximum Threshold

Income $300,000 $1,000,000 $2,000,000 Program ET Presentations of P.A. 7 31 55 E.T. Film Screenings 25 40 52 NIU Collaborative - 24 28 Rental Days* 75 67 90 Special Attractions 8 7 10 Total Events 115 169 235 Total Paid Attendance 18,000 77,000 140,000

*Rental days represent the Egyptian Theatre auditorium only. Currently, and in the minimum scenario, rental days are primarily community user groups rentals. With a rehabilitated theatre, it is expected that there may be more private, corporate and commercial rentals of the theatre.

The theatre should continue to be proactive in planning events that involve the ACE Corridor and include the STEAM Learning Center Project. It may be advisable to have the theatre be the home of highly professional cultural tourism marketing for the community.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 83 December 2016 Summary of Operating Resources A new strategic orientation to the performing arts center will require a professionally facilitated strategic planning process engaging the Egyptian Theatre’s major stakeholders and implementing policy, ownership, governance and management changes.

To leverage the theatre’s full potential, it should be reconceived as the Egyptian Center for the Performing Arts. This direction will require an investment of leadership and financing by City government. Recruitment of leadership from the current Egyptian Board, the University, the County and the local Historic Resources community, as well as highly experienced historic theatre architectural and management consultants are necessary to shepherd the theatre project skillfully and cost effectively. The current Egyptian staff will require reorganization and expansion to successfully expand programming, audience relations, marketing and development and resource management.

An upgrade to the Egyptian Theatre should be planned and executed that takes into account: • Safety and Code Compliance • Variable Functions for Performing Arts and Earned Income • Operating Efficiencies to Minimize Overhead • Historic Preservation • Patron Comfort and Convenience • Cost and Cost Effectiveness • Downtown Planning and Circulation

Ownership, Governance and Management Objectives Summary Given the prominence of the Egyptian Theatre as a beloved icon of the citizens of DeKalb, a potentially powerful catalyst for socio-economic development and a national historic site requiring public investment, it is recommended that the ownership be transferred to the City of DeKalb. City commitment and investment is likely to help leverage private investment and donors may be more confident if the asset is secured in the public trust.

The governance trend for sustainable Centers for Performing Arts is a public-private sector partnership where the asset is supported by public funds and the operation is governed by a private not-for-profit which entrusts a professional Chief Executive Officer (or Officers) to fulfill the mission and develop budgets for approval and implementation. The board would be conscripted from leaders among the private and public sectors with financial, legal, property, educational and political acumen and they would work with the professional staff to further develop policies to guide the operation of the theatre. The CEO will be responsible for fulfilling corporate responsibilities and prepare and maintain budgets, cashflow and financial statements for board and audit scrutiny.

In sum, to meet the optimum sustainable development aspirations for the Egyptian Theatre, it is recommended that a combination of City ownership for stability, public-private community governance for wisdom, growth and arm’s length accountability, and professional staff under an experienced Executive Director would be ideal complement for a DeKalb Performing Arts Center.

Financial and Cultural Impact At this very early stage of planning the City might be expected to facilitate a significant capital investment for the adaptive reuse of the Egyptian Theatre and a significant investment from the private sector. A theatre is a major cultural institution not unlike a library with the bonus of

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 84 December 2016 having a greater measurable economic impact.

At this very early stage of planning it is difficult to predict what the scope of work should be until a building program is extrapolated from the anticipated performing arts center program aspirations and an architectural concept is developed and costed.

Summary of Consultant Recommendations This business assessment of the Egyptian Theatre has established that it is underachieving for a number of reasons and, with greater support from the City of DeKalb, it has the potential to significantly increase its socio-economic impact on the City of DeKalb.

Changes Required to Ensure the Egyptian Theatre’s Future Success 1. Approve in principal the directions implied in the business planning assessment study for the Egyptian Theatre and approve the extension of the study to further business, architectural and project planning. (currently costed at $75,000) 2. To kick off the next study, the consultant will facilitate planning sessions and Invite the current Egyptian board, staff and stakeholders to collectively establish a new theatre mission, vision and values that align with City goals and fully utilize the asset. 3. Continue to serve local resident theatre companies of the Egyptian, preserve the historic elements of the Egyptian Theatre and seek ways to leverage its significance nationally and regionally. 4. Better leverage the 1,397 seating capacity of the Egyptian and its potential to generate income for the community by developing a plan for a professional performing arts center that will attract audiences from throughout the region and beyond. 5. Pursue a cost-effective retrofit design and upgrade from theatre experts to turn the Egyptian vaudeville facility into a regional performing arts centre that has greater programming flexibility and income potential and maximizes its 1,397 seating capacity. 6. Transfer the ownership responsibility to secure it as a prominent public asset and icon of the City of DeKalb – which has the professional capacity to supervise significant capital upgrades and secure public funding for a major public project. 7. Expand the governing structure of the Egyptian from a community-based volunteer board of directors to a broader-based public-private governance structure. 8. Expand the management structure to assume full professional responsibility for the development and execution of an expanded programming and operating structure.

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 85 December 2016 9.0 APPENDIX – AVAILABLE SEPARATELY

Includes: • Research Index • Audience Survey Results • User Survey Results • Power of Historic Theatres • Sample Programming of Similar Theatres in Size and Community o Flynn Center for the Performing Arts o The Grand 1984 Opera House o Ritz Theatre o Bardavon 1869 Opera House & Ulster Performing Arts Center • Tickets Sold 2013, 2014, 2015 • Economic Impact o Canada Council’s Short-Hand Technique o Value of Nonprofit Arts & Culture in Illinois – Key Findings

DeKalb Egyptian Janis A. Barlow & Associates BUSINESS FEASIBILITY STUDY 86 December 2016 Exhibit B

Egyptian Theatre Economic Impact Study

Summary

In order to better understand the impact that the Egyptian Theatre (Theatre) has on the downtown, the Community Development Department partnered with volunteers at the Theatre to conduct surveys of patrons and performers in an effort to measure the economic value provided to surrounding businesses. Intended to be supplementary information to the work done by Janis Barlow & Associates, this report aims to provide a “snapshot” of the economic impact of the Theatre as a foot-traffic driver. Anecdotally, downtown merchants have always said that the “downtown is a different place when there is an event at the Egyptian.” To capture whether there is any truth to that statement, a brief survey was conducted between November 18, and December 17, 2016. It should be understood that this “study” would not hold up to academic standards of survey methodology or calculations of true economic impact. However, results from the survey do support the idea that the Theatre is an economic engine for the downtown. Further analysis would need to be conducted using rigorous survey techniques, discounting, and accounting for any multiplier effects to quantify the true economic value of the Theatre.

A total of 89 respondents answered 8 questions, two of which were follow-up questions. Admittedly, a major flaw in the survey was the lack of accounting for whether an individual was answering the questions or if a group was answering the questions. General observations of survey takers indicated that a majority of those interviewed were couples, or pairs of friends. For this reason, each calculation provides a range for the estimated impact. The high end of the range assumes that those answering the survey were answering for themselves. The low end of the range was calculated by dividing the high end in half, assuming that the survey taker was answering the questions for the pair of attendees. It is likely that the true impact is somewhere in the middle of the range. This is supported by the Americans for the Arts Economic Impact Calculator, which estimates the impact of the Egyptian at roughly $1.9 million annually.

The findings from the survey indicate that the estimated direct impact that the Theatre currently has is somewhere between $1.35 million and $2.7 million annually. These figures represent money spent by visitors to the Theatre on surrounding businesses. The largest impact was on the restaurant industry, which accounted for 40% of the total dollars spent by those visiting the Theatre. The strong impact that the Theatre has on the food and beverage industry indicates what the “Egyptian Experience” might be, which is to have dinner and drinks and then see a show.

Current Economic Impact Additional Impact Potential Total Impact Category Low High Low High Low High Food & Beverage $544,344 $1,088,687 $939,866 $1,879,732 $1,484,210 $2,968,419 Retail & Service $286,377 $572,753 $494,459 $988,917 $780,836 $1,561,670 Gasoline $237,981 $475,962 $410,899 $821,798 $648,880 $1,297,760 Overnight Accommodation $284,378 $568,756 $491,008 $982,016 $775,386 $1,550,772 Total $1,353,079 $2,706,158 $2,336,232 $4,672,463 $3,689,311 $7,378,621

In order to calculate the potential impact that the Theatre would have if it were to successfully evolve into a regional performing arts center, the projections provided by Janis Barlow & Associates were used. This projected an additional 49,298 visitors to the Theatre over 2016 figures. Using this figure, the potential additional revenue that could be brought to surrounding businesses ranged from $2.34 million to $4.67

1 million, with a midpoint of $3.5 million. This would bring the total potential direct impact to somewhere between $3.69 million and $7.38 million. The actual impact on the DeKalb economy would likely be significantly higher, once the multiplier effect was considered.

Background

Surveys were conducted at the Egyptian Theatre between November 18, and December 17, in an effort to quantify the economic impact of the Theatre on the local economy. Events between these dates included the OCB Midwest States regional bodybuilding competition, a showing of the movie “It’s a Wonderful Life” and the Christ Community Church Holiday Concert.

Data was collected digitally using the Qualtrics Survey Tool, with respondents being interviewed by volunteers. Prior to the survey being conducted, respondents were told that the purpose of the survey was to measure the economic impact of the Egyptian Theater on the surrounding businesses. A total of 89 surveys were collected. The following questions were asked:

1.) What is your zip code? a. Fill in the blank 2.) Are you a performer, volunteer, or patron? a. Multiple Choice 3.) Did you purchase any food or beverage prior to your visit to the Theatre? a. If Yes, how much did you spend on food and drink? i. $1-24 ii. $25-49 iii. $50-74 iv. $75-99 v. $100-150 vi. $151+ b. If No, do you anticipate going out after the show? i. Definitely Yes ii. Probably Yes iii. Maybe iv. Probably No v. Definitely No 4.) Did you make any retail purchases locally prior to the show? a. If Yes, how much did you spend? i. $1-24 ii. $25-49 iii. $50-74 iv. $75-99 v. $100-150 vi. $151+ b. If No, do you anticipate going out after the show? i. Definitely Yes ii. Probably Yes

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iii. Maybe iv. Probably No v. Definitely No 5.) Do you anticipate filling your car with gas before leaving DeKalb, or did you do so prior to the show? a. Multiple Choice (Yes, Maybe, No) 6.) Did you require overnight accommodations at a local hotel/motel? a. Multiple Choice (Yes, No)

Calculations and Results

Question 1: What is your zip code?

The 60115 (DeKalb) zip code was the most common answer provided to this question. Of the 89 responses, 31 of the respondents were DeKalb residents. The next most common answer was 60178 (Sycamore) with 8 responses. The next most common answer was a three way tie between 60175 (St. Charles), 60134 (Geneva), and 60135 (Genoa), with three responses each.

Question 2: Are you a performer, volunteer, or patron?

3 Question 3: Did you purchase any food or drinks prior to attending the Theatre?

This questions was posed in two parts. Respondents answering ‘Yes’ were then asked how much their total bill came to, with a multiple choice options providing ranges of $25 increments. Respondents answering ‘No’ were asked if they anticipated going out afterwards. Although some ‘No’ respondents did anticipate going out for food or drinks after the show, their economic impact was calculated as $0. Therefore, it is likely that the economic impact of patrons is actually higher than calculated, by a small margin.

With ‘Yes’ responses being provided a range in the follow up question, rather than asking a specific dollar amount, a midpoint of the range was used to calculate the value of all responses in a specific range. The frequency of responses of a given range was multiplied by the midpoint, followed by a summation of all ranges. Finally, the total summation was divided by the number of total respondents. The following are three categories of responses: All Responses, DeKalb residents (those answering 60115 to Question 1), and non-DeKalb residents (those answering anything other than 60115 to Question 1).

Non-DeKalb Residents DeKalb Residents Range Freq Midpoint Freq x Mid Range Freq Midpoint Freq x Mid $0 14 0 $0.00 $0 12 0 $0.00 $1 - $24 6 12.5 $75.00 $1 - $24 7 12.5 $87.50 $25 - $49 19 37 $703.00 $25 - $49 3 37 $111.00 $50 - $74 8 62 $496.00 $50 - $74 5 62 $310.00 $75 - $99 7 87 $609.00 $75 - $99 2 87 $174.00 $100 - $150 2 125 $250.00 $100 - $150 1 125 $125.00 $151+ 2 151 $302.00 $151+ 1 151 $151.00 Total 58 $2,435.00 Total 31 $958.50 Impact per respondent $41.98 Impact per respondent $30.92

All Responses The economic impact that non-DeKalb residents visiting Range Freq Midpoint Freq x Mid the Theatre have on local restaurants is significantly $0 27 0 $0.00 higher than DeKalb residents. With 74.14% of non- $1 - $24 13 12.5 $162.50 DeKalb residents stating that they had food and drinks $25 - $49 22 37 $814.00 before attending the Theatre, it shows that the “Egyptian experience” is more than just a show to visitors from $50 - $74 13 62 $806.00 outside the community. The half dozen restaurants $75 - $99 9 87 $783.00 within walking distance of the Theatre offer an $100 - $150 3 125 $375.00 opportunity to socialize prior to the show, which was $151+ 3 151 $453.00 evident during the survey process as most respondents Total 89 $3,393.50 were surveyed in pairs. Impact per respondent $38.13 Based on the projections provided by Janis Barlow & Associates, if the Theatre’s potential as a successful regional performing arts center were to be realized, the direct impact on local restaurants could be $939,866 - $1,879,732 in new revenue.

[Estimated Attendance (77,850 Section 4.5.4) – 2016 Attendance (28,552 pg. 23)] x $38.13

([Estimated Attendance (77,850 Section 4.5.4) – 2016 Attendance (28,552 pg. 23)]/2) x $38.13

4 Those that answered no to the original question were asked a follow up in regards to whether they anticipated going out after the show. Two-thirds of responses were either definitely not, or probably not. Of the remaining responses, the majority (6 of 9) answered definitely yes, they anticipated getting food or drinks after their visit to the Theatre.

Question 4: Did you purchase any retail or other types of purchases prior to your visit to the Egyptian Theatre?

The majority of respondents to this question answered ‘No’ (63/89). This could potentially be due to the business hours of surrounding retail shops, compared to the start times of shows at the Theatre. When filtering responses by DeKalb residents and non-DeKalb residents, the percentage of ‘Yes’ responses is higher for DeKalb residents.

DeKalb Residents: 41.94%

Non-DeKalb Resident: 22.41%

Based on how this question was asked, it is impossible to determine whether the retail purchases of residents are directly linked to their attendance at the Theatre. For that reason, the economic impact on retail should be discounted, though to what extent, is unknown. For the purpose of this study, no discounting took place.

The following charts provide the calculations for impact on the local retail sector:

All Responses Range Freq Midpoint Freq x Mid $0 63 0 $0.00 $1 - $24 5 12.5 $62.50 $25 - $49 9 37 $333.00 $50 - $74 2 62 $124.00 $75 - $99 3 87 $261.00 $100 - $150 2 125 $250.00 $151+ 5 151 $755.00 Total 89 $1,785.50 Impact per respondent $20.06 Non-DeKalb Residents DeKalb Residents Range Freq Midpoint Freq x Mid Range Freq Midpoint Freq x Mid $0 45 0 $0.00 $0 18 0 $0.00 $1 - $24 1 12.5 $12.50 $1 - $24 4 12.5 $50.00 $25 - $49 8 37 $296.00 $25 - $49 1 37 $37.00 $50 - $74 0 62 $0.00 $50 - $74 2 62 $124.00 $75 - $99 2 87 $174.00 $75 - $99 1 87 $87.00 $100 - $150 0 125 $0.00 $100 - $150 2 125 $250.00 $151+ 2 151 $302.00 $151+ 3 151 $453.00 Total 58 $784.50 Total 31 $1,001.00 Impact per respondent $13.53 Impact per respondent $32.29

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Based on calculations, the economic impact that non-DeKalb residents have is primarily on the food/beverage industry, compared to the retail/service sector. The dollars spent per respondent was $28.45 less in the retail/service sectors than in food/beverage.

Based on responses given by DeKalb residents, the impact on retail was higher for retail/service compared to food/beverage by the amount of $1.37. It is likely that this is due to general shopping habits associated with residents, and their ability to eat in their homes prior to the show. Further data collection would be necessary in order to more accurately quantify the economic impact on the retail sector that is explicitly correlated to attendance at the Theatre. Though this question is somewhat flawed, it does provide insight into what the “Egyptian Experience” currently is, and what collaborative marketing strategies may need to be pursued in order to leverage the Theatre fully.

Using the figure of $20.06 from All Responses, it is estimated that the economic impact on retail would be between $494,459 and $988,917.

High: 49,298 x $20.06 Low: 24,649 x $20.06

Of the 63 respondents that initially answered no to the question, only 7 (11.11%) answered positively that they anticipated shopping after the show. This is likely due to the show getting out well after closing hours of most local merchants.

Question 5: Do you anticipate filling your car with gas before leaving DeKalb, or did you do so prior to the show?

For the purpose of calculating the impact that gasoline purchases would have, without expressly asking for the fuel capacity of the respondent’s car and the type of fuel required, the figures of 15 gallon capacity and $2.25/gallon were used. Though the price of gasoline is currently higher than $2.25/gallon, it is impossible to predict where the price will be in a year or two. Though it will likely be higher, a conservative figure was used to establish a baseline. The actual impact could be up to 50% higher than calculations predict.

*Answers of ‘Maybe’ were not calculated

Non-DeKalb Residents DeKalb Residents Freq Midpoint Freq x Mid Freq Midpoint Freq x Mid $0 25 $0.00 $0 17 $0.00 15g@$2.25 28 $33.75 $945.00 15g@$2.25 13 $33.75 $438.75 Total 53 $945.00 Total 30 $438.75 Impact per respondent $17.83 Impact per respondent $14.63

All Responses Freq Midpoint Freq x Mid $0 42 $0.00 15g@$2.25 41 $33.75 $1,383.75 Total 83 $1,383.75 Impact per respondent $16.67

6

The overall impact per respondent was $16.67, with the impact of non-DeKalb residents being slightly higher than DeKalb residents by $3.20. It is also important to note that 52.8% of non-DeKalb residents anticipated purchasing fuel. This may be especially true for visitors coming from distances greater than 30 miles, which was indicated by Janis Barlow & Associates as being a potential target market and could be an opportunity for cross promotion. Using the value of $16.67, the potential impact of a regional performing arts center would be between $410,899 and $821,798

High: 49,298 x $16.67 Low: 24,649 x $16.67

Question 6: Did you require overnight accommodations at a local hotel/motel?

Of the 89 surveys conducted, 19 individuals stated that All Responses they required overnight accommodations, 18 of which Freq Midpoint Freq x Mid were non-DeKalb residents. This represented 31% of $0 70 $0.00 non-DeKalb residents that took the survey (58). In order $93.31 19 $93.31 $1,772.89 to estimate the economic impact this would have on the Total 89 $1,772.89 community, it was assumed that respondents were only Impact per respondent $19.92 staying for one night. The rate was calculated as an average of the current rates being charged per night between 7 hotels/motels in DeKalb and Sycamore, which ended up being $93.31. Based on these assumptions, the economic impact on the surrounding hotel/motel industry would be between $491,008 and $982,016.

High: 49,298 x $19.92 Low: 24,649 x $19.92

7

DATE: January 4, 2017

TO: Honorable Mayor John Rey City Council

FROM: Anne Marie Gaura, City Manager Cathy Haley, Finance Director Robert Miller, Assistant Finance Director

SUBJECT: FY2016 Management Letter and Comprehensive Annual Financial Report (CAFR).

I. Summary

Sikich, LLP has completed the FY2016 audit and will be presenting the Comprehensive Annual Financial Report (CAFR) to Council at their January 9, 2017 Regular meeting. This presentation usually takes place within six months of the end of the fiscal year, but due to the change in actuaries in FY2016, more time was needed by the actuary to fully understand the City’s post-employment benefits in order to prepare the Other Post- Employment Benefit (OPEB) report. This OPEB report is needed by the auditors in order to complete the CAFR. Deadline extensions have been requested and confirmed with the Government Finance Officers Association (GFOA), Illinois Comptroller, and DeKalb County.

II. Background

The CAFR for the fiscal year ended June 30, 2016 is being submitted to Council as mandated by both local ordinances and state statutes. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

Sikich, LLP have issued an unmodified ("clean") opinion on the City's financial statements for the year ended June 30, 2016. The independent auditor's report is located at the front of the financial section of this report.

Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it.

Also included is the Management Letter, which includes comments and suggestions from Sikich, LLP that are designed to assist in effecting improvements in internal controls and procedures. New comments were added during FY2016 based on the City’s change in auditing firms. Sikich, LLP provided a more in-depth look at the City’s internal controls and their comments are noted in the Management Letter. It is the City’s intention to clean up many of the comments by the end of FY2016.5, however with the short fiscal year, some of the items may get addressed in FY2017.

III. Community Groups/Interested Parties Contacted

City staff worked with DeKalb County to pull together some of the statistical data provided at the end of this report. Confirmation letters were also sent out to all applicable financial institutions and other vendors that the Audit Team needed third party verification of, which included the City’s Balance Sheet and Income Statement ending balances.

The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2015. This was the 22nd consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. It is thought that the City’s current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and it will be submitted it to the GFOA to determine its eligibility for another certificate.

IV. Legal Impact

Local ordinances and State statutes require the City to issue a report of its financial position and activity annually and that this report be audited by an independent firm of certified public accountants, which the City has complied with during the audit process.

V. Financial Impact

This is strictly a report for fiscal year end June 30, 2016 and has no financial impact on the City. There are some positive financial changes that took place during FY2016 that are worth noting. Excluding amounts restricted, committed, or assigned for various purposes, the unassigned fund balance in the General Fund was 28.26% of actual expenditures for FY2016 or $9,123,076. Because of the City's conservative approach and prudent fiscal spending, this was a 4.82% increase over last fiscal year and a 7.87% increase from the prior fiscal year. This is the strongest the General Fund fund balance reserves have been in the last 11 years.

Page | 2 Also of note are some of the processes utilized by the City to accomplish its long-term financial planning.

1. The City began implementing a 10-year Strategic Plan to ensure that its long-term goals are reviewed, updated and implemented on a continual basis.

2. The City has established several key written financial policies including a Budget policy, a Reserve and Fund Balance policy, a Revenue and Expenditure policy, an Accounting, Auditing and Financial Reporting policy, a Debt Management policy, and an Investment policy.

3. The City adopted a new Purchasing Manual to establish guidelines for City staff in procuring goods and materials in a manner that is consistent with the highest standards of public service in obtaining quality goods and services at the lowest possible price.

4. The City adopted a 10-year capital improvement plan for the Water Fund and structured the necessary fees in order to maintain the Water Division’s capital equipment and infrastructure, and maintain or enhance the current levels of service.

5. The City adopted a five-year Capital Improvement Plan during the FY2017 budget process for the General Capital Infrastructure of Streets, Fleet and Equipment. Funding to implement this plan will be reviewed during the FY2018 budget process.

6. The City attempts to maintain a diversified and stable revenue system to shelter it from short-term fluctuations in any one revenue source. All fees and charges are in the process of being reviewed.

VI. Options

Council approval is not required.

Page | 3 CITY OF DEKALB, ILLINOIS

MANAGEMENT LETTER

June 30, 2016 The Honorable Mayor Members of the City Council City of DeKalb, Illinois

Ladies and Gentlemen:

In planning and performing our audit of the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of DeKalb, Illinois (the City) as of and for the year ended June 30, 2016, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses and therefore material weaknesses may exist that were not identified. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a significant deficiency.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

The City’s written responses to these matters identified in our audit have not been subjected to the audit procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

- 1 - This communication is intended solely for the information and use of the Mayor, the City Council, and management of the City and is not intended to be and should not be used by anyone other than these specified parties.

Naperville, Illinois December 19, 2016

- 2 - SIGNIFICANT DEFICIENCY

1. Capital Assets

During our testing of capital assets we identified a number of items within the capital asset detail records that required adjustments during the current year as well as a prior period adjustment to the City’s financial statements as of July 1, 2015. These items included:

 Assets that were disposed of in the prior year, but the related accumulated deprecation was not removed.  Assets that had been previously disposed, or partially disposed, that were not removed from the records, but rather a negative asset component was added to the detail. This created instances in which the original asset was being depreciated but the negative component was not.  An asset that had remained in Construction in Progress for several years, but had been placed in service during that time.

We recommend that the capital asset details be reviewed during the year to ensure that these items are identified and corrected.

Management Response

In prior years the audit team has done all journal entries related to capital assets. For FY 2016, City Finance staff pulled all this work in house to eliminate from having to pay an hourly fee to the audit team for this work. Staff is aware of these entries and has incorporated all changes in to our current work papers. Moving forward staff will ensure capital assets are reviewed on a monthly basis to have better control on all asset changes throughout the year.

- 3 - Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016

City of DeKalb, Illinois CITY OF DEKALB, ILLINOIS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Year Ended June 30, 2016

Prepared by the City of DeKalb Finance Department CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS

Page(s)

INTRODUCTORY SECTION

List of Principal Officials...... i

Organization Chart ...... ii

Certificate of Achievement for Excellence in Financial Reporting ...... iii

Transmittal Letter...... iv-x FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT ...... 1-3

GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS

Management’s Discussion and Analysis ...... MD&A 1-13

Basic Financial Statements

Government-Wide Financial Statements

Statement of Net Position ...... 4 Statement of Activities ...... 5-6

Fund Financial Statements

Governmental Funds

Balance Sheet ...... 7-8 Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position ...... 9 Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 10-11 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Governmental Activities in the Statement of Activities ...... 12

Proprietary Funds

Statement of Net Position ...... 13-14 Statement of Revenues, Expenses, and Changes in Net Position ...... 15 Statement of Cash Flows ...... 16-17 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued)

Page(s)

FINANCIAL SECTION (Continued)

GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued)

Basic Financial Statements (Continued)

Fund Financial Statements (Continued)

Fiduciary Funds

Statement of Fiduciary Net Position ...... 18 Statement of Changes in Fiduciary Net Position ...... 19

Notes to Financial Statements ...... 20-82

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Funding Progress and Employer Contributions Other Postemployment Benefits Plan ...... 83 Schedule of Employer Contributions Illinois Municipal Retirement Fund ...... 84 Police Pension Fund ...... 85 Firefighters’ Pension Fund ...... 86 Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios Illinois Municipal Retirement Fund ...... 87 Police Pension Fund ...... 88 Firefighters’ Pension Fund ...... 89 Schedule of Investment Returns Police Pension Fund ...... 90 Firefighters’ Pension Fund ...... 91 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Fund ...... 92 Motor Fuel Tax Fund...... 93 Mass Transit Fund ...... 94 Tax Increment Financing #1 Fund ...... 95 Tax Increment Financing #2 Fund ...... 96 Notes to Required Supplementary Information ...... 97 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued)

Page(s)

FINANCIAL SECTION (Continued)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

MAJOR GOVERNMENTAL FUNDS

Schedule of Revenues - Budget and Actual - General Fund ...... 98-99 Schedule of Expenditures - Budget and Actual - General Fund ...... 100 Schedule of Detailed Expenditures - Budget and Actual - General Fund ...... 101-105

NONMAJOR GOVERNMENTAL FUNDS

Combining Balance Sheet ...... 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 107

Nonmajor Special Revenue Funds Combining Balance Sheet ...... 108-109 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 110-111 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Foreign Fire Insurance Tax Fund ...... 112 Housing Rehabilitation Fund ...... 113 Community Development Block Grant Fund ...... 114 Heritage Ridge Special Service Area #3 Fund ...... 115 Knolls Special Service Area #4 Fund ...... 116 Greek Row Special Service Area #6 Fund ...... 117 Heartland Fields Special Service Area #14 Fund ...... 118

Nonmajor Debt Service Funds Combining Balance Sheet ...... 119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...... 120 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual General Debt Service Fund ...... 121 Tax Increment Financing Debt Service Fund ...... 122 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued)

Page(s)

FINANCIAL SECTION (Continued)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued)

NONMAJOR GOVERNMENTAL FUNDS (Continued)

Nonmajor Capital Projects Funds Combining Balance Sheet ...... 123 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...... 124 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Capital Projects Fund ...... 125 Equipment Fund ...... 126 Fleet Replacement Fund ...... 127

ENTERPRISE FUNDS

Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual - Water Fund Department Accounts ...... 128-129 Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual Airport Fund ...... 130 Refuse Fund ...... 131

INTERNAL SERVICE FUNDS

Combining Statement of Net Position ...... 132 Combining Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual ...... 133-134 Combining Statement of Cash Flows ...... 135

FIDUCIARY FUNDS

PENSION TRUST FUNDS

Combining Statement of Net Position ...... 136 Combining Statement of Changes in Plan Net Position- Budget and Actual ..... 137 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued)

Page(s)

FINANCIAL SECTION (Continued)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Continued)

DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY

Statement of Net Position and Combining Balance Sheet ...... 138-139 Statement of Activities and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances/Net Position ...... 140-141

SUPPLEMENTAL FINANCIAL INFORMATION

Schedule of Long-Term Debt Requirements General Obligation Bonds of 2010A ...... 142 General Obligation Refunding Bonds of 2010B ...... 143 General Obligation Refunding Bonds of 2010C ...... 144 General Obligation Bonds of 2012A ...... 145 General Obligation Bonds of 2013B ...... 146 General Obligation Refunding Bond Series of 2014 (Total Issue) ...... 147 General Obligation Refunding Bond Series of 2014 (Debt Service Fund Share) ... 148 General Obligation Refunding Bond Series of 2014 (Water Fund Share) ...... 149 General Obligation Refunding Bond Series of 2014 (Airport Fund Share) ...... 150 IEPA Loan #L17133700 Contract Payable of 1999 ...... 151 IEPA Loan #L17161400 Contract Payable of 2000 ...... 152 IEPA Loan #L174045 Contract Payable of 2012 ...... 153 Component Unit DeKalb Public Library General Obligation Bonds of 2013A ...... 154 Loan Payable of 2015 ...... 155 Debt Certificates of 2011 ...... 156

STATISTICAL SECTION

Financial Trends Net Position by Component ...... 157-158 Change in Net Position ...... 159-162 Fund Balances of Governmental Funds ...... 163-164 Changes in Fund Balances of Governmental Funds ...... 165-166 CITY OF DEKALB, ILLINOIS TABLE OF CONTENTS (Continued)

Page(s)

STATISTICAL SECTION (Continued)

Revenue Capacity Taxable Sales by Category ...... 167 Taxable Sales by Category - Home Rule ...... 168 Direct and Overlapping Sales Tax Rates ...... 169 Assessed Value and Actual Value of Taxable Property ...... 170 Property Tax Rates - Direct and Overlapping Governments ...... 171 Principal Property Taxpayers ...... 172 Property Tax Rates, Levies, and Collections ...... 173-174 Debt Capacity Ratios of Outstanding Debt by Type ...... 175 Ratios of General Bonded Debt Outstanding ...... 176 Direct and Overlapping Governmental Activities Debt ...... 177 Legal Debt Margin ...... 178 Pledged-Revenue Coverage ...... 179 Demographic and Economic Information Demographic and Economic Information ...... 180 Principal Employers ...... 181 Operating Information Full-Time Equivalent Employees...... 182-183 Operating Indicators ...... 184-185 Capital Asset Statistics ...... 186 INTRODUCTORY SECTION CITY OF DEKALB, ILLINOIS

PRINCIPAL OFFICIALS

June 30, 2016

LEGISLATIVE

John Rey, Mayor

Alderman David Jacobson, Ward One

Alderman Bill Finucane, Ward Two

Alderman Michael Marquardt, Ward Three

Alderman Bob Snow, Ward Four

Alderman Katherine Noreiko, Ward Five

Alderman David Baker, Ward Six

Alderman Anthony Faivre, Ward Seven

Jennifer Jeep Johnson, City Clerk

ADMINISTRATIVE

Anne Marie Gaura, City Manager

Patty Hoppenstedt, Assistant City Manager

Gene Lowery, Police Chief

Eric Hicks, Fire Chief

Cathy Haley, Finance Director

Tim Holdeman, Public Works Director

Jo Ellen Charlton, Community Development Director

- i - Organizational Chart ______

Residents of DeKalb

City Clerk

Mayor City Council

City Manager

Finance Information Community Public Works City Manager's Police Department Fire Department Human Resources Department Technology Development Department Office

Administration Administration Administration

Patrol Operations Streets

Investigations Water

Support Services Special Services

Engineering & Communications Transportation

Crime Free Airport Housing

- ii - - iii -

December 21, 2016

Mayor John Rey Members of the DeKalb City Council City Manager Anne Marie Gaura Residents of the City of DeKalb

The Comprehensive Annual Financial Report of the City of DeKalb for the fiscal year ended June 30, 2016 is hereby submitted as mandated by both local ordinances and state statutes. These ordinances and statutes require that the City of DeKalb issue annually a report of its financial position and activity, and that this report be audited by an independent firm of certified public accountants.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

Sikich, LLP, have issued an unmodified ("clean") opinion on the City of DeKalb’s financial statements for the year ended June 30, 2016. The independent auditor's report is located at the front of the financial section of this report.

Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it.

Profile of the City of DeKalb

The City of DeKalb was incorporated in 1856, and is located in the center of DeKalb County Illinois. Located 60 miles west of Chicago, the City of DeKalb’s current land area is 15.55 square miles and approximately 130 miles of streets. In spite of its proximity to the Chicago region, the City remains apart, maintaining its own unique character as a rapidly growing university community with both urban and rural roots. Many of its older neighborhoods have brick paved streets and well-kept historic homes while the edge of the City bustles with new residential and commercial development. The City of DeKalb has a 2014 population estimate of 44,030, therefore the City is a home rule community because its population exceeds 25,000. Home rule communities

- iv - in the State of Illinois have greater control of their finances because of additional revenue generating abilities afforded to home rule communities. As a home-rule unit of government under the 1970 Illinois Constitution, the City has no tax rate limit or debt limit, nor is it required to seek referendum approval to raise its tax rate or to issue debt.

In 1961, a Council-Manager form of government was adopted by the City of DeKalb. Seven aldermen are elected, one in each of the seven wards, and aldermanic elections are held every two years, at which time half of the City Council is elected. The Mayor is elected, at large, every four years. The City Manager is appointed by the City Council and all other employees are appointed by the City Manager. The elected officials determine policy while professional appointed officials implement policy.

The City provides a full range of services including: public safety (police and fire protection); the construction and maintenance of highways, streets, and infrastructure; municipal airport services; water production, treatment and distribution; planning and zoning; and general administrative services.

The financial reporting entity (the City) includes all the funds of the primary government (i.e., the City of DeKalb, DeKalb County, Illinois), as well as all of its component units. The DeKalb Public Library is considered a component unit of government which, although a legally separate entity, is in substance a part of the primary government’s operations and included as part of the primary government. Therefore, in the CAFR, the Library’s audited financial data is presented in a separate column in the entity-wide financial statements to differentiate their financial position and results of operations from those of the primary government.

The City Council is required to adopt a budget for each fiscal year by no later than the close of the prior fiscal year. This annual budget serves as the foundation for the City of DeKalb’s financial planning and control. These controls are intended to ensure that there is compliance with the legal provisions of the annual budget approved by the Mayor and City Council. Activities of the governmental and proprietary funds are included in the approved annual budget. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control.

Local Economy

The local economy is still being impacted by regional, state and national economic conditions. However, the City’s three largest sources of revenue have started to show signs of economic vitality. These three largest sources of revenue are property taxes received from the county, sales taxes, both municipal and home rule, and income tax. The EAV decline has slowed and the unemployment rate has dropped. The City’s total EAV increased by 8.27% compared to the small increase from the previous year of .67%. Prior to the small increase in 2015 the EAV dropped drastically for six years in a row.

The City’s income tax revenue decreased slightly by $52,737 or 1.17% from $4,515,729 in FY15 to $4,462,992 in FY16. This per-capita revenue source is based more on the state’s economy and unemployment rate rather than the local economy. The State of Illinois’ unemployment rate peaked to 11.50% in December 2009 and has dropped to 5.60% in November 2016.

P a g e | v

The state portion of sales tax revenue has shown signs of a slight decrease from FY15 but still an increase over FY14. The home rule portion continues to show a downward trend which could be offset by the increase being seen in Local Use Tax. Combined these actual revenue dollars came in below budgeted parameters by over $500,000 or 4.80%. However, signs of economic vitality for the City are Local Use Tax, Restaurant & Bar Tax and Income Tax all coming in above budgeted parameters.

As a result, the General Fund unrestricted fund balance ended at $9,123,076 or 28.26% of annual expenditures. This is $1,104,321 higher than FY15 and the strongest the General Fund balance reserves have been in the last eleven years.

Long-term Financial Planning

The following processes are utilized by the City to accomplish its long-term financial planning:

1. The City implemented a 10-year strategic plan in 2015 to ensure that its long-term goals are reviewed, updated and implemented to continue to address the City’s mission of “Deliver high quality municipal services to those who live, work, learn in, or visit our community.” All elected officials, appointed board and commission chairpersons, executive team members, and DeKalb residents participated in the planning sessions that helped to create this final 2025 Strategic Plan Document.

2. The City has established several key written financial policies including a Budget policy, a Reserve & Fund Balance Policy, a Revenue & Expenditure policy, an Accounting, Auditing & Financial Reporting policy, a Debt Management policy and an Investment policy. The General Fund fund balance policy is currently 25% of the total General Fund annual expenditures to provide financing for unanticipated expenditures and revenue shortfalls and possible delays and changes in state distribution of shared revenues.

3. The City adopted a new Purchasing Manual to establish guidelines for City staff in procuring goods and materials in a manner that is consistent with the highest standards of public service in obtaining quality goods and services at the lowest possible price.

4. The City adopted a 10-year capital improvement plan for the Water Fund and structured the necessary fees in order to maintain the Water Divisions capital equipment and infrastructure, and maintain or enhance the current levels of service.

5. The City Adopted a 5-year Capital Improvement Plan during the FY17 budget process for the General Capital Infrastructure of Streets, Fleet and Equipment. Funding to implement this plan is being reviewed during the FY18 budget process.

6. The City attempts to maintain a diversified and stable revenue system to shelter it from short- term fluctuations in any one revenue source. All fees and charges were reviewed and five recommendations will be implemented in FY16.5 and FY17. These were increases to the ambulance transport fees, increase in the video gaming licensing fees, increase to the fuel surcharge, adding a treat non-transport to the ambulance fees and adding a fee for the leasing of our records management software fee. The City will continue to make this review an annual process during the budget season each year.

P a g e | vi

Relevant Financial Policies

The City Council passed a resolution in 2015 to adopt certain financial management policies including a budget policy, a fund balance policy, a revenue and expenditure policy, an accounting/auditing and financial reporting policy, a capital asset policy, a debt management policy, and an investment policy. Changes were made to these policies during the FY17 budget process to incorporate a Capital Equipment Replacement Funding Policy for the implementation of the City’s 5-year Capital Improvement Plan.

Excluding amounts restricted, committed, or assigned for various purposes, the unassigned fund balance in the General Fund was 28.26% of actual expenditures for FY16. Because of the City’ conservative approach and prudent fiscal spending, this was a 4.82% increase over last fiscal year.

Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, municipal bonds, and the Illinois Public Treasurer’s Investment Pool. The City's investment policy seeks to ensure the preservation of capital in the overall portfolio, while mitigating credit and interest rate risks.

Major Initiatives

During FY 2016, the City was able to initiate and/or complete a variety of projects, programs and activities designed to meet identified community needs. These included:

. Completion of an RFP process for new auditing services. . Completion of an RFP process for Liability and Workers Compensation insurance. . Continued to enhance the City Health Insurance program to keep premiums low by adding a High Deductible plan option. . Development of a Benefits Handbook for non-bargaining unit employees and a Personnel Manual for all employees. . Returned funding level for the Police and Fire pension funds back to the higher funding methodology to help sustain the City’s bond rating with Moody’s. . Achieved the Government Finance Officers Association Award “Excellence in Financial Reporting” for the 22nd consecutive year. . Achieved the Government Finance Officers Association “Distinguished Budget Presentation Award for the 1st year in the City’s history. . Achieved the Government Finance Officers Association Award for “Outstanding Achievement in Popular Annual Financial Reporting” for the 2nd consecutive year. . Achieved the Illinois Policy Institute’s Sunshine Award for Financial Transparency. . Began the formation of a City of DeKalb Wellbeing Program to promote and support programs that encourage emotional, physical, financial, social and career wellbeing for its employee and families. . The “20/20: A Clear Vision for the Future”, a strategic plan for 20 new crime reduction and community partnership initiatives in 20 months was completely implemented. . A significant enhancement to the efficiency of Records operations was the implementation of GovPay, a vendor that facilitates credit card payments to the police department for items such as parking tickets, bond, and administrative tow fees, then distributes the payment to its intended recipient, such as to the Circuit Clerk for bond. This program has also significantly reduced the time our officers spend on transporting arrestees to the county jail by facilitating their ability to acquire bond using a credit card.

P a g e | vii

. Another records enhancement was the implementation of automated traffic accident reporting, the Apriss system. This allows officers to electronically complete and submit traffic accident reports, streamlining the process of dissemination to motorists, insurance companies, and the Illinois Department of Transportation. This program has also significantly reduced support staff time dedicated to processing these requests. . The 911 Police Communications Center demonstrated an increase in compliance with National Fire Protection Association (NFPA) standards for fire dispatch; having achieved compliance within a three month period with over 95% of our calls being dispatched within 106 seconds, and a consistent rise in the percentage of calls being dispatched within 60 seconds which helps to improve our response times and ISO rating for the City. . The “Camp Power” program celebrated a successful second year, and developed a strategy for the program’s sustainability and expansion by joining forces with the YMCA and other community stakeholders. . Completed the training and deployment of Narcan, with new first responder medical bags being purchased and assembled for each patrol vehicle. This program allows police officers who are usually the first to arrive on scene to effectively deploy the overdose intervention drug Narcan to save a life that may have been taken through a narcotics overdose. Two of our officers successfully administered Narcan to a heroin overdose victim and saved the victim’s life. . Repaved the parking lot at Station 1, replaced roof at Fire Station 2, painted the exterior of Fire Station 3 and replaced all Station 1 apparatus floor heaters. . Purchased mobile training tower through a grant from FEMA. . Negotiated a new contract with IAFF. . Negotiated new agreement with DeKalb High School for high school football EMS standby. . Negotiated new agreement with Kishwaukee Education Consortium for Fire Science classes. . Obtained ADA website compliance. . Addressed regional water quality and quantity (flooding issues) utilizing a watershed management approach by participating with the DeKalb County Stormwater Management Committee. . Identified regional stakeholders for a subcommittee to evaluate the transit needs of the region and areas of potential shared service provision between TransVAC and Huskie Bus. . Developed and implemented the DSATS Unified Planning Work Program (UPWP). This document is reviewed and approved by IDOT, the Federal Highway Administration (FHWA), and Federal Transit Administration (FTA) to authorize DSATS funding for projects in the next fiscal year. . Completed the FY2016 Street Maintenance Patching Program throughout the non-TIF areas of the City of DeKalb. . Collaborated with the Active Transportation group to establish bicycle advocacy goals for the region. . Successfully used agricultural based deicers to lessen the amount of road salt required to keep roads safe during winter driving season. . Purchased a new Stepp 2.0 heated patch box improving pothole repair times in cold conditions. . Removed over 70 dead Ash trees as part of the adopted Emerald Ash Bore Management program. . Updated the City Council meeting agenda development process on best practices.

P a g e | viii

. Initiated a City-wide policy and program for records retention and document destruction in compliance with State of Illinois regulations. . Continued implementation of the Pay, Compensation and Classification Study, specifically with the development of a performance evaluation program for non-bargaining unit employees and revising job descriptions for all employees. . The City played a role in the America’s Best Communities competition, providing oversight to the committee and subcomittees. . Continued to supplement the CDBG Housing Rehabilitation Program with grants to 14 income eligible homeowners to expand the number of homes served by the program. . Provided $59,000 in supplemental grants to local social service agencies who provide supportive services to the residents of DeKalb

Awards and Acknowledgements

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of DeKalb for its comprehensive annual financial report for the fiscal year ended June 30, 2015. This was the twenty-second consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

In addition, the GFOA has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City of DeKalb for its Popular Annual Financial Report for the fiscal year ended June 30, 2015. This is the second year the City has received this award. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, the City must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal.

Finally, the GFOA has presented to the City of DeKalb the Distinguished Budget Presentation Award for the FY15 Budget document. This is the first time the City has applied for this award and received it on this first attempt.

The GFOA established the Distinguished Budget Presentation Awards Program (Budget Awards Program) in 1984 to encourage and assist state and local governments to prepare budget documents of the very highest quality that reflect both the guidelines established by the National Advisory Council on State and Local Budgeting and the GFOA’s best practices on budgeting and then to recognize individual governments that succeed in achieving that goal.

P a g e | ix

FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT

The Honorable Mayor Members of the City Council City of DeKalb, Illinois

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of DeKalb, Illinois (the City), as of and for the year ended June 30, 2016, and the related notes to financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

- 1 -

Opinions

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of DeKalb, Illinois as of June 30, 2016, and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other required supplementary information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, supplemental financial information, and statistical section in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section, supplemental financial information, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated December 19, 2016 on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Naperville, Illinois December 19, 2016

- 23 - GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS

CITY OF DEKALB, ILLINOIS

MANAGEMENT’S DISCUSSION AND ANALYSIS

June 30, 2016

As the management of the City of DeKalb (the “City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2016. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal included earlier in this report.

USING THE FINANCIAL SECTION OF THIS COMPREHENSIVE ANNUAL REPORT

Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

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 the 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., earned but unused sick leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, highways and streets, and community development. The business-type activities of the City include a water system, a municipal airport, and refuse services.

The government-wide financial statements can be found on pages 4 through 6 of this report.

Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

(See independent auditor’s report) MD&A 1 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains seventeen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Motor Fuel Tax Fund, Mass Transit Fund, TIF #1 Fund, and TIF #2 Fund Fund which are considered to be “major” funds. Data from the other twelve governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided elsewhere in this report.

The City adopts an annual budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the budget.

The basic governmental fund financial statements can be found on pages 7 through 12 of this report.

Proprietary Funds. There are two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water system, the municipal airport, and refuse services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City maintains three internal service funds to account for workers’ compensation insurance premiums, health insurance premiums, and liability insurance premiums.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund, the Airport Fund, and the Refuse Fund. Data from the other three internal service funds are combined into a single, aggregate presentation. Individual fund data for each of these internal service funds is provided elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 13 through 17 of this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of 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. (See independent auditor’s report) MD&A 2 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

The City maintains two fiduciary funds, the Police Pension Fund and the Fire Pension Fund. Data from the two fiduciary funds are combined into a single, aggregate presentation. Individual fund data for each of these fiduciary funds is provided elsewhere in this report.

The basic fiduciary fund financial statements can be found on pages 18 and 19 of this report.

Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 20 through 82 of this report.

Financial Analysis of the City as a Whole Beyond presenting current year financial information in the government-wide and major individual fund formats, the City also presents comparative information from the prior year in Management’s Discussion and Analysis. By doing so, the City is providing the best means of analyzing its financial condition and position as of June 30, 2016.

(See independent auditor’s report) MD&A 3 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

GOVERNMENT-WIDE STATEMENTS

Net Position

The following table reflects the condensed Statement of Net Position.

Table 1 Statement of Net Position As of June 30, 2016

Governmental Business-Type Total Activities Activities Primary Government FY16 FY15 FY16 FY15 FY16 FY15

Current and Other Assets $ 40,578,668 37,272,732 7,296,702 8,279,983 47,875,370 45,552,715 Capital Assets 131,309,223 134,126,562 57,049,230 57,649,708 188,358,453 191,776,270 Deferred Outflows 6,699,392 11,046,441 871,223 445,223 7,570,615 11,491,664 Total Assets and Deferred Outflows 178,587,283 182,445,735 65,217,155 66,374,914 243,804,438 248,820,649

Long-Term Liabilities 116,676,411 107,398,113 7,122,869 6,207,102 123,799,280 113,605,215 Other Liabilities 4,253,617 7,547,395 2,167,332 3,257,134 6,420,949 10,804,529 Deferred Inflows 11,939,730 10,373,855 - - 11,939,730 10,373,855 Total Liabilities and Deferred Inflows 132,869,758 125,319,363 9,290,201 9,464,236 142,159,959 134,783,599

Net Position: Net Investment in Capital Assets 111,898,622 113,826,017 52,803,874 52,605,345 164,702,496 166,431,362 Restricted 13,365,048 12,897,923 - - 13,365,048 12,897,923 Unrestricted (79,546,145) (69,597,568) 3,123,080 4,305,333 (76,423,065) (65,292,235)

Total Net Position 45,717,525 57,126,372 55,926,954 56,910,678 101,644,479 114,037,050

The City’s combined net position decreased from $114 million to $101.6 million for the fiscal year ending June 30, 2016.

Net position attributable to governmental activities decreased by $11.4 million due primarily to the increase in net pension liability for the police and fire pension funds. While the City is in the process of funding both pensions at the entry age normal cost method, investment rate of returns were much lower than the actuarial assumption of 7.5%, which created a larger net pension liability. Net position attributable to business-type activities decreased by $1.0 million due mainly to a change in the water billing cycle from three months to two months, which decreased receivables by over $600,000.

For more detailed information, see the Statement of Net Position on page 4.

(See independent auditor’s report) MD&A 4 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Activities

The following table summarizes the revenue and expenses of the City’s activities.

Table 2 Changes in Net Position For the Fiscal Years Ended June 30, 2016 and 2015

Governmental Business-Type Total Activities Activities Primary Government FY16 FY15 FY16 FY15 FY16 FY15

Revenues Program Revenues: Charges for Services $ 4,016,686 3,722,145 7,906,974 8,046,786 11,923,660 11,768,931 Operating Grants/Contributions 1,218,315 1,114,773 - - 1,218,315 1,114,773 Capital Grants/Contributions 3,933,596 4,375,595 81,555 2,566,070 4,015,151 6,941,665 General Revenues Property Taxes 11,812,941 11,981,519 - - 11,812,941 11,981,519 Sales Taxes 11,801,518 11,092,497 - - 11,801,518 11,092,497 Utility Taxes 3,202,384 3,433,879 - - 3,202,384 3,433,879 State Income Taxes 4,462,992 4,515,729 - - 4,462,992 4,515,729 Other Taxes 5,585,744 5,340,751 - - 5,585,744 5,340,751 Other 342,765 1,440,754 148,014 4,353 490,779 1,445,107 Total Revenues 46,376,941 47,017,642 8,136,543 10,617,209 54,513,484 57,634,851

Expenses General Government 8,456,094 12,795,131 - - 8,456,094 12,795,131 Public Safety 33,400,660 22,259,920 - - 33,400,660 22,259,920 Highways and Streets 8,086,082 4,158,954 - - 8,086,082 4,158,954 Community Development 6,984,506 8,859,472 - - 6,984,506 8,859,472 Interest on Long-Term Debt 1,057,938 987,476 - - 1,057,938 987,476 Water - - 5,354,514 4,288,137 5,354,514 4,288,137 Airport - - 1,263,527 1,410,722 1,263,527 1,410,722 Refuse - - 2,110,657 1,920,958 2,110,657 1,920,958 Total Expenses 57,985,280 49,060,953 8,728,698 7,619,817 66,713,978 56,680,770

Change in Net Position Before Transfers (11,608,339) (2,043,311) (592,155) 2,997,392 (12,200,494) 954,081

Transfers (62,163) (29,377) 62,163 29,377 - -

Change in Net Position (11,670,502) (2,072,688) (529,992) 3,026,769 (12,200,494) 954,081

Net Position, July 1 57,126,372 115,912,677 56,910,678 53,920,184 114,037,050 169,832,861

Restatement 261,655 (56,713,617) (453,732) (36,275) (192,077) (56,749,892)

Net Position, June 30 45,717,525 57,126,372 55,926,954 56,910,678 101,644,479 114,037,050

(See independent auditor’s report) MD&A 5 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Total Primary Government Revenues for FY16

Charges for Services - 21.9% Operating Grants/Contributions - 2.2% Capital Grants/Contributions - 7.4% Property Taxes - 21.7% Sales Taxes - 21.6% Utility Taxes - 5.9% State Income Taxes - 8.2% Other Taxes - 10.2% Other - 0.9%

For the fiscal year ended June 30, 2016, revenues totaled $54.5 million. The City benefits from a highly diversified revenue base. Revenues from property taxes amounted to $11.8 million or 21.7% of total revenues. Property taxes support governmental activities including the City’s contribution to the Police and Fire Pension Funds. Property tax revenues remained at last year’s level as the City did not increase its property tax levy. Property tax revenues collected in Fiscal Year 2016 were based on the 2014 Equalized Assessed Valuation (EAV) and property tax rate. The City’s 2014 EAV decreased by 4.31% to $464,966,381 due to the depressed economy. The EAV approximates 33 1/3% of the total market value of real estate within the corporate limits of the City. The property tax rate for 2014 was $1.0245 per $100 of EAV.

Sales taxes are typically the highest revenue source for the City. They are collected by the State of Illinois and remitted back to the City on a monthly basis. The general sales tax collected by the state for sales within the corporate boundaries of the City is 6.25%. However, only 1% of that total is remitted back to the City of DeKalb. The remainder goes to the state (5%), and DeKalb County (.25%). In addition, a home rule sales tax of 1.75% is also collected by the State of Illinois and remitted back to the City on a monthly basis. The home rule sales tax is not applicable to food, drugs, or licensed vehicle purchases.

For FY16, general sales tax revenues were $5,289,536 compared to $4,983,000 for FY15, while home rule sales tax revenues were $6,511,982 compared to $6,109,497 for FY15. Overall, sales tax revenues have been stable over the last four years and are projected to keep at the pace in the near future.

(See independent auditor’s report) MD&A 6 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Income taxes are shared with municipalities by the state on a per-capita basis. The City’s income tax revenue decreased by $52,737 or 1.2% from $4,515,729 in FY15 to $4,462,992 in FY16. This per-capita revenue source is based more on the state’s economy and unemployment rate rather than the local economy. The State of Illinois’ unemployment rate peaked to 11.50% in December 2009 and has dropped to 4.80% in October 2016.

Telecommunications taxes are collected by the state and remitted back to the City on a monthly basis. The City’s telecommunications tax rate is 6%. A total of $849,837 was collected in FY16 which represents a 3.0% decrease from the $876,495 that was collected in FY15. This revenue source is expected to decrease slightly over the next several years as more residents convert to internet telephone service or cellular telephone service as their primary source of communication and eliminate landline service. Also, the option to package and bundle programs has brought down the consumer costs of cell phones and therefore has dropped this tax revenue source.

Use tax is a tax imposed on the privilege of using, in the State of Illinois, any item of tangible personal property that is purchased anywhere at retail. This revenue source is collected by the State and forwarded to the City on a per capita basis. For FY16, $1,040,616 was collected which represents a 23.2% increase from the $844,359 collected in FY15. This revenue source is expected to increase further next year due to the state’s increased collection efforts which include a separate line for use taxes on the state income tax return form along with the increase in internet sales that are considered use tax revenue depending on the purchase

The major revenue component of the “charges for services” classification is fees from the City’s water utility. Water related revenue was $5,391,676 in FY16 compared to $5,377,744 in FY15. In the case of the Water Fund, the economy is still having an impact on water revenue. Foreclosures, closed businesses, and a tendency to conserve water are still contributing factors that continue to drive down the City’s water sales. In addition, the general trend towards using water- saving fixtures and toilets is reducing water consumption.

Capital grants and contributions revenue decreased from $6,941,665 in FY15 to $4,015,151 in FY16. Streets, storm sewers, right-of-ways, water mains, etc. are recorded on the City’s general ledger as contributions of capital assets upon acceptance of the public improvements from the developer by the City Council. Airport related capital grants and contributions decreased from $2,566,070 in FY15 to $81,555 in FY16 due to completion of the runway project in FY15.

(See independent auditor’s report) MD&A 7 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

The City’s expenses totaled $66.7 million in FY16 which was an increase of $10.0 million compared to FY15 total expenses. General government expenses were 12.7% of the total or $8,456,094. This represents a 33.9% decrease from the FY15 total of $12,795,131. This decrease is primarily due to DSATS spending $4.8 million less than budgeted for FY16 due to the uncertainty of receiving revenue from the State and its lack of a budget.

Public safety expenses related to the operations of both the Police Department and Fire Department accounted for the largest share of expenses at $33,400,660 or 50.1% of the total. This represents a 50.1% increase from the FY15 total of $22,259,920. This increase was due primarily to the increase in the net pension liability for police and fire pension plans.

Highways and Streets related expenses were $8,086,082 or 12.1% of the total. This represents a 94.43% increase from the FY15 total of $4,158,954. The increase was primarily due to the fact that the Highways and Streets expenditures in the General Fund were reported last year under Community Development.

Community Development related expenses accounted for 10.5% of the total or $6,984,506. This represents a 21.2% decrease from the FY15 total of $8,859,472. This decrease was due to spending $1.9 million less in expenditures than budgeted in the TIF #2 fund. Also contributing to the decrease is the fact that the Highways and Streets expenditures in the General Fund were being reported last year under Community Development.

(See independent auditor’s report) MD&A 8 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Water related expenses were $5,354,514 or 8.0% of the total. This represents a 24.87% increase from the FY15 total of $4,288,137. This increase was primarily due to charging of personnel and services directly to the Water fund in FY16 when in prior years it was recorded as an interfund transfer. This change was made to substantiate the dollar amount that was being transferred to the General Fund in past years.

Airport related expenses were $1,263,527 or 1.9% of the total. This represents a 10.43% decrease from the FY15 total of $1,410,722. The Refuse Fund ($2,110,657 or 3.2% of total expenses) and interest on long-term debt ($1,057,938 or 1.6% of total expenses) account for the balance of the FY16 expenses.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

At June 30, 2016, the governmental funds had a combined fund balance of $23,184,172. This reflects a $1,663,392 or 7.7% increase from the prior fiscal year. The General Fund fund balance increased by $1,263,407 or 15.4% .This increase can be attributed to revenues coming in higher than budgeted parameters and expenditures coming in below budgeted parameters. The Motor Fuel Tax Fund fund balance increased by $718,751 or 30.2%. The TIF District Funds fund balances decreased by $87,474 or 0.9%, A TIF phase out committee has been formed to plan out the remaining expenditures for the remaining years of these two TIF’s. Finally, the fund balances of nonmajor governmental funds decreased by $231,292 or 34.9% as funds are being spent on projects in the Foreign Fire Insurance Fund, Housing Rehabilitation Fund, Community Development Block Grant Fund, Special Service Area Funds, and the Capital Project Funds.

(See independent auditor’s report) MD&A 9 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Table 3 General Fund Budgetary Highlights For the Fiscal Year Ended June 30, 2016

Original Final Budget Budget Actual

Revenues Taxes $ 17,720,540 17,720,540 17,104,968 Licenses & Permits 809,291 809,291 876,788 Intergovernmental 11,353,970 11,571,243 11,748,169 Charges for Services 2,085,800 2,085,800 2,143,615 Fines & Forfeitures 863,500 863,500 796,390 Miscellaneous 499,750 499,750 364,514 Total Revenues 33,332,851 33,550,124 33,034,444 Expenditures and Transfers General Government (4,925,359) (5,024,058) (5,012,558) Public Safety (21,868,503) (22,107,503) (21,397,418) Highways and Streets (3,609,193) (3,609,193) (3,286,770) Community Development (1,412,338) (1,412,338) (1,047,614) Disposal of Capital Assets - - 496 Transfers In 508,965 508,965 508,965 Transfers Out (1,523,692) (1,523,692) (1,536,138) Total Expenditures and Transfers (32,830,120) (33,167,819) (31,771,037)

Change in Fund Balance 502,731 382,305 1,263,407

The City had originally budgeted for a $502,731 increase to the General Fund fund balance. The City conducts periodic budget reviews throughout the fiscal year to identify revenue and expenditure line items that require amendments and, accordingly, the City Council approved four budget amendments during the year. The amendments accounted for any unanticipated changes in revenues or expenditures that occurred since the initial budget was adopted. The budget amendments resulted in an increase to total revenues and an increase to total expenditures. Due to the revised revenue and expenditure projections, the final budget called for a surplus of $382,305 for the General Fund fund balance. Actual results for FY16 indicated an increase in fund balance of $1,263,407 because of positive variances for both the amended revenues and the amended expenditures. The better than expected General Fund results for FY16 were attributable to increased revenues due to the improving local economy, and to the City being able to contain expenditures and not exceed the budgeted level for any department.

(See independent auditor’s report) MD&A 10 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

With respect to the business-type activities, the Water Fund had an increase in Net Position due to a major water main project that started in late FY15 and continued into FY16. The Municipal Airport Fund showed a decrease in Net Position at the end of FY16 due to lower than anticipated revenues. The City has established a fund balance policy for these funds to ensure reserves are available for operations first before committing any funds to capital projects.

Capital Assets

The following schedule reflects the City’s capital asset balances as of June 30, 2016.

Table 4 Capital Assets As of June 30, 2016

Governmental Business-Type Activities Activities Total FY16 FY15 FY16 FY15 FY16 FY15

Land $ 10,358,605 10,358,605 19,386,047 19,386,047 29,744,652 29,744,652 Land Right of Way 25,742,257 25,736,657 544,893 544,893 26,287,150 26,281,550 Construction in Progress 198,864 713,961 640,086 607,435 838,950 1,321,396 Buildings and Improvements 20,814,645 20,814,645 4,804,864 4,804,864 25,619,509 25,619,509 Equipment 2,832,248 4,422,565 688,715 688,715 3,520,963 5,111,280 Vehicles 8,460,549 6,106,593 966,936 966,936 9,427,485 7,073,529 Infrastructure 153,207,659 152,473,401 12,797,766 12,791,713 166,005,425 165,265,114 Water Distribution System - - 42,614,946 41,357,049 42,614,946 41,357,049 Less: Accumulated Depreciateion (90,305,604) (86,499,865) (25,395,023) (23,497,944) (115,700,627) (109,997,809) Total 131,309,223 134,126,562 57,049,230 57,649,708 188,358,453 191,776,270

At year-end, the City’s investment in capital assets for both its governmental and business-type activities was $188.4 million (net of accumulated depreciation). This represents a decrease of $3.4 million or 1.8% from June 30, 2015. This decrease is the result of the capitalization of new capital assets acquired or constructed during FY16 offset by the current year’s depreciation expense for all depreciable capital assets. Most notably, for the business-type activities, the South First Street watermain project was completed in FY16.

See Note 4 to the financial statements for further information on capital assets.

(See independent auditor’s report) MD&A 11 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Long-Term Debt

As of June 30, 2016, the City had a total of $123,799,280 in long-term debt outstanding. The table below summarizes the City’s bonded and similar indebtedness.

Table 5 Bonded and Similar Indebtedness As of June 30, 2016

Governmental Business-type Activities Activities Total FY16 FY15 FY16 FY15 FY16 FY15

General Obligation Bonds $ 24,998,425 27,046,775 1,726,575 2,093,225 26,725,000 29,140,000 Premium on Bonds 307,166 227,393 - - 307,166 227,393 Capital Leases 199,999 216,666 - - 199,999 216,666 IEPA Loan - - 2,518,781 2,951,138 2,518,781 2,951,138 Compensated Absences 5,243,538 5,393,470 628,691 537,865 5,872,229 5,931,335 Net Pension Liability 78,413,065 70,639,684 1,828,480 1,107,005 80,241,545 71,746,689 Net OPEB Obligation 6,915,527 7,017,836 420,342 424,449 7,335,869 7,442,285 Claims Payable 598,691 717,563 - - 598,691 717,563 Total 116,676,411 111,259,387 7,122,869 7,113,682 123,799,280 118,373,069

In regards to governmental activities, $24,998,425 is outstanding from General Obligation Bonds and $199,999 is outstanding for capital leases. Additionally, as of June 30, 2016, $5,243,538 is outstanding for compensated absences payable, $6,915,527 is outstanding for net other postemployment benefit obligations, $78,413,065 is outstanding for net pension liabilities, $598,691 is outstanding for claims payable, and $307,166 in unamortized premium on bonds was outstanding.

Business-type activity debt includes $1,726,575 outstanding from the General Obligation Refunding Bonds issued to advance refund the 2004 General Obligation Refunding Bonds issued to finance safety improvements at the airport and to partially advance refund the 2006 General Obligation Bonds issued to finance the water main replacement program. Another $2,518,781 is outstanding IEPA loans. $628,691 is outstanding in business-type activity debt in the form of compensated absences payable as of June 30, 2016, $1,828,480 is outstanding for net pension liabilities, and $420,342 is outstanding for net other postemployment benefit obligations.

The City received a credit rating of Aa2 by Moody’s Investors Service in connection with the issuance of its 2014 General Obligation Refunding Bonds.

See Note 5 to the financial statements for further information on long-term debt.

(See independent auditor’s report) MD&A 12 CITY OF DEKALB, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Economic Factors

Although, the City’s property tax base is primarily residential, the commercial and industrial tax base continues to be an important component in the diversification of the City’s tax base. In 2015, the equalized assessed valuation (EAV) for residential properties was $313,041,585 or 59.9% of the total EAV. Commercial EAV was $160,710,755 or 30.7% of the total EAV. Farm, industrial and other EAV was $49,280,501 or 9.4% of the total EAV. EAV approximates 33 1/3% of the market value of real property within the City’s corporate limits. Property taxes imposed on property within the City’s corporate limits provide a stable revenue source. Because the City is a home rule municipality, it is not subject to the Property Tax Extension Limitation Law.

While the City receives revenue from a variety of sources, it closely monitors its sales tax revenue, income tax revenue, and development and construction related revenue such as building permits, water connection fees, and impact fees. In FY16, income tax revenue showed a slight decrease, while sales tax revenue, along with development and construction related revenue increased. Therefore, although the increase in sales taxes and development revenue may indicate that the local economy is improving, these revenues and all other revenue sources will continue to be monitored during 2016 to ensure that the City addresses any significant variations in revenues in a timely fashion.

The 2011-2015 American Community Survey released by the U.S. Census Bureau found that 81.2% of residential properties in the City had a value of $100,000 or more and 52.8% had a value of $150,000 or more. The median value was $154,100 and the median income of families living in the City was $59,588.

The 2010 census found that the City’s population was 43,862 which is an increase of 12.4% over the 2000 census population of 39,018. The City’s population estimate for 2015 is 44,030. Due to the increase in population over the years, the City has experienced increased per capita revenue from the State of Illinois for income taxes, motor fuel taxes, and use taxes.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Cathy Haley, Finance Director, City of DeKalb, 200 S Fourth St, DeKalb, Illinois 60115.

(See independent auditor’s report) MD&A 13 CITY OF DEKALB, ILLINOIS

STATEMENT OF NET POSITION

June 30, 2016

Governmental Business-Type Component Unit Activities Activities Total Library

ASSETS Cash and Investments $ 28,059,811 $ 5,859,015 $ 33,918,826 $ 1,707,762 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes 6,217,065 - 6,217,065 1,382,928 Accounts Receivable 491,863 1,607,916 2,099,779 87,451 Accrued Interest 33,085 8,051 41,136 123 Other 653,323 71,315 724,638 - Prepaid Items 415,242 20,077 435,319 16,559 Inventory 7,591 36,610 44,201 - Advance To/From Other Funds 334,000 (334,000) - - Due from Other Governments 4,366,688 27,718 4,394,406 - Capital Assets Not Depreciated 36,299,726 20,571,026 56,870,752 22,999,773 Depreciated (Net of Accumulated Depreciation) 95,009,497 36,478,204 131,487,701 298,998

Total Assets 171,887,891 64,345,932 236,233,823 26,493,594

DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF 3,164,042 871,223 4,035,265 567,863 Pension Items - Police Pension 1,715,337 - 1,715,337 - Pension Items - Firefighters' Pension 1,770,024 - 1,770,024 - Loss on Refunding 49,989 - 49,989 -

Total Deferred Outflows of Resources 6,699,392 871,223 7,570,615 567,863

Total Assets and Deferred Outflows of Resources 178,587,283 65,217,155 243,804,438 27,061,457

LIABILITIES Accounts Payable 3,191,643 1,759,435 4,951,078 367,044 Accrued Payroll 589,139 78,523 667,662 38,198 Accrued Interest Payable 338,790 31,598 370,388 131,845 Line of Credit - - - 1,591,079 Unearned Revenue 134,045 252,913 386,958 - Deposits Payable - 44,863 44,863 - Claims Payable - - - - Long-Term Liabilities Due Within One Year 3,468,146 918,920 4,387,066 2,399,124 Due in More than One Year 113,208,265 6,203,949 119,412,214 7,609,517

Total Liabilities 120,930,028 9,290,201 130,220,229 12,136,807

DEFERRED INFLOWS OF RESOURCES Pension Items - Firefighters' Pension 85,700 - 85,700 - Pension Items - Police Pension 818,015 - 818,015 - Unavailable Property Taxes 11,036,015 - 11,036,015 2,793,535

Total Deferred Inflows of Resources 11,939,730 - 11,939,730 2,793,535

Total Liabilities and Deferred Inflows of Resources 132,869,758 9,290,201 142,159,959 14,930,342

NET POSITION Net Investment in Capital Assets 111,898,622 52,803,874 164,702,496 13,002,136 Restricted for Public Safety 27,262 - 27,262 - Highways and Streets 3,097,499 - 3,097,499 - Economic Development 10,240,287 - 10,240,287 - Endowments - - - 223,625 Unrestricted (Deficit) (79,546,145) 3,123,080 (76,423,065) (1,094,646)

TOTAL NET POSITION $ 45,717,525 $ 55,926,954 $ 101,644,479 $ 12,131,115

See accompanying notes to financial statements. - 4 - CITY OF DEKALB, ILLINOIS

STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2016

Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General Government $ 8,456,094 $ 456,082 $ - $ 3,198,877 Public Safety 33,400,660 2,875,539 12,054 238,468 Highways and Streets 8,086,082 - 1,206,261 496,251 Community Development 6,984,506 685,065 - - Interest 1,057,938 - - -

Total Governmental Activities 57,985,280 4,016,686 1,218,315 3,933,596

Business-Type Activities Water 5,354,514 5,391,676 - - Airport 1,263,527 468,110 - 81,555 Refuse 2,110,657 2,047,188 - -

Total Business-Type Activities 8,728,698 7,906,974 - 81,555

TOTAL PRIMARY GOVERNMENT $ 66,713,978 $ 11,923,660 $ 1,218,315 $ 4,015,151

COMPONENT UNIT Library $ 2,442,727 $ 43,324 $ - $ 525,241

Transfers In (Out)

CHANGE IN NET POSITION

NET POSITION, JULY 1

NET POSITION, JULY 1, RESTATED

NET POSITION, JUNE 30

- 5 -

Net (Expense) Revenue and Change in Net Position Primary Government Governmental Business-Type Component Unit Activities Activities Total Library

$ (4,801,135) $ - $ (4,801,135) $ - (30,274,599) - (30,274,599) - (6,383,570) - (6,383,570) - (6,299,441) - (6,299,441) - (1,057,938) - (1,057,938) -

(48,816,683) - (48,816,683) -

- 37,162 37,162 - - (713,862) (713,862) - - (63,469) (63,469) -

- (740,169) (740,169) -

(48,816,683) (740,169) (49,556,852) -

- - - (1,874,162)

General Revenues Taxes Property 11,812,941 - 11,812,941 2,339,245 Home Rule Sales 6,511,982 - 6,511,982 - Utility 3,202,384 - 3,202,384 - Restaurant/Bar 1,913,222 - 1,913,222 - Hotel/Motel 296,570 - 296,570 - Other 1,666,205 - 1,666,205 - Intergovernmental State Sales Taxes 5,289,536 - 5,289,536 - Income Taxes 4,462,992 - 4,462,992 - Local Use Taxes 1,040,616 - 1,040,616 - Replacement Taxes 129,241 - 129,241 31,144 Other 539,890 - 539,890 - Investment Income (257,706) 38,672 (219,034) 2,308 Miscellaneous 598,730 109,342 708,072 4,189 Gain on Sale of Capital Asset 1,741 - 1,741 - Transfers In (Out) (62,163) 62,163 - -

Total 37,146,181 210,177 37,356,358 2,376,886

CHANGE IN NET POSITION (11,670,502) (529,992) (12,200,494) 502,724

NET POSITION, JULY 1 57,126,372 56,910,678 114,037,050 11,765,312

Prior Period Adjustment 261,655 (453,732) (192,077) (136,921)

NET POSITION, JULY 1, RESTATED 57,388,027 56,456,946 113,844,973 11,628,391

NET POSITION, JUNE 30 $ 45,717,525 $ 55,926,954 $ 101,644,479 $ 12,131,115

See accompanying notes to financial statements. - 6 - CITY OF DEKALB, ILLINOIS

BALANCE SHEET GOVERNMENTAL FUNDS

June 30, 2016

Special Revenue

Motor Mass General Fuel Tax Transit

ASSETS

Cash and Investments $ 7,050,360 $ 3,051,678 $ 448,971 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes 2,591,483 - - Accounts Receivable 491,863 - - Accrued Interest 13,689 - - Other 565,275 - - Prepaid Items 19,993 - - Inventory 7,591 - - Advances to Other Funds 334,000 - - Due from Other Governments 3,858,154 62,759 408,469 Due from Other Funds 48,923 52,317 -

TOTAL ASSETS $ 14,981,331 $ 3,166,754 $ 857,440

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES Accounts Payable $ 1,523,122 $ 69,255 $ 805,234 Accrued Payroll 582,219 - 6,920 Unearned Revenue 11,858 - 45,286 Due to Other Funds 67,437 - -

Total Liabilities 2,184,636 69,255 857,440

DEFERRED INFLOWS OF RESOURCES Unavailable Property Tax Revenues 3,312,035 - -

Total Deferred Inflows of Resources 3,312,035 - -

Total Liabilities and Deferred Inflows of Resources 5,496,671 69,255 857,440

FUND BALANCES Nonspendable Prepaids 19,993 - - Inventory 7,591 - - Advances to Other Funds 334,000 - - Restricted Public Safety - - - Highways and Streets - 3,097,499 - Economic Development - - - Assigned for Capital Projects - - - Unassigned (Deficit) 9,123,076 - -

Total Fund Balances 9,484,660 3,097,499 -

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 14,981,331 $ 3,166,754 $ 857,440

- 7 -

Special Revenue Tax Increment Tax Increment Nonmajor Total Financing Financing Governmental Governmental #1 #2 Funds Funds

$ 5,665,924 $ 9,186,491 $ 642,631 $ 26,046,055

3,011,680 604,509 9,393 6,217,065 - - - 491,863 6,238 10,460 - 30,387 - - 28,080 593,355 - - - 19,993 - - - 7,591 - - - 334,000 - - 37,306 4,366,688 4,655 10,465 - 116,360

$ 8,688,497 $ 9,811,925 $ 717,410 $ 38,223,357

$ 450,511 $ 172,955 $ 143,450 $ 3,164,527 - - - 589,139 - - 76,000 133,144 - - 48,923 116,360

450,511 172,955 268,373 4,003,170

6,519,024 1,187,454 17,502 11,036,015

6,519,024 1,187,454 17,502 11,036,015

6,969,535 1,360,409 285,875 15,039,185

- - - 19,993 - - - 7,591 - - - 334,000

- - 27,262 27,262 - - - 3,097,499 1,718,962 8,451,516 69,809 10,240,287 - - 358,251 358,251 - - (23,787) 9,099,289

1,718,962 8,451,516 431,535 23,184,172

$ 8,688,497 $ 9,811,925 $ 717,410 $ 38,223,357

See accompanying notes to financial statements. - 8 - CITY OF DEKALB, ILLINOIS

RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET POSITION

June 30, 2016

FUND BALANCES OF GOVERNMENTAL FUNDS $ 23,184,172

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 131,309,223

The loss on refunding of bonds is capitalized and amortized over the life of the bonds on the statement of net position 49,989

Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Police Pension Fund are recognized as deferred outflows and inflows of resources on the statement of net position 897,322

Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Firefighters' Pension Fund are recognized as deferred outflows and inflows of resources on the statement of net position 1,684,324

Differences between expected and actual experiences, assumption changes, and net difference between projected and actual earnings for the Illinois Municipal Retirement Fund are recognized as deferred outflows and inflows of resources on the statement of net position 3,164,042

Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds (24,998,425) Capital leases (199,999) Net pension liability - Police Pension (32,197,930) Net pension liability - Firefighters' Pension (39,321,164) Net pension liability - IMRF (6,893,971) Premium on bonds payable (334,971) Discount on bonds payable 27,805 Compensated absences payable (5,243,538) Other postemployment benefit obligation (6,915,527)

Accrued interest on long-term liabilities is reported as a liability on the statement of net position (338,790)

The net position of the Internal Service Funds is included in the governmental activities in the statement of net position 1,844,963

NET POSITION OF GOVERNMENTAL ACTIVITIES $ 45,717,525

See accompanying notes to financial statements. - 9 - CITY OF DEKALB, ILLINOIS

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS

For the Year Ended June 30, 2016

Special Revenue

Motor Mass General Fuel Tax Transit

REVENUES Taxes $ 17,104,968 $ - $ - Licenses and Permits 876,788 - - Intergovernmental 11,748,169 1,170,889 3,198,877 Charges for Services 2,143,615 - - Fines and Forfeitures 796,390 - - Investment Income (26,140) 3,357 - Miscellaneous 390,654 - 1,432

Total Revenues 33,034,444 1,174,246 3,200,309

EXPENDITURES Current General Government 5,012,558 - 3,110,302 Public Safety 21,397,418 - - Highways and Streets 3,286,770 487,066 - Community Development 1,047,614 - - Capital Outlay - 501 90,007 Debt Service Principal Retirement - - - Interest and Fiscal Charges - - -

Total Expenditures 30,744,360 487,567 3,200,309

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 2,290,084 686,679 -

OTHER FINANCING SOURCES (USES) Proceeds on Sale of Capital Assets 496 - - Transfers In 508,965 32,072 - Transfers (Out) (1,536,138) - -

Total Other Financing Sources (Uses) (1,026,677) 32,072 -

NET CHANGE IN FUND BALANCES 1,263,407 718,751 -

FUND BALANCES, JULY 1 8,221,253 2,378,748 -

FUND BALANCES, JUNE 30 $ 9,484,660 $ 3,097,499 $ -

- 10 - Special Revenue Tax Increment Tax Increment Nonmajor Total Financing Financing Governmental Governmental #1 #2 Funds Funds

$ 6,347,586 $ 1,216,455 $ 734,294 $ 25,403,303 - - - 876,788 - - 496,251 16,614,186 - - 141,793 2,285,408 - - 58,101 854,491 (288,068) 53,089 56 (257,706) - - 208,612 600,698

6,059,518 1,269,544 1,639,107 46,377,168

- - 188,039 8,310,899 - - 20,836 21,418,254 - - - 3,773,836 2,253,338 287,360 - 3,588,312 3,615,093 192,082 937,747 4,835,430

- - 2,065,017 2,065,017 - - 911,606 911,606

5,868,431 479,442 4,123,245 44,903,354

191,087 790,102 (2,484,138) 1,473,814

- - 1,245 1,741 - - 2,589,172 3,130,209 (1,068,663) - (337,571) (2,942,372)

(1,068,663) - 2,252,846 189,578

(877,576) 790,102 (231,292) 1,663,392

2,596,538 7,661,414 662,827 21,520,780

$ 1,718,962 $ 8,451,516 $ 431,535 $ 23,184,172

See accompanying notes to financial statements. - 11 - CITY OF DEKALB, ILLINOIS

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2016

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 1,663,392

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlay as expenditures; however, they are capitalized on the statement of net position and depreciated on the statement of activities 1,087,859

Depreciation expense does not require the use of current financial resources and, therefore, is not reported as an expenditure in governmental funds (4,139,462)

Proceeds from the disposal of capital assets are recognized in governmental funds but the gain (loss) is recognized on the statement of activities (27,391)

The repayment of the principal portion of long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding on the statement of net position 2,065,017

Certain revenue recognition is different on the full accrual basis than on the modified accrual basis (1,968)

Amortization of premium on bonds is reported as a reduction of interest expense on the statement of activities 56,342

Amortization of discount on bonds is reported as a reduction of interest expense on the statement of activities (136,115)

Amortization of the loss on refunding is reported as interest expense on the statement of activities (82,640)

The decrease of accrued interest payable is shown as an decrease of expense on the statement of activities 16,081

The decrease in compensated absences payable is shown as an decrease of the statement of activities 149,932

The change in the other postemployment benefit obligation 102,309

The change in the Police Pension Fund net pension liability and deferred outflows/inflows of resources is not a source or use of financial resources (6,843,979)

The change in the Firefighters' Pension Fund net pension liability and deferred outflows of resources is not a source or use of a financial resource (4,808,550)

The change in the Illinois Municipal Retirement Fund net pension liability and deferred outflows of resources is not a source or use of a financial resource (851,376)

The change in net position of Internal Service Funds is reported in governmental activities 80,047

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ (11,670,502)

See accompanying notes to financial statements. - 12 - CITY OF DEKALB, ILLINOIS

STATEMENT OF NET POSITION PROPRIETARY FUNDS

June 30, 2016

Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds

CURRENT ASSETS Cash and Investments $ 5,582,629 $ 6,053 $ 270,333 $ 5,859,015 $ 2,013,756 Receivables Accounts Receivable 1,449,265 - 158,651 1,607,916 - Accrued Interest 8,051 - - 8,051 2,698 Other 4,290 20,004 47,021 71,315 59,968 Prepaid Expenses 9,529 10,548 - 20,077 395,249 Inventory - 36,610 - 36,610 - Due from Other Governments - 27,718 - 27,718 -

Total Current Assets 7,053,764 100,933 476,005 7,630,702 2,471,671

NONCURRENT ASSETS Capital Assets Nondepreciable 528,648 20,042,378 - 20,571,026 - Depreciable 46,168,559 15,704,668 - 61,873,227 - Accumulated Depreciation (20,482,598) (4,912,425) - (25,395,023) -

Total Noncurrent Assets 26,214,609 30,834,621 - 57,049,230 -

Total Assets 33,268,373 30,935,554 476,005 64,679,932 2,471,671

DEFERRED OUTFLOWS OF RESOURCES Pension Items - IMRF 790,647 80,576 - 871,223 -

Total Assets and Deferred Outflows of Resources 34,059,020 31,016,130 476,005 65,551,155 2,471,671

CURRENT LIABILITIES Accounts Payable 1,305,276 133,797 320,362 1,759,435 27,116 Accrued Payroll 69,116 9,407 - 78,523 - Accrued Interest Payable 28,965 2,633 - 31,598 - Deposits Payable 13,150 31,713 - 44,863 - Unearned Revenue 27,974 66,288 158,651 252,913 901 Claims Payable - - - - 299,346 General Obligation Bonds Payable 286,325 70,250 - 356,575 - IEPA Loans Payable 443,355 - - 443,355 - Compensated Absences Payable 116,740 2,250 - 118,990 -

Total Current Liabilities 2,290,901 316,338 479,013 3,086,252 327,363

LONG-TERM LIABILITIES General Obligation Bonds Payable 1,099,250 270,750 - 1,370,000 - Net Pension Liability - IMRF 1,657,369 171,111 - 1,828,480 - Net Other Postemployment Benefit Payable 368,927 51,415 - 420,342 - IEPA Loans Payable 2,075,426 - - 2,075,426 - Advances from Other Funds - 334,000 - 334,000 - Compensated Absences Payable 466,958 42,743 - 509,701 - Claims Payable - - - - 299,345

Total Long-Term Liabilities 5,667,930 870,019 - 6,537,949 299,345

Total Liabilities 7,958,831 1,186,357 479,013 9,624,201 626,708

(This statement is continued on the following page.) - 13 - CITY OF DEKALB, ILLINOIS

STATEMENT OF NET POSITION (Continued) PROPRIETARY FUNDS

June 30, 2016

Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds

NET POSITION Net Investment in Capital Assets $ 22,310,253 $ 30,493,621 $ - $ 52,803,874 $ - Unrestricted (Deficit) 3,789,936 (663,848) (3,008) 3,123,080 1,844,963

TOTAL NET POSITION $ 26,100,189 $ 29,829,773 $ (3,008) $ 55,926,954 $ 1,844,963

See accompanying notes to financial statements. - 14 - CITY OF DEKALB, ILLINOIS

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS

For the Year Ended June 30, 2016

Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds

OPERATING REVENUES Charges for Services $ 5,391,676 $ 468,110 $ 2,047,188 $ 7,906,974 $ 6,715,457 Miscellaneous 23,472 24,646 59,500 107,618 34,387

Total Operating Revenues 5,415,148 492,756 2,106,688 8,014,592 6,749,844

OPERATING EXPENSES Administration - - - - 6,449,678 Operations 4,215,687 861,202 2,110,657 7,187,546 - Depreciation 1,046,871 396,476 - 1,443,347 -

Total Operating Expenses 5,262,558 1,257,678 2,110,657 8,630,893 6,449,678

OPERATING INCOME (LOSS) 152,590 (764,922) (3,969) (616,301) 300,166

NONOPERATING REVENUES (EXPENSES) Investment Income 38,668 4 - 38,672 29,881 Proceeds on Sale of Capital Assets 1,724 - - 1,724 - Interest Expense (91,956) (5,849) - (97,805) -

Total Nonoperating Revenues (Expenses) (51,564) (5,845) - (57,409) 29,881

NET INCOME (LOSS) BEFORE TRANSFERS AND CONTRIBUTIONS 101,026 (770,767) (3,969) (673,710) 330,047

CONTRIBUTIONS Contributions - Capital Grant Revenue - 81,555 - 81,555 -

Total Contributions - 81,555 - 81,555 -

TRANSFERS Transfers In 321,128 - - 321,128 - Transfers (Out) (258,965) - - (258,965) (250,000)

Total Transfers 62,163 - - 62,163 (250,000)

CHANGE IN NET POSITION 163,189 (689,212) (3,969) (529,992) 80,047

NET POSITION, JULY 1 26,390,732 30,518,985 961 56,910,678 1,764,916

Prior Period Adjustment (453,732) - - (453,732) -

NET POSITION, JULY 1, RESTATED 25,937,000 30,518,985 961 56,456,946 1,764,916

NET POSITION, JUNE 30 $ 26,100,189 $ 29,829,773 $ (3,008) $ 55,926,954 $ 1,844,963

See accompanying notes to financial statements. - 15 - CITY OF DEKALB, ILLINOIS

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS

For the Year Ended June 30, 2016

Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users $ 5,868,212 $ 546,378 $ 2,000,167 $ 8,414,757 $ - Receipts from Interfund Services Transactions - - - - 5,250,395 Receipts from Employees and Others - - - - 1,499,457 Receipts from Miscellaneous Revenues 23,472 24,646 59,500 107,618 34,387 Payments to Other Funds (486,953) (81,801) (175,000) (743,754) - Payments to Suppliers (2,609,370) (183,900) (1,940,643) (4,733,913) (6,476,272) Payments to Employees (2,108,835) (662,341) - (2,771,176) (6,117)

Net Cash from Operating Activities 686,526 (357,018) (55,976) 273,532 301,850

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund Advances 49,000 285,000 - 334,000 - Transfers In 321,128 - - 321,128 - Transfers (Out) (258,965) - - (258,965) (250,000)

Net Cash from Noncapital Financing Activities 111,163 285,000 - 396,163 (250,000)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grants 91,793 121,629 - 213,422 - Purchase of Capital Assets (1,159,624) (136,977) - (1,296,601) - Proceeds From Sale of Capital Assets 1,724 - - 1,724 - Principal Payments on Long-Term Debt (723,356) (75,650) - (799,006) - Interest Payments on Long-Term Debt (100,293) (7,166) - (107,459) -

Net Cash from Capital and Related Financing Activities (1,889,756) (98,164) - (1,987,920) -

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received on Investments 40,111 4 - 40,115 29,881

Net Cash from Investing Activities 40,111 4 - 40,115 29,881

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,051,956) (170,178) (55,976) (1,278,110) 81,731

CASH AND CASH EQUIVALENTS, JULY 1 5,474,962 39,253 326,309 5,840,524 1,932,025

CASH AND CASH EQUIVALENTS, JUNE 30 $ 4,423,006 $ (130,925) $ 270,333 $ 4,562,414 $ 2,013,756

(This statement is continued on the following page.) - 16 - CITY OF DEKALB, ILLINOIS

STATEMENT OF CASH FLOWS (Continued) PROPRIETARY FUNDS

For the Year Ended June 30, 2016

Governmental Business-Type Activities Activities Nonmajor Enterprise Internal Funds Service Water Airport Refuse Total Funds

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) $ 152,590 $ (764,922) $ (3,969) $ (616,301) $ 300,166 Adjustments to Reconcile Operating Income (Loss) to Net Cash from Operating Activities Depreciation and Amortization 1,046,871 396,476 - 1,443,347 - Changes in Assets and Liabilities Accounts Receivable 495,651 (2,730) 83,484 576,405 - Other Receivables 2,312 - (47,021) (44,709) 33,494 Prepaid Expenses (9,529) (2,412) - (11,941) 111,695 Inventory - 14,710 - 14,710 - Accounts Payable (228,017) 57,451 (4,986) (175,552) (19,417) Accrued Payroll 32,984 2,139 - 35,123 (6,117) Claims Payable - - - - (118,872) Other Payables (3,400) 8,880 - 5,480 - Unearned Revenue (21,427) 66,288 (83,484) (38,623) 901 Pension Items - IMRF (389,127) (36,873) - (426,000) - Net Pension Liability - IMRF 659,027 62,448 - 721,475 - Other Postemployment Benefit (3,678) (429) - (4,107) - Compensated Absences 111,892 (21,066) - 90,826 -

NET CASH FROM OPERATING ACTIVITIES $ 1,846,149 $ (220,040) $ (55,976) $ 1,570,133 $ 301,850

See accompanying notes to financial statements. - 17 - CITY OF DEKALB, ILLINOIS

STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS

June 30, 2016

ASSETS Cash and Short-Term Investments $ 2,321,076 Investments U.S. Treasury Obligations 8,473,776 U.S. Agency Obligations 7,504,979 Corporate Bonds 2,879,836 Mutual Funds 32,676,534 Common Stock 170,841 Receivables Accrued Interest 79,296 Prepaid Expenses 7,669

Total Assets 54,114,007

LIABILITIES Accounts Payable 16,325

Total Liabilities 16,325

DEFERRED INFLOWS OF RESOURCES Unavailable property taxes 1,926,286

Total Deferred Inflows of Resources 1,926,286

NET POSITION RESTRICTED FOR PENSIONS $ 52,171,396

See accompanying notes to financial statements. - 18 - CITY OF DEKALB, ILLINOIS

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUNDS

For the Year Ended June 30, 2016

ADDITIONS Contributions Employer Contributions $ 3,780,261 Employee Contributions 1,204,875

Total Contributions 4,985,136

Investment Income Net Appreciation in Fair Value of Investments (1,714,675) Interest 1,414,838

Total Investment Income (299,837) Less Investment Expense (86,769)

Net Investment Income (386,606)

Total Additions 4,598,530

DEDUCTIONS Administrative Expenses 86,603 Benefits and Refunds 5,651,761

Total Deductions 5,738,364

NET DECREASE (1,139,834)

NET POSITION RESTRICTED FOR PENSIONS July 1 53,311,230

June 30 $ 52,171,396

See accompanying notes to financial statements. - 19 -

CITY OF DEKALB, ILLINOIS

NOTES TO FINANCIAL STATEMENTS

June 30, 2016

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the City of DeKalb (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America, as applicable to governments (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies:

a. Reporting Entity

The City is a municipal corporation governed by an elected mayor and council. As defined by GAAP established by GASB, the financial reporting entity consists of the primary government, as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable. Financial accountability is defined as:

1) Appointment of a voting majority of the component unit’s board and either (a) the ability to impose will by the primary government or (b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government; or

2) Fiscal dependency on the primary government.

Based on the above criteria, the City has one component unit.

Discretely Presented Component Unit

The component unit column in the basic financial statements includes the financial data of the City’s component unit. It is reported in a separate column to emphasize that it is legally separate from the City.

The DeKalb Public Library

The DeKalb Public Library (the Library) operates and maintains the City’s public library facilities. The Library’s Board is appointed by the Mayor with the consent of the City Council. The Library may not issue bonded debt, and its annual budget and property tax levy requests are subject to the City Council’s approval. Separate financial statements for the Library are not available.

- 20 - - 20 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b. Fund Accounting

The City uses funds to report on its financial position and the change in its financial position. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities.

A fund is a separate accounting entity with a self-balancing set of accounts. The minimum number of funds are maintained consistent with legal and managerial requirements.

Funds are classified into the following categories: governmental, proprietary, and fiduciary.

Governmental funds are used to account for all or most of the City’s general activities, including the collection and disbursement of committed, restricted, or assigned monies (special revenue funds), the funds committed, restricted, or assigned for the acquisition or construction of capital assets (capital projects funds), and the funds committed, restricted, or assigned for the servicing of long-term debt (debt service funds). The General Fund is used to account for all activities of the City not accounted for in some other fund.

Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the City (internal service funds).

Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the City. The City utilizes pension trust funds which are generally used to account for assets that the City holds in a fiduciary capacity.

c. Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the City. The effect of material interfund activity has been eliminated from these statements. Interfund services provided and used are not eliminated on these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

- 21 - - 21 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Government-Wide and Fund Financial Statements (Continued)

The statement of activities demonstrates the degree to which the direct expenses of a given function, segment, or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Motor Fuel Tax Fund accounts for the operations of street maintenance programs and capital projects as authorized by the Illinois Department of Transportation. Financing is provided by the City’s share of gasoline taxes. The City has elected to report the Motor Fuel Tax Fund as major.

The Mass Transit Fund accounts for the restricted grant revenues for the two community mass transit services: Northern Illinois University’s Huskies Line and Voluntary Action Center’s Trans Vac Service. The City has elected to report the Mass Transit Fund as major.

The Tax Increment Financing #1 Fund accounts for the restricted property taxes for the redevelopment activities within a defined area of the community in order to eliminate blighted conditions in that area.

The Tax Increment Financing #2 Fund accounts for the restricted property taxes for the redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area.

- 22 - - 22 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Government-Wide and Fund Financial Statements (Continued)

The City reports the following major proprietary funds:

The Water Fund accounts for the provision of water service to the residents of the City. All activity necessary to provide such services is accounted for in this fund including, but not limited to, administration, operation, maintenance, financing and related debt service, and billing and collection.

The Airport Fund is used to account for the operation of the Taylor Municipal Airport. Financing may be provided from a number of sources including user fees as well as property taxes.

Additionally, the City reports the following Internal Service Fund:

Internal Service Funds account for the City’s self-insured property, casualty, workers’ compensation and health insurance programs provided to other departments or agencies of the City on a cost reimbursement basis. These are reported as part of the governmental activities on the government-wide financial statements as they provide services to the City’s governmental funds/activities.

The City reports pension trust funds as fiduciary funds to account for the Police Pension Fund and Firefighters’ Pension Fund.

d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues and additions are recorded when earned and expenses and deductions are recorded when a liability is incurred. Property taxes are recognized as revenues in the year for which they are levied (i.e., intended to finance). Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Operating revenues and expenses are directly attributable to the operation of the proprietary funds. Non-operating revenue/expenses are incidental to the operations of these funds.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collectible

- 23 - - 23 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

within the current period or soon enough thereafter to be used to pay liabilities of the current period, generally 60 days except for sales taxes, income taxes, and telecommunication taxes which use 90 days. The City recognizes property taxes when they become both measurable and available in the year for which they are levied (i.e., intended to finance). Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as expenditures when due.

Property taxes, sales taxes owed from the state at year end, franchise taxes, licenses, charges for services, restaurant and bar taxes and investment income associated with the current fiscal period are all considered to be susceptible to accrual and are recognized as revenues of the current fiscal period. Fines and permits revenues are not susceptible to accrual because generally they are not measurable until received in cash.

In applying the susceptible to accrual concept to intergovernmental revenues (e.g., federal and state grants), the legal and contractual requirements of the numerous individual programs are used as guidelines. There are, however, essentially two types of revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are generally revocable only for failure to comply with prescribed eligibility requirements, such as equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the availability criterion.

The City reports unearned revenue and deferred/unavailable revenue on its financial statements. Deferred/unavailable revenues arise when a potential revenue does not meet both the available criteria for recognition in the current period, under the modified accrual basis of accounting. Unearned revenue arises when a revenue is measurable but not earned under the accrual basis of accounting. Unearned revenues also arise when resources are received by the City before it has a legal claim to them or prior to the provision of services, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability or deferred inflows of resource for unearned and deferred/unavailable revenue are removed from the financial statements and revenue is recognized.

- 24 - - 24 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Cash and Investments

For purposes of the statement of cash flows, the City’s proprietary funds considers cash and cash equivalents to include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

Investments with a maturity of one year or less when purchased and all non-negotiable certificates of deposit are stated at cost or amortized cost. Investments with a maturity greater than one year when purchased are reported at fair value. All investments of the pension trust funds, regardless of length of maturity, are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

f. Interfund Receivables/Payables

Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “interfund receivables/payables” (current portion of interfund loans) or “advances to/from other funds” (noncurrent portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.”

Advances are offset by nonspendable fund balance in applicable governmental funds.

Interfund service transactions are accounted for as revenues, expenditures, or expenses.

Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers.

g. Property Taxes

Property taxes are levied in December of each year on all taxable real property and attach as an enforceable lien on the property as of the preceding January 1. Tax bills are prepared by the County and are payable in two installments on or about June 1 and September 1. The County Collector collects such taxes and remits them periodically. Since the 2015 levy is intended to finance the 2016-2017 fiscal year, the entire levy

- 25 - - 25 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g. Property Taxes (Continued)

has been recorded as deferred inflow of resources. The 2016 levy has not been recorded as a receivable in accordance with GASB Statement No. 33, Accounting for Nonexchange Transactions. While the levy attached as a lien as of January 1, 2016, the taxes will not be levied by the City or extended by the County until December 2016 and, therefore, the amount is not measurable at June 30, 2016.

h. Inventories and Prepaid Items/Expenses

Inventories are valued at cost, which approximates market, using the first-in/first-out (FIFO) method. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased.

Payments made to vendors for services that will benefit periods beyond the date of this report are recorded as prepaid items/expenses. Prepaid items/expenses are recorded as expenditures/expenses when consumed rather than when purchased.

i. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost in excess of $25,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, and equipment is depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Buildings and improvements 40-50 Equipment 10-20 Vehicles 3-20 Infrastructure 25-50 Water Distribution System 40-65

- 26 - - 26 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

j. Compensated Absences

Vested or accumulated vacation and sick leave that is owed to retirees or terminated employees is reported as an expenditure and a fund liability of the governmental fund that will pay it in the fund financial statements, and the remainder is reported in governmental activities. Vested or accumulated vacation and sick leave of proprietary funds and governmental activities at the government-wide level is recorded as an expense and liability as the benefits accrue to employees.

k. Long-Term Obligations

In the government-wide financial statements and proprietary funds in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund financial statements. Bond premiums and discounts, as well as the unamortized loss on refunding, are deferred and amortized over the life of the bonds. Bonds payable are reported net of any applicable bond premium or discount. Issuance costs are reported as expenses.

The unamortized loss on refunding is reported as a deferred outflow of resources.

In the fund financial statements, governmental funds recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures.

l. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

- 27 - - 27 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

m. Fund Balance/Net Position

In the fund financial statements, governmental funds report nonspendable fund balance for amounts that are either not in spendable form or legally or contractually required to be maintained intact. Restrictions of fund balance are reported for amounts constrained by legal restrictions from outside parties for a specific purpose, or externally imposed by outside entities. None of the restricted fund balance resulted from enabling legislation adopted by the City. Committed fund balance is constrained by formal actions of the City Council, which is considered the City’s highest level of decision-making authority. Formal actions include ordinances approved by the Council. Assigned fund balance represents amounts constrained by the City’s intent to use them for a specific purpose. The authority to assign fund balance has been delegated to the City Manager through the fund balance policy adopted by the City Council. Any residual fund balance of the General Fund is reported as unassigned. Deficit fund balances of other governmental funds are also reported as unassigned.

The City has established a fund balance reserve policy for several of its funds. The policy requires unassigned fund balances to be maintained in the General Fund equivalent to 25% of the fund’s annual operating expenditures. The Tax Increment Financing Funds should be self-supporting and should maintain a fund balance equivalent to meet the planned improvements identified in a multi-year capital schedule. The Capital Projects Fund should maintain a fund balance of the planned improvements for the current fiscal year. The Special Revenue Funds should maintain the least fund balance necessary to cover current fiscal year expenditures, plus an amount to pay for those expenditures of the subsequent fiscal year needed to avoid a cash deficit position. The Water Fund unrestricted net position will be maintained at a minimum level equal to 25% of the annual budgeted operating expenses, plus the budged capital improvements. The unrestricted net position of the Airport Fund will be maintained at a minimum level equal to 25% of annual budgeted operational expenses, plus the budgeted capital improvements for the current fiscal year. The Health Insurance Fund should maintain unrestricted net position of one month of IPBC premiums. The Workers’ Compensation Fund should maintain unrestricted net position of $1,000,000 collectively. The Liability/Property Insurance Fund should maintain unrestricted net position of approximately 25% of annual budgeted expenses. The Fleet Replacement Fund should maintain unrestricted net position of the planned replacements for the current fiscal year. The Equipment Fund should maintain unrestricted net position of the planned replacements for the current fiscal year.

The City’s flow of funds assumption prescribes that the funds with the highest level of constraint are expended first. If restricted or unrestricted funds are available for spending, the restricted funds are spent first. Additionally, if different levels of unrestricted funds are available for spending the City considers committed funds to be expended first followed by assigned and then unassigned funds.

- 28 - - 28 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

m. Fund Balance/Net Position (Continued)

In the government-wide financial statements, restricted net positions are legally restricted by outside parties for a specific purpose. Net investment in capital assets represents the book value of capital assets less any outstanding long-term debt issued to acquire or construct the capital assets.

n. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

2. DEPOSITS AND INVESTMENTS

The City maintains a cash and investment pool that is available for use by all funds, except the pension trust funds. Each fund’s portion of this pool is displayed on the financial statements as “cash and investments.” In addition, investments are separately held by several of the City’s funds. The deposits and investments of the pension trust fund are held separately from those of other funds.

The City’s investment policy authorizes the City to invest in all investments allowed by Illinois Compiled Statutes (ILCS). These include deposits/investments in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, and Illinois Funds (created by the Illinois State Legislature under the control of the State Comptroller that maintains a $1 per share value which is equal to the participants fair value) and Illinois Metropolitan Investment Fund (IMET).

It is the policy of the City to invest its funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of public funds, using the “prudent person” standard for managing the overall portfolio. The primary objectives of the policy are, in order of priority, safety of principal, liquidity, and rate of return.

- 29 - - 29 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

2. DEPOSITS AND INVESTMENTS (Continued)

Deposits with Financial Institutions

Custodial credit risk for deposits with financial institutions is the risk that in the event of bank failure, the City’s deposits may not be returned to it. The City’s investment policy requires pledging of collateral for all bank balances in excess of federal depository insurance with the collateral held by an independent third party acting as the agent of the City.

Investments

The following table presents the investments and maturities of the City’s debt securities as of June 30, 2016:

Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10

Negotiable Certificates of Deposit $ 15,024,903 $ 11,594,826 $ 3,430,077 $ - $ -

TOTAL $ 15,024,903 $ 11,594,826 $ 3,430,077 $ - $ -

The City categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The City has the following recurring fair value measurements as of June 30, 2016: Negotiable Certificates of Deposit of $15,024,903 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs).

Interest rate risk is the risk that changes in interest rates will adversely affect the market value of an investment. In accordance with its investment policy, the City limits its exposure to interest rate risk by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and by investing operating funds primarily in short-term securities.

The City limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by requiring that deposits with financial institutions in excess of FDIC coverage be collateralized with collateral in excess of the uninsured deposits with the collateral held by a third party acting as the agent of the City. At the end of the year, the City’s investments in Illinois Funds were rated AAA by Standard and Poor’s.

- 30 - - 30 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

2. DEPOSITS AND INVESTMENTS (Continued)

Investments (Continued)

Illinois Funds is an investment pool managed by the State of Illinois, Office of the Treasurer, which allows governments within the state to pool their funds for investment purposes. Illinois Funds is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of 1940.

The State Treasurer maintains the Illinois Funds Money Market at cost and fair value through daily adjustment in the interest earnings. The State Treasurer also maintains the average duration of the pool at less than 25 days. The fair value of the City’s investment in the funds is the same as the value of the pool shares. The pool is audited annually by an outside independent auditor and copies of the report are distributed to participants. The pool had a Standard and Poor’s AAAm rating as June 30, 2016. The relationship between the City and the investment agent is a direct contractual relationship and the investments are not supported by a transferable instrument that evidences ownership or creditorship.

IMET is a governmental investment fund created under the Illinois Municipal Code. IMET actively manages two investment funds for municipal treasurers, official custodians of municipal funds and other public agencies in the State. IMET’s offerings consist of the 1-3 Year Series and the Convenience Series. The 1-3 Year Series invests exclusively in United States Government backed securities (Treasury and agencies) and has a fluctuating net asset value and an average portfolio maturity of one to three years. The 1-3 Year Series is rated Aaa/MR1 by Moody’s Investors Services. The Convenience Series is a short-term money market instrument collateralized via FDIC Insurance, the FHLB LOC Program, Unites States Government securities at 110% on bank deposits and United States Government securities in the repurchase agreement program. The relationship between the College and the investment agent is a direct contractual relationship and the investments are not supported by a transferable instrument that evidences ownership or creditorship.

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the City will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the City’s investment policy requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held in a custodial account with the trust department of an approved financial institution. Illinois Funds are not subject to custodial credit risk.

- 31 - - 31 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

2. DEPOSITS AND INVESTMENTS (Continued)

Investments (Continued)

Concentration of credit risk is the risk that the City has a high percentage of their investments invested in one type of investment. The City’s investment policy limits the City’s investments to the safest types of securities, pre-qualifies financial institutions, broker/dealers, intermediaries and advisors with which the City does business and diversifies the investment portfolio so that potential losses on individual securities will be minimized. At year end, the City’s investment in negotiable certificates of deposit represents more than 5% of the total cash and investment portfolio.

3. RECEIVABLES

The following receivables are included in due from other governments on the statement of net position at June 30, 2016:

GOVERNMENTAL ACTIVITIES Local Use Tax $ 265,951 Sales Tax - State 1,281,997 Income Tax 287,073 Sales Tax - City 1,566,001 Auto Rental Sales Tax 5,617 Video Gaming Tax 40,617 Telecommunication Tax 192,498 Grants 473,478 TIF Surplus 190,222 Motor Fuel Tax 62,759 Miscellaneous 475

TOTAL GOVERNMENTAL ACTIVITIES $ 4,366,688

BUSINESS-TYPE ACTIVITIES Airport Grants $ 27,718

TOTAL BUSINESS-TYPE ACTIVITIES $ 27,718

- 32 - - 32 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

4. CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2016 was as follows:

Beginning Balances, Ending Restated Increases Transfers Decreases Balances

GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land $ 10,358,605 $ - $ - $ - $ 10,358,605 Land Right of Way 25,736,657 5,600 - - 25,742,257 Construction in Progress 713,961 636,774 - 1,151,871 198,864 Total Capital Assets not Being Depreciated 36,809,223 642,374 - 1,151,871 36,299,726

Capital Assets being Depreciated Buildings and Improvements 20,814,645 - - - 20,814,645 Equipment 4,422,565 206,098 (1,696,956) 99,459 2,832,248 Vehicles 6,106,593 657,000 1,696,956 - 8,460,549 Infrastructure 152,473,401 734,258 - - 153,207,659 Total Capital Assets Being Depreciated 183,817,204 1,597,356 - 99,459 185,315,101

Less Accumulated Depreciation for Buildings and Improvements 4,280,798 400,255 - - 4,681,053 Equipment 2,445,199 142,613 (678,782) 72,068 1,836,962 Vehicles 4,343,317 429,715 678,782 - 5,451,814 Infrastructure 75,168,896 3,166,879 - - 78,335,775 Total Accumulated Depreciation 86,238,210 4,139,462 - 72,068 90,305,604

Total Capital Assets Being Depreciated, Net 97,578,994 (2,542,106) - 27,391 95,009,497

GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET $ 134,388,217 $ (1,899,732) $ - $ 1,179,262 $ 131,309,223

Beginning Balances, Ending Restated Increases Decreases Balances

BUSINESS-TYPE ACTIVITIES Capital Assets not Being Depreciated Land $ 19,386,047 $ - $ - $ 19,386,047 Land Improvements 544,893 - - 544,893 Construction in Progress 607,435 1,290,548 1,257,897 640,086 Total Capital Assets not Being Depreciated 20,538,375 1,290,548 1,257,897 20,571,026

Capital Assets being Depreciated Buildings and Improvements 4,804,864 - - 4,804,864 Equipment 688,715 - - 688,715 Vehicles 966,936 - - 966,936 Airport Infrastructure 12,791,713 6,053 - 12,797,766 Water Distribution System 41,357,049 1,257,897 - 42,614,946 Total Capital Assets Being Depreciated 60,609,277 1,263,950 - 61,873,227

- 33 - - 33 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

4. CAPITAL ASSETS (Continued)

Beginning Balances, Ending Restated Increases Decreases Balances

BUSINESS-TYPE ACTIVITIES (Continued) Less Accumulated Depreciation for Building and Improvements $ 1,947,710 $ 93,652 $ - $ 2,041,362 Equipment 456,414 22,713 - 479,127 Vehicles 734,189 39,861 - 774,050 Airport Infrastructure 2,953,042 322,166 - 3,275,208 Water Distribution System 17,860,321 964,955 - 18,825,276 Total Accumulated Depreciation 23,951,676 1,443,347 - 25,395,023

Total Capital Assets Being Depreciated, Net 36,657,601 (179,397) - 36,478,204

BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET $ 57,195,976 $ 1,111,151 $ 1,257,897 $ 57,049,230

Depreciation expense was charged to functions/programs of the primary government as follows:

GOVERNMENTAL ACTIVITIES General Government $ 105,833 Public Safety 486,156 Community Development 127,065 Highways and Streets 3,420,408

TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 4,139,462

BUSINESS-TYPE ACTIVITIES Water $ 1,046,871 Airport 396,476

TOTAL DEPRECIATION EXPENSE - BUSINESS-TYPE ACTIVITIES $ 1,443,347

Capital asset additions were charged to functions/programs of the primary government as follows:

GOVERNMENTAL ACTIVITIES Public Safety $ 738,235 Community Development 82,863 Highways and Streets 266,761

TOTAL ADDITIONS - GOVERNMENTAL ACTIVITIES $ 1,087,859

- 34 - - 34 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT

a. General Obligation Bonds

The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and to fund noncapital Tax Increment Financing costs. General obligation bonds have been issued for both governmental and business- type activities. General obligation bonds issued for business-type activities are reported in the proprietary funds as they are expected to be repaid from proprietary revenues. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds currently outstanding are as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements June 30 Portion

$10,800,000 2010A Series General Obligation Refunding Bonds, dated May 27, 2010, due in annual installments of $755,000 to $1,145,000, plus interest of 2% to 4% TIF through December 2, Debt 2021 Service $ 6,870,000 $ - $ 825,000 $ 6,045,000 $ 845,000

$3,905,000 2010B Series General Obligation Refunding Bonds, dated December 1, 2010, due in annual installments of $150,000 to $955,000, plus interest of 4.25% to General 4.75% through January 1, Debt 2028 Service 3,905,000 - - 3,905,000 -

$5,415,000 2010C Series General Obligation Refunding Bonds, dated December 1, 2010, due in annual installments of $180,000 to $755,000, plus interest of 1.9% to General 5.9% through January 1, Debt 2023 Service 4,465,000 - 195,000 4,270,000 205,000

$9,905,000 2012A Series General Obligation Bonds, dated October 25, 2012, due in annual installments of $505,000 to $845,000, plus interest General of 2.0% to 2.5% through Debt January 1, 2030 Service 8,690,000 - 635,000 8,055,000 650,000

- 35 - - 35 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT (Continued)

a. General Obligation Bonds (Continued)

Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements June 30 Portion

$2,380,000 2013B Series General Obligation Bonds, dated June 18, 2013, due in annual installments of $40,000 to $745,000, plus interest of General 0.8% to 3.0% through Debt January 1, 2022 Service $ 2,340,000 $ - $ 10,000 $ 2,330,000 $ 10,000

$2,870,000 2014 Series General Obligation Water $ 1,676,575 $ - $ 291,000 $ 1,385,575 $ 286,325 Refunding Bonds, dated November 3, 2014, due in Airport 416,650 - 75,650 341,000 70,250 annual installments of $340,000 to $750,000, General plus interest of 1.54% Debt through January 1, 2021 Service 776,775 - 383,350 393,425 393,425

TOTAL $ 29,140,000 $ - $ 2,415,000 $ 26,725,000 $ 2,460,000

b. Illinois Environmental Protection Agency Loan Contracts Payable

The City, through the Illinois Environmental Protection Agency (IEPA), received low interest loans for the construction of a water treatment facility. Loan contracts payable have been issued for business-type activities. IEPA loan contracts currently outstanding are as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions June 30 Portion

$4,072,711 IEPA Loan #L17133700 Contract Payable of 1999, due in semiannual installments of $133,239 including interest at 2.535% through January 8, 2021 Water $ 1,474,577 $ - $ 230,549 $ 1,244,028 $ 236,431

$3,344,932 IEPA Loan #L17161400 Contract Payable of 2000, due in semiannual installments of $109,406 including interest at 2.535% through May 30, 2021 Water 1,210,813 - 189,311 1,021,502 194,139

- 36 - - 36 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT (Continued)

b. Illinois Environmental Protection Agency Loan Contracts Payable (Continued)

Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions June 30 Portion

$283,072 IEPA Loan #L174045 Contract Payable of 2012, due in semiannual installments of $5,749 including interest at 2.295% through October 26, 2032 Water 265,748 - 12,497 253,251 12,785

TOTAL $ 2,951,138 $ - $ 432,357 $ 2,518,781 $ 443,355

c. Capital Leases

The City is committed under leases for various vehicle and equipment purchases as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions June 30 Portion

Capital Equipment Projects $ 216,666 $ - $ 16,667 $ 199,999 $ 16,667

TOTAL $ 216,666 $ - $ 16,667 $ 199,999 $ 16,667

d. Debt Service Requirements to Maturity

General Obligation Bonds Year Governmental Business-Type Ending Activities Activities June 30, Principal Interest Principal Interest

2017 $ 2,103,425 $ 859,896 $ 356,575 $ 26,658 2018 2,165,000 802,724 340,000 21,153 2019 2,355,000 724,529 345,000 15,903 2020 2,440,000 637,329 340,000 10,576 2021 2,545,000 538,349 345,000 5,327 2022 2,645,000 432,989 - - 2023 1,560,000 344,704 - - 2024 1,620,000 284,974 - - 2025 1,670,000 232,834 - - 2026 1,725,000 177,996 - - 2027 1,785,000 120,164 - - 2028 1,015,000 58,119 - - 2029 865,000 32,088 - - 2030 505,000 12,625 - -

TOTAL $ 24,998,425 $ 5,259,320 $ 1,726,575 $ 79,617

- 37 - - 37 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT (Continued)

d. Debt Service Requirements to Maturity (Continued)

IEPA Loan Contract Capital Leases Year Business Type Governmental Ending Activities Activities June 30, Principal Interest Principal Interest

2017 $ 443,355 $ 60,459 $ 16,667 $ - 2018 454,635 49,180 16,667 - 2019 466,201 37,613 16,667 - 2020 478,061 25,753 16,667 - 2021 490,224 13,590 16,667 - 2022 14,331 4,194 16,667 - 2023 14,661 3,863 16,667 - 2024 15,000 3,525 16,667 - 2025 15,346 3,179 16,667 - 2026 15,700 2,824 16,667 - 2027 16,063 2,462 16,667 - 2028 16,433 2,091 16,662 - 2029 16,813 1,712 - - 2030 17,201 1,324 - - 2031 17,598 927 - - 2032 18,004 521 - - 2033 9,155 105 - -

TOTAL $ 2,518,781 $ 213,322 $ 199,999 $ -

e. Changes in Long-Term Liabilities

During the fiscal year the following changes occurred in liabilities reported in the governmental activities:

Balances July 1, Issuances or Balances Current Reclassified Accretions Reductions June 30 Portion

General Obligation Bonds Payable $ 27,046,775 $ - $ 2,048,350 $ 24,998,425 $ 2,103,425 Premium on Bonds Payable 391,313 - 56,342 334,971 - Discount on Bonds Payable (163,920) - (136,115) (27,805) - Capital Leases 216,666 - 16,667 199,999 16,667 Compensated Absences Payable 5,393,470 - 149,932 5,243,538 1,048,708 Net Pension Liability - IMRF 4,815,134 2,078,837 - 6,893,971 - Net Pension Liability - Police Pension 29,809,622 2,388,308 - 32,197,930 - Net Pension Liability - Firefighters’ Pension 36,014,928 3,306,236 - 39,321,164 - Net Other Postemployment Benefit Obligation 7,017,836 - 102,309 6,915,527 - Claims Payable 717,563 274,029 392,901 598,691 299,346

TOTAL GOVERNMENTAL ACTIVITIES $ 111,259,387 $ 8,047,410 $ 2,630,386 $ 116,676,411 $ 3,468,146 - 38 - - 38 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT (Continued)

e. Changes in Long-Term Liabilities (Continued)

For the governmental activities, the compensated absences, net pension liability, and the net other postemployment benefit obligation are generally liquidated by the General Fund. Claims payable are generally liquidated by the internal service funds.

Balances Balances Current July 1 Additions Reductions June 30 Portion

BUSINESS-TYPE ACTIVITIES General Obligation Bonds Water $ 1,676,575 $ - $ 291,000 $ 1,385,575 $ 286,325 Airport 416,650 - 75,650 341,000 70,250

Total General Obligation Bonds 2,093,225 - 366,650 1,726,575 356,575

IEPA Loans Water 2,951,138 - 432,357 2,518,781 443,355

Net Pension Liability - IMRF Water 998,342 659,027 - 1,657,369 - Airport 108,663 62,448 - 171,111 -

Total Net Pension Liability - IMRF 1,107,005 721,475 - 1,828,480 -

Compensated Absences Water 471,806 111,892 - 583,698 116,740 Airport 66,059 - 21,066 44,993 2,250

Total Compensated Absences 537,865 111,892 21,066 628,691 118,990

Other Postemployment Benefit Water 372,605 - 3,678 368,927 - Airport 51,844 - 429 51,415 -

Total Other Postemployment Benefit 424,449 - 4,107 420,342 -

TOTAL BUSINESS-TYPE ACTIVITIES $ 7,113,682 $ 833,367 $ 824,180 $ 7,122,869 $ 918,920

f. Legal Debt Margin

The City is a home rule municipality.

Chapter 65, Section 5/8-5-1 of the Illinois Compiled Statutes governs computation of the legal debt margin.

- 39 - - 39 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

5. LONG-TERM DEBT (Continued)

f. Legal Debt Margin (Continued)

“The General Assembly may limit by law the amount and require referendum approval of debt to be incurred by home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property...(2) if its population is more than 25,000 and less than 500,000 an aggregate of one percent:...indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum...shall not be included in the foregoing percentage amounts.”

To date, the General Assembly has set no limits for home rule municipalities.

g. Conduit Debt

The City has issued Industrial Development Revenue Bonds (IDRBs) to provide financial assistance to private organizations for the construction and acquisition of industrial and commercial improvements deemed to be in the public interest. The bonds are secured solely by the property financed and are payable solely from the payments received on the underlying mortgage loans on the property. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds outstanding are not reported as a liability in these financial statements. As of June 30, 2016, there were four IDRBs outstanding totaling $8,795,329.

h. Refunded Debt

On November 3, 2014, the City issued $2,870,000 par value General Obligation Refunding Bonds Series of 2014 to refund $2,845,000 of the General Obligation Refunding Bonds of 2004. The City defeased bonds by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payment of the old bonds. Since the requirements that normally satisfy defeasance have been met, the financial statements reflect satisfaction of the original liability through the irrevocable transfer to an escrow agent of an amount computed to be adequate to meet the future debt service requirements of the issue. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the government's basic financial statements. The outstanding principal of the General Obligation Refunding Bonds of 2004 to be paid from escrow was $2,150,000 at June 30, 2016.

6. RISK MANAGEMENT

The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; natural disasters; and injuries to the City’s employees. The City has purchased insurance from private insurance companies. Risks covered included certain types of liabilities and bonds. Premiums have been displated as expenditures/expense in appropriate funds.

- 40 - - 40 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

6. RISK MANAGEMENT (Continued)

Intergovernmental Personnel Benefit Cooperative

Risks for medical and death benefits for employees and retirees are provided for through the City’s participation in the Intergovernmental Personnel Benefit Cooperative (IPBC). IPBC is a public entity risk pool established in 1979 by certain units of local government in Illinois to administer some or all of the personnel benefit programs (primarily medical, dental, and life insurance coverage) offered by these members to their officers and employees and to the officers and employees of certain other governmental, quasi governmental, and nonprofit public service entities. Management consists of a Board of Directors comprised of one appointed representative from each member. The officers of IPBC are chosen by the Board of Directors from among their membership. The City does not exercise any control over the activities of IPBC beyond its representation on the Board of Directors.

IPBC also acts as an administrative agency to receive, process, and pay such claims as may come within the benefit program of each member. Through IPBC, the City offers both a PPO plan and an HMO plan.

For those employees enrolled in the PPO plan, the City is responsible for the first $35,000 in claims for each individual employee participant every claim year. The members of IPBC share claims (for each individual employee) between $35,000 and $125,000.

IPBC maintains stop-loss insurance to cover claims in excess of $125,000. Approximately 94% of the City’s employees and retirees are PPO participants.

The HMO plan is also self-insured through a special arrangement. Members of IPBC pay for fixed costs of capitation and administration and then fund for claims not covered under the capitation fee. This plan is fully pooled and the City is not individually rated based on claims experience. All members of the IPBC pay the same rates based on plan design choices. Approximately 6% of the City’s employees and retirees are HMO participants.

The City makes payments to IPBC monthly based on its participation in the plan. The rates per individual participant are determined annually based on each member’s prior experience within the pool and projected future claims. This rate also includes a provision for the cost of excess insurance purchased by IPBC. The City makes monthly payments to IPBC for administration of the plan. The City had terminal reserve net of deficit of other accounts as of June 30, 2016 of $29,134. This amount was declared as a dividend to the City and, therefore, has been recorded as a receivable in the Health Insurance Fund of $29,134 as of June 30, 2016.

The City has established the following internal service funds to account for these activities: workers’ compensation, liability/property insurance and health insurance. Each participating fund makes payments to the insurance funds. Such payments are displayed on the financial statements as revenues and expenditures/expenses to the extent that the charge to the other funds is based on the actual expenses of the funds plus an additional amount for catastrophic losses. Payments in excess of these amounts, if any, are reported as transfers.

- 41 - - 41 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

6. RISK MANAGEMENT (Continued)

Intergovernmental Personnel Benefit Cooperative (Continued)

The City has contracted with third party administrators (TPAs) to administer the workers’ compensation program and to review and process claims. In addition, the City has contracted with third party carriers for specific and aggregate stop-loss coverage to limit the City’s exposure to losses. Prior to May 2012, the City was completely self-insured for workers’ compensation with no specific or aggregate stop-loss policies. However, as of June 30, 2016, the City is self-insured up to $600,000 in potential claims losses while any additional claims liabilities are covered by a policy purchased from a national insurance provider.

There have been no significant changes in coverage from the prior two years and settlements have not exceeded coverage in any of the prior three fiscal years.

A reconciliation of claims payable for the fiscal years ended June 30, 2015 and 2016 are as follows:

Workers’ Compensation Liability/Property 2015 2016 2015 2016

CLAIMS PAYABLE, JULY 1 $ 572,011 $ 656,610 $ 1,000 $ 60,953 Add Claims Incurred 460,488 229,847 117,445 44,182 Less Claims Paid (375,889) (364,419) (57,492) (28,482)

CLAIMS PAYABLE, JUNE 30 $ 656,610 $ 522,038 $ 60,953 $ 76,653

7. INDIVIDUAL FUND DISCLOSURES

a. Due From/To Other Funds

Due From Due To

General Motor Fuel Tax $ - $ 52,317 Tax Increment Financing #1 - 4,655 Tax Increment Financing #2 - 10,465 Nonmajor Governmental 48,923 - Total General 48,923 67,437

Motor Fuel Tax General 52,317 - Total Motor Fuel Tax 52,317 -

- 42 - - 42 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

7. INDIVIDUAL FUND DISCLOSURES (Continued)

a. Due From/To Other Funds (Continued)

Due From Due To

Tax Increment Financing #1 General $ 4,655 $ - Total Tax Increment Financing #1 4,655 -

Tax Increment Financing #2 General 10,465 - Total Tax Increment Financing #1 10,465 -

Nonmajor Governmental General - 48,923 Total Nonmajor Governmental - 48,923

TOTAL $ 116,360 $ 116,360

The purpose of significant due from/to other funds is as follows:

 $48,923 due to the General Fund from the Nonmajor Governmental Funds (i.e., the CDBG Fund, SSA #6 Fund and General Debt Service Fund) to cover negative cash balances and to cover salary and benefits related to CDBG. Repayment is expected within one year.

 $52,317 due to the Motor Fuel Tax Fund from the General Fund as a result of the IMET loss. Repayment is expected within one year.

b. Advances To/From Other Funds

Receivable Fund Payable Fund Amount

General Airport $ 334,000

TOTAL $ 334,000

The purpose of significant advance to/from other funds is as follows:

 $334,000 advance to the Airport Fund from the General Fund as a result of cash overdrafts. Repayment is not expected within one year.

- 43 - - 43 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

7. INDIVIDUAL FUND DISCLOSURES (Continued)

c. Interfund Transfers

Interfund transfers between funds for the year ended June 30, 2016 were as follows:

Transfers In Transfers Out

General Motor Fuel Tax $ - $ 32,072 Water 258,965 - Internal Service 250,000 - Nonmajor Governmental - 1,504,066 Total General 508,965 1,536,138

Motor Fuel Tax General 32,072 - Total Motor Fuel Tax 32,072 -

Tax Increment Financing #1 Nonmajor Governmental - 1,068,663 Total Tax Increment Financing #1 - 1,068,663

Nonmajor Governmental General 1,504,066 - Tax Increment Financing #1 1,068,663 - Water - 321,128 Nonmajor Governmental 16,443 16,443 Total Nonmajor Governmental 2,589,172 337,571

Water General - 258,965 Nonmajor Governmental 321,128 - Total Water 321,128 258,965

Internal Service General Fund - 250,000 Total Internal Service - 250,000

TOTAL $ 3,451,337 $ 3,451,337

- 44 - - 44 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

7. INDIVIDUAL FUND DISCLOSURES (Continued)

c. Interfund Transfers (Continued)

The purpose of significant transfers is as follows:

 $250,000 transferred from the Internal Service Fund (Workers’ Compensation Fund) to the General Fund to draw down fund balance to $1,000,000. This transfer will not be repaid.

 $258,965 transferred from the Water Fund to the General Fund to cover payment in lieu of taxes. This transfer will not be repaid.

 $1,504,066 transferred from the General Fund to the Nonmajor Governmental Fund (General Debt Service Fund) to cover debt service payments. This transfer will not be repaid.

 $1,068,663 transferred from the Tax Increment Financing #1 Fund to the Nonmajor Governmental Fund (General Debt Service Fund) to cover debt service payments. This transfer will not be repaid.

 $321,128 transferred from the Nonmajor Governmental Fund (CDBG Fund) to the Water Fund to cover costs related to the South First Street watermain project. This transfer will not be repaid.

8. LEGAL COMPLIANCE AND ACCOUNTABILITY

Deficit Fund Balances/Net Position of Individual Funds

The following funds had deficit fund balances/net position as of June 30, 2016:

Deficit Fund Balance

Knolls Special Service Area #4 $ 1,443 Greek Row Special Service Area #6 8,831 General Debt Service 13,513 Refuse 3,008 Library General 1,859,156

- 45 - - 45 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

9. CONTINGENT LIABILITIES

a. Litigation

The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s attorney, the resolution of these matters will not have a material adverse effect on the financial condition of the City.

b. Grants

Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial.

c. Sales Tax Sharing

The City has entered into intergovernmental agreement with DeKalb County to share in the sales tax revenues generated from companies located within certain property developments through the fiscal year 2033. The total rebate expenditures incurred during the fiscal year ended June 30, 2016 was $1,717,078 and the total rebate revenue earned during the fiscal year ended June 30, 2016 was $162,306.

d. Property Tax Rebates

The City has entered into a development agreement whereby it has committed to abate 90%, 80%, 70%, 60%, and 50%, respectively, of a certain company’s TIF and non- TIF property taxes for years 1 through 5 after the issuance of occupancy permits. In addition, the company is entitled to property tax rebates of 50% for the TIF property for years 6 through 10 after the issuance of occupancy permits but no later than December 31, 2017. As of June 30, 2016, the City has incurred $1,470,477 in rebates in total to date.

10. OTHER POSTEMPLOYMENT BENEFITS

a. Plan Description

In addition to providing the pension benefits described, the City provides postemployment health care and life insurance benefits (OPEB) for its eligible retired employees through a single-employer defined benefit plan. The benefits, benefit levels, employee contributions, and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate report. The activity of the plan is reported in the City’s governmental and business-type activities.

- 46 - - 46 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

10. OTHER POSTEMPLOYMENT BENEFITS (Continued)

b. Benefits Provided

The City provides postemployment health care and life insurance benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the City’s retirement plans.

All health care benefits are provided through the City’s health insurance plan with IPBC. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; mental, nervous, and substance abuse care; vision care; dental care; and prescriptions. Upon a retiree reaching age 65 years of age, Medicare becomes the primary insurer and the City’s plan becomes secondary.

c. Membership

At June 30, 2016, membership consisted of:

Retirees and Beneficiaries Currently Receiving Benefits 166 Terminated Employees Entitled to Benefits but not yet Receiving Them - Active Employees 209

TOTAL 375

Participating Employers 1

d. Funding Policy

The City negotiates the contribution percentages between the City and employees through the union contracts and personnel policy. Retirees contribute a percentage of the actuarially determined premium to the plan and the City contributes the remainder to cover the cost of providing the benefits to the retirees. For the year ended June 30, 2016, retirees contributed $381,354 and the City contributed $1,007,982. The City is not required to and currently does not advance fund the cost of benefits that will become due and payable in the future. Active employees do not contribute to the plan until retirement.

- 47 - - 47 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

10. OTHER POSTEMPLOYMENT BENEFITS (Continued)

e. Annual OPEB Costs and Net OPEB Obligation

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2016 and the prior two years was as follows:

Percentage of Annual Year Annual Employer OPEB Cost Net OPEB Ended OPEB Cost Contributions Contributed Obligation

2014 $ 955,868 $ 997,999 104.41% $ 7,549,011 2015 906,540 988,408 109.03% 7,467,143 2016 900,810 1,007,982 111.90% 7,359,971

The net OPEB obligation (NOPEBO) as June 30, 2016 was calculated as follows:

Annual Required Contribution $ 860,985 Interest on Net OPEB Obligation 298,686 Adjustment to Annual Required Contribution (258,861)

Annual OPEB Cost 900,810 Contributions Made (1,007,982)

Increase (Decrease) in Net OPEB Obligation (107,172) Net OPEB Obligation, Beginning of Year 7,467,143

NET OPEB OBLIGATION, END OF YEAR* $ 7,359,971

*The DeKalb Public Library’s portion of $24,102 is included.

Funded Status and Funding Progress. The funded status of the plan as of June 30, 2016 was as follows:

Actuarial Accrued Liability (AAL) $ 23,904,376 Actuarial Value of Plan Assets - Unfunded Actuarial Accrued Liability (UAAL) 23,904,376 Funded Ratio (Actuarial Value of Plan Assets/AAL) 0.00% Covered Payroll (Active Plan Members) $ 16,649,799 UAAL as a Percentage of Covered Payroll 143.57%

- 48 - - 48 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

10. OTHER POSTEMPLOYMENT BENEFITS (Continued)

e. Annual OPEB Costs and Net OPEB Obligation (Continued)

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial methods and assumptions involve the projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the June 30, 2016 actuarial valuation, the entry-age actuarial cost method was used. The actuarial assumptions included a 4% investment rate of return and an annual healthcare cost trend rate of 8% initially, reduced by decrements to an ultimate rate of 4%. Both rates include a 2.5% inflation assumption. The actuarial value of assets was not determined as the City has not advance funded its obligation. The plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a 30-year open basis.

11. DEFINED BENEFIT PENSION PLANS

The City contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer public employee retirement system; the Police Pension Plan, which is a single-employer pension plan; and the Firefighters’ Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributions, and employer contributions for all three plans are governed by ILCS and can only be amended by the Illinois General Assembly. IMRF issues a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois 60523 or at www.imrf.org. The Police and Firefighters’ Pension Plans do not issue separate reports.

- 49 - - 49 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions

Illinois Municipal Retirement Fund

Plan Administration

All employees (other than those covered by the Police and Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members.

Plan Membership

At December 31, 2015, IMRF membership consisted of:

Inactive Employees or their Beneficiaries Currently Receiving Benefits 144 Inactive Employees Entitled to but not yet Receiving Benefits 101 Active Employees 97

TOTAL 342

Benefits Provided

All employees (other than those covered by the Police or Firefighters’ Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF provides two tiers of pension benefits. Employees hired prior to January 1, 2011, are eligible for Tier 1 benefits. For Tier 1 employees, pension benefits vest after eight years of service. Participating members who retire at age 55 (reduced benefits) or after age 60 (full benefits) with eight years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter.

Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating members who retire at age 62 (reduced benefits) or after age 67 (full benefits) with ten years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2% for each year thereafter. IMRF also provides death and disability benefits. These benefit provisions and all are established by state statute.

- 50 - - 50 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Illinois Municipal Retirement Fund (Continued)

Contributions

Participating members are required to contribute 4.5% of their annual salary to IMRF. The City is required to contribute the remaining amounts necessary to fund IMRF as specified by statute. The employer contribution for the years ended December 31, 2015 and 2016 was 16.39% and 16.23% of covered payroll, respectively.

Actuarial Assumptions

The City’s net pension liability was measured as of December 31, 2015 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of the same date using the following actuarial methods and assumptions.

Actuarial Valuation Date December 31, 2015

Actuarial Cost Method Entry-Age Normal

Assumptions Inflation 3.50%

Salary Increases 3.75% to 14.50%

Interest Rate 7.50%

Cost of Living Adjustments 3.00%

Asset Valuation Method Market Value

For nondisabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table applying the same adjustment that were applied for nondisabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience.

- 51 - - 51 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Illinois Municipal Retirement Fund (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 7.46%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the IMRF’s fiduciary net position was not projected to be available to make all projected future benefit payments of current plan members.

Therefore, the long-term expected rate of return on pension plan investments of 7.50% was blended with the index rate of 3.57% for tax exempt general obligation bonds rated AA or better at December 31, 2015 to arrive at a discount rate of 7.46% used to determine the total pension liability.

The discount rate used to measure the total pension liability at January 1, 2015 was 7.47% and the index rate was 3.56%.

Changes in the Net Pension Liability

(a) (b) (a) - (b) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability

BALANCES AT JANUARY 1, 2015 $ 52,038,319 $ 45,246,876 $ 6,791,443

Changes for the Period Service Cost 681,650 - 681,650 Interest 3,822,530 - 3,822,530 Difference Between Expected and Actual Experience 459,522 - 459,522 Changes in Assumptions 66,340 - 66,340 Employer Contributions - 1,122,559 (1,122,559) Employee Contributions - 351,553 (351,553) Net Investment Income - 223,883 (223,883) Benefit Payments and Refunds (2,414,792) (2,414,792) - Other (Net Transfer) - 162,122 (162,122)

Net Changes 2,615,250 (554,675) 3,169,925

BALANCES AT DECEMBER 31, 2015 $ 54,653,569 $ 44,692,201 $ 9,961,368

- 52 - - 52 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Illinois Municipal Retirement Fund (Continued)

Changes in the Net Pension Liability (Continued)

Changes in assumptions related to retirement age and mortality were made since the prior measurement date.

City Library Total

Beginning Net Pension Liability at January 1, 2015 $ 5,922,138 $ 869,305 $ 6,791,443 Employer Contributions 982,944 139,615 1,122,559 Ending Net Pension Liability at December 31, 2015 8,722,450 1,238,918 9,961,368

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources

For the year ended June 30, 2016, the City recognized pension expense of $2,055,011.

At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to IMRF from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Difference Between Expected and Actual Experience $ 589,354 $ - Changes in Assumption 550,427 - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 2,880,858 - Contributions Subsequent to the Measurement Date 582,489 -

TOTAL $ 4,603,128 $ -

- 53 - - 53 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Illinois Municipal Retirement Fund (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources (Continued)

Amounts reported as deferred outflows of resources and deferred inflows of resources related to IMRF will be recognized in pension expense as follows:

Year Ending June 30,

2017 $ 2,309,731 2018 914,385 2019 750,923 2020 628,089 2021 - Thereafter -

TOTAL $ 4,603,128

City Library Total

Share of Deferred Outflows $ 4,035,265 $ 567,863 $ 4,603,128 Share of Deferred Inflows - - -

TOTAL $ 4,035,265 $ 567,863 $ 4,603,128

Discount Rate Sensitivity

The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.46% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.46%) or 1 percentage point higher (8.46%) than the current rate:

Current 1% Decrease Discount Rate 1% Increase (6.46%) (7.46%) (8.46%)

Net Pension Liability - City $ 15,054,809 $ 8,722,450 $ 3,521,666 Net Pension Liability - Library 2,138,353 1,238,918 500,210

Total $ 17,193,162 $ 9,961,368 $ 4,021,876

- 54 - - 54 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan

Plan Administration

Police sworn personnel are covered by the Police Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the plan as a pension trust fund.

The plan is governed by a five-member Board of Trustees. Two members of the Board are appointed by the Mayor, one member is elected by pension beneficiaries, and two members are elected by active police employees.

The plan is accounted for on the economic resources measurement focus and the accrual basis of accounting. Employer and employee contributions are recognized when earned in the year that the contributions are required, benefits, and refunds are recognized as an expense and liability when due and payable.

Plan Membership

At June 30, 2016, the measurement date, membership consisted of:

Inactive Plan Members Currently Receiving Benefits 48 Inactive Plan Members Entitled to but not yet Receiving Benefits 4 Active Plan Members 63

TOTAL 115

Benefits Provided

The Police Pension Plan provides retirement benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.5% of such salary for each additional year of service

- 55 - - 55 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Benefits Provided (Continued)

over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive 2.5% of salary for each year of service. The monthly benefit shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3% of the original pension, and 3% compounded annually thereafter.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officers’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police officer retires, or the first anniversary of the pension starting date, whichever is later.

Contributions

Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Police Pension Plan. The City has chosen a policy to fund 100% of the past service costs by 2040. For the year ended June 30, 2016, the City’s contribution was 28.77% of covered payroll.

- 56 - - 56 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Investment Policy

ILCS limits the Police Pension Fund’s (the Fund) investments to those allowable by ILCS and require the Fund’s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund’s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, investment grade corporate bonds, and Illinois Funds. The Fund may also invest in certain non-U.S. obligations, Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds and corporate equity securities, and real estate investment trusts. The investment policy was not modified during the year ended June 30, 2016.

The Fund’s investment policy, in accordance with ILCS, establishes the following target allocation across asset classes:

Long-Term Expected Real Asset Class Target Rate of Return

Cash and Cash Equivalents 3% (0.26%)

Fixed Income 32% Aggregate Bonds 1.82% Investment Grade Corporates 2.69% Intermediate U.S. Treasuries 2.03% High Yield 4.14%

Equities 65%

- 57 - - 57 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Investment Policy (Continued)

Long-Term Expected Real Asset Class Target Rate of Return

Further, the policy diversifies in the following equity categories:

Domestic Equities 62% Large Caps 5.34% Mid Caps 6.08% Small Caps 6.55% U.S. Real Estate 5.91%

International Equities 35% Developed Foreign 5.84% Emerging Markets 9.51%

Commodities 3% 2.96%

ILCS limits the Fund’s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The long-term expected real rates of return are net of a 2.26% factor for inflation and investment expense. The Fund has hired a fund manager to manage the fixed income portfolio and utilizes its consultant to assist with the equity investments.

The long-term expected rate of return on the Fund’s investments was determined using the Asset Management and Trust Division of the investment management consultant’s proprietary research and analytical tools in which best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. Best estimates or arithmetic real rates of return excluding inflation for each major asset class included in the Fund’s target asset allocation as of June 30, 2016 are listed in the table above.

Investment Concentrations

At June 30, 2016, the Fund had the following investments that represented 5% or more of the Fund’s investments: Federal Home Loan Banks Consolidated Bds. and Tennessee Valley Auth. A.

- 58 - - 58 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Investment Rate of Return

For the year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (0.90%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Deposits with Financial Institutions

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Fund’s deposits may not be returned to them. The Fund’s investment policy requires all bank balances to be covered by federal depository insurance. Flow-through FDIC insurance is available for the Fund’s deposits with financial institutions.

Interest Rate Risk

The following table presents the investments and maturities of the Fund’s debt securities as of June 30, 2016:

Investment Maturities (in Years) Less Greater Than Investment Type Fair Value Than 1 1-5 6-10 10

U.S. Treasury Obligations $ 2,096,927 $ - $ 2,096,927 $ - $ - U.S. Agency Obligations 5,516,015 - 3,880,152 1,635,863 - Corporate Bonds 2,879,836 - 1,209,150 1,670,686 -

TOTAL $ 10,492,778 $ - $ 7,186,229 $ 3,306,549 $ -

Interest Valuations (Continued)

The Fund categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

- 59 - - 59 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Interest Valuations (Continued)

The Fund has the following recurring fair value measurements as of June 30, 2016: U.S. Treasury obligations of $2,096,927, mutual funds of $17,797,214, and equity securities of $170,841 are valued using quoted market prices (Level 1 inputs); U.S. agency obligations and corporate bonds of $8,395,851 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs).

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund.

Credit Risk

The Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in securities issued by the United States Government and/or its agencies that are implicitly guaranteed by the United States Government and corporate bonds in the top three investment classes by a national rating agency. The corporate bonds are rated AA- to AA+, and the U.S. agencies and treasuries are rated AA+ by Standard and Poor’s.

Custodial Credit Risk

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund’s agent separate from where the investment was purchased in the Fund’s name. The money market mutual funds and equity mutual funds are not subject to custodial credit risk.

- 60 - - 60 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

Changes in the Net Pension Liability

(a) (b) Total Plan (a) - (b) Pension Fiduciary Net Pension Liability Net Position Liability

BALANCES AT JULY 1, 2015 $ 58,766,623 $ 28,957,001 $ 29,809,622

Changes for the Period Service Cost 1,138,556 - 1,138,556 Interest 4,396,163 - 4,396,163 Difference Between Expected and Actual Experience (981,619) - (981,619) Changes in Assumptions - - Employer Contributions - 1,622,105 (1,622,105) Employee Contributions - 570,363 (570,363) Net Investment Income - 17,314 (17,314) Contributions - Buy Back 157,490 157,490 - Benefit Payments and Refunds (2,579,348) (2,579,348) - Administrative Expense - (44,990) 44,990

Net Changes 2,131,242 (257,066) 2,388,308

BALANCES AT JUNE 30, 2016 $ 60,897,865 $ 28,699,935 $ 32,197,930

- 61 - - 61 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Changes in Net Pension Liability (Continued)

There was a change with respect to actuarial assumptions from the prior year to reflect revised expectations with respect to mortality rates, disability rates, turnover rates, and retirement rates.

Actuarial Assumptions

The total pension liability above was determined by an actuarial valuation using the following actuarial methods and assumptions.

Actuarial Valuation Date June 30, 2016

Actuarial Cost Method Entry-Age Normal

Assumptions Inflation 2.50%

Salary Increases 4.50%

Interest Rate 7.50%

Cost of Living Adjustments 3.00% (Tier 1) 1.25% (Tier 2)

Asset Valuation Method Market

Mortality rates were based on the RP-2000 Mortality Table adjusted for future mortality improvement using one-year setback after 15 years.

Discount Rate Sensitivity

The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.5% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5%) than the current rate:

- 62 - - 62 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Discount Rate Sensitivity (Continued)

Current 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%)

Net Pension Liability $ 40,414,374 $ 32,197,930 $ 25,404,443

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources

For the year ended June 30, 2016, the City recognized pension expense of $3,113,091. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to the police pension from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Difference Between Expected and Actual Experience $ - $ 818,015 Changes in Assumptions - - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,715,337 -

TOTAL $ 1,715,337 $ 818,015

Changes in the net pension liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in pension expense over the expected remaining service life of all employees (active and retired) in the plan. Differences in projected and actual earnings over the measurement period are recognized over a five-year period.

- 63 - - 63 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Police Pension Plan (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources (Continued)

Amounts reported as deferred outflows of resources and deferred inflows of resources related to the police pension will be recognized in pension expense as follows:

Year Ending June 30,

2017 $ 265,232 2018 265,231 2019 265,231 2020 265,231 2021 (163,603) Thereafter -

TOTAL $ 897,322

Firefighters’ Pension Plan

Plan Administration

Firefighter sworn personnel are covered by the Firefighters’ Pension Plan, a single-employer defined benefit pension plan sponsored by the City. The defined benefits and employee and minimum employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 5/4-101) and may be amended only by the Illinois legislature. The City accounts for the Firefighters’ Pension Plan as a pension trust fund.

The plan is governed by a five-member Board of Trustees. Two members of the Board are appointed by the Mayor, one member is elected by pension beneficiaries, and two members are elected by active firefighter employees.

The plan is accounted for on the economic resources measurement focus and the accrual basis of accounting. Employer and employee contributions are recognized when earned in the year that the contributions are required, benefits and refunds are recognized as an expense and liability when due and payable.

- 64 - - 64 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Plan Membership

At June 30, 2016, the measurement date, membership consisted of:

Inactive Plan Members Currently Receiving Benefits 56 Inactive Plan Members Entitled to but not yet Receiving Benefits 3 Active Plan Members 57

TOTAL 116

Benefits Provided

The following is a summary of benefits of the plan as provided for in ILCS:

The Firefighters’ Pension Plan provides retirement benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held at the date of retirement. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of such salary. Employees with at least ten years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3% of the original pension, and 3% compounded annually thereafter.

Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters’ salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index or 3% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75% of

- 65 - - 65 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Benefits Provided (Continued)

such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3% or ½ of the change in the Consumer Price Index for the proceeding calendar year.

Contributions

Covered employees are required to contribute 9.455% of their base salary to the Firefighters’ Pension Plan. If an employee leaves covered employment with fewer than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. Contributions are recognized when due pursuant to formal commitments, as well as statutory or contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the Firefighters’ Pension Plan. The costs of administering the Firefighters’ Pension Plan are financed through investment earnings. The City is required to finance the Firefighters’ Pension Plan as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Firefighters’ Pension Plan. The City has chosen a policy to fund 100% of the past service costs by 2040. For the year ended June 30, 2016, the City’s contribution was 43.68% of covered payroll.

Investment Policy

ILCS limits the Fund’s investments to those allowable by ILCS and require the Fund’s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund’s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, insured credit union shares, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, repurchase agreements, short-term commercial paper rated within the three highest classifications by at least two standard rating services, investment-grade corporate

- 66 - - 66 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Investment Policy (Continued)

bonds and Illinois Funds. The Fund may also invest in certain non-U.S. obligations, Illinois municipal corporations tax anticipation warrants, veteran’s loans, obligations of the State of Illinois and its political subdivisions, Illinois insurance company general and separate accounts, mutual funds, corporate equity and corporate debt securities and real estate investment trusts. During the year, the following changes to the investment policy were approved by the Board of Trustees: target allocations across asset classes were adjusted.

The Fund’s investment policy in accordance with ILCS establishes the following target allocation across asset classes:

Long-Term Expected Real Asset Class Target Rate of Return

Cash and Cash Equivalents 1% 0.5%

Fixed Income Short-Term 5% 2% Intermediate 36% 2.5%

Equities Large Cap 5% 4.5% Large Cap Value 5% 5% Mid Cap Value 6% 5% Small Cap 7% 6% Small Cap Value 7% 7% International Developed 4% 4.5% International Value 7% 7% International Small 7% 8% Emerging Markets 8% 8% U.S. Real Estate 2% 4%

ILCS limits the Fund’s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund.

- 67 - - 67 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Investment Policy (Continued)

The long-term expected real rates of return are net of a 3% factor for inflation and investment expense. The long-term expected rates of return are the best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) for each major assets class. Best estimates or geometric real rates of return excluding inflation for each major asset class included in the Fund’s target asset allocation as of June 30, 2016 are listed in the table above.

Concentrations

At June 30, 2016, the Fund had no significant investments (other than United States Government guaranteed obligations) in any one organization that represent 5% or more of the Fund’s investments.

Investment Rate of Return

For the year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (1.53%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Deposits with Financial Institutions

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Fund’s deposits may not be returned to them. The Fund’s investment policy requires all bank balances to be covered by federal depository insurance. Flow-through FDIC insurance is available for the Fund’s deposits with financial institutions.

- 68 - - 68 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Interest Rate Risk

The following table presents the investments and maturities of the Fund’s debt securities as of June 30, 2016:

Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10

U.S. Treasury Obligations $ 6,376,849 $ 471,086 $ 5,190,300 $ 715,463 $ - U.S. Agency Obligations 1,988,964 - 906,254 742,145 340,565

TOTAL $ 8,365,813 $ 471,086 $ 6,096,554 $ 1,457,608 $ 340,565

Investment Valuations

The Fund categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The Fund has the following recurring fair value measurements as of June 30, 2016: U.S. Treasury obligations of $6,376,849 and mutual funds of $14,879,320 are valued using quoted market prices (Level 1 inputs); U.S. agency obligations of $1,988,964 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs).

Interest rate risk is the risk that change in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund.

- 69 - - 69 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Credit Risk

The Fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in securities issued by the United States Government and/or its agencies that are implicitly guaranteed by the United States Government. The U.S. agencies and treasuries are rated AAA by Standard and Poor’s.

Custodial Credit Risk

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund’s agent separate from where the investment was purchased in the Fund’s name. The money market mutual funds and equity mutual funds are not subject to custodial credit risk.

Discount Rate

The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

- 70 - - 70 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Changes in the Net Pension Liability

(a) (b) Total Plan (a) - (b) Pension Fiduciary Net Pension Liability Net Position Liability

BALANCES AT JULY 1, 2015 $ 60,369,157 $ 24,354,229 $ 36,014,928

Changes for the Period Service Cost 1,103,489 - 1,103,489 Interest 4,495,233 - 4,495,233 Difference Between Expected and Actual Experience (102,841) - (102,841) Changes in Assumptions - - - Employer Contributions - 2,158,156 (2,158,156) Employee Contributions - 477,022 (477,022) Net Investment Income - (403,920) 403,920 Benefit Payments and Refunds (3,072,413) (3,072,413) - Administrative Expense - (41,613) 41,613

Net Changes 2,423,468 (882,768) 3,306,236

BALANCES AT JUNE 30, 2016 $ 62,792,625 $ 23,471,461 $ 39,321,164

There was a change with respect to actuarial assumptions from the prior year to reflect revised expectations with respect to mortality rates, disability rates, turnover rates, and retirement rates.

- 71 - - 71 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Actuarial Assumptions

The total pension liability above was determined by an actuarial valuation using the following actuarial methods and assumptions.

Actuarial Valuation Date June 30, 2016

Actuarial Cost Method Entry-Age Normal

Assumptions Inflation 2.50%

Salary Increases 4.50%

Interest Rate 7.50%

Cost of Living Adjustments 3.00% (Tier 1) 1.25% (Tier 2)

Asset Valuation Method Market

Mortality rates were based on the RP-2000 Mortality Table adjusted for future mortality improvement using one-year setback after 15 years.

Discount Rate Sensitivity

The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the City calculated using the discount rate of 7.5% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5%) than the current rate:

Current 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%)

Net Pension Liability $ 47,505,292 $ 39,321,164 $ 32,544,327

- 72 - - 72 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

a. Plan Descriptions (Continued)

Firefighters’ Pension Plan (Continued)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources

For the year ended June 30, 2016, the City recognized pension expense of $3,780,068. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to the firefighters’ pension from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources

Difference Between Expected and Actual Experience $ - $ 85,700 Changes in Assumption - - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,770,024 -

TOTAL $ 1,770,024 $ 85,700

Changes in the net pension liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in pension expense over the expected remaining service life of all employees (active and retired) in the plan. Differences in projected and actual earnings over the measurement period are recognized over a five-year period.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to the firefighters’ pension will be recognized in pension expense as follows:

Year Ending June 30,

2017 $ 425,366 2018 425,366 2019 425,366 2020 425,366 2021 (17,140) Thereafter -

TOTAL $ 1,684,324

- 73 - - 73 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

b. Pension Fund Disclosures

Plan Net Position

Police Firefighters’ Pension Pension Total

ASSETS Cash and Short-Term Investments $ 1,034,000 $ 1,287,076 $ 2,321,076 Investments U.S. Treasury Obligations 2,096,927 6,376,849 8,473,776 U.S. Agency Obligations 5,516,015 1,988,964 7,504,979 Corporate bonds 2,879,836 - 2,879,836 Mutual Funds 17,797,214 14,879,320 32,676,534 Equity Securities 170,8041 - 170,841 Receivables Accrued interest 34,857 44,439 79,296 Prepaid Expenses 7,669 - 7,669

Total assets 29,537,359 24,576,648 54,114,007

LIABILITIES Accounts Payable 10,860 5,465 16,325

Total liabilities 10,860 5,465 16,325

DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes 826,564 1,099,722 1,926,286

Total Deferred Inflows of Resources 826,564 1,099,722 1,926,286

NET POSITION RESTRICTED FOR PENSIONS $ 28,699,935 $ 23,471,461 $ 52,171,396

- 74 - - 74 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

11. DEFINED BENEFIT PENSION PLANS (Continued)

b. Pension Fund Disclosures (Continued)

Changes in Plan Net Position

Police Firefighters’ Pension Pension Total

ADDITIONS Contributions Employer $ 1,622,105 $ 2,158,156 $ 3,780,261 Employee 727,853 477,022 1,204,875

Total Contributions 2,349,958 2,635,178 4,985,136

Investment Income Net Depreciation in Fair Value of Investments (568,927) (1,145,748) (1,714,675) Interest 629,179 785,659 1,414,838

Total Investment Income 60,252 (360,089) (299,837) Less Investment Expense (42,938) (43,831) (86,769)

Net Investment Income 17,314 (403,920) (386,606)

Total Additions 2,367,272 2,231,258 4,598,530

DEDUCTIONS Administrative Expenses 44,990 41,613 86,603 Benefits and Refunds 2,579,348 3,072,413 5,651,761

Total Deductions 2,624,338 3,114,026 5,738,364

NET DECREASE (257,066) (882,768) (1,139,834)

NET POSITION RESTRICTED FOR PENSIONS

July 1 28,957,001 24,354,229 53,311,230

June 30 $ 28,699,935 $ 23,471,461 $ 52,171,396

- 75 - - 75 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY

a. Financial Information

No separate financial statements are available for the DeKalb Public Library.

b. Deposits and Investments

Library Deposits with Financial Institutions

Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank’s failure, the Library’s deposits may not be returned to it. The Library’s investment policy requires pledging of collateral in excess of federal depository insurance with collateral held by the Library’s agent in the Library’s name.

Library Investments

The following table presents the investments and maturities of the Library’s debt securities as of June 30, 2016:

Investment Maturities (in Years) Less Greater Investment Type Fair Value Than 1 1-5 6-10 Than 10

Negotiable Certificates of Deposit $ 260,535 $ - $ 260,535 $ - $ -

TOTAL $ 260,535 $ - $ 260,535 $ - $ -

The Library categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The Library has the following recurring fair value measurements as of June 30, 2016: Negotiable Certificates of Deposit of $260,535 are significant other observable inputs and are part of a limited secondary market (Level 2 inputs).

Interest rate risk is the risk that changes in interest rates will adversely affect the market value of an investment. The Library limits its exposure to interest rate risk by structuring the portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and investing operating funds primarily in shorter term securities. Unless matched to a specific cash flow, the Library does not directly invest in securities maturing more than three years from the date of purchase.

- 76 - - 76 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

b. Deposits and Investments (Continued)

Library Investments (Continued)

The Library limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in negotiable certificates of deposit.

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Library will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Library’s investment policy requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Library’s agent in the Library’s name, separate from where the investment was purchased.

Concentration of credit risk is the risk that the Library has a high percentage of their investments invested in one type of investment. The Library attempts to diversify its investments appropriate to the nature of the funds, purpose for the funds, and the amount available to invest.

c. Receivables

Property taxes are levied in December of each year on all taxable real property attach as an enforceable lien on the property as of the preceding January 1. Tax bills are prepared by the County and are payable in two installments on or about June 1 and September 1. The County Collector collects such taxes and remits them periodically. Since the 2015 levy is intended to finance the 2016-2017 fiscal year, the entire levy has been recorded as deferred inflow of resources. The 2016 levy has not been recorded as a receivable in accordance with GASB Statement No. 33, Accounting for Nonexchange Transactions. While the levy attached as a lien as of January 1, 2016, the taxes will not be levied by the City or extended by the County until December 2016 and, therefore, the amount is not measurable at June 30, 2016.

- 77 - - 77 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

d. Capital Assets

The following is a summary of the capital asset activity for the year ended June 30, 2016:

Beginning Ending Balances Increases Decreases Balances

GOVERNMENTAL ACTIVITIES Capital Assets not Being Depreciated Land $ 1,558,032 $ - $ - $ 1,558,032 Construction in Progress 11,501,703 9,940,038 - 21,441,741 Total Capital Assets not Being Depreciated 13,059,735 9,940,038 - 22,999,773

Capital Assets Being Depreciated Buildings and Improvements 593,325 - - 593,325 Equipment and Furniture 227,010 - - 227,010 Total Capital Assets Being Depreciated 820,335 - - 820,335

Less Accumulated Depreciation for Buildings and Improvements 359,926 10,024 - 369,950 Equipment and Furniture 133,919 17,468 - 151,387 Total Accumulated Depreciation 493,845 27,492 - 521,337

Total Capital Assets Being Depreciated, Net 326,490 (27,492) - 298,998

GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, NET $ 13,386,225 $ 9,912,546 $ - $ 23,298,771

Depreciation expense was charged to functions/programs of the governmental activities as follows:

GOVERNMENTAL ACTIVITIES Culture and Recreation $ 27,492

TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 27,492

- 78 - - 78 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

e. Long-Term Debt

General Obligation Bonds

The City issues general obligation bonds on behalf of the Library to provide funds for the acquisition and construction of major capital facilities. General obligation bonds currently outstanding are as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements June 30 Portion

$6,685,000 2013A Series General Obligation Bonds, dated June 18, 2013, due in annual installments of $265,000 to $470,000, plus interest of 3% to 4% through Library January 1, 2033 General $ 6,420,000 $ - $ 270,000 $ 6,150,000 $ 280,000

TOTAL $ 6,420,000 $ - $ 270,000 $ 6,150,000 $ 280,000

Loans Payable

The Library enters into loans payable for the acquisition of capital equipment. Loans payable currently outstanding are as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Additions Reductions June 30 Portion

$3,000,000 Loan Payable of 2015 dated June 5, 2015 due in one payment of $3,000,000 plus interest at 3.25% through Library December 18, 2016 General $ 3,000,000 $ - $ 1,000,000 $ 2,000,000 $ 2,000,000

TOTAL $ 3,000,000 $ - $ 1,000,000 $ 2,000,000 $ 2,000,000

- 79 - - 79 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

e. Long-Term Debt (Continued)

Debt Certificates

The City issues debt certificates on behalf of the Library to provide funds for the acquisition and construction of major capital facilities. Debt certificates currently outstanding are as follows:

Fund Debt Balances Balances Current Issue Retired by July 1 Issuances Retirements June 30 Portion

$1,000,000 2011 Series Debt Certificates, Dated December 16, 2011, due in annual installments of $111,000, plus interest of 2.96% through July 1, Library 2020. General $ 666,667 $ - $ 111,111 $ 555,556 $ 111,111

TOTAL $ 666,667 $ - $ 111,111 $ 555,556 $ 111,111

Debt Service Requirements to Maturity

Year General Obligation Bonds Ending General Obligation Bonds Loans Payable June 30, Principal Interest Principal Interest

2017 $ 280,000 $ 210,025 $ 2,000,000 $ 32,500 2018 285,000 201,625 - - 2019 295,000 193,075 - - 2020 305,000 184,225 - - 2021 315,000 175,075 - - 2022 325,000 165,625 - - 2023 335,000 155,875 - - 2024 345,000 145,825 - - 2025 355,000 135,475 - - 2026 365,000 124,825 - - 2027 375,000 112,963 - - 2028 390,000 99,838 - - 2029 405,000 86,188 - - 2030 420,000 71,000 - - 2031 435,000 54,200 - - 2032 450,000 36,800 - - 2033 470,000 18,800 - -

TOTAL $ 6,150,000 $ 2,171,439 $ 2,000,000 $ 32,500

- 80 - - 80 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

e. Long-Term Debt (Continued)

Debt Service Requirements to Maturity (Continued)

Year Ending Debt Certificates June 30, Principal Interest

2017 $ 111,111 $ 16,444 2018 111,111 13,156 2019 111,111 9,867 2020 111,111 6,578 2021 111,112 3,289

TOTAL $ 555,556 $ 49,334

Changes in Long-Term Liabilities

During the fiscal year the following changes occurred in long-term liabilities for Library:

Balances Issuances or Balances Current July 1 Accretions Reductions June 30 Portion

General Obligation Bonds Payable $ 6,420,000 $ - $ 270,000 $ 6,150,000 $ 280,000 Loans Payable 3,000,000 - 1,000,000 2,000,000 2,000,000 Debt Certificates Payable 666,667 - 111,111 555,556 111,111 Compensated Absences Payable 47,877 - 7,812 40,065 8,013 Net Pension Liability - IMRF 869,305 369,613 - 1,238,918 - Net Other Postemployment Benefit Obligation 24,858 - 756 24,102 -

TOTAL GOVERNMENTAL ACTIVITIES $ 11,028,707 $ 369,613 $ 1,389,679 $ 10,008,641 $ 2,399,124

The compensated absences, net pension liability, and the net other postemployment benefit obligation are generally liquidated by the General Fund.

- 81 - - 81 - CITY OF DEKALB, ILLINOIS NOTES TO FINANCIAL STATEMENTS (Continued)

12. DISCRETELY PRESENTED COMPONENT UNIT - DEKALB PUBLIC LIBRARY (Continued)

f. Short-Term Debt

Changes in Short-Term Liabilities

During the year ended June 30, 2016, the following changes occurred in short-term liabilities:

Balances Balances Current July 1 Additions Reductions June 30 Portion

GOVERNMENTAL ACTIVITIES Line of Credit $ - $ 1,591,079 $ - $ 1,591,079 $ 1,591,079

TOTAL GOVERNMENTAL ACTIVITIES $ - $ 1,591,079 $ - $ 1,591,079 $ 1,591,079

Line of Credit

On January 6, 2016, the Library entered into a line of credit. The maximum amount that can be drawn down is $4,500,000. Amounts drawn under the line of credit during the year ended June 30, 2016 totaled $1,591,079. Amounts due at June 30, 2016 totaled $1,591,079. Interest is payable at 3.75% and paid monthly. The line of credit matures December 18, 2016.

13. PRIOR PERIOD ADJUSTMENTS

Discretely Business- Presented Government Type Component al Activities Activities Unit

PRIOR PERIOD ADJUSTMENTS To Correct Governmental Activities Fixed Asset Depreciation $ 261,655 $ - $ - To Correct Business-Type Activities Fixed Asset Depreciation - (453,732) - To Record Library Interest Payable not Accrued for in the Prior Fiscal Year - - (136,921)

TOTAL PRIOR PERIOD ADJUSTMENTS $ 261,655 $ (453,732) $ (136,921)

- 82 - - 82 - REQUIRED SUPPLEMENTARY INFORMATION

CITY OF DEKALB, ILLINOIS

REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFIT PLAN

June 30, 2016

Schedule of Funding Progress

(2) UAAL Actuarial (4) As a Actuarial (1) Accrued (3) Unfunded Percentage Valuation Actuarial Liability Funded AAL (5) of Covered Date Value of (AAL) Ratio (UAAL) Covered Payroll June 30, Assets Entry-Age (1) / (2) (2) - (1) Payroll (4) / (5)

2011 $ - $ 32,360,982 0.00% $ 32,360,982 $ 13,625,025 237.51%

2012 - 20,805,232 0.00% 20,805,232 13,467,132 154.49%

2013 - 21,666,777 0.00% 21,666,777 13,631,798 158.94%

2014 - 20,149,079 0.00% 20,149,079 14,916,350 135.08%

2015 N/A N/A N/A N/A N/A N/A

2016 - 23,904,376 0.00% 23,904,376 16,649,799 143.57%

Employer Contributions

Annual Required Fiscal Employer Contribution Percentage Year Contributions (ARC) Contributed

2011 $ 1,112,666 $ 2,628,440 42.33%

2012 813,475 2,265,382 35.91%

2013 950,439 882,122 107.74%

2014 997,999 905,260 110.24%

2015 988,408 856,213 115.44%

2016 1,007,982 860,985 117.07%

N/A - Information not available

(See independent auditor's report.) - 83 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF EMPLOYER CONTRIBUTIONS ILLINOIS MUNICIPAL RETIREMENT FUND

June 30, 2016

2015 2016

Actuarially Determined Contribution $ 1,234,927 $ 1,106,410

Contribution in Relation to the Actuarially Determined Contribution 1,234,927 1,106,410

CONTRIBUTION DEFICIENCY (Excess) $ - $ -

Covered-Employee Payroll $ 5,664,236 $ 6,850,602

Contributions as a Percentage of Covered-Employee Payroll 21.80% 16.15%

Notes to the Required Supplementary Information

Information is presented for the fiscal year ended June 30, 2016.

The information presented was determined as part of the actuarial valuations as of December 31, 2013 and 2014. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry-age normal; the amortization method was level percent of pay, closed, and the amortization period was 28 years; the asset valuation method was five-year smoothed market; and the significant actuarial assumptions were an investment rate of return at 7.5% annually, projected salary increases assumption of 4.4% to 16.0% compounded annually, and postretirement benefit increases of 3.0% compounded annually.

This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 84 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF EMPLOYER CONTRIBUTIONS POLICE PENSION FUND

June 30, 2016

2014 2015 2016

Actuarially Determined Contribution $ 1,379,234 $ 1,627,268 $ 1,730,712

Contribution in Relation to the Actuarially Determined Contribution 1,352,291 1,448,949 1,622,105

CONTRIBUTION DEFICIENCY (Excess) $ 26,943 $ 178,319 $ 108,607

Covered-Employee Payroll $ 5,215,818 $ 5,565,214 $ 5,638,291

Contributions as a Percentage of Covered-Employee Payroll 25.93% 26.04% 28.77%

Notes to the Required Supplementary Information

The information presented was determined as part of the actuarial valuation as of May 1 of two years prior. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry-age normal; the amortization method was level percent of pay, closed and the amortization period was 27 years; the asset valuation method was at five-year average market value; and the significant actuarial assumptions were an investment rate of return of 7.5% annually and projected salary increase assumption of 4.5%.

This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 85 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF EMPLOYER CONTRIBUTIONS FIREFIGHTERS' PENSION FUND

June 30, 2016

2014 2015 2016

Actuarially Determined Contribution $ 2,078,061 $ 2,250,772 $ 2,373,253

Contribution in Relation to the Actuarially Determined Contribution 2,037,490 2,024,522 2,158,166

CONTRIBUTION DEFICIENCY (Excess) $ 40,571 $ 226,250 $ 215,087

Covered-Employee Payroll $ 4,649,060 $ 4,846,412 $ 4,941,381

Contributions as a Percentage of Covered-Employee Payroll 43.83% 41.77% 43.68%

Notes to the Required Supplementary Information

The information presented was determined as part of the actuarial valuation as of May 1 of two years prior. Additional information as of the latest actuarial valuation presented is as follows: the actuarial cost method was entry-age normal; the amortization method was level percent of pay, closed and the amortization period was 27 years; the asset valuation method was at five-year average market value; and the significant actuarial assumptions were an investment rate of return of 7.5% annually and projected salary increase assumption of 4.5%.

This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 86 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS ILLINOIS MUNICIPAL RETIREMENT FUND

June 30, 2016

2015 2016

TOTAL PENSION LIABILITY Service Cost $ 708,539 $ 681,650 Interest 3,499,944 3,822,530 Changes of Benefit Terms - - Differences Between Expected and Actual Experience 940,811 459,522 Changes of Assumptions 1,655,050 66,340 Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,414,792)

Net Change in Total Pension Liability 4,524,391 2,615,250

Total Pension Liability - Beginning 47,513,928 52,038,319

TOTAL PENSION LIABILITY - ENDING $ 52,038,319 $ 54,653,569

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 1,417,780 $ 1,122,559 Contributions - Member 292,711 351,553 Net Investment Income 2,586,081 223,883 Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,414,792) Administrative Expense 550,760 162,122

Net Change in Plan Fiduciary Net Position 2,567,379 (554,675)

Plan Net Fiduciary Position - Beginning 42,679,497 45,246,876

PLAN NET FIDUCIARY POSITION - ENDING $ 45,246,876 $ 44,692,201

EMPLOYER'S NET PENSION LIABILITY $ 6,791,443 $ 9,961,368

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 86.90% 81.80%

Covered-Employee Payroll $ 6,138,945 $ 6,850,602

Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 110.60% 145.40%

Changes in assumptions related to retirement age and mortality were made since the prior measurement date.

Note: This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 87 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS POLICE PENSION FUND

June 30, 2016

2014 2015 2016

TOTAL PENSION LIABILITY Service Cost $ 983,478 $ 994,063 $ 1,138,556 Interest 3,601,542 3,816,916 4,396,163 Changes of Benefit Terms - - - Differences Between Expected and Actual Experience 654,735 546,806 (981,619) Changes of Assumptions (*) - 3,756,869 - Contributions - Buy Back - - 157,490 Benefit Payments, Including Refunds of Member Contributions (2,255,726) (2,480,487) (2,579,348)

Net Change in Total Pension Liability 2,984,029 6,634,167 2,131,242

Total Pension Liability - Beginning 49,148,427 52,132,456 58,766,623

TOTAL PENSION LIABILITY - ENDING $ 52,132,456 $ 58,766,623 $ 60,897,865

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 1,352,291 $ 1,448,949 $ 1,622,105 Contributions - Member 632,775 711,771 570,363 Contributions - Buy Back - - 157,490 Net Investment Income 3,240,785 312,398 17,314 Benefit Payments, Including Refunds of Member Contributions (2,255,726) (2,480,487) (2,579,348) Administrative Expense (39,544) (44,531) (44,990)

Net Change in Plan Fiduciary Net Position 2,930,581 (51,900) (257,066)

Plan Net Fiduciary Position - Beginning 26,078,320 29,008,901 28,957,001

PLAN NET FIDUCIARY POSITION - ENDING $ 29,008,901 $ 28,957,001 $ 28,699,935

EMPLOYER'S NET PENSION LIABILITY $ 23,123,555 $ 29,809,622 $ 32,197,930

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 55.60% 49.30% 47.10%

Covered-Employee Payroll $ 5,215,818 $ 5,565,214 $ 5,638,291

Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 443.30% 535.60% 571.10%

*The June 30, 2015 valuation had changes in the disability rates.

Note: This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 88 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS FIREFIGHTERS' PENSION FUND

June 30, 2016

2014 2015 2016

TOTAL PENSION LIABILITY Service Cost $ 1,033,286 $ 1,077,550 $ 1,103,489 Interest 3,857,132 4,102,276 4,495,233 Changes of Benefit Terms - - - Differences Between Expected and Actual Experience 1,330,700 (477,382) (102,841) Changes of Assumptions (*) - 2,460,941 - Benefit Payments, Including Refunds of Member Contributions (2,922,598) (2,982,470) (3,072,413)

Net Change in Total Pension Liability 3,298,520 4,180,915 2,423,468

Total pension liability - beginning 52,889,722 56,188,242 60,369,157

TOTAL PENSION LIABILITY - ENDING $ 56,188,242 $ 60,369,157 $ 62,792,625

PLAN FIDUCIARY NET POSITION Contributions - Employer $ 2,037,490 $ 2,024,522 $ 2,158,156 Contributions - Member 420,534 466,475 477,022 Net Investment Income 3,075,655 126,661 (403,920) Benefit Payments, Including Refunds of Member Contributions (2,922,598) (2,982,470) (3,072,413) Administrative Expense (34,562) (43,547) (41,613)

Net Change in Plan Fiduciary Net Position 2,576,519 (408,359) (882,768)

Plan Net Fiduciary Position - Beginning 22,186,069 24,762,588 24,354,229

PLAN NET FIDUCIARY POSITION - ENDING $ 24,762,588 $ 24,354,229 $ 23,471,461

EMPLOYER'S NET PENSION LIABILITY $ 31,425,654 $ 36,014,928 $ 39,321,164

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 44.10% 40.30% 37.40%

Covered-Employee Payroll $ 4,649,060 $ 4,846,412 $ 4,941,381

Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 676.00% 743.10% 795.80%

*The June 30, 2015 valuation had changes in the disability rates.

Note: This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 89 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF INVESTMENT RETURNS POLICE PENSION FUND

June 30, 2016

2014 2015 2016

Annual Money-Weighted Rate of Return, Net of Investment Expense 12.36% 1.05% (0.90%)

Note: This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 90 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF INVESTMENT RETURNS FIREFIGHTERS' PENSION FUND

June 30, 2016

2014 2015 2016

Annual Money-Weighted Rate of Return, Net of Investment Expense 13.67% 0.73% (1.53%)

Note: This schedule is intended to show information for ten years. Additional information will be added each year.

(See independent auditor's report.) - 91 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes $ 17,720,540 $ 17,720,540 $ 17,104,968 Licenses and Permits 809,291 809,291 876,788 Intergovernmental 11,353,970 11,571,243 11,748,169 Charges for Services 2,085,800 2,085,800 2,143,615 Fines and Forfeitures 863,500 863,500 796,390 Investment Income 84,950 84,950 (26,140) Miscellaneous 414,800 414,800 390,654

Total Revenues 33,332,851 33,550,124 33,034,444

EXPENDITURES General Government 4,925,359 5,024,058 5,012,558 Public Safety 21,868,503 22,107,503 21,397,418 Highways and Streets 3,609,193 3,609,193 3,286,770 Community Development 1,412,338 1,412,338 1,047,614

Total Expenditures 31,815,393 32,153,092 30,744,360

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,517,458 1,397,032 2,290,084

OTHER FINANCING SOURCES (USES) Proceeds on Sale of Capital Assets - - 496 Transfers In 508,965 508,965 508,965 Transfers (Out) (1,523,692) (1,523,692) (1,536,138)

Total Other Financing Sources (Uses) (1,014,727) (1,014,727) (1,026,677)

NET CHANGE IN FUND BALANCE $ 502,731 $ 382,305 1,263,407

FUND BALANCE, JULY 1 8,221,253

FUND BALANCE, JUNE 30 $ 9,484,660

(See independent auditor's report.) - 92 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MOTOR FUEL TAX FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Intergovernmental State Motor Fuel Tax $ 1,047,914 $ 1,047,914 $ 1,170,889 Investment Income 875 875 3,357

Total Revenues 1,048,789 1,048,789 1,174,246

EXPENDITURES Highways and Streets Commodities 100,000 100,000 86,769 Contractual Services 825,000 825,000 400,297 Capital Outlay 390,000 390,000 501

Total Expenditures 1,315,000 1,315,000 487,567

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (266,211) (266,211) 686,679

OTHER FINANCING (USES) Transfer In - - 32,072

Total Other Financing (Uses) - - 32,072

NET CHANGE IN FUND BALANCE $ (266,211) $ (266,211) 718,751

FUND BALANCE, JULY 1 2,378,748

FUND BALANCE, JUNE 30 $ 3,097,499

(See independent auditor's report.) - 93 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MASS TRANSIT FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Intergovernmental Federal Grants $ 2,200,665 $ 2,200,665 $ 939,318 State Grants 5,828,610 5,828,610 2,259,559 Miscellaneous - - 1,432

Total Revenues 8,029,275 8,029,275 3,200,309

EXPENDITURES General Government Personal Services 213,965 213,965 210,460 Commodities 27,714 27,714 20,491 Contractual Services 3,179,693 3,179,693 2,879,351 Capital Outlay 4,623,270 4,623,270 90,007

Total Expenditures 8,044,642 8,044,642 3,200,309

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (15,367) (15,367) -

OTHER FINANCING SOURCES (USES) Transfers In 19,626 19,626 - Transfers (Out) (7,782) (7,782) -

Total Other Financing Sources (Uses) 11,844 11,844 -

NET CHANGE IN FUND BALANCE $ (3,523) $ (3,523) -

FUND BALANCE, JULY 1 -

FUND BALANCE, JUNE 30 $ -

(See independent auditor's report.) - 94 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING #1 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property $ 6,439,658 $ 6,439,658 $ 6,347,586 Investment Income 50,000 50,000 (288,068)

Total Revenues 6,489,658 6,489,658 6,059,518

EXPENDITURES Community Development Contractual Services 966,926 996,926 2,253,338 Capital Outlay 5,483,249 5,053,249 3,615,093

Total Expenditures 6,450,175 6,050,175 5,868,431

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 39,483 439,483 191,087

OTHER FINANCING SOURCES (USES) Transfer (Out) (1,068,663) (1,068,663) (1,068,663)

Total Other Financing Sources (Uses) (1,068,663) (1,068,663) (1,068,663)

NET CHANGE IN FUND BALANCE $ (1,029,180) $ (629,180) (877,576)

FUND BALANCE, JULY 1 2,596,538

FUND BALANCE, JUNE 30 $ 1,718,962

(See independent auditor's report.) - 95 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING #2 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property $ 1,329,665 $ 1,329,665 $ 1,216,455 Investment Income - - 53,089

Total Revenues 1,329,665 1,329,665 1,269,544

EXPENDITURES Community Development Contractual Services 301,463 311,463 287,360 Capital Outlay 1,690,000 2,080,000 192,082

Total Expenditures 1,991,463 2,391,463 479,442

NET CHANGE IN FUND BALANCE $ (661,798) $ (1,061,798) 790,102

FUND BALANCE, JULY 1 7,661,414

FUND BALANCE, JUNE 30 $ 8,451,516

(See independent auditor's report.) - 96 -

CITY OF DEKALB, ILLINOIS

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

June 30, 2016

1. BUDGETS

Annual budgets are adopted for all governmental and proprietary funds. Budgets are adopted on a basis consistent with GAAP. All annual appropriations lapse at fiscal year end. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental and proprietary funds. All outstanding encumbrances lapse at year end and do not carry forward into the subsequent fiscal year unless they are reappropriated.

All departments of the City submit requests for appropriations to the City manager so that a budget may be prepared. The budget is prepared by fund, department and division, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year.

The proposed budget is presented to the governing body for review. The governing body holds public hearings and may add to, subtract from or change appropriations, but may not change the form of the budget. The budget may be amended by the governing body.

The budget officer can transfer amounts between departments within a fund; however, transfers between funds must be approved by the City Council. Expenditures may not legally exceed budgeted appropriations at the fund level. During the year, there were several budget transfers.

2. EXCESS OF ACTUAL EXPENDITURES/EXPENSES OVER BUDGET IN INDIVIDUAL FUNDS

The City reported no funds in excess of actual expenditures/expenses (exclusive of depreciation and amortization) over budget for the fiscal year.

- 9769 - COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

MAJOR GOVERNMENTAL FUNDS

GENERAL FUND

The General Fund accounts for all financial resources except those required to be accounted for in another fund.

SPECIAL REVENUE FUNDS

The Motor Fuel Tax Fund is used to account for the operations of street maintenance programs and capital projects as authorized by the Illinois Department of Transportation. Financing is provided by the City’s share of gasoline taxes.

The Mass Transit Fund is used to account for the tow community mass transit services: Northern Illinois University Huskies Line and Voluntary Action Center’s Trans Vac Service.

The Tax Increment Financing #1 Fund is used to account for redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area.

The Tax Increment Financing #2 Fund is used to account for redevelopment activities within another defined area of the community in order to eliminate blighted conditions in that area.

CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property $ 4,270,540 $ 4,270,540 $ 4,231,993 Home Rule Sales 7,000,000 7,000,000 6,511,982 Utilities 3,410,000 3,410,000 3,202,384 Franchise 470,000 470,000 498,852 Restaurant/Bar 1,825,000 1,825,000 1,913,222 Miscellaneous 745,000 745,000 746,535

Total Taxes 17,720,540 17,720,540 17,104,968

Licenses and Permits Licenses Amusement 2,900 2,900 1,875 Liquor 215,000 215,000 236,764 Rooming House 13,500 13,500 14,300 Other 45,000 45,000 83,352 Permits Building and Electrical 485,401 485,401 464,639 Plumbing 20,000 20,000 24,208 HVAC 15,000 15,000 25,399 Sewer 3,750 3,750 3,780 Parking 3,240 3,240 2,151 Other 5,500 5,500 20,320

Total Licenses and Permits 809,291 809,291 876,788

Intergovernmental State Sales 5,400,000 5,400,000 5,289,536 Income 4,358,970 4,358,970 4,462,992 Local Use 900,000 900,000 1,040,616 Replacement 150,000 150,000 129,241 Federal Grants 15,000 232,273 282,704 TIF Property Tax Surplus 180,000 180,000 190,222 TIF Sales Tax Surplus 350,000 350,000 349,668 State Grants - - 3,190

Total Intergovernmental 11,353,970 11,571,243 11,748,169

Charges for Services Fire Services 800,000 800,000 894,082 Ambulance Fees 820,000 820,000 904,968 Police Services 4,000 4,000 10,264 Zoning Fees 5,300 5,300 11,457 Administration Fees 112,500 112,500 33,750 Fuel Sales 150,000 150,000 87,703 Rental Crime Free Registration 190,000 190,000 192,655 Development Inspection Fees - - 229 Hotel Inspection Fees 4,000 4,000 5,409 Finger Print Fee - - 3,098

Total Charges for Services 2,085,800 2,085,800 2,143,615

(This schedule is continued on the following page.) - 98 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES - BUDGET AND ACTUAL (Continued) GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES (Continued) Fines and Forfeitures Circuit Court $ 300,000 $ 300,000 $ 310,159 Tow 237,000 237,000 217,224 Police 105,000 105,000 105,211 Abatement 10,000 10,000 6,020 False Fire Alarm 2,000 2,000 4,200 Crime Fee Housing 500 500 - DUI 110,000 110,000 44,274 Other 99,000 99,000 109,302

Total Fines and Forfeitures 863,500 863,500 796,390

Investment Income 84,950 84,950 (26,140)

Miscellaneous Refunds/Reimbursements 300,000 300,000 358,654 Miscellaneous 114,800 114,800 32,000

Total Miscellaneous 414,800 414,800 390,654

TOTAL REVENUES $ 33,332,851 $ 33,550,124 $ 33,034,444

(See independent auditor's report.) - 99 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

GENERAL GOVERNMENT Elected Officials $ 257,033 $ 257,033 $ 247,097 Municipal Band 60,200 60,200 54,350 City Manager's Office Administration 1,023,154 1,023,154 1,058,728 Human Resources Division 329,228 329,228 253,906 General Fund Support Service 2,873,894 2,972,593 3,001,517 Finance Administration 669,609 669,609 664,946 Information and Technology 789,105 789,105 783,361 Less Administrative Costs Charged to Other Departments and Funds (1,076,864) (1,076,864) (1,051,347)

Total General Government 4,925,359 5,024,058 5,012,558

PUBLIC SAFETY Police Protection 12,132,984 12,132,984 11,533,573 Fire Protection 9,735,519 9,974,519 9,863,845

Total Public Safety 21,868,503 22,107,503 21,397,418

HIGHWAYS AND STREETS Public Works Administration 207,871 207,871 167,179 Public Facilities and Fleet Maintenance 446,514 446,514 434,231 Streets 2,625,879 2,625,879 2,430,036 Engineering 328,929 328,929 255,324

Total Highways and Streets 3,609,193 3,609,193 3,286,770

COMMUNITY DEVELOPMENT Community Development Administration 831,763 831,763 684,264 Building and Code Enforcement 580,575 580,575 363,350

Total Community Improvement 1,412,338 1,412,338 1,047,614

TOTAL EXPENDITURES $ 31,815,393 $ 32,153,092 $ 30,744,360

(See independent auditor's report.) - 100 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

GENERAL GOVERNMENT Elected Officials Personnel Services $ 70,296 $ 70,296 $ 67,343 Commodities 100 100 218 Contractual Services 186,637 186,637 179,536

Total Elected Officials 257,033 257,033 247,097

Municipal Band Commodities 2,300 2,300 1,650 Contractual Services 57,900 57,900 52,700

Total Municipal Band 60,200 60,200 54,350

City Manager's Office Administration Personnel Services 745,506 745,506 754,220 Commodities 12,500 12,500 14,388 Contractual Services 264,648 264,648 289,671 Capital Outlay 500 500 449

Total City Manager's Office Administration 1,023,154 1,023,154 1,058,728

Human Resources Division Personnel Services 225,774 225,774 170,390 Commodities 2,198 2,198 2,193 Contractual Services 98,256 98,256 66,829 Capital Outlay 3,000 3,000 14,494

Total Human Resource Division 329,228 329,228 253,906

General Fund Support Service Personnel Services 1,211,194 1,211,194 1,161,601 Contractual Services 1,662,700 1,703,913 1,824,947 Capital Outlay - 57,486 14,969

Total General Fund Support Service 2,873,894 2,972,593 3,001,517

(This schedule is continued on the following pages.) - 101 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

GENERAL GOVERNMENT (Continued) Finance Administration Personnel Services $ 600,883 $ 600,883 $ 603,410 Commodities 10,965 10,965 11,410 Contractual Services 57,761 57,761 50,126

Total Finance Administration 669,609 669,609 664,946

Information and Technology Personnel Services 431,335 431,335 398,738 Commodities 73,817 73,817 86,666 Contractual Services 269,953 269,953 282,763 Capital Outlay 14,000 14,000 15,194

Total Information and Technology 789,105 789,105 783,361

Less Administrative Costs Charged to Other Departments and Funds (1,076,864) (1,076,864) (1,051,347)

Total General Government 4,925,359 5,024,058 5,012,558

PUBLIC SAFETY Police Protection Police Department Administration Personnel Services 824,106 824,106 826,706 Commodities 169,847 169,847 118,175 Contractual Services 186,287 186,287 150,786 Capital Outlay 2,925 2,925 647

Total Police Department Administration 1,183,165 1,183,165 1,096,314

Patrol Services Personnel Services 6,527,348 6,527,348 6,448,448 Commodities 157,281 157,281 145,462 Contractual Services 85,228 85,228 78,013 Capital Outlay 84,534 84,534 48,220

Total Patrol Services 6,854,391 6,854,391 6,720,143

(This schedule is continued on the following pages.) - 102 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

PUBLIC SAFETY (Continued) Police Protection (Continued) Communications Personnel Services $ 1,239,388 $ 1,239,388 $ 1,093,459 Commodities 3,866 3,866 1,748 Contractual Services 18,797 18,797 14,137 Capital Outlay 2,490 2,490 1,662

Total Communications 1,264,541 1,264,541 1,111,006

Criminal Investigations Personnel Services 1,933,165 1,933,165 1,796,497 Commodities 25,205 25,205 19,279 Contractual Services 23,884 23,884 14,104 Capital Outlay - - -

Total Criminal Investigations 1,982,254 1,982,254 1,829,880

Police Department Special Services Personnel Services 517,300 517,300 477,948 Commodities 15,787 15,787 3,369 Contractual Services 20,895 20,895 5,420 Capital Outlay 925 925 405

Total Police Department Special Services 554,907 554,907 487,142

Crime Free Housing and Inspection Personnel Services 267,851 267,851 275,980 Commodities 12,437 12,437 6,159 Contractual Services 13,083 13,083 6,833 Capital Outlay 355 355 116

Total Crime Free Housing and Inspection 293,726 293,726 289,088

Total Police Protection 12,132,984 12,132,984 11,533,573

(This schedule is continued on the following pages.) - 103 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

PUBLIC SAFETY (Continued) Fire Protection Fire Department Administration Personnel Services $ 749,480 $ 749,480 $ 704,333 Commodities 56,668 56,668 33,688 Contractual Services 44,574 44,574 39,557

Total Fire Department Administration 850,722 850,722 777,578

Fire Department Operations Personnel Services 8,551,627 8,551,627 8,550,059 Commodities 137,053 137,053 120,293 Contractual Services 185,031 185,031 171,651 Capital Outlay 11,086 250,086 244,264

Total Fire Department Operations 8,884,797 9,123,797 9,086,267

Total Fire Protection 9,735,519 9,974,519 9,863,845

Total Public Safety 21,868,503 22,107,503 21,397,418

HIGHWAYS AND STREETS Public Works Administration Personnel Services 183,750 183,750 138,355 Commodities 1,150 1,150 300 Contractual Services 22,971 22,971 28,024 Capital Outlay - - 500

Total Public Works Administration 207,871 207,871 167,179

Public Facilities and Fleet Maintenance Personnel Services 181,854 181,854 162,629 Commodities 29,800 29,800 24,767 Contractual Services 234,260 234,260 246,625 Capital Outlay 600 600 210

Total Public Facilities and Fleet Maintenance 446,514 446,514 434,231

(This schedule is continued on the following page.) - 104 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF DETAILED EXPENDITURES - BUDGET AND ACTUAL (Continued) GENERAL FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

HIGHWAYS AND STREETS (Continued) Streets Personnel Services $ 1,745,119 $ 1,745,119 $ 1,719,777 Commodities 604,100 604,100 473,035 Contractual Services 260,660 260,660 220,997 Capital Outlay 16,000 16,000 16,227

Total Streets 2,625,879 2,625,879 2,430,036

Engineering Personnel Services 219,015 219,015 214,886 Commodities 23,747 23,747 4,973 Contractual Services 80,167 80,167 32,933 Capital Outlay 6,000 6,000 2,532

Total Engineering 328,929 328,929 255,324

Total Highways and Streets 3,609,193 3,609,193 3,286,770

COMMUNITY DEVELOPMENT Community Development Administration Personnel Services 536,507 536,507 490,253 Commodities 17,360 17,360 12,146 Contractual Services 277,896 277,896 181,865

Total Community Development Administration 831,763 831,763 684,264

Building and Code Enforcement Personnel Services 143,467 143,467 85,400 Commodities 7,900 7,900 - Contractual Services 426,708 426,708 276,066 Capital Outlay 2,500 2,500 1,884

Total Building and Code Enforcement 580,575 580,575 363,350

Total Community Development 1,412,338 1,412,338 1,047,614

TOTAL EXPENDITURES $ 31,815,393 $ 32,153,092 $ 30,744,360

(See independent auditor's report.) - 105 - NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

The Foreign Fire Insurance Fund is used to account for certain fire department related expenditures. Financing is provided by taxes on out-of-state insurance companies.

The Housing Rehabilitation Fund is used to account for federal and state grants received through 1983 that were targeted for low interest housing rehabilitation loans to income qualified properties.

The Community Development Block Grant Fund is used to account for the receipts and disbursement of community development grant funds.

The Heritage Ridge Special Service Area #3 Fund is used to account for the accumulation of resources for improvements for Special Service Area #3.

The Knolls Special Service Area #4 Fund is used to account for the accumulation of resources for improvements for Special Service Area #4.

The Greek Row Special Service Area #6 Fund is used to account for the accumulation of resources for improvements for Special Service Area #6.

The Heartland Fields Special Service Area #14 Fund is used to account for the accumulation of resources for improvements for Special Service Area #14.

DEBT SERVICE FUNDS

The General Debt Service Fund is used to account for the accumulation of resources and payment of bond principal and interest on debt other than tax increment financing debt.

The Tax Increment Financing Debt Service Fund is used to account for the accumulation of resources and payment of bond principal and interest on the tax increment financing areas.

NONMAJOR GOVERNMENTAL FUNDS (Continued)

CAPITAL PROJECTS FUNDS

The Capital Projects Fund is used to account for the City’s general infrastructure improvements including street (re)construction, storm water management, public buildings, street lighting, sidewalk repairs, as well as the purchase of vehicles and equipment.

The Equipment Fund is used to account for major equipment purchases which cost in excess of $5,000 and have a useful life expectancy of three years or more.

The Fleet Replacement Fund is used to account for revenues and expenditures associated with the acquisition of City vehicles and major equipment (i.e. trailers and plows).

CITY OF DEKALB, ILLINOIS

COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS

June 30, 2016

Total Nonmajor Special Debt Capital Governmental Revenue Service Projects Funds

ASSETS

Cash and Investments $ 103,817 $ 407 $ 538,407 $ 642,631 Receivables Property Taxes 9,393 - - 9,393 Other - 28,080 - 28,080 Due from Other Governments 5,904 - 31,402 37,306

TOTAL ASSETS $ 119,114 $ 28,487 $ 569,809 $ 717,410

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUNDS BALANCES

LIABILITIES Accounts Payable $ 7,892 $ - $ 135,558 $ 143,450 Unearned Revenues - - 76,000 76,000 Due to Other Funds 6,923 42,000 - 48,923

Total Liabilities 14,815 42,000 211,558 268,373

DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes 17,502 - - 17,502

Total Liabilities and Deferred Inflows of Resources 32,317 42,000 211,558 285,875

FUND BALANCES Restricted for Public Safety 27,262 - - 27,262 Restricted for Specific Purpose 69,809 - - 69,809 Assigned for Capital Projects - - 358,251 358,251 Unassigned (Deficit) (10,274) (13,513) - (23,787)

Total Fund Balances (Deficit) 86,797 (13,513) 358,251 431,535

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 119,114 $ 28,487 $ 569,809 $ 717,410

(See independent auditor's report.) - 106 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS

For the Year Ended June 30, 2016

Total Nonmajor Special Debt Capital Governmental Revenue Service Projects Funds

REVENUES Taxes $ 63,487 $ 311,862 358,945 $ 734,294 Intergovernmental 496,251 - - 496,251 Charges for Services - - 141,793 141,793 Fines and Forfeitures - 58,101 - 58,101 Investment Income 56 - - 56 Miscellaneous 1,787 - 206,825 208,612

Total Revenues 561,581 369,963 707,563 1,639,107

EXPENDITURES General Government 135,170 - 52,869 188,039 Public Safety 20,836 - - 20,836 Capital Outlay 85,686 - 852,061 937,747 Debt Service Principal Retirement - 2,048,350 16,667 2,065,017 Interest and Fiscal Charges - 911,606 - 911,606

Total Expenditures 241,692 2,959,956 921,597 4,123,245

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 319,889 (2,589,993) (214,034) (2,484,138)

OTHER FINANCING SOURCES (USES) Transfers In 16,443 2,572,729 - 2,589,172 Transfers (Out) (337,571) - - (337,571) Proceeds from Sale of Capital Assets - - 1,245 1,245

Total Other Financing Sources (Uses) (321,128) 2,572,729 1,245 2,252,846

NET CHANGE IN FUND BALANCES (1,239) (17,264) (212,789) (231,292)

FUND BALANCES, JULY 1 88,036 3,751 571,040 662,827

FUND BALANCES (DEFICIT), JUNE 30 $ 86,797 $ (13,513) $ 358,251 $ 431,535

(See independent auditor's report.) - 107 - CITY OF DEKALB, ILLINOIS

COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS

June 30, 2016

Community Foreign Fire Housing Development Insurance Tax Rehabilitation Block Grant

ASSETS

Cash and Investments $ 30,073 $ 63,715 $ 38 Receivables (Net, Where Applicable, of Allowances for Uncollectibles) Property Taxes - - - Due from Other Governments - - 5,904

TOTAL ASSETS $ 30,073 $ 63,715 $ 5,942

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUNDS BALANCES

LIABILITIES Accounts Payable $ 2,811 $ - $ 119 Due to Other Funds - - 5,823

Total Liabilities 2,811 - 5,942

DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes - - -

Total Liabilities and Deferred Inflows of Resources 2,811 - 5,942

FUND BALANCES Restricted for Public Safety 27,262 - - Restricted for Specific Purpose - 63,715 - Unassigned (Deficit) - - -

Total Fund Balances (Deficit) 27,262 63,715 -

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 30,073 $ 63,715 $ 5,942

- 108 - Heritage Ridge Knolls Greek Row Heartland Fields Special Service Special Service Special Service Special Service Area #3 Area #4 Area #6 Area #14 Total

$ 4,924 $ 2,416 $ 75 $ 2,576 $ 103,817

- 2,392 5,786 1,215 9,393 - - - - 5,904

$ 4,924 $ 4,808 $ 5,861 $ 3,791 $ 119,114

$ - $ 1,250 $ 3,591 $ 121 $ 7,892 - - 1,100 - 6,923

- 1,250 4,691 121 14,815

- 5,001 10,001 2,500 17,502

- 6,251 14,692 2,621 32,317

- - - - 27,262 4,924 - - 1,170 69,809 - (1,443) (8,831) - (10,274)

4,924 (1,443) (8,831) 1,170 86,797

$ 4,924 $ 4,808 $ 5,861 $ 3,791 $ 119,114

(See independent auditor's report.) - 109 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS

For the Year Ended June 30, 2016

Community Foreign Fire Housing Development Insurance Tax Rehabilitation Block Grant

REVENUES Taxes $ 46,581 $ - $ - Intergovernmental - - 496,251 Investment Income - 56 - Miscellaneous 126 1,661 -

Total Revenues 46,707 1,717 496,251

EXPENDITURES General Government - 287 125,028 Public Safety 20,836 - - Capital Outlay 12,279 2,006 50,096

Total Expenditures 33,115 2,293 175,124

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 13,592 (576) 321,127

OTHER FINANCING SOURCES (USES) Transfers In - 16,443 - Transfers (Out) - - (337,571)

Total Other Financing Sources (Uses) - 16,443 (337,571)

NET CHANGE IN FUND BALANCES 13,592 15,867 (16,444)

FUND BALANCES, JULY 1 13,670 47,848 16,444

FUND BALANCES (DEFICIT), JUNE 30 $ 27,262 $ 63,715 $ -

- 110 - Heritage Ridge Knolls Greek Row Heartland Fields Special Service Special Service Special Service Special Service Area #3 Area #4 Area #6 Area #14 Total

$ - $ 4,406 $ 10,000 $ 2,500 $ 63,487 - - - - 496,251 - - - - 56 - - - - 1,787

- 4,406 10,000 2,500 561,581

1,162 5,873 500 2,320 135,170 - - - - 20,836 - - 21,305 - 85,686

1,162 5,873 21,805 2,320 241,692

(1,162) (1,467) (11,805) 180 319,889

- - - - 16,443 - - - - (337,571)

- - - - (321,128)

(1,162) (1,467) (11,805) 180 (1,239)

6,086 24 2,974 990 88,036

$ 4,924 $ (1,443) $ (8,831) $ 1,170 $ 86,797

(See independent auditor's report.) - 111 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOREIGN FIRE INSURANCE TAX FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Foreign Fire Insurance Tax $ 45,000 $ 45,000 $ 46,581 Miscellaneous - - 126

Total Revenues 45,000 45,000 46,707

EXPENDITURES Public Safety Commodities 23,777 23,777 19,324 Contractual Services 2,217 2,217 1,512 Capital Outlay 20,590 20,590 12,279

Total Expenditures 46,584 46,584 33,115

NET CHANGE IN FUND BALANCE $ (1,584) $ (1,584) 13,592

FUND BALANCE, JULY 1 13,670

FUND BALANCE, JUNE 30 $ 27,262

(See independent auditor's report.) - 112 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOUSING REHABILITATION FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Investment Income $ 35 $ 35 $ 56 Miscellaneous 6,000 6,000 1,661

Total Revenues 6,035 6,035 1,717

EXPENDITURES Current General Government Contractual Services 12,000 12,000 287 Capital Outlay 24,000 24,000 2,006

Total Expenditures 36,000 36,000 2,293

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (29,965) (29,965) (576)

OTHER FINANCING SOURCES (USES) Transfers In - - 16,443

Total Other Financing Sources (Uses) - - 16,443

NET CHANGE IN FUND BALANCE $ (29,965) $ (29,965) 15,867

FUND BALANCE, JULY 1 47,848

FUND BALANCE, JUNE 30 $ 63,715

(See independent auditor's report.) - 113 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Intergovernmental Grants $ 728,632 $ 728,632 $ 496,251

Total Revenues 728,632 728,632 496,251

EXPENDITURES General Government Commodities 1,000 1,000 - Contractual Services 236,053 236,053 125,028 Capital Outlay 491,579 491,579 50,096

Total Expenditures 728,632 728,632 175,124

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - - 321,127

OTHER FINANCING SOURCES (USES) Transfers (Out) - - (337,571)

Total Other Financing Sources (Uses) - - (337,571)

NET CHANGE IN FUND BALANCE $ - $ - (16,444)

FUND BALANCE, JULY 1 16,444

FUND BALANCE, JUNE 30 $ -

(See independent auditor's report.) - 114 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HERITAGE RIDGE SPECIAL SERVICE AREA #3 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES None $ - $ - $ -

Total Revenues - - -

EXPENDITURES General Government Contractual Services 1,250 1,250 1,162

Total Expenditures 1,250 1,250 1,162

NET CHANGE IN FUND BALANCE $ (1,250) $ (1,250) (1,162)

FUND BALANCE, JULY 1 6,086

FUND BALANCE, JUNE 30 $ 4,924

(See independent auditor's report.) - 115 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL KNOLLS SPECIAL SERVICE AREA #4 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property Taxes $ 4,406 $ 4,406 $ 4,406

Total Revenues 4,406 4,406 4,406

EXPENDITURES General Government Contractual Services 3,500 5,874 5,873

Total Expenditures 3,500 5,874 5,873

NET CHANGE IN FUND BALANCE $ 906 $ (1,468) (1,467)

FUND BALANCE, JULY 1 24

FUND BALANCE (DEFICIT), JUNE 30 $ (1,443)

(See independent auditor's report.) - 116 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GREEK ROW SPECIAL SERVICE AREA #6 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property Taxes $ 10,000 $ 10,000 $ 10,000

Total Revenues 10,000 10,000 10,000

EXPENDITURES General Government Contractual Services 500 500 500 Capital Outlay 7,500 21,305 21,305

Total Expenditures 8,000 21,805 21,805

NET CHANGE IN FUND BALANCE $ 2,000 $ (11,805) (11,805)

FUND BALANCE, JULY 1 2,974

FUND BALANCE (DEFICIT), JUNE 30 $ (8,831)

(See independent auditor's report.) - 117 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HEARTLAND HILLS SPECIAL SERVICE AREA #14 FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Property Taxes $ 2,500 $ 2,500 $ 2,500

Total Revenues 2,500 2,500 2,500

EXPENDITURES General Government Contractual Services 1,000 2,320 2,320

Total Expenditures 1,000 2,320 2,320

NET CHANGE IN FUND BALANCE $ 1,500 $ 180 180

FUND BALANCE, JULY 1 990

FUND BALANCE, JUNE 30 $ 1,170

(See independent auditor's report.) - 118 - CITY OF DEKALB, ILLINOIS

COMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS

June 30, 2016

General TIF Debt Service Debt Service Total

ASSETS

Cash and Investments $ 407 $ - $ 407 Other receivable 28,080 - 28,080

TOTAL ASSETS $ 28,487 $ - $ 28,487

LIABILITIES AND FUND BALANCES

LIABILITIES Due to Other Funds $ 42,000 $ - $ 42,000

Total Liabilities 42,000 - 42,000

FUND BALANCES Unassigned (Deficit) (13,513) - (13,513)

Total Fund Balances (Deficit) (13,513) - (13,513)

TOTAL LIABILITIES AND FUND BALANCES $ 28,487 $ - $ 28,487

(See independent auditor's report.) - 119 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS

For the Year Ended June 30, 2016

General TIF Debt Service Debt Service Total

REVENUES Taxes $ 311,862 $ - $ 311,862 Fines and Forfeitures 58,101 - 58,101

Total Revenues 369,963 - 369,963

EXPENDITURES Debt Service Principal 1,223,350 825,000 2,048,350 Interest and Fiscal Charges 667,943 243,663 911,606

Total Expenditures 1,891,293 1,068,663 2,959,956

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,521,330) (1,068,663) (2,589,993)

OTHER FINANCING SOURCES (USES) Transfers In 1,504,066 1,068,663 2,572,729

Total Other Financing Sources (Uses) 1,504,066 1,068,663 2,572,729

NET CHANGE IN FUND BALANCES (17,264) - (17,264)

FUND BALANCES, JULY 1 3,751 - 3,751

FUND BALANCES (DEFICIT), JUNE 30 $ (13,513) $ - $ (13,513)

(See independent auditor's report.) - 120 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL DEBT SERVICE FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Hotel/Motel $ 43,417 $ 43,417 $ 42,367 Local Fuel Tax 245,000 245,000 269,495 Fines and Forfeitures 100,000 100,000 58,101

Total Revenues 388,417 388,417 369,963

EXPENDITURES Debt Service Principal Retirement 1,223,350 1,223,350 1,223,350 Interest and Fiscal Charges 669,133 669,133 667,943

Total Expenditures 1,892,483 1,892,483 1,891,293

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,504,066) (1,504,066) (1,521,330)

OTHER FINANCING SOURCES (USES) Transfer In 1,504,066 1,504,066 1,504,066

Total Other Financing Sources (Uses) 1,504,066 1,504,066 1,504,066

NET CHANGE IN FUND BALANCE $ - $ - (17,264)

FUND BALANCE, JULY 1 3,751

FUND BALANCE (DEFICIT), JUNE 30 $ (13,513)

(See independent auditor's report.) - 121 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TAX INCREMENT FINANCING DEBT SERVICE FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES None $ - $ - $ -

Total Revenues - - -

EXPENDITURES Debt Service Principal Retirement 825,000 825,000 825,000 Interest and Fiscal Charges 243,663 243,663 243,663

Total Expenditures 1,068,663 1,068,663 1,068,663

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,068,663) (1,068,663) (1,068,663)

OTHER FINANCING SOURCES (USES) Transfer In 1,068,663 1,068,663 1,068,663

Total Other Financing Sources (Uses) 1,068,663 1,068,663 1,068,663

NET CHANGE IN FUND BALANCE $ - $ - -

FUND BALANCE, JULY 1 -

FUND BALANCE, JUNE 30 $ -

(See independent auditor's report.) - 122 - CITY OF DEKALB, ILLINOIS

COMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECTS FUNDS

June 30, 2016

Capital Fleet Projects Equipment Replacement Total

ASSETS

Cash and Investments $ 137,815 $ 325,067 $ 75,525 $ 538,407 Due from Other Governments 31,402 - - 31,402

TOTAL ASSETS $ 169,217 $ 325,067 $ 75,525 $ 569,809

LIABILITIES AND FUND BALANCES

LIABILITIES Accounts Payable $ 32,942 $ 102,616 $ - $ 135,558 Unearned Revenues - 76,000 - 76,000

Total Liabilities 32,942 178,616 - 211,558

FUND BALANCES Assigned for Capital Projects 136,275 146,451 75,525 358,251

Total Fund Balances 136,275 146,451 75,525 358,251

TOTAL LIABILITIES AND FUND BALANCES $ 169,217 $ 325,067 $ 75,525 $ 569,809

(See independent auditor's report.) - 123 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECTS FUNDS

For the Year Ended June 30, 2016

Capital Fleet Projects Equipment Replacement Total

REVENUES Taxes $ 358,945 $ - $ - $ 358,945 Charges for Services - - 141,793 141,793 Miscellaneous Income 500 160,000 46,325 206,825

Total Revenues 359,445 160,000 188,118 707,563

EXPENDITURES General Government Contractual Services 9,297 43,572 - 52,869 Capital Outlay 333,894 126,688 391,479 852,061 Debt Service Principal - - 16,667 16,667

Total Expenditures 343,191 170,260 408,146 921,597

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 16,254 (10,260) (220,028) (214,034)

OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Assets - - 1,245 1,245

Total Other Financing Sources (Uses) - - 1,245 1,245

NET CHANGE IN FUND BALANCES 16,254 (10,260) (218,783) (212,789)

FUND BALANCES, JULY 1 120,021 156,711 294,308 571,040

FUND BALANCES, JUNE 30 $ 136,275 $ 146,451 $ 75,525 $ 358,251

(See independent auditor's report.) - 124 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL PROJECTS FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Taxes Local Motor Fuel Taxes $ 355,000 $ 355,000 $ 358,945 Miscellaneous Income - - 500

Total Revenues 355,000 355,000 359,445

EXPENDITURES General Government Contractual Services 50,000 50,000 9,297 Capital Outlay 420,000 420,000 333,894

Total Expenditures 470,000 470,000 343,191

NET CHANGE IN FUND BALANCE $ (115,000) $ (115,000) 16,254

FUND BALANCE, JULY 1 120,021

FUND BALANCE, JUNE 30 $ 136,275

(See independent auditor's report.) - 125 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL EQUIPMENT FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Miscellaneous Income 144,000 144,000 160,000

Total Revenues 144,000 144,000 160,000

EXPENDITURES General Government Contractual Services 55,000 55,000 43,572 Capital Outlay 131,300 131,300 126,688

Total Expenditures 186,300 186,300 170,260

NET CHANGE IN FUND BALANCE $ (42,300) $ (42,300) (10,260)

FUND BALANCE, JULY 1 156,711

FUND BALANCE, JUNE 30 $ 146,451

(See independent auditor's report.) - 126 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FLEET REPLACEMENT FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

REVENUES Charges for Services Rental Income $ 145,000 $ 145,000 $ 141,793 Miscellaneous Income - - 46,325

Total Revenues 145,000 145,000 188,118

EXPENDITURES Capital Outlay 115,000 393,000 391,479 Debt Service Principal 16,667 16,667 16,667

Total Expenditures 131,667 409,667 408,146

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 13,333 (264,667) (220,028)

OTHER FINANCING SOURCES (USES) Proceeds from Sale of Capital Assets - - 1,245

Total Other Financing Sources (Uses) - - 1,245

NET CHANGE IN FUND BALANCE $ 13,333 $ (264,667) (218,783)

FUND BALANCE, JULY 1 294,308

FUND BALANCE, JUNE 30 $ 75,525

(See independent auditor's report.) - 127 - MAJOR ENTERPRISE FUNDS

The Water Fund is used to account for the provision of water service to the residents of the City. All activity necessary to provide such services is accounted for in this fund including, but not limited to, administration, operation, maintenance, financing and related debt service, and billing and collection.

The Airport Fund is used to account for the operations of the Taylor Municipal Airport. Financing may be provided from a number of sources including user fees as well as property taxes.

NONMAJOR ENTERPRISE FUNDS

The Refuse Fund is used to account for the billing, collection and payment of refuse collection.

CITY OF DEKALB, ILLINOIS

COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL WATER FUND DEPARTMENT ACCOUNTS

For the Year Ended June 30, 2016

Operations and Maintenance System Construction Total Original Final Original Final Original Final Budget Budget Actual Budget Budget Actual Budget Budget Actual

OPERATING REVENUES Charges for Services Water Sales $ 4,965,122 $ 4,965,122 $ 5,262,483 $ - $ - $ - $ 4,965,122 $ 4,965,122 $ 5,262,483 Permits 16,500 16,500 32,348 50,000 50,000 96,845 66,500 66,500 129,193 Miscellaneous 20,000 20,000 23,472 - - - 20,000 20,000 23,472

Total Operating Revenues 5,001,622 5,001,622 5,318,303 50,000 50,000 96,845 5,051,622 5,051,622 5,415,148

OPERATING EXPENSES EXCLUDING DEPRECIATION Personal Services 2,556,534 2,556,534 2,855,377 - - - 2,556,534 2,556,534 2,855,377 Commodities 444,075 444,075 396,175 - - - 444,075 444,075 396,175 Contractual Services 696,106 696,106 636,208 - - - 696,106 696,106 636,208 Other Services/Expenses 44,000 44,000 196,896 - - - 44,000 44,000 196,896 Equipment 735,800 1,216,841 1,290,654 - - - 735,800 1,216,841 1,290,654

Total Operating Expenses 4,476,515 4,957,556 5,375,310 - - - 4,476,515 4,957,556 5,375,310

OPERATING INCOME 525,107 44,066 (57,007) 50,000 50,000 96,845 575,107 94,066 39,838

NON-OPERATING REVENUES (EXPENSES) Investment Income - - 38,668 - - - - - 38,668 Gain on Sale of Capital Assets 2,000 2,000 1,724 - - - 2,000 2,000 1,724 Interest Expense (143,384) (143,384) (91,956) - - - (143,384) (143,384) (91,956) Principal (453,423) (453,423) (453,423) - - - (453,423) (453,423) (453,423)

Total Non-operating Revenues (Expenses) (594,807) (594,807) (504,987) - - - (594,807) (594,807) (504,987)

NET INCOME BEFORE TRANSFERS (69,700) (550,741) (561,994) 50,000 50,000 96,845 (19,700) (500,741) (465,149)

- 128 - Operations and Maintenance System Construction Total Original Final Original Final Original Final Budget Budget Actual Budget Budget Actual Budget Budget Actual

TRANSFERS Transfers In $ - $ - $ 321,128 $ - $ - $ - $ - $ - $ 321,128 Transfers (Out) (258,965) (258,965) (258,965) - - - (258,965) (258,965) (258,965)

Total Transfers (258,965) (258,965) 62,163 - - - (258,965) (258,965) 62,163

CHANGE IN NET POSITION - BUDGETARY BASIS $ (328,665) $ (809,706) (499,831) $ 50,000 $ 50,000 96,845 $ (278,665) $ (759,706) (402,986)

ADJUSTMENTS TO GAAP BASIS Additions to capital assets 1,159,623 - 1,159,623 Depreciation and Amortization (1,046,871) - (1,046,871) Principal payments 453,423 - 453,423

Total adjustment to GAAP basis 566,175 - 566,175

CHANGE IN NET POSITION 66,344 96,845 163,189

NET POSITION, JULY 1 25,390,987 999,745 26,390,732

Prior Period Adjustment (453,732) - (453,732)

NET POSITION, JULY 1, RESTATED 24,937,255 999,745 25,937,000

NET POSITION, JUNE 30 $ 25,003,599 $ 1,096,590 $ 26,100,189

(See independent auditor's report.) - 129 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF OPERATING REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL AIRPORT FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

OPERATING REVENUES Charges for Services Rents/Taxes $ 380,030 $ 380,030 $ 229,969 Fuel Sales 340,000 340,000 238,141 Airport Operations 33,000 33,000 - Miscellaneous 88,200 88,200 24,646

Total Operating Revenues 841,230 841,230 492,756

OPERATING EXPENSES Personal Services 325,449 325,449 329,620 Commodities 280,525 280,525 219,851 Contractual Services 208,906 208,906 213,249 Other Services 35,230 35,230 39,467 Equipment 27,680 27,680 45,892 Permanent Improvements 1,367,395 1,367,395 150,101

Total Operating Expenses 2,245,185 2,245,185 998,180

OPERATING INCOME (LOSS) (1,403,955) (1,403,955) (505,424)

NON-OPERATING REVENUES (EXPENSES) Investment Income 5 5 4 Interest Expense (7,166) (7,166) (5,849) Principal (75,650) (75,650) (75,650)

Total Non-Operating Revenues (Expenses) (82,811) (82,811) (81,495)

CONTRIBUTIONS Contributions - Capital Grant Revenue 1,280,450 1,280,450 81,555

CHANGE IN NET POSITION - BUDGETARY BASIS $ (206,316) $ (206,316) (505,364)

ADJUSTMENTS TO GAAP BASIS Additions to capital assets 136,978 Depreciation and Amortization (396,476) Principal payments 75,650

Total adjustments to GAAP basis (183,848)

CHANGE IN NET POSITION (689,212)

NET POSITION, JULY 1 30,518,985

NET POSITION, JUNE 30 $ 29,829,773

(See independent auditor's report.) - 130 - CITY OF DEKALB, ILLINOIS

SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL REFUSE FUND

For the Year Ended June 30, 2016

Original Final Budget Budget Actual

OPERATING REVENUES Charges for Services $ 2,070,500 $ 2,070,500 $ 2,047,188 Miscellaneous - - 59,500

Total Operating Revenues 2,070,500 2,070,500 2,106,688

OPERATING EXPENSES Contractual Services 2,100,590 2,110,658 2,110,657

Total Operating Expenses 2,100,590 2,110,658 2,110,657

CHANGE IN NET POSITION $ (30,090) $ (40,158) (3,969)

NET POSITION, JULY 1 961

NET POSITION (DEFICIT), JUNE 30 $ (3,008)

(See independent auditor's report.) - 131 - INTERNAL SERVICE FUNDS

Workers’ Compensation Fund - to account for payment of workers’ compensation insurance premiums. Financing is provided by contributions from other funds.

Health Insurance Fund - to account for payment of health insurance premiums. Financing is provided by contributions from employees, retirees, and other funds.

Liability/Property Insurance Fund - to account for payment of liability insurance premiums. Financing is provided by contributions from other funds. CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS

June 30, 2016

Liability/ Workers' Health Property Compensation Insurance Insurance Total

CURRENT ASSETS Cash and Investments $ 1,658,458 $ 169,832 $ 185,466 $ 2,013,756 Receivables Accrued Interest 2,698 - - 2,698 Other - 56,840 3,128 59,968 Prepaid Expenses 365,249 - 30,000 395,249

Total Current Assets 2,026,405 226,672 218,594 2,471,671

CURRENT LIABILITIES Accounts Payable 17,022 6,080 4,014 27,116 Claims Payable 261,019 - 38,327 299,346 Unearned Revenue - 901 - 901

Total Current Liabilities 278,041 6,981 42,341 327,363

NONCURRENT LIABILITIES Claims Payable 261,019 - 38,326 299,345

Total Noncurrent Liabilities 261,019 - 38,326 299,345

Total Liabilities 539,060 6,981 80,667 626,708

NET POSITION Unrestricted 1,487,345 219,691 137,927 1,844,963

TOTAL NET POSITION $ 1,487,345 $ 219,691 $ 137,927 $ 1,844,963

(See independent auditor's report.) - 132 - CITY OF DEKALB, ILLINOIS

COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - BUDGET AND ACTUAL INTERNAL SERVICE FUNDS

For the Year Ended June 30, 2016

Liability/ Workers' Compensation Health Insurance Property Insurance Original Final Original Final Budget Budget Actual Budget Budget Actual

OPERATING REVENUES Charges for Services Contributions $ 1,203,200 $ 1,203,200 $ 1,203,200 $ 5,472,987 $ 5,472,987 $ 5,382,257 Miscellaneous - - 38 - - -

Total Operating Revenues 1,203,200 1,203,200 1,203,238 5,472,987 5,472,987 5,382,257

OPERATING EXPENSES Administration 634,019 634,019 626,537 5,375,460 5,519,359 5,519,358 Claims 650,000 650,000 229,847 - - -

Total Operating Expenses 1,284,019 1,284,019 856,384 5,375,460 5,519,359 5,519,358

OPERATING INCOME (LOSS) (80,819) (80,819) 346,854 97,527 (46,372) (137,101)

NON-OPERATING REVENUES Investment Income - - 26,281 10 10 3,600

Total Non-Operating Revenues - - 26,281 10 10 3,600

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (80,819) (80,819) 373,135 97,537 (46,362) (133,501)

OTHER FINANCING SOURCES (USES) Transfers (Out) (250,000) (250,000) (250,000) - - -

Total Other Financing Sources (Uses) (250,000) (250,000) (250,000) - - -

CHANGE IN NET POSITION $ (330,819) $ (330,819) 123,135 $ 97,537 $ (46,362) (133,501)

NET POSITION, JULY 1 1,364,210 353,192

NET POSITION, JUNE 30 $ 1,487,345 $ 219,691

- 133 - Liability/ Property Insurance Total Original Final Original Final Budget Budget Actual Budget Budget Actual

$ 130,000 $ 130,000 $ 130,000 $ 6,806,187 $ 6,806,187 $ 6,715,457 15,000 15,000 34,349 15,000 15,000 34,387

145,000 145,000 164,349 6,821,187 6,821,187 6,749,844

25,808 25,808 29,754 6,035,287 6,179,186 6,175,649 100,000 100,000 44,182 750,000 750,000 274,029

125,808 125,808 73,936 6,785,287 6,929,186 6,449,678

19,192 19,192 90,413 35,900 (107,999) 300,166

- - - 10 10 29,881

- - - 10 10 29,881

19,192 19,192 90,413 35,910 (107,989) 330,047

- - - (250,000) (250,000) (250,000)

- - - (250,000) (250,000) (250,000)

$ 19,192 $ 19,192 90,413 $ (214,090) $ (357,989) 80,047

47,514 1,764,916

$ 137,927 $ 1,844,963

(See independent auditor's report.) - 134 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS

For the Year Ended June 30, 2016

Liability/ Workers' Health Property Compensation Insurance Insurance Total

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Interfund Services Transactions $ 1,202,074 $ 3,919,545 $ 128,776 $ 5,250,395 Receipts from Employees and Others - 1,499,457 - 1,499,457 Receipts from Miscellaneous Revenue 38 - 34,349 34,387 Payments to Employees - (6,117) - (6,117) Payments to Suppliers (897,303) (5,516,980) (61,989) (6,476,272)

Net Cash from Operating Activities 304,809 (104,095) 101,136 301,850

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers (Out) (250,000) - - (250,000)

Net Cash from Noncapital Financing Activities (250,000) - - (250,000)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES None - - - -

Net Cash from Capital and Related Financing Activities - - - -

CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 26,281 3,600 - 29,881

Net Cash from Investing Activities 26,281 3,600 - 29,881

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 81,090 (100,495) 101,136 81,731

CASH AND CASH EQUIVALENTS, JULY 1 1,577,368 270,327 84,330 1,932,025

CASH AND CASH EQUIVALENTS, JUNE 30 $ 1,658,458 $ 169,832 $ 185,466 $ 2,013,756

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) $ 346,854 $ (137,101) $ 90,413 $ 300,166 Adjustments to Reconcile Operating Income (Loss) to Net Cash from Operating Activities Changes in Assets and Liabilities Receivables (1,126) 35,844 (1,224) 33,494 Prepaid Expenses 111,695 - - 111,695 Accounts Payable (18,042) 2,378 (3,753) (19,417) Claims Payable (134,572) - 15,700 (118,872) Accrued Payroll - (6,117) - (6,117) Unearned Revenue - 901 - 901

NET CASH FROM OPERATING ACTIVITIES $ 304,809 $ (104,095) $ 101,136 $ 301,850

(See independent auditor's report.) - 135 - FIDUCIARY FUNDS

PENSION TRUST FUNDS

The Police Pension Fund is used to account for the accumulation of resources to be used for retirement annuity payments to employees on the police force at appropriate amounts and times in the future. Resources are contributed by employees at rates fixed by law and by the City at amounts determined by an annual actuarial study.

The Firefighters’ Pension Fund is used to account for the accumulation of resources to be used for retirement annuity payments to employees on the fire department at appropriate amounts and times in the future. Resources are contributed by employees at rates fixed by law and by the City at amounts determined by an annual actuarial study. CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF NET POSITION PENSION TRUST FUNDS

June 30, 2016

Pension Trust Police Firefighters' Pension Pension Total

ASSETS Cash and Short-Term Investments $ 1,034,000 $ 1,287,076 $ 2,321,076 Investments U.S. Treasury Obligations 2,096,927 6,376,849 8,473,776 U.S. Agency Obligations 5,516,015 1,988,964 7,504,979 Corporate Bonds 2,879,836 - 2,879,836 Mutual Funds 17,797,214 14,879,320 32,676,534 Equity Securities 170,841 - 170,841 Receivables Accrued Interest 34,857 44,439 79,296 Prepaid Expenses 7,669 - 7,669

Total Assets 29,537,359 24,576,648 54,114,007

LIABILITIES Accounts Payable 10,860 5,465 16,325

Total Liabilities 10,860 5,465 16,325

DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes 826,564 1,099,722 1,926,286

Total Deferred Inflows of Resources 826,564 1,099,722 1,926,286

NET POSITION RESTRICTED FOR PENSIONS $ 28,699,935 $ 23,471,461 $ 52,171,396

(See independent auditor's report.) - 136 - CITY OF DEKALB, ILLINOIS

COMBINING STATEMENT OF CHANGES IN PLAN NET POSITION - BUDGET AND ACTUAL PENSION TRUST FUNDS

For the Year Ended June 30, 2016

Police Pension Firefighters' Pension Total Original Final Original Final Original Final Budget Budget Actual Budget Budget Actual Budget Budget Actual

ADDITIONS Contributions Employer Contributions $ 1,636,885 $ 1,636,885 $ 1,622,105 $ 2,177,836 $ 2,177,836 $ 2,158,156 $ 3,814,721 $ 3,814,721 $ 3,780,261 Employee Contributions 568,388 568,388 727,853 465,674 465,674 477,022 1,034,062 1,034,062 1,204,875

Total Contributions 2,205,273 2,205,273 2,349,958 2,643,510 2,643,510 2,635,178 4,848,783 4,848,783 4,985,136

Investment Income Net Depreciation in Fair Value of Investments - - (568,927) - - (1,145,748) - - (1,714,675) Interest 2,050,000 2,050,000 629,179 1,879,835 1,879,835 785,659 3,929,835 3,929,835 1,414,838

Total Investment Income 2,050,000 2,050,000 60,252 1,879,835 1,879,835 (360,089) 3,929,835 3,929,835 (299,837) Less Investment Expense - - (42,938) - - (43,831) - - (86,769)

Net Investment Income 2,050,000 2,050,000 17,314 1,879,835 1,879,835 (403,920) 3,929,835 3,929,835 (386,606)

Total Additions 4,255,273 4,255,273 2,367,272 4,523,345 4,523,345 2,231,258 8,778,618 8,778,618 4,598,530

DEDUCTIONS Administrative Expenses 57,128 57,128 44,990 71,433 71,433 41,613 128,561 128,561 86,603 Benefits and Refunds 2,384,757 2,610,149 2,579,348 3,061,625 3,086,424 3,072,413 5,446,382 5,696,573 5,651,761

Total Deductions 2,441,885 2,667,277 2,624,338 3,133,058 3,157,857 3,114,026 5,574,943 5,825,134 5,738,364

NET INCREASE (DECREASE) $ 1,813,388 $ 1,587,996 (257,066) $ 1,390,287 $ 1,365,488 (882,768) $ 3,203,675 $ 2,953,484 (1,139,834)

NET POSITION RESTRICTED FOR PENSIONS July 1 28,957,001 24,354,229 53,311,230

June 30 $ 28,699,935 $ 23,471,461 $ 52,171,396

(See independent auditor's report.) - 137 - COMPONENT UNIT - DEKALB PUBLIC LIBRARY

CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY

STATEMENT OF NET POSITION AND BALANCE SHEET

June 30, 2016

Capital Statement of General Projects Permanent Total Adjustments Net Position

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

Current Assets Cash and Investments $ 1,448,951 $ 35,479 $ 223,332 $ 1,707,762 $ - $ 1,707,762 Receivables (Net Where Applicable of Allowance for Uncollectibles) Property taxes 1,382,928 - - 1,382,928 - 1,382,928 Accounts 87,111 47 293 87,451 - 87,451 Accrued Interest 123 - - 123 - 123 Prepaid Expenses 16,559 - - 16,559 - 16,559

Total Current Assets 2,935,672 35,526 223,625 3,194,823 - 3,194,823

Noncurrent Assets Capital Assets Not Depreciated - - - - 22,999,773 22,999,773 Depreciated (Net of Accumulated Depreciation) - - - - 298,998 298,998

Total Noncurrent Assets - - - - 23,298,771 23,298,771

Total Assets 2,935,672 35,526 223,625 3,194,823 23,298,771 26,493,594

Deferred Outflows of Resources Pension Items - IMRF - - - - 567,863 567,863

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 2,935,672 $ 35,526 $ 223,625 $ 3,194,823 $ 23,866,634 $ 27,061,457

- 138 - Capital Statement of General Projects Permanent Total Adjustments Net Position

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES/ NET POSITION

LIABILITIES Accounts Payable $ 367,044 $ - $ - $ 367,044 $ - $ 367,044 Accrued Payroll 38,198 - - 38,198 - 38,198 Accrued Interest Payable 4,972 - - 4,972 126,873 131,845 Line of Credit 1,591,079 - - 1,591,079 - 1,591,079 Long-Term Liabilities Due Within One Year - - - - 2,399,124 2,399,124 Due in More than One Year - - - - 7,609,517 7,609,517

Total Liabilities 2,001,293 - - 2,001,293 10,135,514 12,136,807

DEFERRED INFLOWS OF RESOURCES Unavailable Property Taxes 2,793,535 - - 2,793,535 - 2,793,535

Total Deferred Inflows of Resources 2,793,535 - - 2,793,535 - 2,793,535

Total Liabilities and Deferred Inflows of Resources 4,794,828 - - 4,794,828 10,135,514 14,930,342

FUND BALANCES/NET POSITION Net Investment in Capital Assets - - - - 13,002,136 13,002,136 Nonspendable - Prepaids 16,559 - - 16,559 (16,559) - Restricted - Endowments - - 223,625 223,625 - 223,625 Assigned - 35,526 - 35,526 (35,526) - Unrestricted (Deficit) (1,875,715) - - (1,875,715) 781,069 (1,094,646)

Total Fund Balances (Deficit) (1,859,156) 35,526 223,625 (1,600,005) 13,731,120 12,131,115

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES/ NET POSITION $ 2,935,672 $ 35,526 $ 223,625 $ 3,194,823 $ 23,866,634 $ 27,061,457

(See independent auditor's report.) - 139 - CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY

STATEMENT OF ACTIVITIES AND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

For the Year Ended June 30, 2016

Capital Statement General Projects Permanent Total Adjustments of Activities

REVENUES Taxes Property Taxes $ 2,267,424 $ - $ - $ 2,267,424 $ - $ 2,267,424 TIF Surplus 71,821 - - 71,821 - 71,821 Replacement Taxes 31,144 - - 31,144 - 31,144 Grants 525,241 - - 525,241 - 525,241 Charges for Services 43,324 - - 43,324 - 43,324 Investment Income 3,380 123 (1,195) 2,308 - 2,308 Miscellaneous 4,189 - - 4,189 - 4,189

Total Revenues 2,946,523 123 (1,195) 2,945,451 - 2,945,451

EXPENDITURES Current Culture and Recreation 11,874,232 - - 11,874,232 (9,769,741) 2,104,491 Debt Service Principal 1,381,111 - - 1,381,111 (1,381,111) - Interest and Fiscal Charges 348,284 - - 348,284 (10,048) 338,236

Total Expenditures 13,603,627 - - 13,603,627 (11,160,900) 2,442,727

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (10,657,104) 123 (1,195) (10,658,176) 11,160,900 502,724

- 140 - Capital Statement General Projects Permanent Total Adjustments of Activities

OTHER FINANCING SOURCES (USES) Transfers In $ 10,217 $ 35,000 $ 12,101 $ 57,318 $ - $ 57,318 Transfers (Out) (47,101) - (10,217) (57,318) - (57,318)

Total Other Financing Sources (Uses) (36,884) 35,000 1,884 - - -

NET CHANGE IN FUND BALANCES/NET POSITION (10,693,988) 35,123 689 (10,658,176) 11,160,900 502,724

FUND BALANCES/NET POSITION, JULY 1 8,834,832 403 222,936 9,058,171 2,707,141 11,765,312

Prior Period Adjustment - - - - (136,921) (136,921)

FUND BALANCES/NET POSITION, JULY 1, RESTATED 8,834,832 403 222,936 9,058,171 2,570,220 11,628,391

FUND BALANCES (DEFICIT)/NET POSITION, JUNE 30 $ (1,859,156) $ 35,526 $ 223,625 $ (1,600,005) $ 13,731,120 $ 12,131,115

(See independent auditor's report.) - 141 - SUPPLEMENTAL FINANCIAL INFORMATION CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010A

June 30, 2016

Date of Issue May 27, 2010 Date of Maturity December 1, 2021 Authorized Issue $10,800,000 Denomination of Notes $5,000 Interest Rates 2% to 4% Interest Dates December 1 and June 1 Principal Maturity Date December 1 Payable at Northern Trust Company, Chicago, Illinois Purpose TIF Downtown Improvements and Northland Plaza Roadwork

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total December 1 Amount June 1 Amount

2015 $ 845,000 $ 220,675 $ 1,065,675 2016 $ 116,675 2017 $ 104,000 2016 870,000 190,600 1,060,600 2017 104,000 2018 86,600 2017 1,020,000 152,800 1,172,800 2018 86,600 2019 66,200 2018 1,060,000 111,200 1,171,200 2019 66,200 2020 45,000 2019 1,105,000 67,900 1,172,900 2020 45,000 2021 22,900 2020 1,145,000 22,900 1,167,900 2021 22,900 2022 -

$ 6,045,000 $ 766,075 $ 6,811,075 $ 441,375 $ 324,700

(See independent auditor's report.) - 142 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010B

June 30, 2016

Date of Issue December 1, 2010 Date of Maturity January 1, 2028 Authorized Issue $3,905,000 Denomination of Notes $5,000 Interest Rates 4.25% to 4.75% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Northern Trust Company, Chicago, Illinois Purpose Refund the Series 1997A and 2002 Bonds

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ - $ 175,968 $ 175,968 2016 $ 87,984 2017 $ 87,984 2016 - 175,968 175,968 2017 87,984 2018 87,984 2017 - 175,968 175,968 2018 87,984 2019 87,984 2018 - 175,968 175,968 2019 87,984 2020 87,984 2019 - 175,968 175,968 2020 87,984 2021 87,984 2020 - 175,968 175,968 2021 87,984 2022 87,984 2021 - 175,968 175,968 2022 87,984 2023 87,984 2022 150,000 169,592 319,592 2023 84,796 2024 84,796 2023 840,000 133,052 973,052 2024 66,526 2025 66,526 2024 875,000 94,115 969,115 2025 47,058 2026 47,057 2025 915,000 52,482 967,482 2026 26,241 2027 26,241 2026 955,000 8,070 963,070 2027 4,038 2028 4,032 2027 170,000 - 170,000 2028 - 2029 -

$ 3,905,000 $ 1,689,087 $ 5,594,087 $ 844,547 $ 844,540

(See independent auditor's report.) - 143 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BONDS OF 2010C

June 30, 2016

Date of Issue December 1, 2010 Date of Maturity January 1, 2023 Authorized Issue $5,415,000 Denomination of Notes $5,000 Interest Rates 1.9% to 5.9% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Northern Trust Company, Chicago, Illinois Purpose Refund a portion of the Series 2014 and 2009 Bond Anticipation Notes

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 205,000 $ 219,792 $ 424,792 2016 $ 109,896 2017 $ 109,896 2016 620,000 211,900 831,900 2017 105,950 2018 105,950 2017 650,000 184,930 834,930 2018 92,465 2019 92,465 2018 680,000 154,380 834,380 2019 77,190 2020 77,190 2019 715,000 119,700 834,700 2020 59,850 2021 59,850 2020 755,000 81,090 836,090 2021 40,545 2022 40,545 2021 645,000 38,056 683,056 2022 19,028 2023 19,028

$ 4,270,000 $ 1,009,848 $ 5,279,848 $ 504,924 $ 504,924

(See independent auditor's report.) - 144 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2012A

June 30, 2016

Date of Issue October 25, 2012 Date of Maturity January 1, 2030 Authorized Issue $9,905,000 Denomination of Notes $5,000 Interest Rates 2.0% to 2.5% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago IL Purpose Police Station Construction

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Requirements Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 650,000 $ 167,882 $ 817,882 2016 $ 83,941 2017 $ 83,941 2016 660,000 154,882 814,882 2017 77,441 2018 77,441 2017 550,000 141,682 691,682 2018 70,841 2019 70,841 2018 - 130,682 130,682 2019 65,341 2020 65,341 2019 - 130,682 130,682 2020 65,341 2021 65,341 2020 - 130,682 130,682 2021 65,341 2022 65,341 2021 765,000 130,682 895,682 2022 65,341 2023 65,341 2022 780,000 115,382 895,382 2023 57,691 2024 57,691 2023 795,000 99,782 894,782 2024 49,891 2025 49,891 2024 810,000 83,881 893,881 2025 41,941 2026 41,941 2025 830,000 67,682 897,682 2026 33,841 2027 33,841 2026 845,000 50,044 895,044 2027 25,022 2028 25,022 2027 865,000 32,088 897,088 2028 16,044 2029 16,044 2028 505,000 12,624 517,624 2029 6,312 2030 6,311

$ 8,055,000 $ 1,448,657 $ 9,503,657 $ 724,329 $ 724,328

(See independent auditor's report.) - 145 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2013B

June 30, 2016

Date of Issue June 18, 2013 Date of Maturity January 1, 2022 Authorized Issue $2,380,000 Denomination of Notes $5,000 Interest Rates 0.8% to 3.0% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago IL Purpose Police Station Construction

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Requirements Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 10,000 $ 69,506 $ 79,506 2016 $ 34,753 2017 $ 34,753 2016 15,000 69,376 84,376 2017 34,688 2018 34,688 2017 135,000 69,150 204,150 2018 34,575 2019 34,575 2018 700,000 65,100 765,100 2019 32,550 2020 32,550 2019 725,000 44,100 769,100 2020 22,050 2021 22,050 2020 745,000 22,350 767,350 2021 11,175 2022 11,175

$ 2,330,000 $ 339,582 $ 2,669,582 $ 169,791 $ 169,791

(See independent auditor's report.) - 146 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (TOTAL ISSUE)

June 30, 2016

Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Requirements Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 750,000 $ 32,734 $ 782,734 2016 $ 16,367 2017 $ 16,367 2016 340,000 21,152 361,152 2017 10,576 2018 10,576 2017 345,000 15,904 360,904 2018 7,952 2019 7,952 2018 340,000 10,576 350,576 2019 5,288 2020 5,288 2019 345,000 5,328 350,328 2020 2,664 2021 2,664

$ 2,120,000 $ 85,694 $ 2,205,694 $ 42,847 $ 42,847

(See independent auditor's report.) - 147 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (DEBT SERVICE FUND SHARE)

June 30, 2016

Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 393,425 $ 6,074 $ 399,499 2016 $ 3,037 2017 $ 3,037

$ 393,425 $ 6,074 $ 399,499 $ 3,037 $ 3,037

(See independent auditor's report.) - 148 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (WATER FUND SHARE)

June 30, 2016

Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 286,325 $ 21,394 $ 307,719 2016 $ 10,697 2017 $ 10,697 2016 273,875 16,972 290,847 2017 8,486 2018 8,486 2017 275,500 12,744 288,244 2018 6,372 2019 6,372 2018 273,875 8,490 282,365 2019 4,245 2020 4,245 2019 276,000 4,262 280,262 2020 2,131 2021 2,131

$ 1,385,575 $ 63,862 $ 1,449,437 $ 31,931 $ 31,931

(See independent auditor's report.) - 149 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION REFUNDING BOND SERIES OF 2014 (AIRPORT FUND SHARE)

June 30, 2016

Date of Issue November 3, 2014 Date of Maturity January 1, 2021 Authorized Issue $28,700,000 Denomination of Notes $5,000 Interest Rates 1.54% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at JP Morgan Chase Purpose Storm Sewer, Street Reconstruction, Park Land Acquisition, Radium Remediation, and Airport Improvements

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Tax Levy Tax Levy Interest Due on Year Principal Interest Total July 1 Amount January 1 Amount

2015 $ 70,250 $ 5,266 $ 75,516 2016 $ 2,633 2017 $ 2,633 2016 66,125 4,180 70,305 2017 2,090 2018 2,090 2017 69,500 3,160 72,660 2018 1,580 2019 1,580 2018 66,125 2,086 68,211 2019 1,043 2020 1,043 2019 69,000 1,066 70,066 2020 533 2021 533

$ 341,000 $ 15,758 $ 356,758 $ 7,879 $ 7,879

(See independent auditor's report.) - 150 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L17133700 CONTRACT PAYABLE OF 1999

June 30, 2016

Date of Issue October 22, 1999 Date of Maturity January 8, 2021 Authorized Issue $4,072,711 Interest Rates 2.535% Interest Dates July 8 and January 8 Payable at Illinois Environmental Protection Agency Purpose Radium Compliance

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Total

2017 $ 236,431 $ 30,047 $ 266,478 2018 242,462 24,016 266,478 2019 248,648 17,830 266,478 2020 254,991 11,487 266,478 2021 261,496 4,982 266,478

$ 1,244,028 $ 88,362 $ 1,332,390

(See independent auditor's report.) - 151 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L17161400 CONTRACT PAYABLE OF 2000

June 30, 2016

Date of Issue April 24, 2000 Date of Maturity May 30, 2021 Authorized Issue $3,344,932 Interest Rates 2.535% Interest Dates November 30 and May 30 Payable at Illinois Environmental Protection Agency Purpose Radium Compliance

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Total

2017 $ 194,139 $ 24,673 $ 218,812 2018 199,094 19,718 218,812 2019 204,170 14,642 218,812 2020 209,379 9,433 218,812 2021 214,720 4,092 218,812

$ 1,021,502 $ 72,558 $ 1,094,060

(See independent auditor's report.) - 152 - CITY OF DEKALB, ILLINOIS

LONG-TERM DEBT REQUIREMENTS IEPA LOAN #L174045 CONTRACT PAYABLE OF 2012

June 30, 2016

Date of Issue August 9, 2013 Date of Maturity October 26, 2032 Authorized Issue $283,072 Interest Rates 2.295% Interest Dates October 26 and April 26 Payable at Illinois Environmental Protection Agency Purpose Hollister Avenue Watermain Replacement

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Total

2017 $ 12,785 $ 5,739 $ 18,524 2018 13,080 5,444 18,524 2019 13,382 5,142 18,524 2020 13,691 4,833 18,524 2021 14,007 4,517 18,524 2022 14,330 4,194 18,524 2023 14,661 3,863 18,524 2024 15,000 3,524 18,524 2025 15,347 3,177 18,524 2026 15,700 2,824 18,524 2027 16,062 2,462 18,524 2028 16,433 2,091 18,524 2029 16,812 1,712 18,524 2030 17,200 1,324 18,524 2031 17,598 926 18,524 2032 18,003 521 18,524 2033 9,160 110 9,270

$ 253,251 $ 52,403 $ 305,654

(See independent auditor's report.) - 153 - CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY

LONG-TERM DEBT REQUIREMENTS GENERAL OBLIGATION BONDS OF 2013A

June 30, 2016

Date of Issue June 18, 2013 Date of Maturity January 1, 2033 Authorized Issue $6,685,000 Denomination of Notes $5,000 Interest Rates 3% to 4% Interest Dates July 1 and January 1 Principal Maturity Date January 1 Payable at Amalgamated Bank of Chicago, Chicago IL Purpose Library Expansion

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Total

2017 $ 280,000 $ 210,025 $ 490,025 2018 285,000 201,625 486,625 2019 295,000 193,075 488,075 2020 305,000 184,225 489,225 2021 315,000 175,075 490,075 2022 325,000 165,625 490,625 2023 335,000 155,875 490,875 2024 345,000 145,825 490,825 2025 355,000 135,475 490,475 2026 365,000 124,825 489,825 2027 375,000 112,963 487,963 2028 390,000 99,838 489,838 2029 405,000 86,188 491,188 2030 420,000 71,000 491,000 2031 435,000 54,200 489,200 2032 450,000 36,800 486,800 2033 470,000 18,800 488,800

$ 6,150,000 $ 2,171,439 $ 8,321,439

(See independent auditor's report.) - 154 - CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY

LONG-TERM DEBT REQUIREMENTS LOAN PAYABLE 2015

June 30, 2016

Date of Issue June 5, 2015 Date of Maturity December 18, 2015 Authorized Issue $3,000,000 Interest Rates 3.25% Interest Dates December 18 Payable at First National Bank of Omaha, NE Purpose Library Expansion

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Total

2017 $ 2,000,000 $ 32,500 $ 2,032,500

$ 2,000,000 $ 32,500 $ 2,032,500

(See independent auditor's report.) - 155 - CITY OF DEKALB, ILLINOIS COMPONENT UNIT - DEKALB PUBLIC LIBRARY

LONG-TERM DEBT REQUIREMENTS DEBT CERTIFICATES OF 2011

June 30, 2016

Date of Issue December 1, 2011 Date of Maturity July 1, 2012 Authorized Issue $1,000,000 Denomination of Notes $5,000 Interest Rates 2.96% Interest Dates July 1 Principal Maturity Date July 1 Payable at Castle Bank, DeKalb, IL Purpose Library Expansion

FUTURE PRINCIPAL AND INTEREST REQUIREMENTS

Fiscal Requirements Year Principal Interest Totals

2017 $ 111,111 $ 16,444 $ 127,555 2018 111,111 13,156 124,267 2019 111,111 9,867 120,978 2020 111,111 6,578 117,689 2021 111,112 3,289 114,401

$ 555,556 $ 49,334 $ 604,890

(See independent auditor's report.) - 156 -

STATISTICAL SECTION

STATISTICAL SECTION

This part of the City of DeKalb, Illinois’ statistical comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health.

Contents Page(s)

Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 157-166

Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue source, the sales tax. 167-174

Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. 175-179

Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 180-181

Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 182-186

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. CITY OF DEKALB, ILLINOIS

NET POSITION BY COMPONENT

Last Ten Fiscal Years

Fiscal Year 2007 2008 2009 2010

GOVERNMENTAL ACTIVITIES Net Investment in Capital Assets $ 109,228,834 $ 113,947,561 $ 116,350,547 $ 116,154,934 Restricted 3,159,513 10,131,297 10,401,769 15,569,514 Unrestricted (Deficit) (10,790,695) (16,660,106) (14,726,824) (20,131,463)

TOTAL GOVERNMENTAL ACTIVITIES $ 101,597,652 $ 107,418,752 $ 112,025,492 $ 111,592,985

BUSINESS-TYPE ACTIVITIES Net Investment in Capital Assets $ 45,585,845 $ 46,840,204 $ 48,402,014 $ 48,482,070 Unrestricted (805,537) (985,741) (724,236) (463,724)

TOTAL BUSINESS-TYPE ACTIVITIES $ 44,780,308 $ 45,854,463 $ 47,677,778 $ 48,018,346

PRIMARY GOVERNMENT Net Investment in Capital Assets $ 154,814,679 $ 160,787,765 $ 164,752,561 $ 164,637,004 Restricted 3,159,513 10,131,297 10,401,769 15,569,514 Unrestricted (11,596,232) (17,645,847) (15,451,060) (20,595,187)

TOTAL PRIMARY GOVERNMENT $ 146,377,960 $ 153,273,215 $ 159,703,270 $ 159,611,331

Note: The City implemented GASB Statement No. 68 for the fiscal year ending June 30, 2015.

Data Source

Audited Financial Statements

- 157 - 2011 2012 2013 2014 2015 2016

$ 119,410,592 $ 120,169,717 $ 118,266,115 $ 116,047,087 $ 113,826,017 $ 111,898,622 11,857,498 12,358,010 12,182,850 11,764,636 12,897,923 13,365,048 (17,715,142) (15,138,497) (13,241,757) (11,899,046) (69,597,568) (79,546,145)

$ 113,552,948 $ 117,389,230 $ 117,207,208 $ 115,912,677 $ 57,126,372 $ 45,717,525

$ 48,222,651 $ 48,123,532 $ 47,928,816 $ 49,590,809 $ 52,605,345 $ 52,803,874 2,919,291 4,179,066 4,899,564 4,329,375 4,305,333 3,123,080

$ 51,141,942 $ 52,302,598 $ 52,828,380 $ 53,920,184 $ 56,910,678 $ 55,926,954

$ 167,633,243 $ 168,293,249 $ 166,194,931 $ 165,637,896 $ 166,431,362 $ 164,702,496 11,857,498 12,358,010 12,182,850 11,764,636 12,897,923 13,365,048 (14,795,851) (10,959,431) (8,342,193) (7,569,671) (65,292,235) (76,423,065)

$ 164,694,890 $ 169,691,828 $ 170,035,588 $ 169,832,861 $ 114,037,050 $ 101,644,479

- 158 - CITY OF DEKALB, ILLINOIS

CHANGE IN NET POSITION

Last Ten Fiscal Years

Fiscal Year 2007 2008 2009 2010

EXPENSES Governmental Activities General Government $ 8,553,164 $ 9,084,220 $ 10,441,675 $ 9,268,403 Public Safety 16,371,735 17,889,697 19,020,552 19,606,432 Highways and Streets 6,133,081 7,844,631 6,074,929 9,415,300 Community Development 4,888,810 4,068,000 6,022,846 5,083,380 Interest 960,500 1,010,059 902,204 723,651

Total Governmental Activities Expenses 36,907,290 39,896,607 42,462,206 44,097,166

Business-Type Activities Water and Sewer 4,206,023 4,146,713 4,347,248 4,222,070 Airport 1,039,450 994,597 1,111,227 914,295 Refuse 1,403,778 1,466,215 1,656,645 1,671,915 Developmental Services 249,295 365,050 378,497 380,574

Total Business-Type Activities Expenses 6,898,546 6,972,575 7,493,617 7,188,854

TOTAL PRIMARY GOVERNMENT EXPENSES $ 43,805,836 $ 46,869,182 $ 49,955,823 $ 51,286,020

PROGRAM REVENUES Governmental Activities Charges for Services General Government $ 259,887 $ 303,453 $ 292,071 $ 340,015 Public Safety 2,325,586 2,440,715 2,631,448 2,710,546 Highways and Streets 433,385 333,154 325,866 210,319 Community Development - 75,291 403,355 402,209 Operating Grants and Contributions 2,148,087 2,481,892 3,656,334 2,488,211 Capital Grants and Contributions 1,609,289 2,083,090 2,013,494 2,471,003

TOTAL GOVERNMENTAL ACTIVITIES PROGRAM REVENUES 6,776,234 7,717,595 9,322,568 8,622,303

BUSINESS-TYPE ACTIVITIES Charges for Services Water and Sewer 4,185,161 4,387,320 4,788,391 5,136,193 Airport 235,999 262,783 261,655 247,364 Refuse 1,501,041 1,584,288 1,623,529 1,625,213 Developmental Services 230,060 96,580 88,319 38,835 Operating Grants and Contributions - 611 - - Capital Grants and Contributions 2,865,831 359,444 2,673,502 760,930

Total Business-Type Activities Program Revenues 9,018,092 6,691,026 9,435,396 7,808,535

TOTAL PRIMARY GOVERNMENT PROGRAM REVENUES $ 15,794,326 $ 14,408,621 $ 18,757,964 $ 16,430,838

NET (EXPENSE) REVENUE Governmental Activities $ (30,131,056) $ (32,179,012) $ (33,139,638) $ (35,474,863) Business-Type Activities 2,119,546 (281,549) 1,941,779 619,681

TOTAL PRIMARY GOVERNMENT NET (EXPENSE) REVENUE $ (28,011,510) $ (32,460,561) $ (31,197,859) $ (34,855,182)

- 159 - 2011 2012 2013 2014 2015 2016

$ 10,647,791 $ 8,859,145 $ 11,865,375 $ 9,744,441 $ 12,795,131 $ 8,456,094 19,660,618 20,989,072 19,017,122 20,797,002 22,259,920 33,400,660 4,465,186 2,207,978 1,449,053 5,016,398 4,158,954 8,086,082 7,929,922 10,738,364 13,208,902 10,726,424 8,859,472 6,984,506 857,764 1,016,815 1,080,709 1,209,191 987,476 1,057,938

43,561,281 43,811,374 46,621,161 47,493,456 49,060,953 57,985,280

4,438,481 4,159,836 4,081,382 4,080,350 4,288,137 5,354,514 1,154,982 1,318,730 1,641,540 1,322,518 1,410,722 1,263,527 1,736,937 1,670,364 1,756,850 1,844,724 1,920,958 2,110,657 ------

7,330,400 7,148,930 7,479,772 7,247,592 7,619,817 8,728,698

$ 50,891,681 $ 50,960,304 $ 54,100,933 $ 54,741,048 $ 56,680,770 $ 66,713,978

$ 325,169 $ 238,190 $ 330,222 $ 485,114 $ 417,915 $ 456,082 2,739,272 2,462,313 2,090,752 2,504,342 3,608,300 2,875,539 496,852 212,232 125,794 144,137 107,317 - 395,147 237,838 422,991 460,458 4,588,613 685,065 3,257,775 1,143,618 1,131,494 1,166,973 1,114,773 1,218,315 4,144,333 6,075,050 4,843,630 4,072,079 4,375,595 3,933,596

11,358,548 10,369,241 8,944,883 8,833,103 14,212,513 9,168,597

5,454,296 5,367,480 5,503,049 5,179,180 5,377,744 5,391,676 405,332 846,375 1,094,127 772,805 658,557 468,110 1,696,466 1,757,410 1,773,670 2,053,424 2,010,485 2,047,188 ------392,373 562,770 130,658 959,182 2,566,070 81,555

7,948,467 8,534,035 8,501,504 8,964,591 10,612,856 7,988,529

$ 19,307,015 $ 18,903,276 $ 17,446,387 $ 17,797,694 $ 24,825,369 $ 17,157,126

$ (32,202,733) $ (33,442,133) $ (37,676,278) $ (38,660,353) $ (34,848,440) $ (48,816,683) 618,067 1,385,105 1,021,732 1,716,999 2,993,039 (740,169)

$ (31,584,666) $ (32,057,028) $ (36,654,546) $ (36,943,354) $ (31,855,401) $ (49,556,852)

- 160 - CITY OF DEKALB, ILLINOIS

CHANGE IN NET POSITION (Continued)

Last Ten Fiscal Years

Fiscal Year 2007 2008 2009 2010

GENERAL REVENUES AND OTHER CHANGES IN NET POSITION Governmental Activities Taxes Property $ 8,799,430 $ 10,366,305 $ 12,446,812 $ 13,371,039 Sales 10,160,582 10,251,569 11,297,335 11,413,254 Utility 4,077,785 4,230,240 4,012,575 3,739,824 Income 3,689,547 4,274,684 3,954,000 3,472,035 Other 2,469,560 2,695,564 2,575,341 2,484,759 Investment Income 428,938 347,511 189,302 75,779 Miscellaneous 2,677,000 5,618,738 2,972,237 188,830 Gain on Sale of Assets - - - - Transfers In (Out) 168,837 232,052 229,413 296,836

Total Governmental Activities 32,471,679 38,016,663 37,677,015 35,042,356

Business-Type Activities Investment Income - 132 300 16 Miscellaneous 3,245,071 1,452,830 110,649 42,707 Transfers In (Out) (168,837) (232,052) (229,413) (321,836)

Total Business-Type Activities 3,076,234 1,220,910 (118,464) (279,113)

TOTAL PRIMARY GOVERNMENT $ 35,547,913 $ 39,237,573 $ 37,558,551 $ 34,763,243

CHANGE IN NET POSITION Governmental Activities $ 2,340,623 $ 5,837,651 $ 4,537,377 $ (432,507) Business-Type Activities 5,195,780 939,361 1,823,315 340,568

TOTAL PRIMARY GOVERNMENT CHANGE IN NET POSITION $ 7,536,403 $ 6,777,012 $ 6,360,692 $ (91,939)

Note: The City implemented GASB Statement No. 68 for the fiscal year ending June 30, 2015.

The City correctly included Public Works General Fund expenses under Highway and Streets for fiscal year ending June 30, 2016.

Data Source

Audited Financial Statements

- 161 - 2011 2012 2013 2014 2015 2016

$ 13,405,653 $ 12,733,599 $ 12,673,310 $ 12,392,230 $ 11,981,519 $ 11,812,941 11,426,292 11,132,604 11,078,544 10,435,096 11,092,497 11,801,518 4,449,288 3,788,953 3,534,755 3,600,059 3,433,879 3,202,384 3,561,130 3,745,298 4,130,363 4,197,440 4,515,729 4,462,992 3,426,431 4,775,612 4,835,868 4,994,817 5,340,751 5,585,744 71,691 37,782 124,029 164,693 182,353 (257,706) 157,306 839,167 623,137 953,687 1,258,401 598,730 - - - - - 1,741 (2,453,290) 225,400 494,250 627,800 (29,377) (62,163)

34,044,501 37,278,415 37,494,256 37,365,822 37,775,752 37,146,181

16 380 4,338 113 27 38,672 28,384 571 (6,038) 2,492 4,326 109,342 2,453,290 (225,400) (494,250) (627,800) 29,337 62,163

2,481,690 (224,449) (495,950) (625,195) 33,690 210,177

$ 36,526,191 $ 37,053,966 $ 36,998,306 $ 36,740,627 $ 37,809,442 $ 37,356,358

$ 1,841,768 $ 3,836,282 $ (182,022) $ (1,294,531) $ 2,927,312 $ (11,670,502) 3,099,757 1,160,656 525,782 1,091,804 3,026,729 (529,992)

$ 4,941,525 $ 4,996,938 $ 343,760 $ (202,727) $ 5,954,041 $ (12,200,494)

- 162 - CITY OF DEKALB, ILLINOIS

FUND BALANCES OF GOVERNMENTAL FUNDS

Last Ten Fiscal Years

Fiscal Year 2007 2008 2009 2010

GENERAL FUND Reserved $ 147,508 $ 738,577 $ 2,067,865 $ 2,177,003 Unreserved 3,155,669 2,161,911 1,633,753 1,331,219 Nonspendable - - - - Restricted - - - - Committed - - - - Unassigned - - - -

TOTAL GENERAL FUND $ 3,303,177 $ 2,900,488 $ 3,701,618 $ 3,508,222

ALL OTHER GOVERNMENTAL FUNDS Reserved $ 3,166,191 $ 1,808,174 $ 2,653,139 $ 2,783,493 Unreserved, Undesignated (Deficit) Reported in Special Revenue Funds (8,808) (445) (362) (383) Capital Project Funds (1,076,165) 9,104,021 8,552,208 13,352,510 Nonspendable - - - - Restricted - - - - Assigned - - - - Unassigned (Deficit) - - - -

TOTAL ALL OTHER GOVERNMENTAL FUNDS $ 2,081,218 $ 10,911,750 $ 11,204,985 $ 16,135,620

Data Source

Audited Financial Statements

- 163 - 2011 2012 2013 2014 2015 2016

$ 6,257 $ - $ - $ - $ - $ ------50,934 61,660 37,161 30,216 22,865 361,584 - - - 104,523 173,187 - - 6,262 6,262 6,262 6,447 - 2,692,928 4,669,218 5,177,514 5,916,598 8,018,754 9,123,076

$ 2,750,119 $ 4,737,140 $ 5,220,937 $ 6,057,599 $ 8,221,253 $ 9,484,660

$ - $ - $ - $ - $ - $ -

------3,650 1,500 - - - - 11,725,897 12,537,031 12,176,588 11,660,113 12,728,487 13,365,048 340,327 219,840 3,739,068 498,285 571,040 358,251 - - - (205,934) - (23,787)

$ 12,069,874 $ 12,758,371 $ 15,915,656 $ 11,952,464 $ 13,299,527 $ 13,699,512

- 164 - CITY OF DEKALB, ILLINOIS

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

Last Ten Fiscal Years

Fiscal Year 2007 2008 2009 2010

REVENUES Taxes $ 29,097,231 $ 31,898,673 $ 34,305,038 $ 34,111,071 Intergovernmental 3,724,715 4,347,447 6,070,086 5,344,122 Licenses, Permits and Fees 448,192 364,103 354,375 346,229 Charges for Services 1,685,991 1,721,234 1,772,322 1,916,012 Fines and Forfeitures 672,403 766,504 728,572 647,913 Investment Income 428,938 347,511 189,302 75,779 Miscellaneous 515,750 734,928 737,263 549,695

Total Revenues 36,573,220 40,180,400 44,156,958 42,990,821

EXPENDITURES General Government 6,740,822 6,925,455 8,604,319 7,839,924 Public Safety 15,719,852 16,666,201 17,407,054 18,074,077 Highways and Streets 1,843,360 2,322,976 1,797,965 1,550,121 Community Development 4,425,779 4,529,707 3,930,979 3,730,883 Capital Outlay 6,647,200 6,843,723 8,163,413 13,281,421 Debt Service Principal Retirement 2,835,214 4,465,000 2,605,000 12,825,000 Interest and Fiscal Charges 906,585 882,467 859,247 775,771

Total Expenditures 39,118,812 42,635,529 43,367,977 58,077,197

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (2,545,592) (2,455,129) 788,981 (15,086,376)

OTHER FINANCING SOURCES (USES) Transfers In 4,054,351 4,032,407 5,679,484 10,104,589 Transfers (Out) (3,885,514) (3,800,355) (5,450,071) (9,807,753) Bonds Issued 1,079,114 10,607,240 - 19,183,291 Premium (Discount) on Bonds Issued - - - 336,326 Payment to Bond Escrow Agent - - - - Sale of Capital Assets 36,433 60,231 6,608 7,162

Total Other Financing Sources (Uses) 1,284,384 10,899,523 236,021 19,823,615

NET CHANGE IN FUND BALANCES $ (1,261,208) $ 8,444,394 $ 1,025,002 $ 4,737,239

DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL EXPENDITURES 11.25% 10.38% 13.44% 8.70%

Note: For fiscal year 2016, the City correctly included Public Works General Fund expenditures under Highway and Streets.

Data Source

Audited Financial Statements

- 165 - 2011 2012 2013 2014 2015 2016

$ 36,266,887 $ 24,753,767 $ 24,330,856 $ 24,430,463 $ 24,733,924 $ 25,403,303 6,576,584 18,750,569 17,863,890 16,384,065 18,199,099 16,614,186 499,938 396,095 483,375 554,740 713,565 876,788 2,137,997 2,149,403 1,727,442 1,961,818 2,003,002 2,285,408 639,450 605,075 758,942 1,077,493 1,005,578 854,491 71,691 37,681 120,520 163,453 182,313 (257,706) 517,485 839,167 623,137 953,687 1,258,401 600,698

46,710,032 47,531,757 45,908,162 45,525,719 48,095,882 46,377,168

9,582,025 8,981,636 10,496,713 9,356,378 11,547,939 8,310,899 18,267,633 19,371,392 18,642,683 19,942,140 20,479,288 21,418,254 1,045,409 609,488 750,074 800,879 537,655 3,773,836 2,933,330 3,185,002 4,083,703 4,015,770 8,500,421 3,588,312 12,011,245 10,359,355 18,631,978 10,892,511 1,547,500 4,835,430

5,940,000 2,129,920 2,268,121 2,548,453 2,296,031 2,065,017 808,239 938,679 835,209 1,054,116 988,529 911,606

50,587,881 45,575,472 55,708,481 48,610,247 45,897,363 44,903,354

(3,877,849) 1,956,285 (9,800,319) (3,084,528) 2,198,519 1,473,814

5,461,545 5,113,090 5,138,884 6,123,312 5,655,359 3,130,209 (8,529,492) (4,420,390) (4,707,634) (6,220,512) (6,034,736) (2,942,372) 9,320,000 - 12,910,969 - 776,775 - (41,304) - 87,782 - - - (7,158,799) - - - (776,775) - 2,050 26,533 11,400 55,198 6,920 1,741

(946,000) 719,233 13,441,401 (42,002) (372,457) 189,578

$ (4,823,849) $ 2,675,518 $ 3,641,082 $ (3,126,530) $ 1,826,062 $ 1,663,392

14.62% 7.38% 6.99% 8.00% 7.35% 6.79%

- 166 - CITY OF DEKALB, ILLINOIS

TAXABLE SALES BY CATEGORY

Last Ten Calendar Years

Calendar Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General Merchandise $ 170,225,753 $ 171,985,064 $ 164,736,328 $ 154,138,547 $ 161,257,806 $ 129,818,177 $ 149,564,784 $ 145,091,378 $ 145,331,012 $ 142,983,051 Food 47,170,335 53,207,066 60,740,900 55,760,959 56,012,687 67,456,918 65,852,747 65,400,022 65,602,683 62,574,399 Drinking and Eating Places 60,927,328 65,260,253 67,402,498 64,478,308 66,461,264 66,649,641 68,587,766 67,411,032 72,375,099 73,690,804 Apparel 10,754,613 9,626,133 7,332,715 6,235,098 5,912,150 30,582,619 7,128,112 8,019,269 9,156,209 9,682,582 Furniture, H.H., and Radio 29,988,920 33,834,022 28,883,333 24,677,414 25,081,450 22,181,422 20,684,998 20,194,461 20,299,326 22,219,433 Lumber, Building Hardware 27,977,040 26,936,010 24,505,165 22,566,265 21,682,737 21,563,108 22,120,923 23,492,009 26,215,248 26,667,559 Automobile and Filling Stations 91,978,172 93,408,943 94,746,090 76,117,806 81,678,462 84,369,200 90,624,448 81,838,781 83,933,383 81,644,714 Drugs and Miscellaneous Retail 81,006,583 83,283,571 84,314,769 81,599,087 79,606,161 76,036,417 74,197,724 78,920,501 81,900,819 86,883,148 Agriculture and All Others 48,715,922 41,446,148 39,136,195 28,154,513 28,623,247 29,011,979 29,448,085 30,174,323 30,610,577 26,789,604 Manufacturers 12,975,167 15,254,811 18,224,889 13,889,966 15,507,914 7,289,300 1,546,592 3,116,244 3,392,915 1,455,793

TOTAL $ 581,719,833 $ 594,242,021 $ 590,022,882 $ 527,617,963 $ 541,823,878 $ 534,958,781 $ 529,756,179 $ 523,658,020 $ 538,817,271 $ 534,591,087

CITY DIRECT SALES TAX RATE 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Note: The data presents taxable sales subject to the Municipal Retailer's Occupation Tax

Data Source

Illinois Department of Revenue

- 167 - CITY OF DEKALB, ILLINOIS

TAXABLE SALES BY CATEGORY - HOME RULE

Last Ten Calendar Years

Calendar Year 2006 2007 2008* 2009 2010 2011 2012 2013 2014 2015

General Merchandise $ 111,235,234 $ 110,641,629 $ 105,718,900 $ 99,635,725 $ 106,361,293 $ 87,558,389 $ 99,024,929 $ 96,069,313 $ 95,614,092 $ 94,092,573 Food 14,228,867 16,220,246 17,771,292 16,039,202 18,341,512 30,104,054 29,741,123 28,856,277 28,086,495 24,719,290 Drinking and Eating Places 59,524,764 63,696,181 65,892,248 63,016,745 64,921,928 65,295,493 67,176,678 66,489,229 70,711,436 71,004,958 Apparel 10,750,251 9,619,122 7,316,764 6,230,748 5,911,746 19,317,301 7,046,287 7,946,743 9,091,595 9,583,535 Furniture, H.H. and Radio 29,956,258 33,782,135 28,777,827 24,555,874 24,340,125 21,984,344 20,503,154 20,039,027 20,419,645 22,061,903 Lumber, Building Hardware 27,950,165 26,884,766 24,259,864 22,394,973 21,589,323 21,526,692 22,070,597 23,431,577 26,161,570 26,623,933 Automobile and Filling Stations 38,130,323 43,057,278 44,642,599 36,573,132 42,992,984 46,695,364 47,519,288 48,575,366 46,268,699 38,844,447 Drugs and Miscellaneous Retail 58,390,055 58,432,889 59,739,818 58,394,357 57,668,525 56,027,770 56,447,398 58,367,979 59,423,173 59,678,688 Agriculture and All Others 41,914,235 37,826,626 35,885,916 26,970,847 27,405,131 28,250,729 28,487,957 28,584,214 29,168,574 25,247,798 Manufacturers 12,663,868 14,914,125 17,841,691 13,412,811 15,166,169 6,981,465 1,250,597 2,801,034 3,018,957 1,149,345

TOTAL $ 404,744,020 $ 415,074,997 $ 407,846,919 $ 367,224,414 $ 384,698,736 $ 383,741,601 $ 379,268,008 $ 381,160,759 $ 387,964,236 $ 373,006,470

CITY DIRECT SALES TAX RATE 1.25% 1.25% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75%

*The City raised its Home Rule Sales tax to 1.75% on July 1, 2008

Note: The data presents taxable sales subject to the City's Home Rule Sales Tax.

Data Source

Illinois Department of Revenue

- 168 - CITY OF DEKALB, ILLINOIS

DIRECT AND OVERLAPPING SALES TAX RATES

Last Ten Calendar Years

City Municipal Calendar Home Rule Retailers County State Year Rate Occupation Tax Rate Rate Total

2007 1.25% 1.00% 0.25% 5.00% 7.50%

2008 1.75% 1.00% 0.25% 5.00% 8.00%

2009 1.75% 1.00% 0.25% 5.00% 8.00%

2010 1.75% 1.00% 0.25% 5.00% 8.00%

2011 1.75% 1.00% 0.25% 5.00% 8.00%

2012 1.75% 1.00% 0.25% 5.00% 8.00%

2013 1.75% 1.00% 0.25% 5.00% 8.00%

2014 1.75% 1.00% 0.25% 5.00% 8.00%

2015 1.75% 1.00% 0.25% 5.00% 8.00%

2016 1.75% 1.00% 0.25% 5.00% 8.00%

The City raised its Home Rule Sales tax to 1.75% on July 1, 2008.

Data Source

City, County, and State Records

- 169 - CITY OF DEKALB, ILLINOIS

ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY

Last Ten Levy Years

Levy Total Direct Year Residential Commercial Industrial Farm Railroad Total Tax Rate*

2006 $ 369,659,572 $ 155,565,480 $ 43,514,766 $ 494,098 $ 572,356 $ 569,806,272 0.8091 2007 407,662,378 163,615,149 51,250,520 666,539 628,255 623,822,841 0.8437 2008 420,413,802 172,166,813 51,905,133 686,727 682,620 645,855,095 0.8509 2009 413,507,993 176,052,268 52,801,237 721,404 833,695 643,916,597 0.9293 2010 389,625,409 167,457,427 49,380,638 825,082 1,044,391 608,332,947 0.9856 2011 365,267,969 167,604,810 47,742,181 782,590 1,107,165 582,504,715 1.0293 2012 331,382,501 156,902,473 43,536,967 731,665 1,252,297 533,805,903 1.1321 2013 300,043,381 143,720,391 39,939,551 673,596 1,546,704 485,923,623 1.3510 2014 285,032,206 138,851,901 38,459,111 1,010,413 1,612,750 464,966,381 1.4113 2015 313,041,585 160,710,755 46,654,911 1,012,840 1,615,750 523,035,841 1.6853

Note: The City only reports the rate setting EAV.

*This includes the City of DeKalb and the DeKalb Public Library.

Data Source

Office of the County Clerk

- 170 - CITY OF DEKALB, ILLINOIS

PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS

Last Ten Levy Years

Tax Levy Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

TAX RATES City of DeKalb 0.5967 0.6000 0.6000 0.6500 0.6899 0.7205 0.7952 0.9809 1.0245 1.1942 DeKalb Library 0.2124 0.2437 0.2509 0.2793 0.2957 0.3088 0.3369 0.3701 0.3868 0.4911 0.8091 0.8437 0.8509 0.9293 0.9856 1.0293 1.1321 1.3510 1.4113 1.6853

DeKalb County 0.8668 0.8449 0.8495 0.8539 0.9052 0.9694 1.0892 1.2013 1.2483 1.2364 DeKalb Township 0.1151 0.1116 0.1130 0.1149 0.1260 0.1350 0.1508 0.1687 0.1797 0.1820 DeKalb Road & Bridge 0.1933 0.1874 0.1808 0.1839 0.1477 0.1548 0.1768 0.1977 0.2106 0.2133 Forest Preserve District 0.0548 0.0677 0.0678 0.0663 0.0700 0.0740 0.0797 0.0852 0.0876 0.0853 Sanitary District 0.0952 0.0913 0.0927 0.0944 0.1036 0.1110 0.1244 0.1393 0.1486 0.1504 DeKalb School District #428 4.8927 4.7288 5.2079 5.2606 5.7414 6.2148 7.0275 7.8215 8.2714 8.2500 Kishwaukee Community College 0.5435 0.5497 0.5468 0.5638 0.5601 0.5758 0.6416 0.7294 0.7123 0.6972 Park District 0.5494 0.5247 0.5131 0.5208 0.5606 0.5987 0.6745 0.7519 0.7969 0.7960

TOTAL TAX RATE PER $100 EQUALIZED ASSESSED VALUATION 8.1199 7.9498 8.4225 8.5879 9.2002 9.8628 11.0966 12.4460 13.0667 13.2959

SHARE OF TOTAL TAX RATE LEVIED BY CITY OF DEKALB AND THE DEKALB LIBRARY 9.96% 10.61% 10.10% 10.82% 10.71% 10.44% 10.20% 10.85% 10.80% 12.68%

The rates are directly applied to the total rate setting EAV amounts listed in the schedule of EAV by property class.

Data Source

Office of the County Clerk

- 171 - CITY OF DEKALB, ILLINOIS

PRINCIPAL TAXPAYERS

June 30, 2016

2016 2007 Percentage Percentage Taxable of Total 2000 of Total Assessed Assessed Assessed Assessed Taxpayers Type of Business Valuation Rank Valuation Valuation Rank Valuation

3M Warehouse/Distributor $ 16,129,836 1 3.32% $ 5,412,680 6 1.19% Target Warehouse/Distributor 9,860,583 2 2.03% 14,351,446 1 3.14% University Village I & II Apartments 6,825,515 3 1.40% 4,913,082 7 1.08% Panduit Manufacturing 6,522,488 4 1.34% 6,172,503 5 1.35% ARC - Goodyear Warehouse/Distributor 6,028,754 5 1.24% 8,611,728 2 1.89% Nestle Warehouse/Distributor 5,722,229 6 1.18% Mason Properties Apartments 5,691,533 7 1.17% 7,917,129 3 1.73% Northland Plaza Retail 5,364,985 8 1.10% 6,345,371 4 1.39% DeKalb Area Retirement Center Retirement Center 4,946,894 9 1.02% 3,686,624 10 0.81% JLAR Apartments/Retail 3,555,646 10 0.73% 4,028,159 9 0.88% Dream Fund LLC Apartments 4,648,471 8 1.02%

TOTAL $ 70,648,463 14.53% $ 66,087,193 14.48%

Data Sources

County Assessors Office (not adjusted for unreported title transfers) City of DeKalb

- 172 - CITY OF DEKALB, ILLINOIS

PROPERTY TAX RATES, LEVIES, AND COLLECTIONS

Last Ten Levy Years

City of DeKalb DeKalb Library Collections within the Total Collections Collections within the Total Collections Levy Year to Date Levy Year to Date Total Tax Percent of Collections in Percent of Total Tax Percent of Collections in Percent of Tax Levy Rates per Levy Levy Subsequent Levy Rates per Levy Levy Subsequent Levy Year $100 Requested Amount Collected Years Amount Collected $100 Requested Amount Collected Years Amount Collected

2006 0.5967 $ 3,400,000 $ 3,400,000 100.00% $ - $ 3,400,000 100.00% 0.2124 $ 1,210,003 $ 1,210,003 100.00% $ - $ 1,210,003 100.00%

2007 0.6000 3,742,937 3,679,970 98.32% - 3,679,970 98.32% 0.2437 1,520,000 1,492,137 98.17% - 1,492,137 98.17%

2008 0.6000 3,889,007 3,765,927 96.84% - 3,765,927 96.84% 0.2509 1,620,420 1,574,213 97.15% - 1,574,213 97.15%

2009 0.6500 4,185,332 4,160,967 99.42% - 4,160,967 99.42% 0.2793 1,798,500 1,796,093 99.87% - 1,796,093 99.87%

2010 0.6899 4,196,805 4,107,807 97.88% - 4,107,807 97.88% 0.2957 1,798,523 1,760,288 97.87% - 1,760,288 97.87%

2011 0.7205 4,196,890 4,127,590 98.35% - 4,127,590 98.35% 0.3088 1,798,536 1,767,397 98.27% - 1,767,397 98.27%

2012 0.7952 4,244,718 4,161,753 98.05% - 4,161,753 98.05% 0.3369 1,798,552 1,762,669 98.00% - 1,762,669 98.00%

2013 0.9809 4,270,457 4,203,106 98.42% - 4,203,106 98.42% 0.3701 1,798,549 1,769,239 98.37% - 1,769,239 98.37%

2014 1.0245 4,270,540 4,231,993 99.10% - 4,231,993 99.10% 0.3868 2,289,658 2,257,413 98.59% - 2,257,413 98.59%

2015 1.1942 5,094,730 2,850,683 55.95% - 2,850,683 55.95% 0.4911 2,298,589 1,160,681 50.50% - 1,160,681 50.50%

* Amount reflects collections through June 30, 2016

Data Sources

Office of the County Clerk Office of the County Treasurer

- 173 - Total Collections within the Total Collections Levy Year to Date Total Tax Percent of Collections in Percent of Rates per Levy Levy Subsequent Levy $100 Requested Amount Collected Years Amount Collected

0.8091 $ 4,610,003 $ 4,610,003 100.00% $ - $ 4,610,003 100.00%

0.8437 5,262,937 5,172,107 98.27% - 5,172,107 98.27%

0.8509 5,509,427 5,340,140 96.93% - 5,340,140 96.93%

0.9293 5,983,832 5,957,060 99.55% - 5,957,060 99.55%

0.9856 5,995,328 5,868,095 97.88% - 5,868,095 97.88%

1.0293 5,995,426 5,894,987 98.32% - 5,894,987 98.32%

1.1321 6,043,270 5,924,422 98.03% - 5,924,422 98.03%

1.3510 6,069,006 5,972,345 98.41% - 5,972,345 98.41%

1.4113 6,560,198 6,489,406 98.92% - 6,489,406 98.92%

1.6853 7,393,319 4,011,364 54.26% - 4,011,364 54.26%

- 174 - CITY OF DEKALB, ILLINOIS

RATIOS OF OUTSTANDING DEBT BY TYPE

Last Ten Fiscal Years

Governmental Activities Business-Type Activities Percentage Fiscal G.O. Bond Due to Tax Increment Tax Increment G.O. Bond IEPA Total of Year G.O. Anticipation Other Financing Financing Capital G.O. Anticipation Loan Capital Primary Personal Per Ended Bonds Notes Governments Revenue Bonds Note Leases Bonds Notes Payable Leases Government Income* Capita*

2007 $ 15,355,328 $ 3,000,000 $ 1,498,998 $ 3,365,000 $ - $ 1,028,621 $ 4,590,000 $ - $ 5,689,292 $ 252,789 $ 34,780,028 4.68% $ 760.24 2008 13,433,931 10,500,000 998,998 2,795,000 - 1,888,540 4,395,000 - 5,346,065 245,519 39,603,053 5.31% 862.87 2009 11,452,534 10,500,000 498,998 2,145,000 - 1,583,900 4,180,000 - 4,994,081 188,714 35,543,227 4.76% 774.16 2010 20,952,108 4,000,000 1,337,055 1,430,000 - 1,245,095 3,950,000 - 4,633,118 128,674 37,676,050 4.84% 858.97 2011 22,377,250 - - 655,000 - 892,257 3,710,000 - 4,262,947 66,093 31,963,547 4.11% 728.65 2012 20,828,534 - - 345,000 - 578,302 3,537,172 - 3,883,332 25,516 29,197,856 3.59% 663.14 2013 31,587,600 - - - - 851,150 3,269,269 - 3,673,988 13,786 39,395,793 4.68% 894.75 2014 29,313,530 - - - - 527,697 2,996,366 - 3,370,464 7,038 36,215,095 4.23% 822.51 2015 27,274,168 - - - - 216,666 2,093,225 - 2,951,138 - 32,535,197 3.86% 738.53 2016 25,305,591 - - - - 199,999 1,726,575 - 2,518,781 - 29,750,946 3.54% 675.70

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. The City abates the entire property tax levied to pay general obligation bond debt each year.

*See the schedule of Demographic and Economic Statistics for personal income and population data.

- 175 - CITY OF DEKALB, ILLINOIS

RATIOS OF GENERAL BONDED DEBT OUTSTANDING

Last Ten Fiscal Years

Percentage of Less Amounts Total Taxable Fiscal General Available in Assessed Year Obligation Debt Service Value of Per Ended Bonds Fund Total Property* Capita**

2007 $ 19,945,328 $ 648,125 $ 19,297,203 4.23% $ 421.81 2008 17,828,931 524,966 17,303,965 3.04% 377.02 2009 15,632,534 578,835 15,053,699 2.41% 327.88 2010 24,902,108 560,413 24,341,695 3.77% 554.96 2011 26,087,250 231,049 25,856,201 4.02% 589.42 2012 24,365,706 185,283 24,180,423 3.97% 549.18 2013 34,856,869 - 34,856,869 5.98% 791.66 2014 32,309,896 - 32,309,896 6.05% 733.82 2015 29,367,393 - 29,367,393 6.04% 666.62 2016 27,032,166 - 27,032,166 5.81% 613.95

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

*See the Schedule of Assessed Value and Actual Value of Taxable Property for property value **See the Schedule of Demographics and Economic Statistics for population data.

- 176 - CITY OF DEKALB, ILLINOIS

DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

June 30, 2016

Percentage of Gross Debt Applicable City's Governmental Unit Bonded Debt to the City* Share of Debt

City of DeKalb $ 27,232,165 100.00% $ 27,232,165

Overlapping DeKalb County 13,770,000 26.88% 3,701,376

DeKalb Community Unit School District #428 96,496,356 74.80% 72,179,274

Kishwaukee College #523 50,141,101 24.18% 12,124,118

DeKalb Sanitary District 53,031,556 0.85% 450,768

DeKalb Park District 665,000 99.23% 659,880

Total Overlapping $ 214,104,013 $ 89,115,416

Total Direct and Overlapping $ 241,336,178 $ 116,347,581

*Determined by ratio of assessed value of property subject to taxation in overlapping unit to value of property subject to taxation in City.

Data Source

Office of the County Clerk

- 177 - CITY OF DEKALB, ILLINOIS

LEGAL DEBT MARGIN

June 30, 2016

The City is a home rule municipality.

Article VII, Section 6(k) of the 1970 Illinois Constitution governs computation of the legal debt margin.

"The General Assembly may limit by law the amount and require referendum approval of debt to be incurred by home rule municipalities, payable from ad valorem property tax receipts, only in excess of the following percentages of the assessed value of its taxable property... (2) if its population is more than 25,000 and less than 500,000 an aggregate of one percent: …indebtedness which is outstanding on the effective date (July 1, 1971) of this constitution or which is thereafter approved by referendum…shall not be included in the foregoing percentage amounts."

To date the General Assembly has set no limits for home rule municipalities.

- 178 - CITY OF DEKALB, ILLINOIS

PLEDGED-REVENUE COVERAGE

Last Ten Fiscal Years

Tax Increment Financing Bonds and Notes Incremental Incremental Less Excluded Available Fiscal Property Sales Contractual for Debt Debt Service Year Taxes Tax Obligations Service Principal Interest Coverage

2007* $ 4,596,145 $ 1,506,288 $ (500,000) $ 5,602,433 $ 1,005,214 $ 112,592 $ 5.01 2008 5,360,771 1,576,559 (500,000) 6,437,330 570,000 87,629 9.79 2009 6,597,332 1,645,810 (498,998) 7,744,144 650,000 87,122 10.51 2010 6,883,479 1,477,587 (1,337,055) 7,024,011 715,000 76,212 8.88 2011 6,937,664 1,400,702 - 8,338,366 775,000 48,464 10.13 2012 6,691,097 1,368,512 - 8,059,609 310,000 9,831 25.20 2013** 6,679,893 1,330,744 - 8,010,637 345,000 9,212 22.62 2014 6,604,296 - - 6,604,296 - - N/A 2015 6,439,568 - - 6,439,568 - - N/A 2016 6,347,586 - - 6,347,586 - - N/A

Note: Details of the City's outstanding debt can be found in the notes to the financial statements. NA - Information Unavailable

*The City issued Tax Increment Financing Notes in the amount of $1,000,000 which were paid off in FY11. **The City issued Tax Increment Financing Revenue Bonds in the amount of $4,350,000 which were paid off in FY13.

- 179 - CITY OF DEKALB, ILLINOIS

DEMOGRAPHIC AND ECONOMIC INFORMATION

Last Ten Fiscal Years

Per Capita Median Fiscal Equalized Personal Personal Family Unemployment Year Population Assessed Value Income Income Income Rate

2007 45,749 $ 569,806,272 $ 743,924,489 $ 16,261 $ 53,017 4.1% 2008 45,897 623,822,841 746,331,117 16,261 53,017 5.3% 2009 45,912 645,855,095 746,575,032 16,261 53,017 9.8% 2010 43,862 643,916,597 777,673,260 17,730 60,571 9.8% 2011 43,867 608,332,947 777,761,910 17,730 60,571 10.0% 2012 44,030 582,504,715 814,026,640 18,488 60,571 9.6% 2013 44,030 533,805,903 841,853,600 19,120 60,571 10.3% 2014 44,030 485,923,623 856,999,920 19,464 60,571 6.9% 2015 44,054 464,966,381 843,854,370 19,155 60,571 5.0% 2016 44,030 532,032,841 840,444,640 19,088 59,588 5.2%

Data Sources

City Records, U.S. Census Bureau, Illinois Department of Employment Security, and Office of the County Clerk

- 180 - CITY OF DEKALB, ILLINOIS

PRINCIPAL EMPLOYERS

Current Year and Nine Years Ago

2016 2007 % of % of Total City Total City Employer Rank Employees Population Rank Employees Population

Northern Illinois University 1 3,523 8.00% 1 3,600 7.87% KishHealth System 2 1,200 2.73% 2 700 1.53% DeKalb School District 3 885 2.01% Sonoco - Alloyd Company 4 500 1.14% 5 325 0.71% 3M 5 480 1.09% 6 325 0.71% Targe Distribution Center 6 435 0.99% 3 650 1.42% Wal-Mart Super Center 7 360 0.82% 4 600 1.31% Nestle Distribution 8 250 0.57% 8 250 0.55% City of DeKalb 9 202 0.46% Panduit 10 200 0.45% GE Motors 10 120 0.26% Ideal Industries (DeKalb) 9 125 0.27% Jewel/Osco 7 260 0.57%

Data Sources

Illinois Manufacturers Directory, Illinois Services Directory, DeKalb County Economic Development Corporation, City Records

- 181 - CITY OF DEKALB, ILLINOIS

FULL-TIME EQUIVALENT EMPLOYEES

Last Ten Fiscal Years

Function/Program 2007 2008 2009 2010

General Government Legislative** 9.00 9.00 9.00 9.00 Administrative Services 25.00 25.00 24.00 23.00 City Clerk 1.50 1.50 1.50 1.50 Legal 4.50 4.50 4.50 4.50 40.00 40.00 39.00 38.00

Public Safety Police Officers 61.00 63.00 63.00 61.00 Civilians 27.50 26.50 25.50 25.50 88.50 89.50 88.50 86.50

Fire Firefighters 60.00 60.00 60.00 58.00 Staff 2.00 2.00 2.00 2.00 62.00 62.00 62.00 60.00

Community Improvement Community Development 20.00 21.00 16.50 13.00 Engineering Services 5.50 5.50 5.50 8.00 Public Works Administration 1.00 1.00 1.00 1.00 Public Facilities 2.50 2.50 1.00 1.00 Engineering 1.00 1.00 1.00 1.00 Streets 21.00 21.00 19.00 19.00 51.00 52.00 44.00 43.00

Water and Sewer 17.50 17.50 16.00 16.00 Airport Division 1.50 1.50 1.50 1.50 Development Services 2.00 2.00 1.00 - Mass Transit - - - -

Total Full-Time Equivalent Employees 262.50 264.50 252.00 245.00

Note: This schedule lists positions budgeted but not necessarily filled. These positions are part-time.

Data Source

City Budget Records

- 182 - 2011 2012 2013 2014 2015 2016

9.00 9.00 9.00 9.00 9.00 9.00 17.50 16.50 20.00 20.50 22.50 24.00 0.50 0.50 - - - - 3.50 2.00 - - - - 30.50 28.00 29.00 29.50 31.50 33.00

60.00 61.00 63.00 65.00 65.00 65.00 24.50 24.50 30.00 30.50 34.00 34.00 84.50 85.50 93.00 95.50 99.00 99.00

54.00 53.00 52.00 57.00 57.00 57.00 1.00 1.00 1.00 1.00 1.50 2.00 55.00 54.00 53.00 58.00 58.50 59.00

- - 7.50 8.00 6.50 6.00 ------

2.00 2.00 2.00 2.00 2.00 2.00 1.00 1.00 1.00 1.00 1.00 1.00 - - 0.50 0.50 0.50 2.00 20.00 20.00 21.00 21.00 21.00 21.00 23.00 23.00 32.00 32.50 31.00 32.00

10.00 10.00 10.00 10.50 10.50 10.50 2.50 4.50 4.50 6.00 6.00 6.00 6.50 6.00 - - - - 2.50 2.50 2.00 2.00 3.50 3.50

214.50 213.50 223.50 234.00 240.00 243.00

- 183 - CITY OF DEKALB, ILLINOIS

OPERATING INDICATORS

Last Ten Fiscal Years

Function/Program 2007 2008 2009 2010

GENERAL GOVERNMENT Community Development Building Permits Issued Residential Permits Issued New Construction 76 43 3 8 Remodel 84 48 82 69 Industrial/Commercial Permits Issued New Construction 27 22 9 10 Remodel 23 28 25 31 Other Permits 805 653 681 745 Total Number of Permits 1,015 794 800 863 Total Building Permit Valuation $ 23,371,977 $ 31,125,085 $ 11,102,307 $ 8,455,270

PUBLIC SAFETY Police Physical Arrests 2,396 2,359 3,023 2,480 Traffic Violations 6,149 6,102 10,530 8,273 Parking Violations 17,405 13,386 12,986 13,965

Fire Fire Responses (Fire and Non-Fire) 2,333 2,908 2,641 3,129 Emergency Medical Services Responses 4,035 4,091 4,018 4,334

PUBLIC WORKS Vehicles Maintained by Department 126 130 132 131 Street Construction (Miles) 0.43 - - - Street Reconstruction (Miles) - 1.30 0.45 1.15 Street Resurfacing (Miles) 0.92 1.48 1.48 1.70

WATER Average Daily Consumption 12/31 Industrial/Commercial 567,998 531,537 488,491 431,992 Residential 2,372,037 2,284,357 2,275,385 2,171,686 Government/Church/School 690,318 677,174 702,852 636,183

Water Billing Accounts on 12/31 Industrial/Commercial 747 774 787 761 Residential 9,838 9,993 10,007 10,011 Government/Church/School 210 230 239 221

Data Source

Various City Departments

- 184 - 2011 2012 2013 2014 2015 2016

2 1 1 4 3 6 55 63 67 52 49 54

20 16 15 21 19 16 12 21 20 25 27 33 764 647 634 651 580 595 853 748 737 753 678 704 $ 30,110,627 $ 11,637,858 $ 11,611,226 $ 8,958,807 $ 54,359,021 $ 66,276,980

2,689 2,799 2,917 2,795 2,987 2,911 4,829 6,136 4,729 4,253 3,956 3,788 13,967 12,211 9,733 7,144 6,335 5,555

3,199 3,516 3,437 3,489 3,948 4,084 4,476 5,005 5,236 5,207 5,196 5,344

128 124 133 135 142 144 ------0.65 0.16 0.51 0.43 - - 1.73 2.86 2.17 1.22 1.66 1.77

417,353 395,288 402,758 401,301 400,450 437,786 2,185,873 2,114,983 2,117,781 2,124,660 1,997,021 1,922,611 561,908 615,165 589,752 562,971 513,539 502,681

767 756 753 731 717 682 10,020 10,104 10,015 9,960 9,963 10,030 224 224 225 222 211 217

- 185 - CITY OF DEKALB, ILLINOIS

CAPITAL ASSET STATISTICS

Last Ten Fiscal Years

Function/Program 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

PUBLIC SAFETY Police Stations/Municipal Center 1 1 1 1 1 1 1 1 1 1 Patrol Vehicles 26 26 28 27 27 26 28 28 29 29 Fire Stations 3 3 3 3 3 3 3 3 3 3 Ambulances 5 5 5 5 5 5 6 7 6 6 Fire Trucks 5 5 4 4 4 4 4 4 5 5

PUBLIC WORKS Residential Streets (Miles) 125 125 126 128 128 128 128 128 128 128 Traffic Signals 20 21 22 22 23 24 24 24 24 24

WATER Water Towers 4 4 4 4 4 4 4 4 4 4 Storage capacity (MG) 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 5.75 Water Wells 9 9 9 9 9 9 9 9 9 9 Water Mains (miles) 170 172 175 175 175 177 177 177 177 178

Data Source

Various City Departments

- 186 -