C COMPREHENSIVE ANNUAL I T FINANCIAL REPORT Y
O F
D E A R B O R N
M I C H I G A For the Year Ended N June 30, 2018 CI TY OF DEARBORN, MICHIGAN
COMPREHENSI VE ANNUAL FI NANCI AL REPORT
For the Year Ended June 30, 2018
MAYOR John B. O’Reilly, Jr.
CI TY COUNCI L
Council President Susan A. Dabaja
Council President Pro-Tem Michael T. Sareini
Council Members David Bazzy Robert A. Abraham Erin Byrnes Leslie Herrick Brian O’Donnell
James J. O’Connor Finance Director/Treasurer
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City of Dearborn, Michigan
Page I NTRODUCTORY SECTI ON
Letter of Transmittal ...... i Mission Statement ...... ix City of Dearborn Map ...... x Organizational Chart ...... xi List of Principal Officials ...... xii
FI NANCI AL SECTI ON
Independent Auditor’s Report ...... 1-3 Management’s Discussion & Analysis ...... 4-18 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ...... 19 Statement of Activities ...... 20-21 Fund Financial Statements Balance Sheet – Governmental Funds ...... 22 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position ...... 23 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds...... 24 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .... 25 Statement of Net Position – Proprietary Funds ...... 26-27 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ...... 28-29 Statement of Cash Flows – Proprietary Funds ...... 30-33 Statement of Net Position – Fiduciary Funds ...... 34 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...... 35 Statement of Net Position – Component Units ...... 36-37 Statement of Activities – Component Units ...... 38-39 Notes to Financial Statements ...... 41-111 Required Supplementary Information: Schedule of Funding Progress: Chapter 21 Policemen’s and Firemen’s Retirement System ...... 113-115 Chapter 22 General Employees’ Retirement System ...... 116-119 Chapter 23 Police and Fire Retirement System ...... 120-123 Municipal Employees Retirement System of Michigan (MERS) ...... 124-127 Postemployment Healthcare Fund ...... 128-130 Budgetary Comparison Schedule – General Fund ...... 132-133 Notes to Required Supplementary Information ...... 134 Other Supplementary Information: Description of Nonmajor Funds ...... 137-139 Combining Balance Sheet – Nonmajor Governmental Funds ...... 140-141 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds ...... 142-143 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Major Street & Trunkline Fund ...... 144 Local Street Fund ...... 145 Drug Law Enforcement Fund ...... 146 City of Dearborn, Michigan
Page FI NANCI AL SECTI ON (Continued) Library Fund ...... 147 Community Development Fund ...... 148 Designated Purposes Fund ...... 149 Capital Projects Fund ...... 150 Combining Statement of Net Position – Internal Service Funds ...... 152-153 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds ...... 154-155 Combining Statement of Cash Flows – Internal Service Funds ...... 156-159 Combining Statement of Net Position – Fiduciary Pension & Other Employee Benefits Funds ...... 160-161 Combining Statement of Changes in Fiduciary Net Position – Fiduciary Pension & Other Employee Benefits Funds ...... 162-163 Combining Statement of Net Position – Fiduciary Agency Funds ...... 164 Statement of Changes in Assets and Liabilities – Fiduciary Agency Funds ...... 165
STATI STI CAL AND CONTI NUI NG DI SCLOSURES SECTION Statistical and Continuing Disclosures Section Contents ...... 167 Net Position by Component – Last Ten Fiscal Years ...... 168-169 Changes in Governmental Net Position – Last Ten Fiscal Years ...... 170-171 Changes in Business-type Net Position – Last Ten Fiscal Years ...... 172-173 Fund Balances, Governmental Funds – Last Ten Fiscal Years...... 174-175 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ...... 176-177 Statement of Net Position, Sewer Fund – Last Ten Fiscal Years ...... 178-179 Percentage of Operating Millage Used to Fund Essential Services – Last Seven Years...... 180-181 Revenue Sharing Payments, State of Michigan - Last Ten Fiscal Years ...... 182 History of Sewage System Rates – Last Ten Fiscal Years ...... 183 Taxable Value and Assessed Value of Taxable Property – Last Ten Fiscal Years ..... 184-185 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ...... 186-187 Principal Property Taxpayers – Next Year, Current Year and Nine Years Previous ... 188 Principal Sewage Utility Customers ...... 189 Property Taxes Levied, Collected and Outstanding – Last Ten Fiscal Years ...... 190-191 Per Capita Debt Statistics – Last Ten Fiscal Years ...... 192-193 Ratios of Outstanding Debt – Last Ten Fiscal Years ...... 194-195 Ratios of General Bond Debt Outstanding – Last Ten Fiscal Years ...... 196-197 Computation of Legal Debt Margin – Last Ten Fiscal Years ...... 198-199 Computation of Direct and Overlapping Bonded Debt – General Obligation Bonds .. 200 Sewage Disposal System Limited Tax Revenue Bonds – Revenue Bond Coverage - Last Ten Fiscal Years ...... 201 Water Supply System Limited Tax Revenue Bonds – Last Eight Fiscal Years ...... 202 Demographic and Economic Statistics – Last Ten Fiscal Years ...... 203 Principal Employers – Current Year and Nine Years Previous ...... 204 Full-Time-Equivalent Government Employees – Last Ten Fiscal Years...... 206-207 Capital Asset Statistics – Last Ten Fiscal Years ...... 208-209 Operating Indicators – Last Ten Fiscal Years ...... 210-211
FEDERAL AWARDS SUPPLEMENTAL I NFORMATI ON SECTI ON ...... 1-9 CITY OF DEARBORN Home Town of Henry Ford JAMES J. O’CONNOR Finance Director/Treasurer DEPARTMENT OF FINANCE ACCOUNTING DIVISION JOHN B. O’REILLY, JR. MAYOR
November 15, 2018
Honorable Mayor, John B. O’Reilly Jr., Members of the City Council, and Citizens of the City of Dearborn:
The Comprehensive Annual Financial Report (CAFR) of the City of Dearborn, for the fiscal year ended June 30, 2018, is submitted with this letter. The City's Finance Department prepared this report pursuant to requirements of both the City Charter and Michigan law, and also to comply with continuing disclosure requirements for outstanding bonds.
This letter is designed to complement the Management Discussion & Analysis (MD&A) as required by Generally Accepted Accounting Principles and the Governmental Accounting Standards Board (GASB) Statement No. 34. This letter should be read in conjunction with the complementary MD&A that can be found on pages 4-18 of the CAFR.
MANAGEMENT REPRESENTATI ONS Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City’s management.
We believe that the financial information, as presented: ♦ is accurate in all material aspects ♦ is presented in a manner designed to set forth fairly the financial position and results of operations of the City as measured by the financial activity of its various funds ♦ includes all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs
Management has reviewed and approved the financial statements, supplementary financial information, and related notes prior to their issuance and has accepted responsibility for the adequacy of the financial statements.
ACCOUNTI NG SYSTEM I NTERNAL CONTROL STRUCTURE In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding:
♦ the safeguarding of assets against loss from unauthorized use or disposition ♦ the reliability of financial records for preparing financial statements and maintaining accountability for assets
i Transmittal Letter November 15, 2018
The concept of reasonable assurance recognizes that:
♦ the cost of a control should not exceed the benefits likely to be derived ♦ the evaluation of costs and benefits requires estim ates and judgments by management
All internal control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Internal controls are reviewed on an ongoing basis by staff and consultants with processes and procedures updated.
I NDEPENDENT AUDI T State of Michigan statutes and the City Charter require that an independent audit be made of the City's financial statements. In addition, the City is required to undergo an annual single audit of its federal financial assistance in conformity with the provisions of the Single Audit Act of 1984 and the U. S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Plante & Moran, PLLC, whose reports are included, has performed the independent audit for fiscal year 2018.
FORM OF GOVERNMENT/ CI TY PROFI LE The City of Dearborn is located in southeast Michigan and borders the City of Detroit to the east. The 2010 census reported a population of 98,146, and current estimates indicate the population is growing. The superior public services and facilities, a well-established employment base, proximity to Detroit and other affluent suburbs, Detroit Metropolitan Airport, and transportation systems, make Dearborn a desirable community in southeast Michigan for families and businesses.
The present City of Dearborn was incorporated in 1929 consolidating the former cities of Fordson and Dearborn. The City operates under a strong mayor, weak council form of government. Its most recent charter was adopted November 6, 2007 and was effective January 1, 2008. The City is incorporated under Michigan law as a home rule city.
Elected officials are comprised of the Mayor, City Clerk, and seven Council members who are elected at large. All terms of office are four years. Department Directors and the Chief of Staff are appointed by, and serve at the pleasure of, the Mayor with the exception of the Human Resource (Civil Service) Director, who is appointed by the respective commission. Corporation Counsel is appointed by the Mayor, subject to confirmation by the City Council. The Mayor is responsible for administration of all departments and functions of the City government not under the jurisdiction of any other elected official or the Civil Service Commission. The City Clerk has duties related to keeping the public records. City Council is led by a Council President being the member receiving the highest number of votes in the last general election. The Council is responsible for all legislative matters including adoption of the annual budget.
Mayor John B. O’Reilly, Jr. and the Council of the City of Dearborn are responsive to the community. Challenges are identified, openly communicated, and action is planned and taken. Mayor O’Reilly served as Council President and was a Council member for total service of seventeen years prior to swearing in as Mayor Decem ber 12, 2006. He is very knowledgeable about the internal operations and the community history. The citizens have a clear preference for continuity in leadership that enables Dearborn to build and maintain a premium level of public services.
GENERAL GOVERNMENT The City of Dearborn is a full-service government. The Mayor, the City Clerk and City Council have department designations. Public Safety departments include Police, and Fire and Rescue. ii Transmittal Letter November 15, 2018
Property Maintenance & Development Services perform s the building permit and inspection work of the public safety function in addition to other core duties. The City includes the 19th District Court with the City serving as the funding unit for this State judicial operation. The Department of Public Works manages the infrastructure projects and general repair and maintenance of City property.
Culture and Recreation encompasses a main library and two branch libraries, a Historical Museum and a robust Recreation Department including neighborhood parks, several large community parks, a dual ice surface arena and the Ford Community & Performing Arts Center. The Recreation Department operates the 18-hole Robert Herndon Dearborn Hills Golf Course within the city limits as well as the 27-hole Mystic Creek Golf Course within the 626 acre Camp Dearborn Park that is located in Milford, Michigan.
The City has a separate Economic & Community Development department inclusive of the Housing program. Legal, Finance, Human Resources, Telecommunications, Assessment, and Public Information function as support-type departments. The City of Dearborn is a medium -sized community, but in many respects operates similar to a large community due to the presence of Ford Motor Company and the corresponding business environment.
PROPRI ETARY TYPE OPERATI ONS The City operates the water and sewer utilities. The City relies on and compensates the Great Lakes Water Authority for providing clean water and for sewage treatment. The City is responsible for complying with the federally mandated reduction in sewer overflows to the Rouge River. This mandate has resulted in substantial capital and operating costs to the community for the construction of enhanced sewer infrastructure. Retention facilities and sewer separation have both been employed depending on the service area. The waterways will be cleaner and the secondary benefit to the community is new water and sewer lines, and new roadways in the construction areas.
The 2004 Voted Combined Sewer Overflow (CSO) Debt Authority of $314 million was fully issued with the final debt issuance in December 2017. An additional $60 million of CSO Debt Authority was approved at the August 2018 election with $23 million Unlimited Tax General Obligation (UTGO) bonds issued in September 2018 and the remaining $37 million UTGO bond issue expected in December 2020 to complete the CSO projects.
The Housing operation manages five retirement buildings with two City-owned and three owned by the Housing Commission under the Federal program.
A group of internal service funds are operated for asset or risk management. In addition, the Management Information Systems department and the Public Works-Building Services operations are accounted for in the internal service funds with allocations to the various user departments.
FI DUCI ARY FUND TYPE OPERATI ONS The City operates three pension trust funds, including two for police and fire personnel and a third for general full-time personnel. All three pension systems were closed with the following operation durations: Policemen and Firemen April 1, 1943 to July 1, 1956, Revised Police and Fire July 1, 1956 to July 1, 2005 (Police) and May 1, 2009 (Fire), General Employees July 1, 1951 through January 1 or July 1, 2002 depending on the labor group.
The three pension systems and the Postemployment Healthcare (PEHC) plans approved by the Chapter 22 and 23 Pension Boards and Chapter 21 and PEHC by the City Council reflecting an assumption rate return of 6.00% for Chapter 21 and 7.00% for Chapter 22, Chapter 23, and the Postemployment Healthcare fund. iii Transmittal Letter November 15, 2018
Beginning in April 2009 police and fire new-hires have the option to participate in the Municipal Employees Retirement System (MERS) defined benefit program, which is a state-wide program.
All full-time personnel not covered by one of these pension plans participate in the defined contribution plan.
COMPONENT UNI TS The City currently has six component units included in this section of the report. The East and West Dearborn Downtown Development Authorities (EDDDA and WDDDA) account for monies from tax increment financing districts under each authority's jurisdiction. These resources are being accumulated to pay debt service and to fund future redevelopment of both the East and West Dearborn Business Districts. The Dix-Vernor and Warren Avenue District Improvement Authorities completed their second year of operation this fiscal year.
The Brownfield Redevelopment Authority was created to account for the redevelopment of environmentally contaminated and other under-utilized property sites within the City. The Economic Development Corporation (EDC) of Dearborn was created to encourage economic development primarily through the issuance of tax-exempt financing.
BUDGET CONTROLS The City's budget is prepared in compliance with uniform budgeting provisions of Michigan law for all governmental fund types and in conformity with generally accepted accounting principles (modified accrual basis of accounting). The proposed annual budget is delivered to City Council no later than April 15th and must be adopted no later than June 13th. Budgets are adopted for all governmental and proprietary funds, and for required trust funds. Appropriations are predominantly controlled at the department level (General fund), project level (Capital Improvement fund), or fund level (all other funds), as appropriate. Appropriations lapse at fiscal year-end except for the portion related to grant- or project-life appropriations, and those amounts approved for carry-forward by the City Council.
Development and Progress
Ford Motor Company Dearborn Campus Transformation (DCT) – Ford has a significant presence in Dearborn, with the Ford World Headquarters, Regent Court Marketing Center, and the Research and Engineering complex combining to represent the heart of the corporate operation. The Rouge Complex, also located in Dearborn, is competitive with the most advanced manufacturing plants in the world. Because of its flexible platform design, the Rouge assembly plant produces the next generation of Ford’s most popular vehicle, the aluminum F-150 pickup truck. The company continues to invest in the complex to keep it state-of-the-art.
Ford is also moving forward on a substantial re-imagining of its corporate facilities in Dearborn, which will result in several thousand additional jobs being added and consolidated at these centers of administration, creativity, design and engineering capabilities. Plans were unveiled in 2016 to redevelop dozens of buildings in the next ten years with an estimated investment of $1.2 billion. The development will consolidate operations in two modern, people- and environmentally-friendly, campuses at the World Headquarters and the Research and Engineering Center with a total population of 30,000 Ford employees. The company is redoubling its commitment to become a mobility organization, not just an automaker. In addition to walkways and bikeways, autonomous vehicles and on-demand shuttles are just the beginning of mobility options for the future.
iv Transmittal Letter November 15, 2018
This announcement illustrates a continued commitment to maintaining Dearborn as Ford’s home. The plan includes renovation of 7.5 million square feet of work space, studios, and labs with 4.5 million for research and development. The campuses will be environmentally sustainable with strong commitments to eliminating surface parking and creating significant open space features for beautiful campus experiences. Advanced energy management, geothermal and solar energy systems and a zero-carbon footprint center will highlight the company’s ongoing commitment to match its green philosophy with transportation/mobility needs. The project will have significant overlapping positive impacts on the community as well as property values.
Downtown Development – In addition to the adaptive reuse of the historic City Hall as the Artspace project in the East Downtown District, the West Downtown District has begun to re-emerge as a center for tourism and entertainment. This district was plagued with property ownership issues and failed development proposals associated with the 2008-2010 economic recession. Unfortunately, it took nearly five years for all of the litigation issues to be resolved, but now substantial reinvestment interest has occurred in various properties in this district with various new businesses opened. A new hotel, several restaurants, a micro-brewery, and some retailers are included in the mix. A Holiday Inn Express coupled with Staybridge Suites opened outside the downtown on Michigan Avenue this past year as well. Additional development is being planned in and near this district in anticipation of surrounding investments at Ford DCT and the Dingell Transit Center.
The most substantial downtown investment underway for 2018 is the Wagner Place project by Ford Motor Land Development Corporation (Ford Land). Wagner Place represents a departure for typical Ford Land developments on property held by the Corporation as part of their Dearborn portfolio. The purpose of Wagner Place is to create a downtown environment that will be an attractive recruiting tool for talent needed by Ford going forward. Ford Land acquired a dozen buildings and demolished most of them to make way for Wagner Place. The historic Wagner Hotel is the exception, where this former icon of the West Downtown is being retained as a centerpiece of the new investments to highlight the long and storied history of Dearborn.
Wagner Place includes two new three-story buildings in the middle of the downtown district with 150,000 square feet of retail/office mixed-use space with 50,000 square feet of retail and restaurant uses on the first floor, and an estimated 600 Ford Research and Engineering staff on the upper floors. The City of Dearborn has recently completed construction of a 373-space parking deck to support this project and has approximately 800 spaces within easy walking distance to support this project. The City will also be making significant related investments in related streetscape and infrastructure improvements. This project will be transformational for the district and will catalyze other investments to broaden the options for people to live, work and play in this downtown district. This project represents a combined investment of $85 million by Ford Land, the City and the State of Michigan.
In the East Downtown, REDICO Development is in the process of building the second phase of the Dearborn Town Center project at Michigan and Schaefer on the former Montgomery Ward’s site. The current phase is independent senior housing, which will be an American House product providing 77 new units at a cost of approximately $16 million. This complements the previously completed Phase I project of a 150,000 square foot medical office building at a cost of $30 million. The City of Dearborn constructed a 525-space parking deck to support these projects at a cost of $11 million, which is paid for through a brownfield plan using tax-increment financing (TIF) revenues generated from the medical building. The brownfield plan is backstopped by a Special Assessment District should the TIF revenues ever fall short of the required bond payments.
City Hall and Artspace – The development of the Dearborn Artspace City Hall Lofts project has occurred over a five-year timeframe through a partnership between the City and the East Dearborn v Transmittal Letter November 15, 2018
Downtown Development Authority. Artspace is a Minneapolis, MN based organization that has successfully developed over 35 similar projects nationwide to provide affordable housing for artists as catalytic redevelopment anchors in downtown/emerging districts. In Dearborn, the $17 million investment in the former City Hall campus has resulted in 53 artist lofts and studios plus future galleries, performing arts space and incubator areas for budding artists. Development of the Artspace project in the historic City Hall was also combined with the City being able to take advantage of a cost- efficient relocation opportunity to move to a modern office building located on its civic campus at Michigan Avenue and Greenfield. The City relocated to its new home at the Dearborn Administrative Center (DAC) in the fall of 2014, and Artspace opened in early 2016. Artspace has 100% occupancy of its residential units.
Dearborn Intermodal Passenger Rail Station – A federal grant of $27.3 million has positioned Dearborn to be a regional leader in rail transit for the Detroit Metro area as high speed and commuter services are developed. This station, known as the Dingell Transit Center, is strategically connected to the West Dearborn Downtown District, The Henry Ford Museum of American innovation, and the Rouge Gateway Greenway trail, linking Dearborn destinations to the region for non-motorized travel. The Michigan Department of Transportation (MDOT) acquired the rail corridor between Dearborn and Kalamazoo in December of 2012 and is investing in corridor upgrades for accelerated rail service between Detroit and Chicago. The new Dearborn station became operational in December of 2014, with higher speed service beginning in 2020. The service improvements to the corridor will offer 110 mph service between Detroit and Chicago, bringing the travel time to four hours or less. The Dearborn station will also be an important location on the Ann Arbor to Detroit commuter line (coming in 2021), moving metro Detroiters effortlessly via rail to their multiple destinations throughout the region. Planning for Transit Oriented Development (TOD) around the new station is occurring with the City and critical partners that include Ford Land, The Henry Ford, the West Downtown Development Authority and The University of Michigan-Dearborn. With the recent announcement of Ford Motor Company purchasing the former Michigan Central Train Station in Detroit’s Corktown District, there may also be a great regional rail connectivity option to link this acquisition with talent centers in Dearborn and Ann Arbor.
University of Michigan-Dearborn (UM-D), Student Housing - UM-D partnered with University Campus Communities (UCC) to construct the first phase of modern student housing for its campus on the site of the Fairlane Town Center. This project provided housing for 505 students during the last five school years (opened 2013). The developer, Urb-Cam, completed 99 additional beds in 2015 in the last remaining building on the site that constitutes the completion of the Phase 1 project. Phase 2 of this project, planned for the near-term, can bring this site to an ultimate population of 900 students. This adaptive reuse of a former Ford test facility was completed through a partnership between the City of Dearborn, UM-D, Wayne County and MDOT and has been complemented by the construction of a greenway extension from the Rouge Gateway Greenway to link the new student housing to the UM-D Dearborn campuses, the new Intermodal Station and the West Downtown District. This student housing project is providing multiple economic development benefits to the Dearborn institutional and business community.
Master Plan Update – During 2014, Dearborn completed an update of its master plan vision for 2030 and has a series of important initiatives under way in support of its goals. One of the key activities is to modernize the City’s Zoning Ordinance, which will help shape and encourage future investment consistent with the community vision. Other key vision elements include strengthening Michigan Avenue as Dearborn’s Main Street destination, sustaining diverse and strong neighborhoods, promoting advanced manufacturing, logistics and supply chain development associated with the Detroit Intermodal Freight Terminal (DIFT) and New International Trade Crossing (NITC) projects, and
vi Transmittal Letter November 15, 2018
building a knowledge-based economy for long-term prosperity. The new Master Plan represents a blueprint for moving Dearborn forward as a progressive regional leader in Southeast Michigan.
Multi-Modal Plan – Another important initiative recommended in the Master Plan was the formulation of a citywide Multi-Modal Plan for Dearborn. A consultant has been retained and a steering committee formed for this effort. Many public meetings and discussions have occurred since the beginning of 2018, and the draft plan will begin to take shape by the fall of this year. Multi-modal planning examines a variety of subjects that include non-motorized systems, transit, shuttles, new technologies, autonomous vehicles, and many mobility options for residents of and visitors to the Dearborn community. This plan will result in short and long term improvements that will range from simple solutions like bike lanes painted on roads, to complex transit and technology options that cost millions and interface with regional and statewide systems.
With a coordinated effort by the Mayor and the Comm unity Task Force the City of Dearborn voters renewed in August 2016 supplemental 3.5 operating m illage for five years, to sunset after fiscal year 2022. In the November 2011 election, City of Dearborn voters approved two ballot proposals for a 3.5 operating millage Charter increase and to establish 1.0 mill for the library. The millage proposals are consistent with the 2010 Community Task Force recommendations, which consisted of a diverse set of resident and business community representatives.
The August 2018 residential single family unit home supply (on-market listings) was approximately 266 units. The median sale price was $145,000 in 2018 compared to $134,000 in 2017 increasing by 8.2% over the same time last year. The average number of days on the market remained at 27 days in 2018, the same as previous year. The historical residential new listing range was slightly down from 1,296 in 2017 to 1,254 in 2018 units on the market. The demand equation continues to increase property sale values. Demolition and renovation activity continues to be strong.
For the past several years, the City’s budget has reflected a greater use of reserves than has actually been used as reflected below (in millions).
Adopted Amended Budget Budget Actual
2017-2018 ($4.17) ($11.98) ($8.25) Reserve Use
A series of strategic initiatives and liability-reducing action items totaling $10.0 million in FY2018 included advanced funding for future years’ capital projects. For FY2018, the use of fund balance of $2.0 million in additional supplemental contribution was made to the Postemployment Healthcare fund, $3.5 million to pay off parking debt for FY2018 and FY2019, $2.0 million for Ford Woods Pool replacement and $720 thousand to the City’s retirement defined benefit plan contributions due to changes in the Police Officers Association of Dearborn (POAD) collective bargaining agreement. In addition to the mentioned strategic initiatives, $250 thousand was contributed for the Facility fund’s Campus LED retro-fit.
Advanced funding of $4.5 million in FY2019 and FY2020 are for capital parking lot and alley projects. Much of the above budgeted use of reserves will lapse at year end with limited carry forward for commitments that are not offset by future grant income.
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CI TY OF DEARBORN MI SSI ON STATEMENT PREAMBLE
Dearborn has a reputation for providing outstanding public service. For over 80 years, Dearborn citizens have benefited from a public service philosophy that has placed their well-being ahead of all other priorities. Today, because of this philosophy, providing outstanding public service is no longer a goal; it's a standard. This standard makes Dearborn a unique and special place to live and work.
Dearborn citizens have responded with a deep sense of loyalty and devotion to the City. They possess a fierce pride in its reputation and are confident in the City's ability to prosper in the future.
MISSION Our mission is to deliver superior public service and earn the public’s trust every day in everything we do.
GUIDING PRINCIPLES Dearborn citizens can expect: The City's total commitment to provide the best possible service Respect and courtesy Fair and consistent treatment Cooperation and honesty Open communication and easy accessibility Our constant readiness to help
City employees can expect: Trust, respect, honesty, and fairness The basic resources needed to do a good job Clear and complete direction when necessary A supportive environment that encourages input on what should be done and how it should be done Recognition and reward based on merit
City employees are expected to: Make a total commitment to provide the best possible public service Use all available resources efficiently and effectively Continuously seek ways to improve service delivery through innovation Continuously seek feedback from citizens Be responsible and accountable for their actions Ask for training when necessary Challenge the status quo if they believe that service delivery can be improved Value, support, and respect co-workers as teammates
The City administration will: Foster cooperation and teamwork between employees and citizens Evaluate every action based on its value to our citizens Work with other public agencies to obtain the most benefits for our citizens Attract citizens dedicated to Dearborn and its future Continually strive to improve our efficiency and effectiveness
ix x DEARBORN’S ORGANIZATIONAL CHART
DEARBORN VOTERS ELECT
Legislative Branch: Executive Branch: Judicial Branch: CITY CITY COUNCIL (7) MAYOR 19TH DISTRICT COURT CLERK JUDGES (3)
MAYOR APPOINTS
CIVIL SERVICE COMMISSION BOARDS AND Appoints 2 of 5 Commissioners COMMISSIONS
HISTORICAL LIBRARIES HUMAN COMMISSION RESOURCES
MAYOR'S CHIEF OF STAFF
DEPARTMENT DIRECTORS
ASSESSMENT LAW
CITY PLAN
FINANCE HOUSING
ACCOUNTING / BUDGETING PURCHASING
TREASURY
ECONOMIC AND MANAGEMENT INFORMATION SYSTEM COMMUNITY DEVELOPMENT (M.I.S.)
PROPERTY MAINTENANCE & DEVELOPMENT SERVICES POLICE
RECREATION FIRE
PUBLIC INFORMATION
PUBLIC WORKS
ADMINISTRATION SANITATION
BUILDING SVCS AND MAINTENANCE POWERHOUSE
HIGHWAYS PARKS
WATER ENGINEERING
SEWERAGE MOTOR TRANSPORT
xi CITY OF DEARBORN, MI CHI GAN
List of Principal Officials
June 30, 2018
TITLE NAME Mayor John B. O’Reilly, Jr. City Clerk George Darany
City Council President Susan A. Dabaja Council President Pro Tem Michael T. Sareini Council Members David Bazzy Robert A. Abraham Erin Byrnes Leslie Herrick Brian O’Donnell
City Assessor Gary Evanko City Engineer M. Yunus Patel City Librarian Maryanne Bartles Corporation Counsel Debra A. Walling Economic & Community Development Director Barry Murray Mayor’s Chief of Staff Mark G. Guido Finance Director/Treasurer James J. O’Connor Human Resources Administrator Cynthia Pepper Management Information Systems Director Doug Feldkamp Purchasing Manager Mark Brace Fire Chief Joseph Murray Deputy Director of Economic Development (Housing) Letetia Kemp-Jarrett Police Chief Ronald Haddad Public Works Director James Murray Public Information Director Mary Laundroche Recreation Director Greg Orner Property Maintenance & Development Services Director Nicholas Siroskey
xii Independent Auditor's Report
To the Honorable Mayor and Members of the City Council City of Dearborn, Michigan
Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dearborn, Michigan (the "City") as of and for the year ended June 30, 2018 and the related notes to the financial statements, which collectively comprise the City of Dearborn, Michigan's basic financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dearborn, Michigan as of June 30, 2018 and the respective changes in its financial position and, where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
1 To the Honorable Mayor and Members of the City Council City of Dearborn, Michigan
Emphasis of Matter As discussed in Note 17 to the basic financial statements, during the year ended June 30, 2018, the City adopted the provisions of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, which established accounting and financial reporting requirements for employers providing OPEB benefits to their employees. As a result of implementing this pronouncement, the City's net OPEB liability has been recognized on the government-wide and proprietary statements, and, as discussed in Note 17, the beginning of year net position has been restated. Our opinion is not modified in respect to this matter. Other Matters Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplemental information, as identified in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplemental information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplemental Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Dearborn, Michigan's basic financial statements. The other supplemental information, as identified in the table of contents, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, and introductory and statistical sections are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The other supplemental information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplemental information and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
2 To the Honorable Mayor and Members of the City Council City of Dearborn, Michigan
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2018 on our consideration of the City of Dearborn, Michigan's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Dearborn, Michigan's internal control over financial reporting and compliance.
November 15, 2018
3 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
This section of the City of Dearborn’s annual financial report represents our discussion and analysis of the City’s financial performance during the fiscal year that ended June 30, 2018. It should be reviewed in conjunction with the preceding transmittal letter and the City’s financial statements, which follow this section.
Using this Annual Report This annual report consists of a series of financial statements. The Statement of Net Position (on page 19) and the Statement of Activities (on pages 20 and 21) provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Fund financial statements start on page 22. These statements tell how services were financed in the short term as well as what remains for future spending for governmental activities. Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information about the City’s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government.
Reporting the City as a Whole
The Statement of Net Position and the Statement of Activities Our analysis of the City as a whole begins on page 19. One of the most important questions asked about the City’s finances is: “Is the City as a whole better or worse off as a result of the year’s activities”? The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting method used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.
These two statements report the City’s net position and changes in it. You can think of the City’s net position – the difference between assets and liabilities – as one way to measure the City’s financial health or financial position. Over time, increases or decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. You will need to consider other non-financial factors, such as changes in the City’s property tax base and the conditions of the City’s roads, to assess the overall health of the City.
In the Statement of Net Position and the Statement of Activities, we divide the City into three kinds of activities:
Governmental activities – Most of the City’s basic services are reported here including police, fire, public works, recreation and the general administration. Property taxes, franchise fees, and state-shared revenues finance most of these activities.
Business-type activities – For these activities, the City charges a fee to customers to help cover all or most of the cost of certain services it provides. The City’s water and sewer systems, and housing activities are reported here.
Component units – The City includes six separate legal entities in its report – the East and West Dearborn Downtown Development Authorities, Dix-Vernor and Warren Business District Improvement Authorities, the Brownfield Development Authority and the Economic Development
4 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Corporation. Although legally separate, these “com ponent units” are important because the City is financially accountable for them.
Reporting the City’s Most Significant Funds
Fund Financial Statements Our analysis of the City’s major funds begins on page 22 and provides detailed information about the most significant funds; not the City as a whole. The City’s two types of funds, governmental and proprietary, use different accounting approaches.
Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using the modified accrual accounting method which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. We describe the relationship (or differences) between governmental activities (reported in the Government-wide Statement of Net Position and the Government-wide Statement of Activities) and governmental funds in a reconciliation following the fund financial statements.
Proprietary funds – When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Government-wide Statement of Net Position and the Government-wide Statement of Activities. In fact, the City’s enterprise funds (a component of proprietary funds) are the same as the business-type activities reported in the government-wide statements with more detail and additional information, such as cash flows, for proprietary funds. Internal service funds (the other component of proprietary funds) are used to report activities that provide supplies and services to the City’s other programs and activities. The activity of the internal service funds is eliminated in the government-wide statements to avoid any “doubling up” in reporting revenues and expenses.
The City as Trustee
Reporting the City’s Fiduciary Responsibilities The City is the trustee, or fiduciary, for its employees’ pension plans. It is also responsible for other assets that, because of a trust agreement, can be used only for the trust beneficiaries. All of the City’s fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position on pages 34 and 35. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.
5 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
The City as a Whole The following table reflects the condensed Statement of Net Position compared to prior year:
Table 1 Net Position (in Millions)
Governmental Business- type Total Activities Activities Primary Government FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 Current and other assets $ 145.2 $ 135.4 $ 108.9 $ 91.1 $ 254.1 $ 226.5 Capital assets 214.8 202.3 395.7 420.2 610.5 622.5 Total assets 360.0 337.7 504.6 511.3 864.6 849.0
Deferred outflows of resources 22.7 30.3 1.2 1.9 23.9 32.2
Long- term liabilities 321.6 184.7 229.5 187.4 551.1 372.1 Other liabilities 13.4 10.5 24.6 22.9 38.0 33.4 Total liabilities 335.0 195.2 254.1 210.3 589.1 405.5
Deferred inflows of resources 1.7 0.5 0.2 - 1.9 0.5
Net position: Net investment in capital assets 208.5 198.3 224.1 233.2 432.6 431.5 Restricted 17.4 16.0 11.0 19.1 28.4 35.1 Unrestriced (deficit) (179.9) (42.0) 16.4 50.6 (163.5) 8.6 Total net position $ 46.0 $ 172.3 $ 251.5 $ 302.9 $ 297.5 $ 475.2
Net position serves as an indicator of the City’s financial position. The table above indicates that the City of Dearborn assets and deferred outflows of resources exceeds liabilities and deferred inflows of resources by $297.5 million as of June 30, 2018 for the Total Primary Government. The largest category of net position is represented by the net investment in capital assets. It is important to note that these assets are not available for future spending and, although they are shown here net of related debt, other resources will be needed to make the debt payments in the future. The restricted category of net position is defined as those resources that have external restrictions that dictate how the assets are to be used. The final category of net position is unrestricted and these are the assets that are available for use in the City’s ongoing operations.
Table 1 Comments: Total Primary Government net position decreased 37.39% or $177.7 million from $475.2 million to $297.5 million. The most significant changes in the Primary Governm ent are the increase in Long-term liabilities and Net position-Unrestricted (deficit) which is explained under the Governmental and Business- Type sections that follow. It is important to note the implementation of Governmental Standards Board (GASB) 75, Accounting & Reporting for Post-Employment Benefits Other Than Pensions, is applicable for fiscal year (FY) 2018 and is the significant driver of the Net Position change.
6 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Governmental activities - Total assets increased by 6.60% or $22.3 million from $337.7 million to $360.0 million. Total assets are reflective of both current and non-current assets. During fiscal year 2018 current assets decreased $2.1 million and non-current assets increased $24.5 million. The decrease in current assets resulted from a decrease of $5.8 million in cash and cash equivalents and increases related to receivables due from other governments of $2.8 million and short term investments of $1.4 million. The increase in non-current assets of $24.5 million is primarily due to an increase of $10.9 million of restricted cash from issuance of bonds, increase of $1.6 million in long-term investments and the increase of $12.5 million in capital assets. Total liabilities increased by 71.62% or by $139.8 million from $195.2 million to $335.0 million. During fiscal year 2018 liabilities increased $3.0 million related to the issued governmental bonds for the construction of the Dunworth swimming pool dive well conversion and bath house replacement. The increase in non-current liabilities of $136.9 million is primarily due to the first time reporting of Governmental Accounting Standards Board 75 reflecting the post-employment heath care unfunded accrued liability (UAL) of $115.8 million, an increase in pension liability of $9.7 million, and an increase of $11.8 million in long-term debt. The City issued debt for $2.3 million to build a new aquatic facility at Ford Woods Park and $8.5 million to redevelop infrastructure related to the Wagner Place Ford Motor Company downtown development project. The total net position of governmental activities decreased $126.3 million from $172.3 million to $46.0 million. This is reflective of the change in unrestricted (deficit) of $137.9 million primarily due to the reporting of post-employment and pension liabilities.
Table 1 Comments:
Business-type activities – Activity in the business-type activities decreased net position by $51.4 million for fiscal year 2018. The most significant changes in business-type activities was driven by a loss on abandoned capital assets of $36.3 million associated with the federally mandated clean water Combined Sewer Overflow (CSO) project. Additionally, long-term debt increased a net $13.0 million due to bond issuance for the CSO project. The deferred outflows and inflows of resources changes are related to pensions and other post-employment benefits.
Tables 3 and 4 provide more information on capital assets and long-term liabilities. Restricted net position is primarily resources associated with the CSO project.
7 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
The following table reflects the condensed Statement of Activities:
Table 2 Changes in Net Position (in Millions)
Governmental Business-type Total Activities Activities Primary Government FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 Revenues Program revenues: Charges for services $ 26.0 $ 25.7 $ 54.4 $ 53.6 $ 80.4 $ 79.3 Operating grants 13.6 12.7 - - 13.6 12.7 Capital grants 6.3 4.9 - 0.1 6.3 5.0 General revenues: Taxes 73.7 73.2 18.3 17.5 92.0 90.7 Intergovernmental revenue 25.1 23.1 - - 25.1 23.1 Other general revenues 1.1 0.6 1.2 2.7 2.3 3.3 Total revenues 145.8 140.2 73.9 73.9 219.7 214.1
Program expenses General government 16.6 23.5 - - 16.6 23.5 Public safety 87.3 70.8 - - 87.3 70.8 Public works 27.5 24.6 - - 27.5 24.6 Recreation & culture 24.4 22.7 - - 24.4 22.7 Community improvement 1.7 1.7 - - 1.7 1.7 Housing - - 2.8 3.1 2.8 3.1 Sewer - - 33.3 36.5 33.3 36.5 Water - - 16.7 20.5 16.7 20.5 Total expenses 157.5 143.3 52.8 60.1 210.3 203.4
Excess (deficiency) before transfers (11.7) (3.1) 21.1 13.8 9.4 10.7
Special items - - (36.3) - (36.3) -
Transfers 0.1 - (0.1) - - -
I ncrease (decrease) in net position (11.6) (3.1) (15.3) 13.8 (26.9) 10.7
Net position - beginning (1) 57.6 175.4 266.8 289.1 324.4 464.5
Net position - ending $ 46.0 $ 172.3 $ 251.5 $ 302.9 $ 297.5 $ 475.2
(1) Net position - beginning of year has been restated in order to adopt GASB 75 (See Note 17).
Table 2 Comments:
Governmental activities - Total revenues increased in combination $5.6 million. Revenue increases were due to $2.0 million in intergovernmental revenues as a result of state legislature reflecting the annual change in personal property taxes, an increase of $2.3 million in operating and capital grant funds, and a net increase of $1.3 million in charges for services, property taxes, and other general revenues.
8 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Program expenses were up $14.2 million from the previous year. The overall increase was primarily due to a $16.5 million increase in Public Safety reflecting $14.6 million related to negotiated contract increases in wages and pension costs, along with $1.9 million in other postemployment benefits. Other increases in expenditures were $2.9 million in Public Works related to the net change in capital assets and for the maintenance of roads and parks. Also, $1.7 million increase in Recreation and culture related to an increase in capital assets and pension and other defined benefits. General government expenditures were down $6.9 million overall related to capital projects funding which was categorized as an operating expense in FY2017 and was categorized as a non-operating transfer in FY2018.
Table 2 Comments:
Business-type activities –The most significant change in business-type activities is the $36.3 million special item representing the expensing of the capital balance for the CSO caisson at site C2. This caisson will not be completed, and will be replaced with a Screening and Disinfection Facility (SDF). The SDF will cost less to build than repairing the caisson. The Michigan Department of Environmental Quality (MDEQ) approved the design of the SDF alternative in 2018.
Program expenses decreased $6.9 million for 2018. The decrease in expenses was driven by $300 thousand reduction in personnel services in the Seniors Apartment Operating fund, settlement reserves in the Sewer and Water funds reduced expenses by $3.0 million, and implementation of GASB 75 resulted in a combined decrease of expenses totaling $3.6 million in the Sewer and Water funds.
General Fund Budgetary Highlights
Over the course of the year, the Mayor and City Council revised the City budget. The budget is automatically amended with the carry-forward of project-life budgets and for encumbrances rolling to the following fiscal year. The budget is also amended by resolution for specific requests, generally for items that were intended to be completed or expended in the previous fiscal year but for some extenuating circumstance were postponed. During the fiscal year, the budget is amended for unanticipated events that could not be foreseen and for opportunities that arose and weren’t known previously.
The City’s financial position is sound and the budget provides the resources necessary for delivering the high quality program and service mix, meeting current obligations, and includes reasonable funding for maintaining assets.
9 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Capital Assets and Debt Administration
Capital Assets At the end of fiscal year 2018, the City had $610.4 million invested in a broad range of capital assets, including vehicles, Police and Fire equipment, buildings, park facilities, roads, bridges and water and sewer lines. (See Table 3 below). Offsetting the year’s increases was the write off of the impaired CSO Caisson asset reflected in the decrease in construction in progress and overall reduction.
Table 3 Capital Assets at Year-end (Net of Depreciation)
Governmental Business- type Total Activities Activities Primary Government FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 Land $ 12,290,049 $ 12,395,051 $ 1,768,541 $ 1,768,541 $ 14,058,590 $ 14,163,592 Right-of-ways 37,818 37,818 - - 37,818 37,818 Construction in progress 9,022,726 1,796,778 30,463,098 54,290,653 39,485,824 56,087,431 Infrastructure assets 76,917,320 70,750,560 - - 76,917,320 70,750,560 Buildings & improvements 97,611,307 99,124,805 14,540,153 14,730,398 112,151,460 113,855,203 Machinery & equipment 18,848,285 18,198,554 24,765,484 27,396,752 43,613,769 45,595,306 Water system - - 86,636,890 84,209,977 86,636,890 84,209,977 Sewer system - - 237,493,962 237,835,083 237,493,962 237,835,083 $ 214,727,505 $ 202,303,566 $ 395,668,128 $ 420,231,404 $ 610,395,633 $ 622,534,970
10 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Table 3 Comments:
This year’s major changes included:
Governmental Activities:
Construction in Progress: Wagner Infrastructure $ 5,476,857 Sutphen Corp Custom Pumper 442,897 Ford Field Comfort Station Renovation 375,716 Powerhouse HVAC Upgrade 370,190 Ford Woods Pool Replacement 350,957 $ 7,016,617
Infrastructure assets, net change due to cost less depreciation $ 6,166,761
Buildings and improvements, net change due to complete projects and transfers less depreciation $ (1,513,498)
Machinery and equipment, net change due to acquisit ions, disposals less depreciation Vehicles net $ 929,507 Other machinery and equipment net (279,776) $ 649,731
Business-type activities:
Construction in progress: Water system $ 1,949,130 Sewer system (25,776,685) $ (23,827,555)
Buildings and improvements, net change due to complete projects and transfers less depreciation $ (190,245)
Machinery and equipment, net change due to acquisit ions, transfers, and disposals less depreciation $ (2,631,268)
Water system, net change due to completed projects less disposals and depreciation $ 2,426,913
Sewer system, net change due to completed projects less disposals and depreciation $ (341,120)
Additional information on the City of Dearborn’s capital assets can be found in Note 3 on pages 58-59 of this report.
11 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Debt
At June 30, 2018 the City had approximately $230 million in bonds and notes outstanding versus $202 million in the prior fiscal year, an increase of 14% - as shown in Table 4.
Table 4 Outstanding Debt, at Year-end
Governmental Business- type Total Activities Activities Primary Government FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 General obligation bonds (backed by City) $ 29,358,291 $ 14,799,978 $ 198,706,783 $ 184,537,216 $ 228,065,074 $ 199,337,194
Revenue bonds and notes (backed by specific tax and fee revenue) - - 2,203,812 2,593,812 2,203,812 2,593,812 Total $ 29,358,291 $ 14,799,978 $ 200,910,595 $ 187,131,028 $ 230,268,886 $ 201,931,006
Table 4 Comments:
Governmental activities – The 2014 Parking General Obligation Limited Tax Refunding Bonds (taxable) was mostly paid off in fiscal year 2018 with minimal balance to be paid in fiscal year 2019. Two General Obligation Limited Tax Open Market Bonds were issued in fiscal year 2018; one issued December, 2017 for $3.5 million for the construction of the Dunworth pool dive well and bath house, and one issued May, 2018 for $14.5 million for the construction of the Powerhouse improvements.
Business-type activities – The 2004 voter approved CSO debt millage currently is generating and paying the outstanding debt principal. An Unlimited Tax General Obligation Open Market Bond was issued in December, 2017 for $26.7 million for the continued CSO project work. This issuance completed the debt authority allowed by the 2004 Voted CSO millage. An additional $60 million of debt authority was voted in August, 2018, with $23 million issued in September, 2018.
Additional information on the City of Dearborn’s long-term debt can be found in Note 4 on pages 60–67 of this report.
Fiscal Year 2019 Budgets & Rates
The fiscal year 2019 General Fund budget for revenue is estimated at $129,180,966 with appropriations of $129,180,966 producing a balanced budgeted use of no fund balance. The primary revenue of the General Fund is property taxes. Property tax revenue is comprised of two components. The first component is property values, which are market driven and the second component is the tax rate, which is controllable within limits of law. Property market values
12 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
continue to increase. However, Proposal A of 1994 limits the taxable value growth to the current State inflation rate of 2.1%.
The State Legislature passed revisions to the business personal property tax law which phases out personal property taxation and replaces it with a state essential services assessment. The State of Michigan is distributing monies under the local community stabilization reimbursement program budgeted in FY2019 at $22.7 million.
In August of 2004, the voters approved a debt millage to cover the debt service associated with the issuance of debt for the federally-mandated remediation of sewer system overflows (referred to as CSO) to the Rouge River. This millage remains at 4.25 mills and with the City Council’s support of a ballot proposal before the voters in August of 2018.
In conjunction with the rapid national decline in property values, in November 2011 the voters approved a five-year, 3.50 mill supplemental operating millage and a 10-year library millage. In August 2016 the voters renewed the 3.50 mill supplemental operating millage. Both millage rates will expire following the fiscal year ending June 30, 2022. The operating millage continues at 18.5 mills including the 3.50 mill supplemental com ponent and the Library millage reflects a reduction of 0.09 mills reducing it to 1.69 mills. The garbage and rubbish millage rem ains at 1.91 mills. The total millage of 26.35 mills, inclusive of the CSO debt service millage, is 0.09 mills less than the prior year of 26.44 mills. In August 2018, voters approved a supplemental bond authority millage for the completion of the CSO-related projects supports up to $60 million in bonds to be issued in series over the next two budget years. The new millage for FY2019 will be 0.22 mills.
Rates and fees continue to be adjusted with income reflective of the economy and economic activity.
The public safety operations have the largest subsidy or tax support at $63.5 million exceeding the City’s operating 18.5 mills of property tax revenue of $61.4 million. Public works is second with $13.0 million in subsidy. Community services are third at $6.4 million in subsidy. The Recreation department is fourth with $5.8 million in subsidy which generates a fair amount of direct revenue that reduces the subsidy. These are the four primary service delivery functions with support services budgeted at a $7.0 million subsidy.
The primary expense of the General Fund is personnel and this cost is driven by staff counts and the corresponding labor agreement provisions. Dearborn is the only community in the State that has Charter-mandated Police staffing and is one of a few communities that has Charter-mandated Fire staffing. The budget reflects six additional firefighters for a total of 146 supported in part by a Federal grant. The fiscal year 2019 budget includes 192 sworn police officers.
There are 146 firefighters, 192 police officers and support staff of 40 positions totaling 378 positions for the two departments of the total full-time staffing count of 762. The fiscal year 2001 city-wide budget included 911 full-time positions that was reduced to a low point of 677 positions for fiscal year 2014, and 85 positions have been added since. Since 2001, Police have decreased their positions by 15 and Fire has increased their positions by 22. Non-public safety staff declined 28%, or 156 positions, from 540 in 2001 to 384 as of the date of this memo.
A total of 13 full-time positions were added in the General Fund for the 2018-2019 budget years with 7 full-time positions added as amendments to the 2017-2018 budget which are reflected in
13 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018 the previously noted staffing counts. The 2017-2018 amended budget reflects one addition of an Executive Assistant in the Council office, and six new fire fighter positions with a federal funding source from the SAFER Grant for advance hire and planned retirement replacements.
The 2018-2019 budget year new positions reflect two additional police officers with a funding source from the Henry Ford Museum agreement (as authorized by Council Resolution 1-46-18) financing source, one Nineteenth District Court Assistant Deputy Clerk, one advance hire in the Department of Public Works Motor Transport division for planned retirements, one full time Recreation Theater employee and one inspector in the Economic Community and Development department with a federal funding source provide by the Home Grant.
Most of the City’s negotiated labor contracts expire June 30, 2021 except the firefighter contract which expired June 30, 2018 and negotiations are in progress. The police officers and Lieutenant/Sergeant contracts provide for a compensation and healthcare re-opener for FY2019 with the Non-supervisory Police contract expiring on June 30, 2020.
Other than the Medicare Advantage fully-insured programs, the active and retiree health care programs are self-insured supported by stop-loss coverage for individuals and in aggregate. Controlling health care costs is a challenge as approximately $20 million per year is expended for health care and a 10% increase produces $2 million in additional costs. A two-year consecutive 10% increase consumes more than an entire tax mill ($3.2 million) in a very short time horizon.
The active employee cost-share is 20% of the adjusted illustrative monthly rate. In fiscal year 2018, the City’s self-insurance fund experienced a decrease in budgeted expenses of approximately $1.8 million. In fiscal year 2019 premium contributions are reduced approximately $1.4 million.
The traditional defined benefit and City provided retiree health care programs have been closed for many years. Employees hired after these closures participate in defined contribution retirement programs. However, the police officer and firefighter groups’ new hires can select a defined benefit program administered by the Municipal Employees Retirement System (MERS) statewide program.
Legacy costs associated with retirement programs are also a challenge. The closing of the systems accelerates funding requirements. There are currently more retirees than active employees and this situation will continue for the immediate future. The funding levels for the General Employees and Police/Fire Retirement System s are 74% or higher and the combined unfunded actuarial accrued liability is $108 million. Postemployment health care is only 28% funded leaving an actuarial accrued liability of $162 million; therefore, the total legacy unfunded liability is $270 million.
The State Legislature has passed legislation that allows communities to issue debt (bonds) for these legacy costs to spread the costs over time. The current law authorizing the issuance of this debt requires an AA bond rating to issue bonds for this debt. The low interest rate environment is still attractive and the recent bond rating enhancement now provides the opportunity for the City to evaluate the option to bond and convert the liability. City Council has authorized a fiscal year 2019 general obligation limited tax pension bond issuance of up to $20 million for the City’s Chapter 22 General Employees’ Retirement System currently in progress and presented to the State of Michigan Department of Treasury for approval.
14 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
A majority of the outstanding debt is CSO-related with debt service paid by the voted debt millage. Additional open market bonds will be issued to complete the sewer separation and water main replacement program. There are currently SRF and DWRF loans outstanding supported by sewer and water rates that total $2.2 million. Other outstanding debt includes $3.5 million December, 2017 issued bonds for Dunworth Pool and $14.5 million May, 2018 issued bonds for Powerhouse HVAC upgrades.
The General fund equity (fund balance) as of June 30, 2018 was $21.6 million. The fiscal year 2019 adopted budget did not include any use of fund balance, but amendments indicate a $1 million use of fund balance. The greatest challenges to fund balance stability are inflationary costs exceeding property taxable value growth as restricted by proposal A of 1994 and the Headlee Amendment, the State funding of shared revenue, and the legacy liabilities funding.
BUDGETARY ASSUMPTI ONS:
The taxable value increase for fiscal year 2019 is 3.33% due to increased property values with residential real property values increasing 3.68% limited by the 2.1% State inflation rate for capped properties.
Tax Rates and Water/Sewer Rates
Fiscal Year Fiscal Year Description 2017-2018 2018-2019 Difference Tax Millage Rate: City Operating 18.50 18.50 - Garbage & Rubbish 1.91 1.91 - Library 1.78 1.69 (0.09) Debt Service 4.25 4.25 - Total Millage Rate 26.44 26.35 (0.09)
Water Rate $ 23.80 $ 21.50 $ (2.30) Sewer Rate $ 38.20 $ 32.10 $ (6.10)
Debt Service fiscal year 2018-2019 reflects August 2018 voter-approved CSO increase of 0.22 mills
The water and sewer bills include two rates: commodity and capacity. The commodity rate is based on water usage. The capacity rate is based on meter size. The shift in the rates for fiscal year 2019 represents a change in the rate methodology to align more closely with the largely fixed water and sewer syst em operation costs. The new methodology assigns 40% of rate revenue to the fixed capacity charge and 60% of rate revenue to the variable commodity charge.
The estimated average Dearborn customer water and sewer bill is expected to increase 3%, but this will vary based on actual consumption. The City receives water and sewer services from the Great Lakes Water Authority (GLWA). For fiscal year 2019, the GLWA water rates have increased while the GLWA sewer rat es have slightly decreased.
15 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Funding for fleet replacement is $3,218,075 and facility reinvestment is $4,036,364 for capital repair and maintenance projects. The major facility projects include the Camp Dearborn Canteen Comfort Station replacement, reroofing the Highways equipment shelter, the Fire stations’ tone alert system upgrade, the Police cameras / DVR storage upgrade, and the infrastructure reinvestments. The ongoing facility reserve funding is based on 5% of the projected funding need. The fleet funding is intended to accumulate sufficient resources to replace components of the fleet as planned, but not replace the entire fleet at once. The facility funding is structured to accumulate resources for major capital component repair or replacement. The annual funding for facility replacement has been pared back as a result of competing demands for the available resources.
The technology replacement funding for computers and printers is budgeted at $250,000 for FY2018-2019.
MAJOR CAPI TAL I NI TI ATI VES
The 2018-2019 funding of the Capital Improvement Plan is $89,495,390. The City is reinvesting in infrastructure and public assets. A classification breakdown follows with some notable projects specifically identified. The projects are supported by various funding sources including the General fund via the General Capital Improvement fund, the Facilities fund, Community Development Block Grant fund, Major Street & Trunkline fund, Local Street fund, Water and Sewer funds, federal aid for street projects, grants and the Wayne County Parks Millage allocation.
Property - $100,000 ♦ Land Acquisition for Resale $ 100,000
Infrastructure - $85,274,718 ♦ Streets $15,623,392 ♦ Sewer $60,560,250 ♦ Water $ 7,372,155 ♦ Sidewalks, Alleys, Streetscape $ 1,718,921
Facilities - $4,120,672 ♦ Camp Dearborn $ 1,407,500 ♦ Public Safety $ 516,500 ♦ Recreation Facilities $ 685,402 ♦ Libraries $ 276,000 ♦ Public Works Facilities $ 433,855 ♦ Dearborn Administrative Center $ 208,750 ♦ Other $ 592,665
The General Capital Improvement Fund is primarily financed by contributions from other funds. The Capital Improvement Plan is included in this document and presents both projects in progress and scheduled projects.
16 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
Other Governmental Fund Types
This section addresses other fund types and is not intended to be a detailed review of all funds. The Major Street & Trunkline and Local Street funds rely on State Gas & Weight Tax revenue. The FY2019 estimated Gas & Weight Tax revenue budget for both funds combined decreased $400 thousand from FY2018. The demands for street projects are exceeding the resources available and the need for local funding for roads is anticipated to increase in the coming years.
The grant revenue from the Community Development Block Grant is estimated to be $2,050,000 million which provides federal resources to support the low to moderate income population.
The General Capital Improvement fund is primarily financed by contributions from other funds. The Capital Improvement Plan is included in this document and presents both projects in progress and scheduled projects.
PROPRI ETARY FUND TYPES
Housing
The Seniors Apartment Operating fund working capital and equity of the fund are both financially healthy.
Utility Funds
Water rates and sewer rates are set by ordinance and the budget revenue estimates are based on the assumptions listed in the table earlier in this memo. The revenues support operations, maintenance, and system asset replacement. The City Engineer has established a target infrastructure investment amount for each system and efforts are made to fund the capital projects at this level.
A ballot proposal was approved in August, 2004 authorizing the City to issue debt in an amount not to exceed $314.12 million to fund the federally-mandated CSO project. Open-market bonds for phase one were issued in the amount of $24.5 million and additional open market bonds were issued in May, 2017 for $10.7 million and December, 2017 for $26.7 million. State Revolving Fund loans have been accessed for the other financing of $252.2 million. The tax millage rate for fiscal year 2018-2019 is 4.25 mills for debt service to pay the principal and interest payments on these bonds.
The sewer separation projects are scheduled through 2022. The final phase of the project requires additional financing. A ballot proposal was approved in August, 2018 authorizing the City to issue debt in an amount not to exceed $60 million to fund this final phase of the CSO project. The first issuance of bonds related to this additional debt authority was completed in September, 2018 for $23 million. The tax millage rate for fiscal year 2018-2019 is 0.22 mills for the debt service to pay the first year’s interest payments on these bonds.
17 City of Dearborn, Michigan Management’s Discussion & Analysis June 30, 2018
I nsurance & Fiduciary Funds
These funds are adequately funded in relation to their purpose and there has been some intentional spend-down or return of excess reserves.
The City has been funding for postemployment health care for almost 30 years. Annual contribution rates are set to more than pay-as-you-go and the unfunded accrued liability is budgeted as lump-sum amounts charged to each department based on historical staffing levels. The City budgets approximately $13.7 million each year as a contribution to the fund. An additional $2,000,000 was added to the funding level for PEHC as a contribution from the General Fund in both fiscal year 2017 and 2018 in an effort to reach the actuarial determined annual funding level.
COMPONENT UNI TS
The Dix-Vernor Business District Improvement Authority (DBDIA) generates funding from tax increment capture. The General fund is providing funding for minimal programming as it will take time for tax capture income to grow.
The West Dearborn Downtown Development Authority (WDDDA) generates funding from tax increment capture. The General fund is providing the lease revenue generated from the businesses participating in the West Village Commons’ outdoor seating space to be used for the Kids Days on the Commons events. In FY2018 the General fund provided funding for the parking debt that eliminated the debt service fee contributions from the WDDDA in FY2019.
Contacting the City’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Department of Finance at the City of Dearborn, 16901 Michigan Avenue, Suite 1, Dearborn, MI 48126.
18 City of Dearborn, Michigan Government-wide Statement of Net Position Year Ended June 30, 2018
Primary Government Component Governmental Business- type Unit s Activities Activities Total (See page 37) Assets Current assets: Cash and cash equivalents (Note 2) $ 57,429,128 $ 42,506,114 $ 99,935,242 $ 3,883,273 Investments 33,781,450 17,614,725 51,396,175 750,078 Accounts receivable (Net) 2,929,174 10,017,448 12,946,622 8,084 Unbilled accounts receivable - 3,826,198 3,826,198 - Property taxes receivable 62,857 15,407 78,264 - Accrued interest receivable 162,685 109,221 271,906 8,985 Due from component units 52,803 - 52,803 - Due from other governments 7,809,078 2,247,113 10,056,191 95,280 Prepaid it ems 289,378 25,418 314,796 - Inventories 356,932 748,391 1,105,323 - Land held for resale 3,778,735 - 3,778,735 - Total current assets 106,652,220 77,110,035 183,762,255 4,745,700 Noncurrent assets: Notes receivable, long-term - - - 177,035 Restricted cash 23,136,770 31,786,992 54,923,762 740,052 Net pension assets 15,503,750 - 15,503,750 - Capital assets, not being depreciated (Note 3) 21,350,593 32,231,639 53,582,232 - Capital assets, net of depreciation (Note 3) 193,376,912 363,436,489 556,813,401 - Total noncurrent assets 253,368,025 427,455,120 680,823,145 917,087 Total assets 360,020,245 504,565,155 864,585,400 5,662,787
Deferred Outflows of Resources: Pensions 22,719,263 1,229,914 23,949,177 - OPEB - - - -
Liabilities Current liabilities: Accounts payable 4,987,618 9,257,979 14,245,597 737,007 Accrued interest payable 143,433 1,104,222 1,247,655 - Accrued liabilities 1,598,286 267,166 1,865,452 127,909 Deposits/refunds payable 1,024,184 305,405 1,329,589 - Due for tax refunds 534,265 - 534,265 - Due to fiduciary funds 2,025 475 2,500 - Due to other governments 8,421 34,184 42,605 - Due to primary government - - - 52,803 Unearned revenue 1,653,847 1,325 1,655,172 - Current portion of long-term debt (Note 4) 3,477,731 13,633,015 17,110,746 321,483 Total current liabilities 13,429,810 24,603,771 38,033,581 1,239,202 Noncurrent liabilities: Current portion of long term debt payable with restricted assets (Note 4) - 101,250 101,250 - Accrued interest payable with restricted assets - 13,773 13,773 - Claims payable 4,494,156 - 4,494,156 - Other liabilities - - - 327,172 Net OPEB liability (Note 7) 151,582,916 31,274,758 182,857,674 - Net pension liability (Note 7) 133,237,431 10,252,885 143,490,316 - Long- term debt, net of current portion (Note 4) 32,263,033 187,817,122 220,080,155 16,632,262 Total noncurrent liabilities 321,577,536 229,459,788 551,037,324 16,959,434 Total liabilities 335,007,346 254,063,559 589,070,905 18,198,636
Deferred Inflows of Resources: Pensions 779,108 16,354 795,462 - OPEB 921,863 190,200 1,112,063 -
Net Position Net investment in capital assets 208,505,984 224,075,598 432,581,582 - Restricted for: Capital projects - 2,000,000 2,000,000 - Debt service - 8,979,271 8,979,271 - Road construction, preservation, maintenance 11,460,719 - 11,460,719 - Law enforcement activities 870,735 - 870,735 - Telecommunications 737,573 - 737,573 - Historical museum activities 570,894 - 570,894 - Community development 686,249 - 686,249 - Library activities 3,094,852 - 3,094,852 - Unrestricted (179,895,815) 16,470,087 (163,425,728) (12,535,849) Total net position $ 46,031,191 $ 251,524,956 $ 297,556,147 $ (12,535,849)
The notes to the financial statements are an integral part of these statements. 19 City of Dearborn, Michigan Government-wide Statement of Activities Year Ended June 30, 2018
Program Revenues Operating Capital Charges for Grants and Grants and Functions/ Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 16,576,427 $ 4,743,453 $ 1,597,880 $ 240,992 Public safety 87,342,059 10,830,169 699,244 394,870 Public works 27,479,082 1,001,809 10,167,390 5,726,937 Recreation and culture 24,423,187 9,379,063 615,022 5,691 Community improvement 1,728,336 32,177 511,989 - Total governmental activities 157,549,091 25,986,671 13,591,525 6,368,490
Business-type activities: Housing 2,763,651 2,771,901 - - Sewer 33,233,673 28,418,154 - - Water 16,729,369 23,214,100 - - Total business-type activities 52,726,693 54,404,155 - - Total primary government $ 210,275,784 $ 80,390,826 $ 13,591,525 $ 6,368,490
Component units: Dix Vernor District Improvement Authority $ 32,474 $ - $ - $ - Warren District Improvement Authority 101,966 - - - West Dearborn Downtown Development Authority 708,335 - - - East Dearborn Downtown Development Authority 1,451,256 - - - Brownfield Redevelopment Authority 11,889,559 - - - Economic Development Corporation 1,553 - - - Total component units $ 14,185,143 $ - $ - $ -
General revenues: Property taxes Intergovernmental revenues - unrestricted Investment earnings Miscellaneous Special items - loss on abandoned assets (Note 13) Transfers Total general revenues, special items and transfers Change in net position Net position - beginning as restated (Note 17) Net position - ending
The notes to the financial statements are an integral part of these statements. 20 City of Dearborn, Michigan Government-wide Statement of Activities Year Ended June 30, 2018
Net (Expense) Revenue and Changes in Net Position Primary Government Component Governmental Business- type Unit s Activities Activities Total (See page 39)
$ (9,994,102) $ - $ (9,994,102) $ - (75,417,776) - (75,417,776) - (10,582,946) - (10,582,946) - (14,423,411) - (14,423,411) - (1,184,170) - (1,184,170) - (111,602,405) - (111,602,405) -
- 8,250 8,250 - - (4,815,519) (4,815,519) - - 6,484,731 6,484,731 - - 1,677,462 1,677,462 - (111,602,405) 1,677,462 (109,924,943) -
- - - (32,474)
- - - (101,966)
- - - (708,335)
- - - (1,451,256)
- - - (11,889,559)
- - - (1,553) - - - (14,185,143)
73,721,119 18,280,760 92,001,879 5,808,284 25,098,577 - 25,098,577 99,677 871,687 789,334 1,661,021 74,848 241,551 364,887 606,438 424,266 (36,287,463) (36,287,463) - 68,623 (68,623) - - 100,001,557 (16,921,105) 83,080,452 6,407,075 (11,600,848) (15,243,643) (26,844,491) (7,778,068) 57,632,039 266,768,599 324,400,638 (4,757,781) $ 46,031,191 $ 251,524,956 $ 297,556,147 $ (12,535,849)
The notes to the financial statements are an integral part of these statements. 21 City of Dearborn, Michigan Balance Sheet Governmental Funds June 30, 2018
Other Governmental Total Funds Governmental General (See page 141) Funds Assets Cash and cash equivalents $ 7,926,404 $ 17,915,487 $ 25,841,891 Investments 11,376,343 8,425,197 19,801,540 Accounts receivable (Net) 2,548,167 366,820 2,914,987 Property taxes receivable 59,721 3,136 62,857 Accrued interest receivable 38,602 44,180 82,782 Due from other funds 208,131 275,855 483,986 Due from component units 52,803 - 52,803 Due from other governments 4,344,447 2,222,346 6,566,793 Prepaid it ems 158,905 - 158,905 Inventories 356,932 - 356,932 Land held for resale - 3,778,735 3,778,735 Total assets $ 27,070,455 $ 33,031,756 $ 60,102,211
Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ 1,740,699 $ 935,731 $ 2,676,430 Accrued liabilities 1,548,610 58,201 1,606,811 Deposits/refunds payable 373,189 650,995 1,024,184 Due for tax appeals - 41,425 41,425 Due to other governments 8,014 401 8,415 Due to other funds 1,538 327,540 329,078 Unearned revenue 1,576,847 - 1,576,847 Total liabilities 5,248,897 2,014,293 7,263,190
Deferred Inflows of Resources: Unavailable revenue 160,048 269,339 429,387
Nonspendable: Inventories 356,932 - 356,932 Prepaid it ems 158,905 - 158,905 Restricted for: Law enforcement activities - 870,735 870,735 Road construction, preservation, maintenance - 11,460,719 11,460,719 Telecommunications 737,573 - 737,573 Historical museum activities - 570,894 570,894 Community development - 426,692 426,692 Library activities - 3,085,070 3,085,070 Committed for: Designated purposes - community programs - 484,658 484,658 Assigned for: Subsequent year's budget 677,696 - 677,696 Capital projects - 13,849,356 13,849,356 Unassigned 19,730,404 - 19,730,404 Total fund balances 21,661,510 30,748,124 52,409,634
Total liabilities, deferred inflows of resources and fund balances $ 27,070,455 $ 33,031,756 $ 60,102,211
The notes to the financial statements are an integral part of these statements. 22 City of Dearborn, Michigan Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2018
Total fund balance for governmental funds $ 52,409,634
Amounts reported for governmental activities in the statement of net position are different because:
1. Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Total capital assets reported by governmental activ ities 214,727,505 Less: amounts reported in the internal service funds (95,858,694) Total adjustment due to capital assets 118,868,811
2. Some receivables are expected to be collected over several years and are not available to pay for current year expenditures 429,387
3. Long- term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds Noncurrrent liabilities, due in more than one year (5,974,528) Net pension assets 15,503,750 Deferred outflows - pensions 22,087,147 Less: net pension liabilities (127,967,845) Less: deferred inflows - pensions (770,715) Total adjustments due to net pension liabilit ies (91,147,663)
Less: net OPEB liabilit ies (144,123,783) Less: deferred inflows - OPEB (876,500) Total adjustments due to net OPEB liabilities (145,000,283)
4. Internal service funds are included as part of governmental activities 116,445,833
Net position of governmental activities $ 46,031,191
The notes to the financial statements are an integral part of these statements. 23 City of Dearborn, Michigan Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2018
Other Governmental Total Funds Governmental General (See page 143) Funds Revenues Taxes, assessments and penalties on taxes $ 66,838,801 $ 7,094,948 $ 73,933,749 Licenses and permits 3,137,262 - 3,137,262 Intergovernmental revenues: Federal sources 1,214,245 1,405,207 2,619,452 State sources 24,651,614 11,887,916 36,539,530 Local sources 797,893 84,906 882,799 Charges for services 12,368,290 154,774 12,523,064 Fines and forfeits 4,699,958 482,587 5,182,545 Rents and royalties 5,329,546 13,497 5,343,043 Miscellaneous revenue 2,033,905 1,073,042 3,106,947 Private source contributions - 201,863 201,863 Investment income 579,959 292,097 872,056 Total revenues 121,651,473 22,690,837 144,342,310
Expenditures Current General government 16,549,588 201,955 16,751,543 Public safety 70,445,497 839,825 71,285,322 Public works 14,961,095 13,151,625 28,112,720 Recreation and culture 16,526,390 5,643,986 22,170,376 Community improvement 1,005,661 299,097 1,304,758 Utilities - 46,756 46,756 Loss on land held for resale - 145,596 145,596 Capital outlay 103,576 2,288,362 2,391,938 Total expenditures 119,591,807 22,617,202 142,209,009
Revenues Over (Under) Expenditures 2,059,666 73,635 2,133,301
Other Financing Sources (Uses) Transfers in 2,200,000 4,601,845 6,801,845 Transfers out (12,510,671) (5,991,520) (18,502,191) Total other financing sources (uses) (10,310,671) (1,389,675) (11,700,346)
Net Change in Fund Balances (8,251,005) (1,316,040) (9,567,045)
Fund Balances - Beginning of Year 29,912,515 32,064,164 61,976,679
Fund Balances - End of Year $ 21,661,510 $ 30,748,124 $ 52,409,634
The notes to the financial statements are an integral part of these statements. 24 City of Dearborn, Michigan Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2018
Net change in fund balance - Total Governmental Funds $ (9,567,045)
Amounts reported for governmental activities in the statement of activities are different because:
1. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives and recorded as depreciation expense. This is the amount by which capital outlay exceeded depreciation expense. Capital outlay 11,670,515 Net book value of assets disposed (21,790) Depreciation (7,118,706) Total excess capital outlay 4,530,019
2. Revenues are recorded in the statement of activities when the revenue is earned; they are not reported in the funds until collected or collectable within 60 days of the year end. (7,622)
3. Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Compensated absences (257,585) Pension (16,700,007) Other postemployment benefits (2,645,520) Total expenses not reported in governmental funds (19,603,112)
4. Internal service funds are included as part of governmental activities. 13,046,912
Change in net position of governmental activities $ (11,600,848)
The notes to the financial statements are an integral part of these statements. 25 City of Dearborn, Michigan
Business-type Activities Enterprise Funds Nonmajor Seniors Apartment Operating Major Major Fund Sewer Water Assets Current assets: Cash and cash equivalents $ 6,054,420 $ 32,058,598 $ 4,393,096 Investments, short- term 2,946,690 12,520,784 2,147,251 Accounts receivable (Net) 20,666 4,236,172 5,760,610 Property taxes receivable - 15,407 - Unbilled accounts receivable - 2,291,436 1,534,762 Accrued interest receivable 15,820 81,872 11,529 Due from other governments 140,532 1,258,843 847,738 Prepaid it ems 25,418 - - Inventories - 185,960 562,431 Total current assets 9,203,546 52,649,072 15,257,417 Noncurrent assets Restricted cash: Construction and equipment - 31,459,968 - Debt service - 308,188 18,836 Capital assets (Net) 1,794,104 303,754,047 90,119,977 Total noncurrent assets 1,794,104 335,522,203 90,138,813 Total assets 10,997,650 388,171,275 105,396,230
Deferred Outflows of Resources - Pensions 193,824 318,531 717,559 Deferred Outflows of Resources - OPEB - - -
Liabilities Current liabilities: Accounts payable 122,445 4,719,779 4,415,755 Accrued interest payable - 1,104,222 - Accrued liabilities 25,081 144,208 97,877 Deposits/refunds payable 155,334 - 150,071 Accrued vacation and sick - - - Due for tax appeals - - - Due to other governments - 34,184 - Due to other funds 77 92 306 Unearned revenue 1,325 - - Current portion of long-term debt 47,511 13,367,603 217,901 Total current liabilities 351,773 19,370,088 4,881,910 Noncurrent liabilities: Current portion of long term debt payable with restricted assets - 85,000 16,250 Accrued interest payable with restricted assets - 11,187 2,586 Long- term debt, net of current portion - 187,118,182 348,812 Net pension liability 1,615,730 2,655,386 5,981,769 Net OPEB liabilit y 5,251,365 5,673,876 20,349,517 Other liabilities 79,997 53,261 216,870 Claims payable - - - Total noncurrent liabilities 6,947,092 195,596,892 26,915,804 Total liabilities 7,298,865 214,966,980 31,797,714
Deferred Inflows of Resources - Pensions 2,582 4,232 9,540 Deferred Inflows of Resources - OPEB 31,937 34,506 123,757
Net Position Net investment in capital assets 1,794,104 132,728,230 89,553,264 Restricted for: Construction - 2,000,000 - Debt service - 8,979,271 - Unrestricted 2,063,986 29,776,587 (15,370,486) Total net position $ 3,858,090 $ 173,484,088 $ 74,182,778
The notes to the financial statements are an integral part of these statements. 26
Statement of Net Position Proprietary Funds June 30, 2018
Governmental Activities - Internal Service Funds Total (See page 153)
$ 42,506,114 $ 31,587,237 17,614,725 13,979,910 10,017,448 14,187 15,407 - 3,826,198 - 109,221 79,903 2,247,113 1,242,285 25,418 130,473 748,391 - 77,110,035 47,033,995
31,459,968 23,136,770 327,024 - 395,668,128 95,858,694 427,455,120 118,995,464 504,565,155 166,029,459
1,229,914 632,116 - -
9,257,979 2,311,188 1,104,222 143,433 267,166 66,508 305,405 - - 138,628 - 492,840 34,184 6 475 156,933 1,325 77,000 13,633,015 1,037,175 24,603,771 4,423,711
101,250 -
13,773 - 187,466,994 28,321,116 10,252,885 5,269,586 31,274,758 7,459,133 350,128 194,284 - 4,494,156 229,459,788 45,738,275 254,063,559 50,161,986
16,354 8,393 190,200 45,363
224,075,598 89,637,173
2,000,000 - 8,979,271 - 16,470,087 26,808,660 $ 251,524,956 $ 116,445,833
The notes to the financial statements are an integral part of these statements. 27
Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Year Ended June 30, 2018
Business-type Activities Enterprise Funds Nonmajor Seniors Apartment Operating Major Major Fund Sewer Water Operating Revenues Intergovernmental revenue: Federal $ - $ 499,425 $ 430,090 Local sources - - - State sources - - - Sales - 19,693,547 13,436,747 Charges for services 897,156 7,606,980 8,722,949 Penalt ies - 618,202 624,314 Rents and royalties 1,874,745 - - City contributions for insurance premiums - - - Miscellaneous revenue 27,215 282,277 55,395 Private source contributions - - - Total operating revenues 2,799,116 28,700,431 23,269,495
Operating Expenses Personnel services 1,353,902 1,846,651 3,891,264 Contractual services 111,174 1,650,501 1,263,453 Insurance and bonds 62,762 135,720 88,500 Insurance benefits - - - Claims and judgments - - - Utilities 404,216 333,890 19,235 Repair and maintenance 462,029 629,549 25,275 Supplies 68,004 161,307 581,995 Cost of sales - 19,628,400 9,487,177 Cost of rentals 72,338 150,599 - Depreciation 223,553 7,152,272 1,929,703 Other 5,673 (1,933,213) (583,245) Total operating expenses 2,763,651 29,755,676 16,703,357
Operating Income (Loss) 35,465 (1,055,245) 6,566,138
Nonoperating Revenues (Expenses) Taxes, assessments and penalties - 18,280,760 - Investment income 98,769 598,318 92,247 Contributions - 21,410 - Gain/(loss) on disposal of assets - (88) (14,542) Other interest - (3,499,319) (11,470) Other expense - - - Total nonoperating revenues (expenses) 98,769 15,401,081 66,235
Income (Loss) before Transfers 134,234 14,345,836 6,632,373
Transfers Transfers in - - 1,858,720 Transfers out (337) (1,873,428) (53,578) Net transfers (337) (1,873,428) 1,805,142
Income (Loss) 133,897 12,472,408 8,437,515
Special Item - Loss on Abandoned Assets (Note 13) - (36,287,463) -
Change in Net Position 133,897 (23,815,055) 8,437,515
Net Position - Beginning of Year (1) 3,724,193 197,299,143 65,745,263
Net Position - End of Year $ 3,858,090 $ 173,484,088 $ 74,182,778
(1) Net position – beginning of year has been restated in order to adopt GASB 75 (see Note 17).
The notes to the financial statements are an integral part of these statements. 28
Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Year Ended June 30, 2018
Governmental Activities - Internal Service Funds Total (See page 155)
$ 929,515 $ 779,762 - 250,027 - 109,421 33,130,294 - 17,227,085 6,638,359 1,242,516 - 1,874,745 3,225,179 - 19,227,941 364,887 4,576,794 - 689,450 54,769,042 35,496,933
7,091,817 4,010,201 3,025,128 1,502,598 286,982 1,102,075 - 47,758 - 20,098,399 757,341 1,352,846 1,116,853 1,041,262 811,306 - 29,115,577 16,240 222,937 - 9,305,528 4,888,329 (2,510,785) 235,870 49,222,684 34,295,578
5,546,358 1,201,355
18,280,760 - 789,334 467,962 21,410 - (14,630) (221,900) (3,510,789) (168,574) - (900) 15,566,085 76,588
21,112,443 1,277,943
1,858,720 11,825,125 (1,927,343) (56,156) (68,623) 11,768,969
21,043,820 13,046,912
(36,287,463) -
(15,243,643) 13,046,912
266,768,599 103,398,921
$ 251,524,956 $ 116,445,833
The notes to the financial statements are an integral part of these statements. 29 City of Dearborn, Michigan
Nonmajor Seniors Apartment Operating Fund Cash Flows from Operating Activities Receipts from customers $ 3,059,399 Payments to suppliers (1,080,798) Payments to employees (1,874,778) Internal activity (6,278) Claims paid - Other receipts 27,216 Other payments (5,336) Net cash provided (used) by operating activities 119,425
Cash Flows from Noncapital Financing Activities Transfers in - Transfers out (337) Net cash provided (used) by noncapital financing ac tivities (337)
Cash Flows from Capital and Related Financing Activ ities Taxes, assessments & penalties on taxes - Grants and contributions received - Proceeds on the issuance of long term debt - Prepaid interest on debt - Principal paid on debt - Acquisition and construction of capital assets - Proceeds from sale of assets - Interest paid on debt - Net cash provided (used) by capital and related financing activities -
Cash Flows from Investing Activities Net sale (purchase) of investments (186,182) Investment income 92,837 Net cash provided (used) by investing activities (93,345)
Net Increase (Decrease) in Cash and Cash Equivalent s 25,743
Cash and Cash Equivalents - Beginning of Year 6,028,677
Cash and Cash Equivalents - End of Year $ 6,054,420
Cash and Cash Equivalents - Unrestricted $ 6,054,420 Cash and Cash Equivalents - Restricted -
Cash and Cash Equivalents - End of Year $ 6,054,420
The notes to the financial statements are an integral part of these statements. 30
Statement of Cash Flows Proprietary Funds Year Ended June 30, 2018
Business-type Activities Enterprise Funds Governmental Activities - Internal Service Major Major Funds Sewer Water Total (See page 157)
$ 27,671,540 $ 22,547,972 $ 53,278,911 $ 32,480,872 (22,641,329) (10,656,531) (34,378,658) (3,640,159) (4,714,321) (7,021,319) (13,610,418) (3,938,717) 92 (19,694) (25,880) 96,450 - - - (20,240,795) 499,425 430,090 956,731 2,900,366 1,933,213 619,884 2,547,761 (235,870) 2,748,620 5,900,402 8,768,447 7,422,147
- - - 11,825,125 (14,708) (53,578) (68,623) (56,156) (14,708) (53,578) (68,623) 11,768,969
18,280,760 - 18,280,760 - 21,410 - 21,410 - 26,710,931 - 26,710,931 18,043,318 - - - (86,279) (12,801,370) 88,287 (12,713,083) (3,485,005) (16,615,345) (4,428,999) (21,044,344) (13,005,049) - - - - (3,325,137) (11,845) (3,336,982) - 12,271,249 (4,352,557) 7,918,692 1,466,985
1,121,250 (583,614) 351,454 (3,387,891) 573,301 86,319 752,457 430,824 1,694,551 (497,295) 1,103,911 (2,957,067)
16,699,712 996,972 17,722,427 17,701,034
47,127,042 3,414,960 56,570,679 37,022,973
$ 63,826,754 $ 4,411,932 $ 74,293,106 $ 54,724,007
$ 32,058,598 $ 4,393,096 $ 42,506,114 $ 31,587,237 31,768,156 18,836 31,786,992 23,136,770
$ 63,826,754 $ 4,411,932 $ 74,293,106 $ 54,724,007
The notes to the financial statements are an integral part of these statements. 31 City of Dearborn, Michigan
Nonmajor Seniors Apartment Operating Fund
Reconciliation of Operating Income (Loss) to Net Ca sh Provided (Used) by Operating Activities: Operating income (loss) $ 35,465 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 223,553 Change in assets and liabilities: Accounts receivable 4,291 Due from other funds - Due from other governments 272,358 Prepaid it ems - Inventories - Accounts payable 52,255 Accrued liabilities 47,807 Customer deposits 11,576 Accrued vacation and sick leave (54,126) Due to other funds (6,278) Due to other governments - Claims payable - Unearned revenue (726) Net pension liability and related deferrals 235,680 Net OPEB liability and related deferrals (702,430) Net cash provided (used) by operating activities $ 119,425
The Water fund received non-cash transfers of capital assets during the year from the Sewer fund of $1,858,720. Additionally, the Sewer fund expensed the balance of an item in Construction in Process, a non-cash transaction of $36,287,463 (see Note 13).
The notes to the financial statements are an integral part of these statements. 32
Statement of Cash Flows Proprietary Funds Year Ended June 30, 2018
Business-type Activities Enterprise Funds Governmental Activities - Internal Service Major Major Funds Sewer Water Total (See page 159)
$ (1,055,245) $ 6,566,138 $ 5,546,358 $ 1,201,355
7,152,272 1,929,703 9,305,528 4,888,329
463,527 524,763 992,581 1,726 - - - 7,560 (992,993) (832,501) (1,553,136) (109,421) - - - 342,018 - 214,636 214,636 - 81,069 621,451 754,775 1,519,247 (16,909) 9,656 40,554 7,268 - 16,305 27,881 (8,000) (2,172,804) (1,008,505) (3,235,435) - 92 (19,694) (25,880) 88,890 (15,523) - (15,523) (103,757) - - - (484,552) - - (726) - 414,864 726,474 1,377,018 633,115 (1,109,730) (2,848,024) (4,660,184) (561,631) $ 2,748,620 $ 5,900,402 $ 8,768,447 $ 7,422,147
The notes to the financial statements are an integral part of these statements. 33 City of Dearborn, Michigan Statement of Net Position Fiduciary Funds June 30, 2018
Pension & Other Employee Agency Benefits Funds Assets Current assets: Cash and cash equivalents $ 2,435,012 $ 3,835,884 Investments - short- term 4,528,516 - Accounts receivable (Net) - 242,275 Accrued interest receivable 386,720 - Due from brokers and other 790,228 - Due from other funds 2,500 - Total current assets 8,142,976 4,078,159
Noncurrent assets - investments: Certificates of deposit 55,901 - Fixed income mutual funds 191,926,442 - Common stock 169,769,008 - Real estate properties 21,177,449 - Mutual funds and other 143,603,983 - Total noncurrent assets 526,532,783 -
Total assets 534,675,759 $ 4,078,159
Liabilities Accounts payable 657,841 $ 330,605 Payroll deductions payable - 244,994 Deposits/refunds payable - 2,227,185 Due to other governments - 1,045,743 Other liabilities - 229,632
Total liabilities 657,841 $ 4,078,159
Net Position - restricted for pensions $ 534,017,918
The notes to the financial statements are an integral part of these statements. 34 City of Dearborn, Michigan Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2018
Pension & Other Employee Benefits Additions Investment income: Interest and dividends $ 6,873,417 Net increase/(decrease) in value of investments 22,780,384 Investment expenses (1,546,135) Net investment income 28,107,666
Contributions: Employer 32,309,329 Employee 1,140,235 Reimbursement s 373,996 Total contributions 33,823,560
Total additions 61,931,226
Deductions Benefit payments 45,796,045 Refunds of contributions 813,346 Claims and judgments 291,433 Administrative expenses 136,899 Total deductions 47,037,723
Change in Net Position 14,893,503
Net Position - Beginning of Year 519,124,415
Net Position - End of Year $ 534,017,918
The notes to the financial statements are an integral part of these statements. 35 City of Dearborn, Michigan
Dix- Vernor Warren West Dearborn Business District Business District Downtown Improvement Improvement Development Authority Authority Authority Assets Current assets: Cash and cash equivalents $ 37,721 $ 73,092 $ 537,667 Due from other governments - - - Investments - short- term 18,360 35,576 261,695 Accounts receivable (Net) 6,425 Accrued interest receivable 99 191 1,405 Noncurrent assets: Notes receivable, long-term - - - Restricted cash and investments: Construction and equipment - - - Debt service - - - Total assets 56,180 108,859 807,192
Liabilities Current liabilities: Accounts payable 3,116 8,408 81,884 Due to primary government 1,386 3,200 17,698 Accrued liabilities - - 87 Current portion of long-term debt - - - Noncurrent liabilities: Other liabilities - - - Bonds payable - - - Total liabilities 4,502 11,608 99,669
Net Position - Unrestricted $ 51,678 $ 97,251 $ 707,523
(1) See Note 15
The notes to the financial statements are an integral part of these statements. 36 Statement of Net Position Component Units June 30, 2018
East Dearborn Downtown Brownfield Economic Development Redevelopment Development Authority Authority (1) Corporation Total
$ 744,696 $ 2,342,199 $ 147,898 $ 3,883,273 - - 95,280 - 95,280 362,462 - 71,985 750,078 1,659 - - 8,084 1,946 4,957 387 8,985
177,035 - - 177,035
- - 262,022 - 262,022 - - 478,030 - 478,030 1,287,798 3,182,488 220,270 5,662,787
23,589 620,010 - 737,007 30,519 - - 52,803 543 127,279 - 127,909 - - 321,483 - 321,483
- - 327,172 - 327,172 - - 16,632,262 - 16,632,262 54,651 18,028,206 - 18,198,636
$ 1,233,147 $ (14,845,718) $ 220,270 $ (12,535,849)
The notes to the financial statements are an integral part of these statements. 37 City of Dearborn, Michigan
Program Revenues
Operating Charges for Grants and Expenses Services Contributions Dix-Vernor Business District Improvement Authority Community improvement $ 32,474 $ - $ -
Warren Business District Improvement Authority Community improvement 101,966 - -
West Dearborn Development Authority Community improvement 708,335 - -
East Dearborn Development Authority Community improvement 1,451,256 - -
Brownfield Redevelopment Authority Community improvement 11,889,559 - -
Economic Development Corporation Community improvement 1,553 - -
Total component units $ 14,185,143 $ - $ -
General revenues: Taxes Federal sources State sources Investment earnings Miscellaneous Total general revenues Change in net position Net position - beginning Net position - ending
The notes to the financial statements are an integral part of these statements. 38 Statement of Activities Component Units Year Ended June 30, 2018
Net (Expense) Revenue and Changes in Net Position Dix- Vernor Warren West Dearborn East Dearborn Business District Business District Downtown Downtown Brownfield Economic Improvement Improvement Development Development Redevelopment Development Authority Authority Authority Authority Authority Corporation Total
$ (32,474) $ - $ - $ - $ - $ - $ (32,474)
- - (101,966) - - - - (101,966)
- - - (708,335) - - - (708,335)
- - - - (1,451,256) - - (1,451,256)
- - - - - (11,889,559) - (11,889,559)
------(1,553) (1,553)
(32,474) (101,966) (708,335) (1,451,256) (11,889,559) (1,553) (14,185,143)
11,583 47,116 628,297 796,146 4,325,142 - 5,808,284 - - - - - 95,280 - 95,280 4,397 - - - - - 4,397 542 1,035 9,786 18,257 42,889 2,339 74,848 42,484 106,930 140,744 58,646 40,000 35,462 424,266 59,006 155,081 778,827 873,049 4,503,311 37,801 6,407,075 26,532 53,115 70,492 (578,207) (7,386,248) 36,248 (7,778,068) 25,146 44,136 637,031 1,811,354 (7,459,470) 184,022 (4,757,781) $ 51,678 $ 97,251 $ 707,523 $ 1,233,147 $ (14,845,718) $ 220,270 $ (12,535,849)
The notes to the financial statements are an integral part of these statements. 39 This Page I ntentionally Left Blank
40 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies
The City of Dearborn, Michigan (the City) was incorporated in 1929 under Michigan law as a home rule city. The City operates under a strong mayor, weak council form of government. The most recent charter was adopted November 6, 2007 and was effective January 1, 2008.
The financial statements of the City have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. Below is a summary of the City’s more significant policies.
A. Reporting Entity
The City is governed by an elected seven-member Council. As required by GAAP, these financial statements present the City of Dearborn and its component units.
Discretely Presented Component Units
The following component units are discretely presented in the combined financial statements. They are reported in a separate column to emphasize that they are legally separate from the City.
Warren Business District I mprovement Authority (WBDIA)
The WBDIA was formed in FY2017 to encourage business improvement and development along the City’s Warren Avenue Corridor. The district has no current outstanding debt and the City has no obligation for any future debt incurred by the district. The City Council must approve the WBDIA’s budget. The Primary government is financially accountable for, imposes its will on, and appoints the voting majority of all component units’ boards.
Dix-Vernor Business District I mprovement Authority (DBDIA)
The DBDIA was formed in FY2017 to encourage business improvement and development along the City’s Dix-Vernor Corridor. The district has no current outstanding debt and the City has no obligation for any future debt incurred by the district. The City Council must approve the DBDIA’s budget. The Primary government is financially accountable for, imposes its will on, and appoints the voting majority of all component units’ boards.
Brownfield Redevelopment Authority (BRA)
The Brownfield Redevelopment Authority was created to account for the redevelopment of environmentally contaminated and other under-utilized sites within the City. The Authority’s governing body consists of the Mayor and six individuals appointed by the Mayor. The City Council must approve the BRA’s budget. The Primary government is financially accountable for, imposes its will on, and appoints the voting m ajority of all component units’ boards.
41 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
The Economic Development Corporation of Dearborn (EDC)
The EDC's purpose is to encourage economic developm ent, primarily through the issuance of tax-exempt financing. Although the City has no involvement in the determination of the EDC’s budget nor any obligation for the EDC's outstanding debt, City Council must approve designation of project areas and must approve each project plan. The Primary government is financially accountable for, imposes its will on, and appoints the voting majority of all component units’ boards.
East Dearborn Downtown Development Authority (EDDDA)
The EDDDA was formed to encourage development within the City's eastern central business district. The City has no obligation for the EDDDA's outstanding debt. The City Council must approve the EDDDA's budget. The Primary government is financially accountable for, imposes its will on, and appoints the voting majority of all component units’ boards.
West Dearborn Downtown Development Authority (WDDDA)
The WDDDA was formed to encourage development within the City's western central business district. The City has no obligation for the WDDDA's outstanding debt. The City Council must approve the WDDDA's budget. The Primary government is financially accountable for, imposes its will on, and appoints the voting majority of all component units’ boards.
Financial information for the discretely presented component units is available during office hours at the City of Dearborn, Dearborn Administrative Center, 16901 Michigan Avenue, Dearborn, Michigan 48126-2899.
B. Basic Financial Statements
The basic financial statements include both governm ent-wide (reporting the City as a whole) and fund reporting the City’s major funds’ financial statements. Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. The City’s public safety, public works, recreation, community improvement and general administrative services are classified as governmental activities. The City’s water and sewer services and housing department are classified as business-type activities.
Government-wide Financial Statements
In the government-wide Statement of Net Position, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in three parts—net investment in capital assets; restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance qualifying activities.
42 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
The government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions (public safety, public works, etc.) and business-type activities. The functions are also supported by general government revenues (property taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (public safety, public works, etc.) or a business-type activity. Operating grants include operating-specific and discretionary (either operating or capital) grants.
The net costs (by function or business-type activity) are normally covered by general revenue (property, sales or gas taxes, intergovernmental revenues, interest income, etc.).
The City does not allocate indirect costs. An administrative fee is charged by the General fund to the other operating funds to recover the direct costs of General fund services provided (finance, human resources, purchasing, legal, etc.). The effect of this fee and all other internal activity has been eliminated from the government-wide financial statements.
This government-wide focus is on the sustainability of the City as an entity and the change in the City’s net position resulting from the current year’s activities.
Fund Financial Statements
The financial transactions of the City are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements.
The following fund types are used by the City:
Governmental Funds
The focus of the governmental funds’ measurement (in the fund statements) is on determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than on net income. The following is a description of the governmental funds of the City:
General Fund – The General fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
Special Revenue Funds – Special Revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.
Capital Projects Fund – The City has one capital project fund. The Capital Projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by business-type/proprietary funds.
43 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
Proprietary Funds
The focus of proprietary fund measurement is on determination of operating income, changes in net position, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to businesses in the private sector.
Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of proprietary funds relate to charges to customers for sales and service. The water and sewer funds also recognize the portion of tap fees intended to recover current costs (e.g., labor and materials to hook up new customers) as operating revenue. The portion intended to recover the cost of the infrastructure is recognized as nonoperating revenue. Property taxes are collected for the paym ent of Combined Sewer Overflow (CSO) debt and are nonoperating. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
The following is a description of the two proprietary fund types of the City:
Enterprise Funds
Enterprise funds are required to be used to account for operations for which a fee is charged to external users for goods or services and the activity (a) is financed with debt that is solely secured by a pledge of the net revenues, (b) has third-party requirements that the cost of providing services, including capital costs, be recovered with fees and charges or (c) establishes fees and charges based on a pricing policy designed to recover similar costs. The government reports the following major enterprise funds:
Water Fund – This fund accounts for operation of the City’s water supply system. Purified water is purchased from the Great Lakes Water Authority.
Sewer Fund – This fund accounts for operation of the City’s sewerage system. Sewage treatment is purchased from the Great Lakes Water Authority.
I nternal Service Funds
Internal Service funds are used to account for the financing of goods or services provided by an activity to other departments, funds or component units of the City on a cost- reimbursement basis. Internal Service funds include fleet replacement, workers’ compensation and employee insurance, fleet and general liability insurance, information systems and facilities.
Fiduciary Funds
Fiduciary funds are used to report assets held in an agency capacity for others and therefore are not available to support City programs. The reporting focus is on net position and changes in net
44 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
position and are reported using accounting principles similar to proprietary funds. Fiduciary Pension funds include the general employees retirement system, the revised police and fire retirement system and the policemen’s and firemen’s retirement system. Fiduciary Agency funds include agency and district court. Other fiduciary funds are the retiree death benefit fund and postemployment healthcare fund.
The emphasis in fund financial statements is on the major funds in either the governmental or business-type activities categories. Nonmajor funds by category are summarized into a single column. GASB 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds.
The City’s internal service funds are presented in the proprietary funds’ financial statements. Because the principal users of the internal services are the City’s governmental activities, the financial statements of the internal service funds are consolidated into the governmental column when presented in the government-wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (public safety, public works, etc.).
The City’s fiduciary funds are presented in the fiduciary fund financial statements by type (pension and other employee benefits and agency). Since by definition these assets are being held for the benefit of a third party (other local governments, private parties, pension participants, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements.
C. Measurement Focus and Basis of Accounting
Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied.
Accrual
Both governmental and business-type activities in the government-wide financial statements and the proprietary and fiduciary pension and other employee benefit fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. The fiduciary agency funds have no measurement focus but use the accrual basis. Revenues are recognized when earned and expenses are recognized when incurred.
Modified Accrual
The governmental funds 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 recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or soon thereafter to be used to pay liabilities of the current period (within 60 days of the next fiscal year). Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on long-term debt,
45 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued) compensated absences, claims and judgments and retiree health care benefits are recognized when due.
Revenues susceptible to accrual are property taxes, special assessments, licenses, interest revenue and charges for services. Sales taxes collected and held by the state at year-end on behalf of the government also are recognized as revenue. Fines, permits and parking meter revenues are not susceptible to accrual because generally they are not measurable until received in cash.
Property taxes and other revenue that are both measurable and available for use to finance operations are recorded as revenue when earned. Other revenue is recorded when received.
D. Financial Statement Amounts
Cash and I nvestments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments (maturities of one year or less from the fiscal year end).
Investments are reported at fair value based on quoted market prices. Investments and certificates of deposit are purchased with pooled cash and are generally held to maturity. Interest is allocated on the basis of time-and-dollar-weighted participation.
The purchase and sale of proprietary fund investments have been netted for cash flow purposes as the nature of the investments is highly liquid because there is an active market readily available.
Accounts Receivable
Receivables as of June 30, 2018 for the City’s General fund and the nonmajor governmental funds in the aggregate are as follows:
Nonmajor General Funds Total Receivables: Due from other governments $ 4,344,447 $ 2,222,346 $ 6,566,793 Accounts 2,548,167 366,820 2,914,987
Net receivables $ 6,892,614 $ 2,589,166 $ 9,481,780
Revenues are reported net of uncollectible amounts. The amount in the allowance for un- collectibles in the General fund at June 30, 2018 is $913,250 and represents potentially uncollectible ambulance billings. Most City service billings, if not paid, are assessed as a lien against the serviced property.
46 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
The unbilled accounts receivable in the Enterprise funds were for unbilled consumption of water and sewer services as of June 30, 2018.
I nventories
Materials and supplies inventories are recorded at cost. Cost is measured using the weighted average method with the exception of Enterprise funds’ inventories which are recorded on a first- in, first-out basis. Land for resale inventories are recorded at the lower of cost or market based on individual parcels. The Capital Projects fund has approximately $3.7 million, the Community Development fund has approximately $114 thousand and the Sewer fund has approximately $186 thousand invested in land inventory at June 30, 2018.
Restricted Assets
The revenue bonds of the Enterprise and Internal Service funds require amounts to be set aside for construction, debt service principal and interest, unspent bond proceeds, operations and maintenance, equipment purchases and a bond reserve. The Brownfield Redevelopment Authority (BRA) fund requires amounts to be set aside for construction, debt services, unspent bond proceeds, principal and interest for redevelopment bonds and principal for non-interest bearing loans. These amounts have been classified as restricted assets.
Capital Assets
Capital assets purchased or acquired with an original cost of $5,000 or more and a useful life of greater than one year are capitalized at historical cost or estimated historical cost. Donated capital assets are valued at the estimated acquisition value on the date received.
Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.
Depreciation on all qualifying assets is provided on the straight-line basis over the assets’ estimated useful lives:
• Equipment 2-40 years • Land improvements 8-45 years • Infrastructure assets (roads, bridges and sidewalks) 15-40 years • Buildings and improvements 5-50 years • Water system 75 years • Sewer system 75 years
The City has a collection of art work presented for public exhibition and education that is being preserved for future generations. The City has an internal policy stating that the proceeds for the sale of these assets would be used to acquire other items for the collection. Therefore, the collection is not capitalized or depreciated as part of capital assets.
47 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
Prepaids
Prepaids are payments made in the current fiscal year for services in the next fiscal year. The July medical and dental premium payments were made in June.
Unearned Revenue
Unearned revenue represents monies that do not yet meet the criteria for revenue recognition. Unearned amounts are always reported as liabilities.
Compensated Absences
The City accrues vested or accumulated sick, vacation and paid time off (PTO) leave when earned by the employee. The non-current portion (that is the amount not expected to be liquidated with expendable available financial resources) for governmental funds is maintained separately and represents a reconciling item between fund and government-wide statement presentations.
Deferred Outflows/ I nflows of Resourses
In addition to assets, the statement of financial position and/or balance sheet 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 position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has deferred outflows of resources from four transactions: contributions to defined benefit pension plan subsequent to the plan’s year end through the City’s fiscal year end, the variance between the plan’s actual investment earnings compared to the plan’s assumed investment earnings, difference between projected and actual experience, and changes in assumptions related to economic and demographic factors.
In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable revenue qualifies for reporting in this category and arises only under a modified accrual basis of accounting. The City has deferred inflows of resources from the difference between the pension plans’ and OPEB’s projected and actual experience, investment earnings related to MERS and OPEB, and unavailable revenues not collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period (within 60 days of the next fiscal year).
Unavailable revenue is reported from the following sources:
Taxes $ 169,830 Notes and mortgages 259,557 Total unavailable revenue $ 429,387
48 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
Property Taxes
Properties are assessed as of December 31 and the related property taxes become a lien on December 31 and are billed in two separate billings, July 1 and December 1 of the following year. Taxable valuations are established annually by the City Assessor and are based on assessed valuations (established at 50 percent of true cash value), with the annual growth of each property's taxable value limited by inflation. Real and personal property in the City subject to the 2017 levy that financed operations for the fiscal year ended June 30, 2018 had a taxable value of $3,116,913,121.
In November 2011 the voters approved a five-year, 3.5 mill supplemental operating millage and a ten-year library millage. In August 2016 the voters renewed the 3.5 mills supplemental operating millage. Both millages will expire following the fiscal year ending June 30, 2022. The City millage for the fiscal year ended June 30, 2018 was 26.44 mills, consisting of 15.00 mills operating, 3.50 mills for voted operations, 1.78 mills for library, 1.91 mills for garbage and rubbish and 4.25 mills for debt service. The City is legally empowered by Section 13.2 of the City Charter and P.A.s 298 and 164 for a maximum limit of 21.5 mills for each fiscal year. The rollbacks required by Michigan law of 1917, as amended, are 24.5 mills of authorization with an annual maximum limit of 21.5 mills for each fiscal year. The rollbacks required by Michigan law are applied to the authorized 24.5 mills. The maximum potential millage for the fiscal year ended June 30, 2018 was 26.2254 mills after applicable rollbacks.
The July tax billing is payable without penalty in three equal installments due September 14 and every two months thereafter with the final installm ent due January 14. The December tax billing is due in full on February 14. Both summer and winter taxes become delinquent if they remain unpaid on March 1. Unpaid real property taxes are returned to the Wayne County Treasurer as delinquent for collection. The amounts of delinquent real property taxes become available to finance expenditures through operation of a County Tax Revolving fund. The City Treasurer is responsible for collection of delinquent personal property taxes. Delinquent personal property taxes and associated penalties not collected within 60 days of fiscal year end are recorded as deferred inflows of resources.
Expenditures
Expenditures in governmental funds are recognized when the related fund liability is incurred. Inventory costs are reported in the period when inventory items are used, rather than in the period purchased.
49 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued)
Encumbrances
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 employed as an extension of the formal budgetary control in the General, Special Revenue and Capital Projects funds. Grant revenues will be recognized in future periods when these encumbrances are expended. The amount of encumbrances outstanding at year-end is as follows:
Fund Amount General $ 576,771 Capital Projects 1,669,007 Other nonmajor governmental funds 5,334,450 $ 7,580,228
Pension and Other Postemployment Benefit Costs
The City offers pension benefits to retirees. The City records a net pension liability for the difference between the total pension liability calculated by the actuary and the pension plan’s fiduciary net position. For the purpose of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the fiduciary net position of the pension plan, and additions to/deductions from the pension plan’s fiduciary net position have been determined on the same basis as they are reported by the pension plan. For this purpose, benefit payments, including refunds of employee contributions, are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
The City offers health care benefits to retirees. The City records a net OPEB liability for the difference between the total OPEB liability calculated by the actuary and the OPEB plan’s fiduciary net position. For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB and OPEB expense, information about the fiduciary net position of the OPEB plan, and additions to/deductions from the OPEB plan’s fiduciary net position have been determined on the same basis as they are reported by the OPEB plan. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
I nterfund Activity
Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or
50 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (Continued) proprietary funds are netted as part of the reconciliation to the government-wide financial statements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
Fund Equity
In the fund financial statements, governmental funds report the following components of fund balance:
• Nonspendable: Amounts that are not in spendable form or are legally or contractually required to be maintained intact;
• Restricted: Amounts that are legally restricted by outside parties, constitutional provisions or enabling legislation for use for a specific purpose;
• Committed: Amounts that have been formally set aside by City Council for use for specific purposes. Commitments are made and can be rescinded only via resolution of City Council;
• Assigned: Intent to spend resources on specific purposes expressed by City Council or the Finance Director/Treasurer, who is authorized by resolution approved by City Council to make assignments;
• Unassigned: Amounts that do not fall into any other category above. This is the residual classification for amounts in the General Fund and represents fund balance that has not been assigned to other funds and has not been restricted, committed, or assigned to specific purposes in the General Fund. In other governmental funds, only negative unassigned amounts are reported, if any, and represent expenditures incurred for specific purposes exceeding the amounts previously restricted, committed, or assigned to those purposes.
When an expense is incurred for purposes for which both restricted and unrestricted fund balance is available, the City’s policy is to first apply restricted resources. When an expense is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, it is the City’s policy to spend funds in this order: committed, assigned and unassigned. Other accounting policies are disclosed in other notes to financial statements.
51 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments
Michigan Compiled Laws section 129.91 (Public Act 20 of 1943, as amended), authorizes local governmental units to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations that have offices in Michigan. In addition, bank deposits in the form of Certificate of Deposit Account Registry Service (CDARS) are allowed to include out of state certificates of deposit. The local unit is allowed to invest in bonds, securities, and other direct obligations of the United States or any agency or instrumentality of the United States; repurchase agreements; bankers’ acceptances of United States banks; commercial paper rated within the two highest classifications, which mature not more than 270 days after the date of purchase; obligations of the State of Michigan or its political subdivisions, which are rated as investment grade; mutual funds composed of investment vehicles that are legal for direct investment by local units of government in Michigan; and investment pools of financial institutions. The City does not engage in reverse repurchase agreements or in repurchase agreements without a master repurchase agreement and delivery of collateral to a third-party custodian.
The pension trust fund is authorized by Michigan Public Act 314 of 1965, as amended, to invest in certain reverse repurchase agreements, stocks, diversified investment companies, annuity investment contracts, real estate leased to public entities, mortgages, real estate, debt or equity of certain small businesses, certain state and local government obligations and certain other specified investment vehicles. In addition, the City created a retiree healthcare trust fund under Public Act 149 of 1999 which allows the funds to be invested in the same investments noted in Public Act 314.
The City deposits all funds with Comerica Bank, but only operating funds required to meet current obligations are kept in Comerica Bank accounts. All other non-pension operating funds are invested with Incore Capital Management in securities backed by the federal government. The investment policy adopted by City Council is required by PA 20 of 1943 as amended. The deposit and investment policies of the City comply with applicable state statutes.
The City’s cash and investments are subject to several types of risk, which are examined in more detail as follows:
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The government does not have a deposit policy for custodial credit risk. At year end, the City had $2,157,569 of bank deposits (certificates of deposit, checking and savings accounts) that were uninsured and uncollateralized. The City believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all deposits. As a result, the City evaluates each financial institution it deposits funds with and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories.
52 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments (Continued)
Custodial Credit Risk of Investments
Custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have a policy for custodial credit risk. At year end, the City did not have custodial credit risk.
I nterest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates. The City’s investment policy minimizes interest rate risk by structuring the portfolio to meet requirement and by investing funds in shorter-term securities, money market mutual funds or similar investment pools. The City’s investment policy does not restrict investment maturities, other than commercial paper which can only be purchased with a 270 day maturity. The weighted average maturity is based on maturity date or contracted modified maturity date as applicable. At year end, the average maturities of investments are as follows:
Weighted Average Fiduciary Investment Types Fair Value Maturity U.S. Treasuries $ 62,315,483 1.34 years Fixed Income - Corporate Bonds 8,697,509 10.17 years U.S. Government - Mortgage Backed 8,581,601 26.89 years U.S. Government - Collateralized Mortgage Obligations 3,968,752 20.35 years Fixed Income - Collateralized Mortgage Obligations 1,083,461 25.41 years Foreign Bonds 721,710 8.33 years Fixed Income - Private Placement 502,768 21.93 years Fixed Income - Corporate Asset Backed Security 446,030 3.97 years Fixed Income - Mutual Funds 147,595,978 *
* The weighted average maturity for $147,595,978 of Fixed Income Mutual Funds is not known based on the information available to the City as of June 30, 2018.
53 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments (Continued)
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by nationally recognized statistical rating organizations at the time of purchase. The City’s investment policy limits investments to the safest types of securities. Financial institutions, broker/dealers, intermediaries and advisers need to be pre-qualified to do business with the City. The policy also states that the investment portfolio will be diversified to minimize potential losses on individual securities. As of year-end, the credit quality ratings of debt securities (other than the U.S. government) are as follows:
Primary Government Investment Types Fair Value Rate Rating Organization Bank Investment Pool $ 75,609,344 N/ R
Fiduciary Investment Types Fair Value Rate Rating Organization Bank Investment Pool $ 3,336,992 N/ R Bank Investment Pool J Funds 2,477,377 N/ R Securities Lending ST Collateral Investment Pool N/ R Corporate Bonds 511,313 AAA** S&P Corporate Bonds 207,575 AA+ S&P Corporate Bonds 183,115 AA S&P Corporate Bonds 320,662 AA- S&P Corporate Bonds 361,681 A+ S&P Corporate Bonds 1,053,397 A** S&P Corporate Bonds 991,079 A-** S&P Corporate Bonds 3,604,250 BBB+ S&P Corporate Bonds 1,924,858 BBB S&P Corporate Bonds 1,108,020 BBB- S&P Federal Agency/Instrumentality (Mortgage Backed) 463,819 N/ R American Depositary Receipt (ADR) 191,464 N/ R Foreign Bonds 134,291 A S&P Foreign Bonds 224,456 A- S&P Foreign Bonds 38,170 AA- S&P Foreign Bonds 44,621 BBB+ S&P Foreign Bonds 280,173 BBB- S&P U.S. Government Securities (Mortgage Backed) 8,581,601 N/ R S&P U.S. Government Securities N/ R S&P (Collateralized Mortgage Obligations) 3,968,752 Fixed Income Mutual Funds 147,595,978 * S&P
* The credit quality ratings for $147,595,978 of Fixed Income Mutual Funds are not known based on the information available to the City as of June 30, 2018.
* * Where S&P credit ratings were unavailable Moody’s credit ratings were used and converted to equivalent S&P credit ratings for consistency in groupings and reporting.
54 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments (Continued) Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City places no limit on the amount that may be invested in any one issuer. At June 30, 2018, the City had more than 5.00% of its investments in the following:
Fiduciary Funds Comerica Foreign Equity fund 10.40% United States Treasury 7.66% Vanguard 6.07% Baird 5.05%
Component Units The component units did not have bank deposits subject to custodial credit risk (uninsured and uncollateralized). Investment securities held by the counterparty (or the counterparty’s trust department) were not in the component unit’s name.
Fair Value Measurements
The City of Dearborn 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; Level 3 inputs are significant unobservable inputs. Investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy below.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The City of Dearborn’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
55 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments (Continued) The City of Dearborn has the following recurring fair value measurements as of June 30, 2018:
Assets and Liabiliteis Measured at Fair Value on a Recurring Basis Fair Value Measure Using Quoted Price in Active Markets for Significant Other Significant Balance at Identical Assets Observable Inputs Unobservable Inputs 06/30/2018 (Level 1) (Level 2) (Level 3) Governmental and proprietary investment types by fair value measure
Mutual Funds U.S. Government Bonds $ 48,971,964 $ - $ 48,971,964 $ -
Total governmental and proprietary investments by fair value level 48,971,964 - 48,971,964 -
Investments measured at the net asset value (NAV)
Add: investments not measured at fair market v alue 2,567,914
Total investments $ 51,539,878
Fiduciary investment types by fair value measure
Common Stock ADR $ 191,464 191,464 - - Equity 11,103,937 11,103,937 - - Foreign Equity 5,907,372 5,907,372 - - U.S. Equity 145,985,203 140,854,613 5,130,590 - Real Estate Trust Funds 6,581,033 6,581,033 - -
Fixed Income Mutual Funds
Fixed Income 156,425,070 81,538,100 74,886,970 -
Mutual Funds Corporate 10,729,768 - 10,729,768 - Foreign Bonds 721,710 - 721,710 - U.S. Government Bonds 24,049,892 - 24,049,892 - Equity 60,248,340 33,776,492 26,471,848 - Foreign Equity 83,355,644 - 83,355,642 -
Total fiduciary investments by fair value level 505,299,433 $ 279,953,011 $ 225,346,420 $ -
Investments measured at the net asset value (NAV)
Real Estate Funds 21,177,449
Total investments measured at the NAV 21,177,449
Total investments measured at fair value 526,476,882
Add: investments not measured at fair market v alue 3,249,188
Total investments $ 529,726,070
56 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 2 –Deposits and I nvestments (Continued)
Component unit investment as of June 30, 2018 includes $750,078 of U.S. Government Bonds whose fair value is measured using Level 1 inputs.
Debt and equity securities classified in Level 1 are valued using prices quoted in active markets for those securities.
The fair value of mutual funds noted as Level 2 above were estimated using other inputs such as interest rate and yield curves that are observable at commonly quoted intervals.
I nvestments in Entities that Calculate Net Asset Value per Share
The City of Dearborn holds shares or interests in investment companies at where the fair value of the investments are measured on a recurring basis using net asset value per share (or its equivalent) of the investment companies as practical expedient. Period
Fair Value Notice Period Real Estate $ 21,177,449 90 Days
At June 30, 2018, the City of Dearborn had no unfunded commitments or redemption restrictions other than the notice periods noted above.
The real estate funds class includes several real estate funds that invest primarily in U.S. commercial real estate. The fair values of the investments in this class have been estimated using the net asset value of the City of Dearborn’s ownership interest in partners’ capital.
57 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 3 – Capital Assets
Capital asset activity for the year ended June 30, 2018 was as follows:
Governmental Activities
Beginning Ending Balance Increases Decreases Transfers Adjustments Balance Assets not being depreciated Land $ 12,395,051 $ - $ (105,001) $ - $ (1) $ 12,290,049 Right of ways 37,818 - - - - 37,818 Construction in progress 1,796,778 8,630,237 - (1,355,431) (48,858) 9,022,726 Total capital assets not being depreciated 14,229,647 8,630,237 (105,001) (1,355,431) (48,859) 21,350,593
Other capital assets Buildings & improvement s 168,982,390 717,267 (259,570) 1,312,623 - 170,752,710 Machinery & equipment 49,789,402 3,981,492 (1,903,509) 32,026 - 51,899,411 Infrastructure assets 130,292,952 11,383,026 - - - 141,675,978
Total other capital assets 349,064,744 16,081,785 (2,163,079) 1,344,649 - 364,328,099
Accumulated depreciation Buildings & improvement s 69,857,585 3,543,075 (259,570) - 313 73,141,403 Machinery & equipment 31,590,848 3,158,693 (1,764,820) (8,265) 74,670 33,051,126 Infrastructure assets 59,542,392 5,216,266 - - - 64,758,658
Total accumulated depreciation 160,990,825 11,918,034 (2,024,390) (8,265) 74,983 170,951,187
Net other capital assets 188,073,919 4,163,751 (138,689) 1,352,914 (74,983) 193,376,912
Net capital assets $ 202,303,566 $ 12,793,988 $ (243,690) $ (2,517) $ (123,842) $ 214,727,505
Depreciation was charged to functions as follows:
Governmental activities General government $ 883,873 Public safety 2,246,280 Public works 6,647,688 Recreation & culture 2,198,819 Community improvement 16,357
Total governmental activities depreciation expense $ 11,993,017
58 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 3 – Capital Assets (Continued)
Business-type Activities
Beginning Ending Balance Increases Decreases Transfers Adjustments (1) Balance Assets not being depreciated Land $ 1,768,541 $ - $ - $ - $ - $ 1,768,541 Construction in progress 54,290,653 20,849,750 - (8,142,324) (36,534,981) 30,463,098 Total capital assets not being depreciated 56,059,194 20,849,750 - (8,142,324) (36,534,981) 32,231,639
Other capital assets Land improvement s 376,500 - - - - 376,500 Buildings 29,599,469 - - 570,018 - 30,169,487 Machinery & equipment 44,650,894 439,597 (340,449) 10,782 - 44,760,824 Water System 129,092,081 - (26,220) 4,174,639 - 133,240,500 Sewer System 282,297,285 - (7,191) 3,397,667 - 285,687,761
Total other capital assets 486,016,229 439,597 (373,860) 8,153,106 - 494,235,072
Accumulated depreciation Land Improvements 376,500 - - - - 376,500 Buildings 14,869,071 760,263 - - - 15,629,334 Machinery & Equipment 17,254,142 3,059,048 (326,115) 8,265 - 19,995,340 Water System 44,882,103 1,747,517 (26,010) - - 46,603,610 Sewer System 44,462,202 3,737,443 (7,103) - 1,257 48,193,799
Total accumulated depreciation 121,844,018 9,304,271 (359,228) 8,265 1,257 130,798,583
Net other capital assets 364,172,211 (8,864,674) (14,632) 8,144,841 (1,257) 363,436,489
Net capital assets $ 420,231,405 $ 11,985,076 $ (14,632) $ 2,517 $ (36,536,238) $ 395,668,128
(1) Assets of $36.3 million were expensed in the Sewer fund related to the abandonment of CSO Caisson C2 (see Special Item section in Note 13).
Depreciation was charged to functions as follows:
Business-type activities Sewer $ 7,152,272 Water 1,929,703 Housing 223,553
Total business-type activities depreciation expense $ 9,305,528
59 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt
Outstanding Debt
The following is a summary of the debt outstanding of the City as of June 30, 2018:
Principal Outstanding Governmental Business- type Activities Activities 2006 General Obligation Limited Tax Refunding Bonds, (Taxable), 5.50% to 5.80%, dated April 25, 2006 $ 368,089 2017 General Obligation Limited Tax Capital Improvement Bonds, 3.00%, dated May 18, 2017 10,946,884 2017 General Obligation Limited Tax Capital Improvement Bonds, 3.00%, dated Dec 7, 2017 3,543,318 2018 General Obligation Limited Tax Capital Improvement Bonds, 3.366%, dated May 3, 2018 14,500,000 2002 Sewage Disposal System Revenue Bonds, 2.50%, dated March 28, 2002 1,790,000 2004 Sewage Disposal System General Obligation Unlimited Tax Bonds, 2.125%, dated September 23, 2004 17,399,705 2005 Sewage Disposal System General Obligation Unlimited Tax Bonds, 1.625% dated September 22, 2005 31,136,299 2006 Sewage Disposal System General Obligation Unlimited Tax Bonds, 1.625%, dated June 22, 2006 3,497,942 2007 Sewage Disposal System General Obligation Unlimited Tax Bonds, 1.625% dated September 20, 2007 63,410,000 2009 Sewage Disposal System General Obligation Unlimited Tax Bonds, 2.50%, dated September 28, 2009 3,995,000 2009 Water Supply System Revenue Bonds, 2.50% dated September 28, 2009 413,812 2012 Sewage Disposal System General Obligation Unlimited Tax Bonds, 2.50% dated June 26, 2012 6,255,000 2013 Sewage Disposal System General Obligation Unlimited Tax Bonds, 2.50% dated April 9, 2013 6,960,889 2014 Sewage Disposal System General Obligation Unlimited Tax Refunding Bonds, 3.00% to 3.75%, dated July 15, 2014 17,196,585 2014 Sewage Disposal System General Obligation Unlimited Tax Bonds, 2.50% dated December 12, 2014 11,530,000 2017 Sewage Disposal System General Obligation Unlimited Tax Bonds, 3.00% to 3.50%, dated May 18, 2017 10,614,432 2017 Sewage Disposal System General Obligation Unlimited Tax Bonds, 3.00% to 4.00%, dated Dec 7, 2017 26,710,931
29,358,291 200,910,595
Accumulated sick, vacation, and PTO benefits 6,382,473 640,792
Total $ 35,740,764 $ 201,551,387
60 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
By statute, the City’s general obligation debt is restricted to ten percent of the equalized value of all property in the City. At June 30, 2018 the City’s general obligation debt margin amounted to approximately $379,000,000.
Changes in Long-term Debt
The following is a summary of long-term debt transactions of the City for the year ended June 30, 2018:
Governmental Activities
Beginning Ending Amounts Due Balance Additions Reductions Balance Within One Year Bonds & notes payable - General obligation bonds $ 14,799,978 $ 18,043,318 $ (3,485,005) $ 29,358,291 $ 1,037,175
Other Liabilities - Compensated absences 6,220,327 4,321,101 (4,158,955) 6,382,473 2,440,556
Total governmental activities $ 21,020,305 $ 22,364,419 $ (7,643,960) $ 35,740,764 $ 3,477,731
Business-type Activities
Beginning Ending Amounts Due Balance Additions Reductions Balance Within One Year Bonds & notes payable - General obligation bonds $ 184,537,216 $ 26,710,931 $ (12,541,364) $ 198,706,783 $ 13,038,601 Revenue bonds 2,593,812 - (390,000) 2,203,812 405,000 Subtotal 187,131,028 26,710,931 (12,931,364) 200,910,595 13,443,601
Other Liabilities - Compensated absences 610,435 529,670 (499,313) 640,792 290,664
Total business-type activities $ 187,741,463 $ 27,240,601 $ (13,430,677) $ 201,551,387 $ 13,734,265
The funds that report each employee’s compensation, the General, Water, Sewer, Library, Facilities, Information Systems and Seniors Apartment Operating funds, are used to liquidate the compensated absences liability.
61 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
Debt Service Requirements
The annual requirements to service all debt outstanding as of June 30, 2018 (excluding sick, vacation and PTO benefits), including both principal and interest, are as follows:
Year Ending Governmental Business- type June 30, Activities Activities Principal Interest Principal Interest 2019$ 1,037,175 $ 899,159 $ 13,443,601 $ 4,458,482 2020 1,359,086 885,881 14,123,601 4,202,907 2021 1,404,086 845,531 14,418,601 3,929,476 2022 1,439,086 803,831 14,703,601 3,649,713 2023 1,484,086 761,081 14,983,601 3,364,095 2024-2028 8,305,431 3,090,944 66,785,763 12,433,550 2029-2033 8,603,511 1,735,631 35,008,005 6,726,120 2034-2038 5,725,830 604,432 15,674,748 3,274,302 2039-2043 - - 11,769,074 1,346,062 Total $ 29,358,291 $ 9,626,490 $ 200,910,595 $ 43,384,707
Description of Long-term Debt Governmental Activities
On April 25, 2006, the City issued $2,475,000 in General Obligation Limited Tax Refunding Bonds (taxable) with interest rates that range from 5.5% to 5.8%. The proceeds from these bonds, along with an additional contribution from the General Fund, were used to advance refund $3,650,000 of outstanding 2004 Capital Improvement Bonds, Series A (non-taxable). The net proceeds of $3,604,631 (net of underwriting fees and issuance costs) were used to purchase U.S. Certificates of Indebtedness – State and Local Government Securities (SLGS). Those securities were deposited into an irrevocable trust with an escrow agent and subsequently used to pay off the bonds. Refinancing of a portion of the bonds was necessary to accommodate a change in the portion of the parking projects that will be dedicated for personal use which resulted in the loss of the exclusion of gross interest for federal income tax purposes. The net economic loss to the City was $299,484.
On July 15, 2014, the City issued $3,125,000 in Limited Tax General Obligation (taxable) Refunding Bonds, with interest rates ranging from 2.55% to 4.05%. The proceeds from these bonds were used to refinance and restructure the 2004 Capital Improvement Bonds Series A and B. The City of Dearborn Postemployment Healthcare fund purchased this bond issue in full which is now a component of the fund’s investment portfolio. The proceeds from these bonds were used to advance refund $3,175,000 of outstanding Capital Improvement General Obligation Limited Tax Bonds (Series A) and $425,000 of outstanding Capital Improvement General Obligation Limited Tax Bonds (Series B). The net proceeds were used to purchase U.S. Certificates of
62 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
Indebtedness – State and local Government Securities (SLGS). Those securities were deposited into an irrevocable trust with an escrow agent and subsequently used to pay off the bonds, including a call premium, on August 14, 2014. The advance refunding increases total debt service payments over 12 years by approximately $604,000 which represents an economic gain of approximately $49,000.
On May 18, 2017, the City issued $10,780,000 in Limited Tax General Obligation Bonds with interest rate of 3.00%. A total of $2,300,000 of these proceeds will be used to build a new aquatic facility at Ford Woods Park, and the remaining $8,480,000 will be used to redevelop infrastructure in West Downtown Dearborn related to the Wagner Place redevelopment project by Ford Motor Company. The first principal payment will be due May 1, 2020 and will continue to be due May 1 through 2032.
On Dec 7, 2017, the City issued $3,543,318 in Limited Tax General Obligation Bonds with an interest rate of 3.00%. The proceeds from the bonds will be used for the construction of the Dunworth pool dive well conversion and bath house replacement. The first principal payment will be due June 1, 2019 and will continue to be due June 1 through 2038.
On May 3, 2018, the City issued $14,500,000 in Limited Tax General Obligation Bonds with an interest rate of 3.366%. The proceeds from the bonds will be used for the construction of the Powerhouse improvement project. The first principal payment will be due June 1, 2019 and will continue to be due June 1 through 2038.
Business-type Activities
On March 28, 2002, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $6,000,000 in principal of Sewage Disposal System Revenue Bonds, Series 2002 (General Obligation Limited Tax) for the construction of the Miller Road Sewage Pump Station. The City is obligated to pay interest at 2.50% per annum commencing on October 1, 2002 and semiannually thereafter. The first principal payment was due April 1, 2004 and will continue to be due April 1 through 2023.
On September 23, 2004, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $61,640,000 in principal of General Obligation Sewer Bonds, Series 2004A (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 1.625% per annum commencing April 1, 2005 and semiannually thereafter. The first principal payment was due April 1, 2008 and will continue to be due April 1 through 2027.
On September 22, 2005, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $72,895,000 in principal of General Obligation Sewer Bonds, Series 2005 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 1.625 percent per annum commencing April 1, 2006 and semiannually thereafter. The first principal payment was due April 1, 2009 and will continue to be due April 1 through 2028.
63 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
On June 22, 2006, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $7,450,000 in principal of General Obligation Sewer Bonds, Series 2006 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. As of December, 2010 this portion of the project was administratively complete and the final loan amount was $7,182,942. The City is obligated to pay interest at 1.625% per annum commencing October 1, 2006 and semi-annually thereafter. The first principal payment was due April 1, 2008 and will continue to be due April 1 through 2027.
On September 20, 2007, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $99,360,000 in principal of General Obligation Sewer Bonds, Series 2007 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 1.625% per annum commencing October 1, 2007 and semiannually thereafter. The first principal payment was due April 1, 2011 and will continue to be due April 1 through 2030.
On September 28, 2009, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $9,460,000 in principal of General Obligation Sewer Bonds, Series 2009 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 2.50% per annum commencing April 1, 2010 and semiannually thereafter. The first principal payment was due April 1, 2012 and will continue to be due April 1 through 2031. Of the authorized amount, $3,784,000 is considered an American Recovery and Reinvestment Act (ARRA) grant. The maximum principal repayment will be $5,676,000.
On September 28, 2009, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $1,655,000 in principal of Water Supply System Revenue Bonds, Series 2009 (Limited Tax General Obligation) for the construction and installation of improvements to the City’s water supply system. The revised final loan amount was $1,453,020. The City is obligated to pay interest at 2.50% per annum commencing April 1, 2010 and semiannually thereafter. The first principal payment was due April 1, 2011 and will continue to be due April 1 through 2024. Of the final loan amount, $581,208 is considered an American Recovery and Reinvestment Act (ARRA) grant. The maximum principal repayment will be $871,812.
On June 26, 2012, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $7,465,000 in principal of General Obligation Sewer Bonds, Series 2009 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 2.5% per annum commencing October 1, 2012 and semiannually thereafter. The first principal payment was due October 1, 2014 and will continue to be due October 1 through 2033.
64 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
On April 9, 2013, the City and the Michigan Municipal Bond Authority entered into an agreement whereby the City would issue, and the Michigan Municipal Bond Authority would purchase, up to $8,105,000 in principal of General Obligation Sewer Bonds, Series 2009 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 2.5% per annum commencing October 1, 2013 and semiannually thereafter. The first principal payment is due October 1, 2015 and will continue to be due October 1 through 2034. The amount drawn as of June 30, 2018 is $7,980,889.
On July 15, 2014, the City issued $20,085,000 in Unlimited Tax General Obligation Sewer Refunding Bonds, with interest rates ranging from 3.00% to 3.75%. The proceeds from these bonds were used to refinance the 2004 Series B Unlimited Tax General Obligation Sewer Bonds. The proceeds were used to purchase U.S. Certificates of Indebtedness – State and local Government Securities (SLGS). Those securities were deposited into an irrevocable trust with an escrow agent and subsequently used to pay off the bonds, including a call premium, on August 15, 2014. The advance refunding reduces total debt service payments over 20 years by approximately $2,423,000 which represents and economic gain of approximately $1,919,000.
On December 12, 2014, the City and the Michigan Finance Authority entered into an agreement whereby the City would issue, and the Michigan Finance Authority would purchase, up to $12,000,000 in principal of General Obligation Sewer Bonds, Series 2014 (Unlimited Tax General Obligation) for the construction of the Combined Sewer Overflow project. The City is obligated to pay interest at 2.50% per annum commencing April 1, 2015 and semiannually thereafter. The first principal payment is due October, 1 2017 and will continue to be due October 1 through 2036. The amount drawn as of June 30, 2018 is $12,000,000.
On May 18, 2017, the City issued $10,700,000 in Unlimited Tax General Obligation Bonds with interest rates ranging from 3.00% to 3.50%. The proceeds from the bonds will be used for the construction of the combined Sewer Overflow project . The first principal payment will be due April 1, 2019 and will continue to be due April 1 through 2043.
On Dec 7, 2017, the City issued $26,710,931 in Unlimited Tax General Obligation Bonds with interest rates ranging from 3.00% to 4.00%. The proceeds from the bonds will be used for the construction of the combined Sewer Overflow project. The first principal payment will be due April 1, 2020 and will continue to be due April 1 through 2043.
65 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
Changes in Long-term Debt - Component Units
The following is a summary of long-term debt transactions of the component units for the year ended June 30, 2018:
Beginning Ending Amounts Due Balance Additions Reductions Balance Within One Year 2009 General Obligation Limited Tax Redevelopment Bonds, Series A (Non- taxable) 5.00% to 5.50%, dated November 10, 2009 $ 9,517,835 $ - $ (226,973) $ 9,290,862 $ 242,330
2017 General Obligation Limited Tax Redevelopment Bonds 3.00%, dated May 18, 2017 7,578,450 - 2,640 7,581,090 (2,640)
Loan due to DCC (see Note 15) 490,759 - (81,794) 408,965 81,793 Total Component Unit Activities $ 17,587,044 $ - $ (306,127) $ 17,280,917 $ 321,483
Debt Service Requirements – Component Units
The annual requirements to service all component unit debt outstanding as of June 30, 2018 (excluding sick, vacation and PTO benefits), including both principal and interest, are as follows:
Year Ending Governmental June 30, Activities Principal Interest 2019$ 321,483 $ 763,671 2020 511,861 751,171 2021 532,260 732,771 2022 552,679 713,471 2023 573,125 693,271 2024-2028 2,834,211 3,126,456 2029-2033 3,624,614 2,409,049 2034-2038 4,581,802 1,459,886 2039-2043 2,511,802 480,298 2044-2048 1,237,080 94,501 Total $ 17,280,917 $ 11,224,545
66 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 4 – Long-term Debt (Continued)
Description of Long-term Debt – Component Units On November 10, 2009 the Brownfield Redevelopment Authority issued $9,815,000 in General Obligation Limited Tax Redevelopment Bonds, Series A (non-taxable) with interest rates that range from 5.00% to 5.50%. The proceeds from these bonds were used to construct a parking deck.
On May 18, 2017, the Brownfield Redevelopment Authority issued $7,655,000 in Limited Tax General Obligation Bonds with interest rates ranging from 3.00% to 3.75%. The proceeds from the bonds will be used to build a parking deck in West Downtown Dearborn related to the Wagner Place redevelopment project by Ford Motor Company. The first principal payment will be due May 1, 2020 and will continue to be due May 1 through 2046.
67 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 5 – I nterfund Receivables and Payables
The following balances at June 30, 2018 represent interfund receivables and payables:
Receivable Fund Payable Fund Amount
Due from/ to Other Funds
General Nonmajor governmental funds $ 51,484 Internal service funds 156,647 Total General 208,131
Nonmajor governmental funds Nonmajor governmental funds 275,855
Fiduciary funds General 1,538 Nonmajor governmental funds 201 Nonmajor enterprise funds 77 Sewer 92 Water 306 Internal service funds 286 Total Fiduciary funds 2,500
Due from/ to Component Units
General Component units 52,803
Total $ 539,289
All remaining balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.
68 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 6 - I nterfund Transfers
The following amounts for the year ended June 30, 2018 represent interfund transfers in and out:
Transferred In Fund Transferred Out Fund Amount
General Nonmajor governmental funds $ 2,200,000 (4)
Nonmajor governmental funds General 1,116,219 (2) Sewer 14,708 (2) Water 14,708 (2) Nonmajor governmental funds 3,400,520 (1) (2) Internal service funds 55,690 (2) Total Nonmajor governmental funds 4,601,845
Water Sewer 1,858,720 (3)
Internal service funds General 11,394,452 (2) Water 38,870 (2) Nonmajor enterprise funds 337 (2) Nonmajor governmental funds 391,000 (2) Internal service funds 466 (2) Total Internal service funds 11,825,125
Total $ 20,485,690
Transfers are used to (1) move revenues from the fund that statute requires to collect them to the funds that statute requires to expend them, (2) use unrestricted revenues collected in the one fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, (3) transfer constructed assets between funds, and (4) return of equity.
69 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans
Employer-Administered Defined Benefit Pension Plans
Plan Description
The City is the administrator of three single-employer defined benefit plans as follows:
Policemen’s and Firemen’s Retirement System Chapter 21 General Employees’ Retirement System Chapter 22 Revised Police and Fire Retirement System Chapter 23
The plan does not issue a separate stand-alone financial statement.
The plans are all closed to new hired employees. Employees not covered by these plans are eligible for either the City’s defined contribution plan, or for Police and Fire, the optional Municipal Employees Retirement System of Michigan (MERS) defined benefit plan.
Management of the plans is vested in the Pension Boards for Chapter 22 and 23 and with the City for Chapter 21. The Chapter 22 Board consists of five members—two elected by plan members, one appointed by the Mayor, one appointed by the City Council and one appointed by the Civil Service Commission. The Chapter 23 Board consists of seven members—four elected by plan members, two appointed by the Mayor, and one appointed by the City Council.
At June 30, 2017, the date of the most recent actuarial valuation, membership consisted of the following:
Revised Policemen's General Police and and Firemen's Employees Fire Retirees and beneficiaries currently receiving benefits 50 544 410
Terminated employees entitled to benefits but not yet receiving them - 66 9
Current active employees - 164 145
Chapter 21 Benefits The last active member retired in the plan-year ended June 30, 1995. The plan contains an “unlimited escalator” provision which calls for annuity payments to be changed automatically whenever the active member pay schedule changes for Chapter 23. If a member had elected an optional form of benefit and the beneficiary were t o predecease the member, the amount payable to the member would “pop-up” to the amount that would have been payable if the optional form had not been elected. This “pop-up” benefit was provided at no cost to the retiring member.
70 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Chapter 22 Benefits
A member may retire after either attaining age 55 (age 50 for Police Dispatch members) and completing 25 years of service or after attaining age 60 and completing 10 years of service.
Benefits are calculated at 2.50% of final average earnings times the first 26 years of credited service plus 1.75% of final average earnings times the next three years of credited service, and 2.25% for the 30th year of service. Final average earnings means the average of the member's highest annual pays received during any three consecutive years of service contained within the last 10 years of credited service.
Optional Forms of Benefit – Retiring members may elect to receive a reduced retirement allowance with the provision that a portion (100%, 75%, or 50%) of the reduced amount will continue to a beneficiary after the death of the retiree. The reduction amount is based upon 7.00% starting January 1, 2017, the RP2000 Mortality Table projected to 2020 using projection scale BB with an 85% Unisex blend, and the ages of the retiree and beneficiary on the member's voluntary retirement date. If a member elects an optional form and the beneficiary predeceases the member, the amount payable to the member "pops-up" to the amount that would have been payable if the optional form had not been elected. This "pop-up" benefit is provided at no cost to the retiring member.
Deferred Retirement - A member with 10 or more years of service who leaves City employment before retirement receives an annuity computed in the same manner as an age and service annuity, payments beginning upon application at voluntary retirement age.
Disability Retirement – A member who becomes totally and permanently disabled from duty- connected causes before attaining age 60 receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a duty disability annuity computed in the same manner as an age and service annuity, including service credit for the period from disability to age 60.
A member with 10 or more years of service who becom es totally and permanently disabled from other than duty-connected causes receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a non-duty disability annuity computed in the same manner as an age and service annuity.
Death of a Member – Upon the death of a member, the surviving dependents receive, subject to offsetting for workers’ compensation and Social Security, the following benefits:
(a) The spouse receives an annuity equal to the Option B-100 annuity (joint and 100% survivor actuarial equivalent benefit) which would have been payable had the deceased member retired at the time of death and elected Option B-100. The minimum annuity payable to the spouse is 20% of the member's final average earnings.
71 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
(b) The dependent children under age 18 (23 if they are full-time students) each receive an annuity of 15% of the member's final average earnings until they reach age 18 (23). If there are four or more dependent children, each child receives an equal share of 50% of the member's final average earnings until they reach the above ages.
(c) If there is neither a spouse nor dependent children, each dependent parent receives an annuity equal to 15% of final average earnings.
Chapter 23 Benefits
A member may retire after either completing 25 years of service regardless of age, or completing 10 years of service and attaining age 55. A member must retire upon attaining age 60, except that under certain conditions a member may be extended in service to age 65.
Fire members – Benefits are calculated at final average earnings times the sum of 2.8% times the first 26 years of service plus 2.2% times the next one year of service plus 1% times the next three years of service, with a maximum of 78%.
Police Non-supervisory members – Benefits are calculated at final average earnings times the sum of 2.8% times the first 25 years of service plus 2.5% times the next 26 and 27 years of service, with a maximum of 75% and 1.0% times the next 3 years with a maximum of 78%.
Police Supervisory and Command staff members – Benefits are calculated at final average earnings times the sum of 2.8% times the first 24 years of service plus 3.8% times the next one year of service plus 1.4% times the next five years of service, with a maximum of 78%.
Annuity Withdrawal - Upon retirement, a member may withdraw a lump sum not to exceed the amount of their accumulated member contributions (not including interest) at time of retirement. The life allowance otherwise payable is not reduced to reflect the withdrawal of contributions. A member may also make an annuity withdrawal after 25 years of credited service.
Optional Forms of Benefit – Retiring members may elect to receive a reduced retirement allowance with the provision that a portion (100%, 75%, or 50%) of the reduced amount will continue to a beneficiary after the death of the retiree. The reduction amount is based upon 7.00% starting January 1, 2017, the RP2000 Mortality Table projected to 2020 using projected scale BB (multiplied by 110% for males) with a 95% unisex blend, a 2% compound cost of living allowance (COLA) with a two-year delay and the ages of the retiree and beneficiary on the retirement date or the member’s 25-year service anniversary if earlier. If a member elects an optional form and the beneficiary predeceases the m ember, the amount payable to the member "pops-up" to the amount that would have been payable if the optional form had not been elected. This "pop-up" benefit is provided at no cost to the retiring m ember.
Deferred Retirement – A member with 10 or more years of service who leaves City employment before retirement is entitled to receive an allowance computed in the same manner as an age and service allowance, payments beginning upon the member's application at age 55 or when the member would have attained 25 years of service, whichever is earlier.
72 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Disability Retirement – A member who becomes totally and permanently disabled from duty- connected causes receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a duty disability allowance equal to 70% of final average earnings.
A member with 10 or more years of service who becom es totally and permanently disabled from other than duty-connected causes receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a non-duty disability allowance computed in the same manner as an age and service allowance.
Death of a Member – Upon the death of a member, the surviving dependents receive, subject to offsetting for workers’ compensation and Social Security, the following benefits:
(a) The spouse receives an annuity equal to the Option B-100 annuity (joint and 100% survivor actuarial equivalent benefit) which would have been payable had the deceased member retired at the time of death and elected Option B-100. The minimum annuity payable to the spouse is 20% of the member's final average earnings.
(b) The dependent children under age 18 (23 if they are full-time students) each receive an annuity of 15% of the member's final average earnings until they reach 18 (23). If there are four or more dependent children, each child receives an equal share of 50% of the member's final average earnings until they reach the above ages.
(c) If there is neither a spouse nor dependent children, each dependent parent receives an annuity equal to 15% of final average earnings.
Benefit Changes After Retirement
Chapter 21
The plan contains an “unlimited escalator” provision which calls for annuity payments to be changed automatically whenever the active member pay schedule changes for Chapter 23.
Chapter 22
There are no provisions for benefit changes after retirement.
Chapter 23
The cap on all raises is the lower of the rate of inflation or 2%. The provision provides “compound” increases after retirement.
Fire – Retirements after July 1, 2002 provide increases each January 1 or July 1, beginning with the January 1 or July 1 that is at least 24 full months after retirement. Persons retired prior to July 1, 2002 are covered by different provisions.
73 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Police – Non-supervisory members retiring after July 1, 2004 receive raises starting January 1 or July 1 two years after retirement. Persons retired prior to July 1, 2004 are covered by different provisions. Police Supervisory and Command staff members retiring after July 1, 2001 receive raises starting 24 full months after retirement. Persons retired prior to July 1, 2001 are covered by different provisions.
Contributions
The financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to the plan are recognized when due pursuant to legal requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are recorded at fair value. Please refer to Note 1 for further significant accounting policies.
The obligation to contribute to and maintain the systems for these employees was established by negotiations with the City's collective bargaining units. Police and Fire employees participating in the Revised Police and Fire Retirement System contribute a refundable five percent of covered wages. Effective January 1, 2013 as established by the City through collective bargaining agreements, General employees participating in the General Employees' Retirem ent System are required to make a 5% non-refundable contribution into their pension system.
Article 9, Section 24 of the State of Michigan constitution requires that financial benefits arising on account of employee service rendered in each year be funded during that year. Accordingly, the Pension Board retains an independent actuary to determine the annual contribution. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by plan members during the year, with an additional amount to finance any unfunded accrued liability. The City’s contribution rate was 39.02% of covered payroll for Chapter 22; the Chapter 23 contribution rate was an average 88.98% for Police and Fire members combined. Employer contributions are made primarily by the City’s General fund where the majority of pension plan members are employed. Other funds that make contributions include certain special revenue funds, enterprise funds and internal service funds that also have employees who are members of the pension plans.
Reserves
In accordance with legal requirements, the following reserves are required to be set aside within the pension plan:
The retiree reserve is to be computed annually by the actuary as the present value of estimates benefit payments for all current retirees. The amounts reserved may be used solely to pay monthly retiree benefit payments.
The employee reserve is credited as employee contributions and are received throughout the year; the plan maintains a record of the amount contributed by each employee. For any employee who terminates before vesting in the plan, their balance is returned to them; for those who stay until retirement, the balance is transferred into the retiree reserve.
74 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
The balances of the reserve accounts at June 30, 2018 are as follows:
Amount Chapter 21 Chapter 22 Chapter 23 Funded
Retiree reserve $ 24,630,629 $ 141,451,759 $ 275,612,840 98.07%
Employee reserve - 238,810 8,740,667 100.00%
The required retiree reserve for Chapter 23 is $284,322,407; however the amount funded is $275,612,840.
Financial Statement I nformation
As of June 30, 2018 the Statement of Net Position for the three pension plans is as follows:
General Revised Policemen's & Employees' Police & Fire Firemen's Retirement Retirement Retirement System Fund System Fund System Fund Assets Current assets Cash and cash equivalents $ 282,798 $ 448,558 $ 30,062 Investments - short- term 765,580 1,867,516 86,384 Receivables Accrued interest receivable 41,985 93,677 14,558 Due from brokers and other 119,798 171,341 - Due from other funds 2,500 - - Total current assets 1,212,661 2,581,092 131,004
Noncurrent assets - investments Certificates of deposit 6,492 10,298 690 Fixed income mutual funds 53,565,335 89,632,351 13,227,385 Common st ock 34,637,185 87,510,990 3,775,108 Real estate properties 7,262,684 13,914,765 - Mutual funds and other 45,089,357 91,011,137 7,503,489 Total noncurrent assets 140,561,053 282,079,541 24,506,672 Total assets 141,773,714 284,660,633 24,637,676
Liabilities Accounts payable 83,095 194,252 7,047 Total liabilities 83,095 194,252 7,047
Net Position - restricted for pensions $ 141,690,619 $ 284,466,381 $ 24,630,629
75 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
For the year ended June 30, 2018 the Statement of Changes in Net Position for the three pension plans is as follows:
General Revised Policemen's & Employees' Police & Fire Firemen's Retirement Retirement Retirement System Fund System Fund System Fund Additions Investment income Interest and dividends $ 1,346,912 $ 2,966,013 $ 554,122 Net increase/(decrease) in value of investments 6,654,156 12,683,090 506,933 Investment expenses (391,273) (954,476) (47,690) Net investment income (loss) 7,609,795 14,694,627 1,013,365
Contributions Employer 4,520,402 12,501,034 - Employee 427,812 700,192 - Total contributions 4,948,214 13,201,226 - Total additions 12,558,009 27,895,853 1,013,365
Deductions Benefit payments 12,004,218 20,645,724 1,778,459 Refunds of contributions 52,616 760,730 - Claims and judgments - 291,433 - Administrative expenses 36,589 58,614 12,446 Total deductions 12,093,423 21,756,501 1,790,905
Change in Net Position 464,586 6,139,352 (777,540)
Net Position - Beginning of Year 141,226,033 278,327,029 25,408,169
Net Position - End of Year $ 141,690,619 $ 284,466,381 $ 24,630,629
Pension Plan I nvestments – Policy and Rate of Return
Investment Policy
The pension plans’ policy in regard to the allocation of invested assets is established and may be amended by the Pension Board by a majority vote of its members. It is the policy of the Pension Board to pursue an investment strategy that manages risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes. The pension plans’ investment policy discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans.
76 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return were adopted by the plans’ trustees after considering input from the plans’ investment consultant(s). For each major asset class that is included in the pension plans’ target asset allocation as of June 30, 2018, these best estimates are summarized in the following tables:
Chapter 21 Asset Allocation
Long- Term Expected Real Asset Class Target Allocation Rate of Return * Global Equit y 30.00% 5.74% All Cap Equit y 15.00% 5.92% Core Bonds 30.00% 1.14% TIPS 10.00% 1.17% Intermediate Credit 15.00% 2.20% Total 100.00%
* Real rate of return is based on investment manager inflation assumption of 2.75%.
77 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Chapter 22 Asset Allocation
Long- Term Expected Real Asset Class Target Allocation Rate of Return * Large Cap Equity 23.00% 4.62% Small/Mid Cap Equity 5.00% 6.71% International Equity 20.00% 5.41% Emerging International Equity 7.00% 9.46% Core Bonds 12.00% 1.14% Emerging Market Debt 5.00% 3.65% TIPS 6.00% 1.17% Diversified Credit 4.00% 2.71% Absolute Return Fixed Income 7.00% 1.67% Real Estate - Core 5.00% 4.38% Short Duration Opportunistic 6.00% 3.04% Total 100.00%
* Real rate of return is based on investment manager inflation assumption of 2.75%.
Chapter 23 Asset Allocation
Long- Term Expected Real Asset Class Target Allocation Rate of Return * Large Cap Equity 21.00% 4.62% Small/Mid Cap Equity 7.00% 6.71% International Equity 20.00% 5.41% Emerging International Equity 7.00% 9.46% Core Bonds 8.00% 1.14% Emerging Market Debt 4.00% 3.65% TIPS 4.00% 1.17% Diversified Credit 4.00% 2.71% Short Duration Opportunistic 5.00% 3.04% REal Estate - Core 3.00% 4.38% Real Estate - Non Core 5.00% 4.35% Hedge Funds 7.00% 3.00% Private Debt 5.00% 4.35% Total 100.00%
* Real rate of return is based on investment manager inflation assumption of 2.75%.
78 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
For the year ended June 30, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 4.08% for Chapter 21, 5.52% for Chapter 22 and 5.25% for Chapter 23. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
Net Pension Liability of the City of Dearborn
In fiscal year 2015 the City adopted GASB 68 which requires the measurement of pension expense as it is earned rather than as it is funded. The net pension liability (NPL) was measured as of June 30, 2018 and is composed of the following:
Chapter 21 – Policemen’s and Firemen’s Retirement System
The City has chosen to use June 30, 2018 as its measurement date for the net pension liability. The June 30, 2018 reported net pension liability was determined using a measure of the total pension liability (TPL) and the pension net position as of June 30, 2018. The June 30, 2018 total pension liability was determined by an actuarial valuation as of June 30, 2017 which used procedures to roll forward the estimated liability to June 30, 2018.
Changes in the net pension liability during the measurement year were as follows:
Increase (decrease) Total Pension Plan Net Net Pension Liability Position Liability (Asset) (a) (b) (a) - (b)
Balances at June 30, 2017 $ 10,634,310 $ 25,408,169 $ (14,773,859) Changes for the year Interest on TPL 584,705 - 584,705 Experience difference (248,496) - (248,496) Net investment income - 1,013,365 (1,013,365) Benefit payments, including refunds (1,778,459) (1,778,459) - Administrative expenses - (12,446) 12,446 Net changes (1,442,250) (777,540) (664,710) Balances at June 30, 2018 $ 9,192,060 $ 24,630,629 $ (15,438,569)
79 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred I nflows of Resources Related to Pensions
For the year ended June 30, 2018, the City of Dearborn recognized pension expense of $(461,950). At June 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual experience $ - $ - Net difference between projected and actual earnings on pension plan investments 1,055,179 - Total $ 1,055,179 $ -
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ended June 30, 2019$ 660,157 2020 305,389 2021 (1,845) 2022 91,478
Actuarial assumptions – The total pension liability was determined by an actuarial valuation as of June 30, 2017, which used updated procedures to roll forward the estimated liability to June 30, 2018. The valuation used the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 0.0% Salary increases N/A Investment rate of return 6.0%, net of pension plan investment expense, Including inflation
For calculation of the beginning and end of year TPL, mortality rates were based on 110% of the male RP-2000 combined healthy life mortality table and 100% of the female RP-2000 combined healthy life mortality table adjusted for mortality improvements to 2020 using projection scale BB.
Discount rate – A single discount rate of 6.00% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 6.00%.
80 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Projected Cash Flows – The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Please refer to page 77 to view the long-term expected rate of return for Chapter 21.
Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the City of Dearborn Chapter 21 Pension System, calculated using the discount rate of 6.0%, as well as what the Chapter 21 net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.00%) or 1-percentage-point higher (7.00%) than the current rate:
1% decrease Current discount 1% increase (5.00%) rate (6.00%) (7.00%)
Net pension liability (asset) $ (15,005,386) $ (15,438,569) $ (15,833,947)
Chapter 22 – General Employees Retirement System
The City has chosen to use June 30, 2018 as its measurement date for the net pension liability. The June 30, 2018 reported net pension liability was determined using a measure of the total pension liability and the pension net position as of June 30, 2018. The June 30, 2018 total pension liability was determined by an actuarial valuation as of June 30, 2017 which used procedures to roll forward the estimated liability to June 30, 2018.
81 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Changes in the net pension liability during the measurement year were as follows:
Increase (decrease) Total Pension Plan Net Net Pension Liability Position Liability (Asset) (a) (b) (a) - (b)
Balances at June 30, 2017 $ 185,375,206 $ 141,226,033 $ 44,149,173 Changes for the year Service cost 1,287,938 - 1,287,938 Interest on TPL 12,599,353 - 12,599,353 Experience difference (407,550) - (407,550) Contributions - employer - 4,520,402 (4,520,402) Contributions - employee - 427,812 (427,812) Net investment income - 7,609,795 (7,609,795) Benefit payments, including refunds (12,056,834) (12,056,834) - Administrative expenses - (36,589) 36,589 Net changes 1,422,907 464,586 958,321 Balances at June 30, 2018 $ 186,798,113 $ 141,690,619 $ 45,107,494
Pension Expense and Deferred Outflows of Resources and Deferred I nflows of Resources Related to Pensions
For the year ended June 30, 2018, the City recognized pension expense of $8,719,865. At June 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual experience $ - $ (71,731) Net difference between projected and actual earnings on pension plan investments 5,411,071 - Total $ 5,411,071 $ (71,731)
82 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ended June 30, 2019$ 3,632,846 2020 1,731,299 2021 (429,976) 2022 405,171
Actuarial assumptions – The total pension liability (TPL) was determined by an actuarial valuation as of June 30, 2017, which used updated procedures to roll forward the estimated liability to June 30, 2018. The valuation used the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.75% Salary increases 3.0-6.3% average, including inflation Investment rate of return 7.00%, net of pension plan investment expense, Including inflation
For calculation of the beginning and end of year TPL, mortality rates are based on the RP-2000 Combined Healthy 22 Mortality Table for males and females, adjusted for mortality improvements to 2020 using projection scale BB. 100% of the rates are used for post-retirement purposes, 60% for pre-retirement purposes.
The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period 2006 – 2013 conducted by the City’s actuary and adopted by The Chapter 22 Pension Board in July 2014.
Discount rate – A single discount rate of 7.00% was used to measure the total pension liability. This single discount rate was based on an expected rate of return on pension plan investments of 7.00% and a municipal bond rate of 3.62%. Projected Cash Flows – The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
83 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Please refer to page 78 to view the long-term expected rate of return for Chapter 22.
Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the City of Dearborn Chapter 22 Pension System, calculated using the discount rate of 7.00%, as well as what Chapter 22’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:
1% decrease Current discount 1% increase (6.00%) rate (7.00%) (8.00%)
Net pension liability (asset) $ 63,438,306 $ 45,107,494 $ 29,384,023
Chapter 23 – Police and Fire Revised Retirement System The City has chosen to use June 30, 2018 as its measu rement date for the net pension liability. The June 30, 2018 reported net pension liability was determined using a measure of the total pension liability and the pension net position as of June 30, 2018. The June 30, 2018 total pension liability was determined by an actuarial valuation as of June 30, 2017 which used procedures to roll forward the estimated liability to June 30, 2018. Changes in the net pension liability during the measurement year were as follows:
Increase (decrease) Total Pension Plan Net Net Pension Liability Position Liability (Asset) (a) (b) (a) - (b)
Balances at June 30, 2017 $ 367,161,180 $ 278,327,029 $ 88,834,151 Changes for the year Service cost 4,018,651 - 4,018,651 Interest on TPL 25,092,709 - 25,092,709 Changes in benefit terms 5,515,313 - 5,515,313 Experience difference 2,467,804 - 2,467,804 Contributions - employer - 12,501,034 (12,501,034) Contributions - employee - 700,192 (700,192) Net investment income - 14,694,627 (14,694,627) Benefit payments, including refunds (21,406,454) (21,406,454) - Administrative expenses - (58,614) 58,614 Miscellaneous other - (291,433) 291,433 Net changes 15,688,023 6,139,352 9,548,671 Balances at June 30, 2018 $ 382,849,203 $ 284,466,381 $ 98,382,822
84 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Pension Expense and Deferred outflows of Resources and Deferred I nflows of Resources Related to Pensions
For the year ended June 30, 2018, the City of Dearborn recognized pension expense of $26,769,572. At June 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual experience $ 1,955,874 $ (34,757) Changes in assumptions 3,891,690 - Net difference between projected and actual earnings on pension plan investments 10,522,399 - Total $ 16,369,963 $ (34,757)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ended June 30, 2019$ 11,809,712 2020 4,514,754 2021 (887,026) 2022 897,766
Actuarial assumptions – The total pension liability was determined by an actuarial valuation as of June 30, 2017, which used updated procedures to roll forward the estimated liability to June 30, 2018. The valuation used the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.75% Salary increases 3.0-6.5% average, including inflation Investment rate of return 7.00%, net of pension plan investment expense, Including inflation
For calculation of the beginning and end of year TPL, mortality rates were based on the RP-2000 Combined Healthy Mortality Table for males (multiplied by 110%) and females (multiplied by 100%), adjusted for mortality improvements to 2020 using projection scale BB.
85 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period 2006 – 2013 conducted by the City’s actuary and adopted by the Chapter 23 Pension Board in July 2014.
Discount rate – A single discount rate of 7.00% was used to measure the total pension liability. This single discount rate was based on an expected rate of return on pension plan investments of 7.00% and a municipal bond rate of 3.62%.
Projected Cash Flows – The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The discount rate used to measure the total pension liability was 7.00% percent. The projection of cash flows used to determine the discount rate assumed that employee 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 employee rate.
Please refer to page 78 to view the long-term expected rate of return for Chapter 23.
Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the City’s Chapter 23 Pension System, calculated using the discount rate of 7.00%, as well as what Chapter 23’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:
1% decrease Current discount 1% increase (6.00%) rate (7.00%) (8.00%)
Net pension liability (asset) $146,358,573 $98,382,822 $58,595,980
Municipal Employees’ Retirement System of Michigan
Plan Description
In 2009, the City of Dearborn began participation in an agent multiple-employer defined benefit pension plan (the “Plan”)administered by the Municipal Employees’ Retirement System of Michigan (MERS), that covers Police employees hired on or after July 1, 2005 and Fire employees hired on or after May 1, 2009. MERS was established as a statewide public employee pension plan by the Michigan Legislature under PA 135 of 1945 and is administered by a nine-member retirement board. MERS issues a publicly available financial report which includes the financial
86 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued) statements and required supplementary information of this defined benefit plan. This report can be obtained at www.mersofmich.com or in writing to MERS at 1134 Municipal Way, Lansing, MI 48917.
Benefits Provided
The Plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. PA 427 of 1984, as amended, establishes and amends the benefit provisions of the participants in MERS.
Benefits Provisions
Police hired after July 1, 2005 2017 Valuation 2016 Valuation Benefit multiplier 2.80% multiplier for svc < 26 yrs 2.50 multiplier (80% max) 2.50% for svc between 26 and 27 yrs 1.00% for svc between 28 and 30 yrs (78% max) Normal retirement age 60 60 Vesting 10 years 10 years Early retirement (unreduced) 50/25 50/25 Early retirement (reduced) 55/15 50/15 Final average compensation 3 years 3 years Employee contributions 6% 5% D-2 D-2 (25%) D-2 (25%) Act 88 No No
Fire hired on or after May 1, 2009 2017 Valuation 2016 Valuation Benefit multiplier Bridged Benefit: 2.50% multiplier 2.50 multiplier (80% max) (80% max ) Termination FAC to 2.8% for svc < 27 yrs 2.2% for svc 27 yrs 1.0% for svc 28 to 30 yrs Bridged benefit data 3/31/2017 Normal retirement age 60 60 Vesting 10 years 10 years Early retirement (unreduced) 50/25 50/25 Early retirement (reduced) 55/15 55/15 Final average compensation 3 years 3 years Employee contributions 5% 5% D-2 D-2 (25%) D-2 (25%) Act 88 No No
Employees are eligible for non-duty disability benefits after 10 years of service and for duty- connected disability benefits upon hire. An employee who leaves service may withdraw his or her contributions plus any accumulated interest.
87 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Disability Retirement – A member who becomes totally and permanently disabled from duty- connected causes receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a duty disability allowance. The member shall be paid a retirement allowance in an amount which is the greater of:
(a) 25% of the member’s final average compensation, or as determined by the Defined Benefits Formula. (b) 10 years of credited service in addition to the member’s actual period of credited service provided that the total years of credited service m ay not exceed the greater of 30 years or the member’s actual period of credited service. In all cases where the retirement allowance benefit program in effect imposes a limitation on the maximum amount of retirement allowance payable, then the Benefit Program D-2 allowance shall not exceed such limitation. A member with 10 or more years of service who becom es totally and permanently disabled from other than duty-connected causes receives, subject to offsetting for workers’ compensation, Social Security, and other remuneration, a non-duty disability allowance computed in the same manner as an age and service allowance. Death of a Member – Duty – Upon the death of a member which is the result of a work-related injury or illness, the surviving dependents receive, subject to offsetting for workers’ compensation and Social Security, the following benefits: (a) The amount of retirement allowance paid a surviving spouse shall not be less that 25% of the deceased member’s final average compensation. (b) The amount of retirement allowance paid a surviving child shall not be less than an equal share of 25% of the deceased member’s final average compensation. (c) Under Benefit Program D-2, the amount of retirement allowance paid a surviving spouse or surviving child shall not be less than the amount computed as if the member had acquired 10 years of credited service in addition to the member’s actual period of credited service, provided that the total years of credited service may not exceed the greater of 30 years or the member’s actual period of credited service. In all cases where the retirement allowance Benefit Program in effect imposes a limitation on the maximum amount of retirement allowance payable, then the Benefit Program D-2 allowance shall not exceed such limitation. Vesting is not required. Death of a Member – Non Duty – Upon the death of a member which is the result of a non-work related injury or illness, the surviving dependents will receive, subject to offsetting for workers’ compensation and Social Security, the following benefits: (a) The surviving spousal beneficiary will receive the greater of a lifetime benefit of at least 85% of the Defined Benefit formula, or the survivor benefit payment option. (b) Children (not named as survivor beneficiary) would equally share a total of 50% of the employees Straight Life benefit until they are age 21 or married. Vesting is required. There are no provisions for benefit changes after retirement. Benefit terms, within the parameters established by MERS, are generally established and amended by authority of the City Council, usually after negotiation of these terms with the
88 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
associated unions. Police and Fire employees’ benefit terms may be subject to binding arbitration in certain circumstances.
Employees Covered by Benefit Terms At the December 31, 2017 measurement date, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits - Inactive plan members entitled to but not yet receiving benefits 1 Active plan members 169
Contributions Article 9, Section 24 of the State of Michigan constitution requires that financial benefits arising on account of employee service rendered in each year be funded during that year. Accordingly, MERS retains an independent actuary to determine the annual contribution. The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by plan mem bers during the year, with an additional amount to finance any unfunded accrued liability. The em ployer may establish contribution rates to be paid by its covered employees. For the year ended December 31, 2017, the average active employee contribution rate was 5% of annual pay for Fire and 6% for Police, and the City’s average contribution rate was 10.60% (Police) and 11.30% for Fire of annual payroll.
Net Pension Liability of the City of Dearborn The net pension liability reported at June 30, 2018 was determined using a measure of the total pension liability and the pension net position as of December 31, 2017. The December 31, 2017 total pension liability was determined by an actuarial valuation performed as of that date. Changes in net pension liability during the measurement year were as follows: Increase (decrease) Total Pension Plan Net Net Pension Liability Position Liability (Asset) (a) (b) (a) - (b)
Balances at December 31, 2016 $ 10,340,655 $ 10,785,175 $ (444,520) Changes for the year Service cost 1,917,113 - 1,917,113 Interest on TPL 902,090 - 902,090 Changes in benefit terms 1,365,338 - 1,365,338 Experience difference (32,862) - (32,862) Contributions - employer - 1,632,550 (1,632,550) Contributions - employee - 616,906 (616,906) Net investment income - 1,547,083 (1,547,083) Benefit payments, including refunds (46,177) (46,177) - Administrative expenses - (24,199) 24,199 Net changes 4,105,502 3,726,163 379,339 Balances at December 31, 2017 $ 14,446,157 $ 14,511,338 $ (65,181)
89 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Pension Expense and Deferred Outflows of Resources and Deferred I nflows of Resources Related to Pensions For the year ended June 30, 2018, the City recognized pension expense of $2,631,719. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows of Resources of Resources Difference between projected and actual experience $ 202,905 $ (355,990) Changes in assumptions 32,027 - Net difference between projected and actual earnings on pension plan investments - (332,984) Employer contributions to the plan subsequent to the measurement date 878,032 - Total $ 1,112,964 $ (688,974)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows. These amounts are exclusive of the employer contributions to the plan of $878,032 subsequent to the measurement date which will impact the net pension liability in fiscal year 2019 rather than pension expense.
Year Ended June 30, 2019$ (10,137) 2020 (35,219) 2021 (186,080) 2022 (125,379) 2023 (5,958) Thereafter (91,269)
Actuarial Assumptions - The total pension liability in the December 31, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.5% Salary increases 3.75% Investment rate of return 7.75%, net of pension plan investment expense, including inflation
Although no specific price inflation assumption is needed for this valuation, the assumed long- term annual rate of price inflation is 2.5%.
90 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Mortality rates used were based on 105% of the RP 2014 Healthy Annuity Mortality Table of a 50% Male and 50% Female blend. The mortality table used to project the mortality experience of disabled plan members is a 50% male – 50% female blend of the RP 2014 Disabled Retiree Mortality Tables.
The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience study covering the period from January 1, 2009 through December 31, 2013.
The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
MERS Asset Allocation
Long- Term Expected Real Asset Class Target Allocation Rate of Return Global Equit y 55.50% 6.65% Global Fixed Income 18.50% 1.76% Real Asset s 13.50% 7.72% Diversifying Strategies 12.50% 5.50% Total 100.00%
Discount rate - The discount rate used to measure the total pension liability is 8.00% for 2017. The projection of cash flows used to do determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers.
Projected cash flows - Based on these assumptions, the pension plan fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
91 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension liability of the City, calculated using the discount rate of 8.0%, 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 (7.00 percent) or 1-percentage-point higher (9.00 percent) than the current rate:
1% decrease Current discount 1% increase (7.00%) rate (8.00%) (9.00%)
Change in net pension liability (asset) as of 12/31/2017 $ 3,048,286 $ (65,181) $ (2,576,308)
Pension Plan Fiduciary Net Position
Detailed information about the Plan’s fiduciary net position is available in the separately issued financial report found at www.mersofmich.com.
The Plan’s fiduciary net position has been determined on the same basis used by the Plan. The Plan uses the economic resources measurement focus and the full accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as contributions are due, pursuant to legal requirements. Benefit payments and refunds of employee contributions are recognized as expense when due and payable in accordance with the benefit terms.
92 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Other Postemployment Benefit (OPEB) Obligations
Plan Description The City of Dearborn established and administers the Retiree Health Care Plan Trust (the “Plan”) pursuant to State of Michigan Public Act 149 of 1999 to provide for future payments of medical benefits for eligible employees and their spouses and dependents. Prior to Public Act 149, in June 1991, the City established and began making annual contributions to a postemployment health insurance fund for the purpose of accumulating money designated for payment of the City’s healthcare benefits obligation.
The Plan is a single-employer defined benefit OPEB plan established to provide post-employment benefits other than pensions for eligible full-time general and public safety employees of the City. Management, funding, and fiduciary responsibility of the Plan is vested with the City. The Plan does not issue a separate stand-alone financial statement.
Plan Membership
At June 30, 2016, the date of the most recent actuarial valuation, plan membership consisted of the following:
Inactive plan members or beneficiaries currently receiving benefits 836
Inactive plan members entitled to benefits but not yet receiving them 9
Active plan members 459
Total 1,304
Benefits Provided
The Plan provides for future payments of medical benefits for eligible retirees and their dependents. Qualified employees become eligible for these benefits through age and years of service provisions of the applicable salary plans or union contracts. Benefits are provided through a third-party insurer and the full cost of benefits is covered by the Plan. The Plan was closed in phases by employee group starting July 1, 2001 and was completely closed to all employees hired after August 26, 2013.
Contributions
Employees are not required to contribute to the trust. The City has no obligation to make contributions in advance of when incurred costs are due for payment and the plan may be financed on a “pay-as-you-go” basis. The City may make contributions to advance-fund these
93 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
benefits as determined by the City Council through the annual budget adoption resolutions and supplemental Council resolutions.
Contributions are made primarily by the City’s General fund where the majority of employees covered by the OPEB plan are employed. Other funds that make contributions include certain special revenue funds, enterprise funds and internal service funds that also have employees that are covered by the OPEB plan.
The City establishes contribution rates based on an actuarially-determined rate per a funding valuation. For the year ended June 30, 2018, the City’s average contribution rate was 13.09% of covered-employee payroll for public safety employees and 18.64% of covered-employee payroll for general employees. The portion of the unfunded accrued liability attributable to retirees is funded to the extent possible by additional fixed dollar contributions.
OPEB Plan I nvestments
I nvestment Policy The Plan’s Investment Policy Statement is established, and may be amended, by City Council resolution. It is the policy of the City to pursue an investment strategy that reduces risk through the prudent diversification of the portfolio. The Plan’s Investment Policy Statement discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans. The following was the Plan’s target asset allocation as of June 30, 2018:
Asset Class Target Allocation
Large Cap Equity 23.00% Small/Mid Cap Equity 5.00% International Equity 20.00% Emerging International Equity 7.00% Core Bonds 12.00% Emerging Market Debt 5.00% TIPS 6.00% Diversified Credit 4.00% Absolute Return Fixed Income 7.00% Real Estate - Core 5.00% Short Duration Opportunistic 6.00% Total 100.00%
The Plan’s Investment Policy Statement was updated on April 17, 2018 by City Council. This update provided for a restructuring of the Plan’s target asset allocation to 55% equity securities, 40% fixed income investments, and 5% real estate investments. This update also included the addition of language allowing for the option to outsource investment management to an outsourced Chief Investment Officer to manage the fund portfolio. The implementation of this Investment Policy Statement update, including the required transfer of plan assets to align with the new asset allocation, was fully executed within 120 days of the fiscal year end.
94 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Rate of Return
For the year ended June 30, 2018, the annual money-weighted rate of return on Plan investments, net of investment expense, was 6.96%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
Net OPEB Liability
The City has chosen to use 06/30/2018 as its measurement date for the net OPEB liability. The 06/30/2018 fiscal year end reported net OPEB liability was determined using a measure of the total OPEB liability and the OPEB net position as of the 06/30/2018 measurement date. The 06/30/2018 total OPEB liability was determined by an actuarial valuation performed as of 06/30/2016, which used update procedures to roll forward the estimated liability to 06/30/2018.
Changes in the net OPEB liability during the measurement year were as follows:
Increase (decrease) Tot al OPEB Plan Net Net OPEB Liability Position Liability (Asset) Changes in Net OPEB Liabilit y (a) (b) (a) - (b)
Balance at 07/ 01/ 2017 $ 259,476,577 $ 72,930,546 $ 186,546,031 Changes for the year: Service cost 2,625,312 - 2,625,312 Interest 15,307,855 - 15,307,855 Differences between expected and actual experience (1,212,420) - (1,212,420) Changes in assumptions - - - Contributions – employer - 15,287,893 (15,287,893) Contributions – employee - - - Net investment income - 4,776,465 (4,776,465) Benefit payments, including refunds (11,316,644) (11,316,644) - Administrative expenses - (29,250) 29,250 Miscellaneous other revenue - 373,996 (373,996)
Net changes 5,404,103 9,092,460 (3,688,357)
Balance at 06/ 30/ 2018 $ 264,880,680 $ 82,023,006 $ 182,857,674
The Plan's fiduciary net position represents 31.0% of the total OPEB liability.
95 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred I nflows of Resources Related to OPEB
For the year ended 06/30/2018, the City recognized OPEB expense of $12,711,599. At 06/30/2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Deferred Outflows of Inflows of Resources Resources Difference between expected and actual experience - $ (895,141) Net difference between projected and actual earnings on OPEB plan investments - (216,922)
Total - $ (1,112,063)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
Years Ending June 30, Amount 2019 $ (371,510) 2020 (371,510) 2021 (314,812) 2022 (54,231) 2023 - Thereafter -
Actuarial Assumptions
The total OPEB liability was determined by an actuarial valuation as of June 30, 2016 which used update procedures to roll forward the estimated liability to June 30, 2018. The valuation used the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Healthcare cost trend rate 9.00% Initial 3.00% Ultimate Salary increases 3.00 – 16.00% average, including inflation Investment rate of return 6.00%, net of OPEB plan administrative expense, including inflation
Mortality rates were based on the RP-2000 Combined Healthy Mortality Table, projected 20 years using projection scale BB (adjusted 110% for male public safety members).
96 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return as of June 30, 2018 for each major asset class included in the target asset allocation are summarized in the following table.
Long- Term Expected Asset Class Real Rat e of Ret urn
Large Cap Equity 5.92% Small/Mid Cap Equity 6.71% International Equity 6.71% Emerging International Equity 9.46% Core Bonds 1.14% Emerging Market Debt 3.65% TIPS 1.17% Diversified Credit 2.71% Absolute Return Fixed Income 1.67% Real Estate - Core 4.38% Short Duration Opportunistic 3.04%
Discount Rate
The discount rate used to measure the total OPEB liability was 6.00%. The projection of cash flows used to determine he discount rate assumed that in all years employer contributions will be made at amounts equal to the average contribution amount over the last five years; no explicit assumption has been made for administrative expenses; and contributions and benefit payments occur halfway through the year.
Projected Cash Flows
Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
97 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability, calculated using the discount rate of 6.00%, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1% lower (5.00%) or 1% higher (7.00%) than the current rate:
1% decrease Current discount 1% increase (5.00%) rate (6.00%) (7.00%)
Net OPEB liability (asset) $ 215,885,665 $ 182,857,674 $ 155,464,023
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability, calculated using the healthcare cost trend rates, as well as what the net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1% lower or 1% higher than the current rate:
Current healthcare cost 1% decrease trend rate 1% increase
Net OPEB liability (asset) $ 152,061,093 $ 182,857,674 $ 219,077,938
Financial Statement I nformation
The following are condensed financial statements for the Postemployment Healthcare fund as of June 30, 2018:
Statement of Net Position
Assets Cash and investments $ 81,661,985 Other assets 733,468 Liabilit ies (372,447) Net position $ 82,023,006
Statement of changes in Net Position
Net investment income $ 4,776,465 Contributions 15,661,889 Benefit payments (11,316,644) Administrative expenses (29,250) Change in net position $ 9,092,460
98 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 7 – Pension and Other Postemployment Plans (Continued)
Retiree Life I nsurance
Retiree life insurance benefits are paid from the City’s Retiree Death Benefit fund. Retirees electing such coverage pay premiums which, when com bined with amounts contributed by the City, pay the cost of the benefits. The cost of claims paid for life insurance benefits for the year ended June 30, 2018 was $51,000.
The following are condensed financial statements for the Retiree Death Benefit fund as of June 30, 2018:
Statement of Net Position
Assets Cash and investments $ 1,187,537 Other assets 2,121 LT bonds 18,625 Liabilit ies (1,000) Net position $ 1,207,283
Statement of changes in Net Position
Net investment income $ 13,414 Contributions: Employer - Employee 12,231 Benefit payments (51,000) Change in net position $ (25,355)
99 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 8 – Health Care Savings Plan (HCSP)
The City established a Health Care Savings Plan (HCSP) for eligible employees in fiscal year 2010. These funds are to be used by the employee, spouse or dependents to offset the cost of health care during retirement or separation of service. These accounts are for City employees that are not eligible for postemployment health care.
All general employees hired on or after July 1, 2010 are required to participate in the plan as determined by labor contracts. All Police employees hired on or after June 20, 2012 and all Fire employees hired on or after August 26, 2013 are also required to participate. Employees may also elect to convert into the plan in lieu of retiree health care provided by the City.
The plan is established by the authority of City Council. The benefits are established under provisions of applicable salary plans or union contracts. Benefits depend solely on amounts contributed to the plan and investment performance.
Participating employees are required to contribute $25 per pay pre-tax withholding from 24 pays per year and the City contributes $1,500 per year (to be paid monthly at $125) during employment. Effective in April 2017 participating Fire employees are required to contribute $32.50 per pay pre-tax withholding from 24 pays with the City contributing $1,800 per year ($150 monthly) during employment. City contributions cease at normal retirement age or termination.
Employee contributions are 100% vested while City contributions vest at five or more years of service.
The HCSP plan is administered by the Municipal Employees Retirement System of Michigan (MERS).
In accordance with the above requirements, the City contributed $447,850 during the current year and employees contributed $199,058.
Note 9 – Deferred Compensation Plan
The City offers its employees a deferred compensation plan established in accordance with Internal Revenue Code Section 457. The plan is available to all City employees and permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All assets of the plan are, until paid or made available to the employee or other beneficiary, held in trust and are not subject to claims of the City’s general creditors. Therefore, the assets of the plan are not reported. The City’s liability to each participant is equal to the participant’s deferred compensation, adjusted by an amount equal to the investment performance in the related asset account. The City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. Investments are managed by a trustee and investment decisions are made by individual employees.
100 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 10 – Defined Contribution Pension Plan The City established a defined contribution plan under Sections 401(a) and 457 of the Internal Revenue Code for general employees who were hired on or after January 1, 2002, depending on bargaining unit. New police officers were added to the plan as of July 1, 2005. The plan became optional for new police officers and firefighters hired in or after 2009. In addition, the plan covers all general employees who elected to transfer from the City’s defined benefit pension plan. The defined contribution plan is administered by Prudential Retirement. The plan is established by authority of the City Council. The City Council has the authority to amend the plan’s provisions. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. As established by the City of Dearborn through collective bargaining agreements, the City contribution rates as a percentage of employees’ earnings are as follows:
General Employees Police and Fire Employees Employee Employer Employee Employer Contribution Contribution Contribution Contribution
401 plan (required) 2% 2% 5% 5%
457 plan up to 6% up to 6% up to 5% up to 5%
The City’s contributions for each employee (plus interest allocated to the employee’s account) are fully vested after five years of service and are vested immediately for employees transferring from the existing defined benefit pension plan.
In accordance with the above requirements, the City contributed $846,556 during the current year and employees contributed $1,361,923.
101 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 11 – Risk Management
Commercial I nsurance The City purchases commercial medical and hospitalization insurance coverage for its employees and eligible retirees. The primary providers are Health Alliance Plan and Blue Cross Blue Shield. A portion of the Health Alliance Plan and Blue Cross Blue Shield groups are self-insured and under administrative service contracts. Many new hire employees have the option to participate in health savings accounts and may not have access to City-provided retiree health care. A retiree medical savings account is available to employees as an option for funding retirement health care. The amount of settlements has not exceeded insurance or reserve coverage for any of the past five fiscal years. Unemployment Compensation Unemployment compensation is on a reimbursement basis with the Unemployment Insurance Agency. Claims are managed by the City's Human Resources Department, with payment for the preceding calendar year's claims due in August of the following year. Funding for unemployment compensation is paid by each department equal to claims paid on its behalf in the prior year. Workers' Compensation The City has excess liability coverage which satisfies statutory requirements. The City maintains a self-insured retention in the amount of $600,000. Funding for the workers' compensation program for the excess premium is based upon a rate applied per $100 of gross payroll. Fleet and General Liability I nsurance Fund The City has been self-insured for civil and fleet liability at various times. Currently, the City maintains excess liability coverage for fleet, general, boiler and machinery, property, crime, contractor’s equipment, electronic data processing, public officials’ errors and omissions, and ambulance attendants’ liability. The City has a self-insured retention of $1,000,000 for each general liability claim. The first layer of insurance is $5,000,000 per occurrence. The excess layer is $10,000,000 per occurrence. The City has increased funding of its insurance program as a result of the City’s past claims and industry conditions. The City estimates liability for claims based on the Law Department's evaluation of potential exposure, historical experience and future development of the claims. Retained earnings are designated for anticipated future catastrophic losses. The City estimates liability for those claims that have been incurred through the end of the fiscal year, including both those claims that have been reported as well as those that have not been reported. Estimates are prepared for both general liabilities and at-risk tax claims. Estimates are recorded in the internal service fund type.
102 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 11 – Risk Management (Continued)
Changes in the estimated liabilities during the year were as follows:
Unemployment Workers' Employee Fleet & General Compensation Compensation Insurance Liability
Claims liability, June 30, 2016 $ - $ 732,840 $ 770,689 $ 2,852,617
Claims incurred during the year 100,689 319,204 19,950,655 4,350,952
Changes in estimates for claims - (386,073) (241,704) (2,757,183) of prior periods
Payments on claims (100,689) 18,752 (19,950,655) (84,783)
Claims liability, June 30, 2017 - 684,723 528,985 4,361,603
Claims incurred during the year 93,402 623,358 19,330,050 3,548,689
Changes in estimates for claims - (419,594) 49,778 (3,369,242) of prior periods
Payments on claims (93,402) 21,906 (19,330,050) (1,043,210)
Claims liability, June 30, 2018 $ - $ 910,393 $ 578,763 $ 3,497,840
Note 12 – Claims, Litigation and Potential Contract Disallowances
Provision for certain claims (see Note 11) and assessments asserted against the City, estimable in amount and probable of payment has been made in the applicable funds.
In addition, the City is a defendant in certain other lawsuits and claims that have resulted from the ordinary course of its activities. The ultimate effect on the combined financial statements of the resolution of these matters is, in the opinion of Corporation Counsel, not expected to be material considering available insurance coverage, legal defenses, and reserves.
The City receives funds from other governmental units to finance specific programs. The final determination of allowable amounts is subject to financial and compliance audit by the responsible agencies. As of June 30, 2018, the audits of certain programs were not completed. Accordingly, the City's compliance with applicable grant requirements and the amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time. The City believes that amounts disallowed, if any, from pending or future audits would not be material.
103 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 13 – Commitments for Construction
Proprietary Funds
The current National Pollution Discharge Elimination System (NPDES) permit M10025542 issued by the Michigan Department of Environmental Quality (MDEQ) specifies the schedule for the design and construction of the Combined Sewer Overflow (CSO) projects for various CSO outfalls. As required by the NPDES permit, no untreated CSO discharges to the Rouge River will be allowed past the date specified in the permit for specific outfalls. The City is aggressively working to meet the MDEQ deadlines for the CSO project. Four underground sinking caissons were constructed and are in operation to address CSO capture and overflow for part of the City (C4, C6, C7, and C8). For the remaining portion of the City, the City is addressing the CSO control with sewer separation.
The structure for Caisson C5, located at the intersection of Palmer Street and Colson Avenue, to address Outfall 016 was abandoned and the concrete walls below the ground were demolished. The sewer separation alternative is being implemented in four phases to address Outfall 016, the first phase of which is complete. The second phase is under construction and is expected to be completed by November 2018. Phases 3 and 4 of the project are slated for 2019 and 2020.
The structure for Caisson C3, located along the Rouge River north of Rotunda Drive, to address Outfall 014 was abandoned and the concrete walls below the ground were demolished. The City is working on the construction of a Screening and Disinfection Facility (SDF) to address both Outfalls 013 and 014.
Construction in West Dearborn for Outfalls 003 and 005 and CSO Control Program Phases 1, 2, and 4 (CSO 002) sewer separations are complete. Phase 3 (CSO 003) of the project is slated for 2020. Construction to address a portion of the drainage area for Outfall 001 is in progress and is expected to be completed by October 2018. Construction of the remainder of Outfall 001 and Outfall 004 is scheduled for 2019, 2020, and 2021.
So far, the City of Dearborn has completely addressed CSO Outfalls 002, 005 to 012, 015, and 017 to 020. Sewer separation for CSO Outfall 001 is 50% complete, 003 is 70% complete, 004 is 50% complete, and 016 is 70% complete. Preliminary conceptual design for the SDF to address outfalls 013 and 014 is in progress.
The Sewer fund cash and cash equivalents balance of $75.8 million as of June 30, 2018 includes $29.5 million earmarked for CSO projects. The City added completed CSO facilities and sewer separation projects of $270.6 million to fixed assets through fiscal year 2017 and an additional $4.9 million in the current fiscal year.
The total cost of construction, including engineering and construction for the City’s CSO project, is estimated at $550 million. This amount does not include any litigation costs or other costs associated with contractor claims. The City has issued all of the authorized $314.12 million in bonds to finance this project in combination with Rouge River Wet Weather Demonstration grants and other grants. An additional $60 million in financing authority was approved by voters in August 2018.
104 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 13 – Commitments for Construction (Continued)
As of June 30, 2018 approximately $252.2 million in State Revolving Fund (SRF) low-interest loan bonds and $61.9 million in general obligation bonds have been issued. This general obligation bond total includes the issuance of $26.7 million of bonds in December, 2017. The City uses the Sewer fund to partially fund the separation projects. The water main portion of the project is funded by the Water fund and/or open-market bonds. In addition to the above special construction projects, the City expects to invest approximately $750,000 annually in sewer rehabilitation projects.
The Public Works Engineering Division has a comprehensive water main replacement program under both the CSO Control Program and the annual water main replacement program. Deep excavation associated with sewer construction in CSO areas will impact the performance of the existing aged water mains, therefore it is important that they be replaced as part of the CSO projects. In addition to replacing aged water mains in the CSO Control Program areas, Engineering plans to replace 12,000 to 15,000 linear feet of aging water mains, related gate valves, and fire hydrants with construction expenditures to be in the range of $5 million annually.
The City is also undertaking multiple projects to update its aging facilities. The pool facility has been demolished at Ford Woods Park, and a new facility is being built in its place. Estimated total cost for the project is approximately $4.6 million, with $4.1 million being comm itted at June 30, 2018 for construction and architecture services. City infrastructure related to the new Wagner Place development and parking deck is also being completed. Work includes updating utility lines, streetscapes, etc. Estimated at a cost of $5.4 million, project funds of $1.3 million are committed as of June 30, 2018. Updates to the City campus Powerhouse facility and related HVAC systems are also being completed. Once complete, the updates will increase efficiency and lower utility costs. The project is estimated to cost $14.5 million in total.
Special Item
The structure of Caissson C2, located within the Greenfield Village property along the Southfield service drive, to address Outfall 013 remains unfinished. The ground water under the rock layers is under artesian pressure and contains hydrogen suphide. Extensive ground freezing would be required to finish construction.
The City is working with the MDEQ and has obtained conceptual approval for the construction of a Screening and Disinfection Facility (SDF) to address both Outfalls 013 and 014. The SDF will eliminate the need for the unfinished Casisson C2. With the MDEQ approval of the SDF, the City has expensed the $36.3 million balance in Construction in Progress for Caisson C2 as a special item in FY2018.
105 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 14 – Construction Code Fees
The City oversees building construction, in accordance with the state’s construction code act, including inspection of building construction and renovation to ensure compliance with the building codes. The City charges fees for these services. Beginning January 1, 2000, the law requires that collection of these fees be used only for construction code costs, including an allocation of estimated overhead costs. A summary of the activity since January 1, 2000 is as follows:
Shortfall at July 1, 2017 $ (9,544,956)
Total code enforcement revenue $ 2,851,784
Less related expenses: Direct costs $ 1,565,622 Estimated indirect costs 62,625 Total code enforcement expenes 1,628,247
Current year surplus (deficit) 1,223,537
Shortfall at June 30, 2018 $ (8,321,419)
106 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 15 – Tax Abatement Disclosures
Brownfield Redevelopment Fund
Brownfield Redevelopment Financing Act 381 of 1996 authorizes municipalities to create a Brownfield Redevelopment Authority (BRA) to facilitate the implementation of brownfield plans; to create brownfield redevelopment zones; to promote the revitalization, redevelopment, and reuse of certain property, including, but not limited to, remediate environmental contamination, tax reverted, blighted, or functionally obsolete property; to prescribe the powers and duties of Brownfield Redevelopment Authorities; to permit the issuance of bonds and other evidences of indebtedness by an authority; to authorize the acquisition and disposal of certain property; to authorize certain funds; to prescribe certain powers and duties of certain state officers and agencies; and to authorize and permit the use of certain tax increment financing.
The City enters into property tax abatement agreements with local businesses under Public Act 381 of 1996. Under the Act, taxes are captured from various taxing authorities and then used to reimburse the taxpayer. The taxpayer's property tax is reimbursed for eligible expenses as defined in the Brownfield Redevelopment Act plan agreement.
For the fiscal year ended June 30, 2018, the City of Dearborn’s Brownfield Redevelopment Authority abated property taxes totaling $1,219,795 under this program.
In October, 2007, the City Council approved BRA Plan # 7, the Redico Redevelopment project. BRA Plan # 7 allowed the BRA to borrow $600,000 interest-free from the Downriver Community Conference (DCC) and to use the BRA local site remediation revolving fund to repay this loan. The DCC authorized loan amount was increased by $300,000 in fiscal year 2009 and another $140,000 in fiscal year 2010. The actual remediation costs covered by the DCC loan were $1,017,931. Upon completion of this project, the DCC converted $200,000 of the loan amount into a grant. The BRA made an early loan payment of $81,793 in 2012 and $81,793 in 2015. The remaining eight annual payments will be paid in years 2016-2023.
Another key aspect of BRA Plan # 7 was the approval by the Michigan Economic Development Corporation (MEGA Board) for tax increment capture to cover eligible activities initially financed by the BRA bond issue ($10,820,000) that occurred in November 2009. In addition, the East Dearborn Downtown Development Authority has pledged its local tax capture generated from the Redico Redevelopment project to the bond repayment.
Severstal International initiated a major modernization strategy involving an investment of over $1 billion. The first amended BRA Plan # 9 allows tax increment revenues be reimbursed to Severstal to cover the cost of eligible activities. In addition, the BRA assisted Severstal in obtaining Michigan Business Tax credits. Severstal was sold to AK Steel Corporation-Dearborn Works in September, 2014. The BRA requirements will continue with the new owners per the first amended BRA Plan # 9 agreement.
In 2015, BRA Plan # 11 for Urban Campus Communities involves demolishing parts of two buildings, expanding floor space, and renovating the new area into state-of-the-art student housing and commercial/retail space. The BRA’s involvement in this project includes using tax increment revenues for financing certain eligible activities. Phase I of the project is complete and Phase II is in the planning stage.
107 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 15 – Tax Abatement Disclosures (Continued)
In August, 2014 the City Council approved BRA Plan # 12 Hallmark Ventures, LLC to fund eligible improvements (primarily demolition and infrastructure) of $1,203,609 to prepare the site for redevelopment as a hotel. The proposed development will transform the functionally and physically obsolete property into a state of the art hotel and retail space. The total capture committed to the project by the West Dearborn Downtown Development Authority (WDDDA) and BRA is not to exceed $650,000. The remainder will come from the State’s commitment of school taxes. It is estimated that the capture time to pay for eligible activities associated with the plan is ten years.
In July, 2016 the City Council approved BRA Plan # 13 Wagner Place Redevelopment project, in partnership with Ford Motor Land Development Corporation, to create and fund eligible activities of $23,937,630 for a West Dearborn mixed-use, private and public redevelopment. This project promotes and supports the revitalization, redevelopment and re-use of functionally obsolete and contaminated property in the west downtown area of the City. The tax capture committed to fund the project will be provided by the WDDDA, the BRA, and the State’s commitment of school taxes. This tax capture is expected to begin in fiscal year 2020. It is estimated that the capture time period to pay for eligible activities associated with the plan is thirty years with capture not to exceed $11,965,500, plus the principal and interest of $7,655,000 in Limited Tax General Obligation bonds with interest rate ranging from 3.00% - 3.75% for a 30-year bonded debt service. The proceeds from the bonds were used to build a parking deck in West Downtown Dearborn to support the Wagner Place redevelopment project.
Another key aspect of BRA Plan # 13 was the approved agreement between the City Council and Ford Motor Land Development Corporation for tax increment capture to cover eligible activities initially financed by the BRA bond issue that occurred in May 2017.
In the event that the project does not generate sufficient tax revenue to pay for bonds issued by the BRA, the City has the right to impose a special assessment on the property owners to cover the cost of the bonds and other eligible expenditures for that year.
The deficit in the Brownfield Redevelopment Fund resulted when the BRA issued the bonds in November 2009 to finance the construction of an East Dearborn parking deck and in May 2017 to finance the construction of the West Dearborn parking deck. The fund deficit will be eliminated as the bonds are paid off.
I ndustrial Facilities Tax Abatement
The Plant Rehabilitation and Industrial Development Districts Public Act 198 of 1974 allows the City to enter into agreements with local businesses to encourage them to construct new industrial facilities or rehabilitate historical facilities. Under the program the City grants reductions of 50% of the property tax bill for new property and freezes the taxable value for rehabilitation properties for up to twelve years.
108 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 15 – Tax Abatement Disclosures (Continued)
For fiscal year ended June 30, 2018, the City’s total Industrial abatements with Ford Motor Company, AK Steel, Link Testing, and Carhartt under this program totaled $2,049,749. There are no provisions to recapture taxes; however, the abatement may be eliminated if taxes are not paid timely. There are no significant abatements made by other governments that reduce the City’s tax revenue.
State Housing Development Authority Act
The State Housing Development Authority Act 346 of 1996 is an act to create a state housing development authority; to define the powers and duties of the authority; to establish a housing development revolving fund; to establish a land acquisition and development fund; to establish a rehabilitation fund; to establish a conversion condominium fund; to create certain other funds and provide for the expenditure of certain funds; to authorize the making and purchase of loans, deferred payment loans, and grants to qualified developers, sponsors, individuals, mortgage lenders, and municipalities; to establish and provide acceleration and foreclosure procedures; to provide tax exemption; to authorize payments instead of taxes (PILOT) by nonprofit housing corporations, consumer housing cooperatives, limited dividend housing corporations, mobile home park corporations, and mobile home park associations; and to prescribe criminal penalties for violations of this act.
The City of Dearborn partnered with the Artspace organization to establish sustainable artist live- and-work lofts in the community. City Hall Artspace Lofts opened in 2016 and is based on a twenty-year tax abatement of all ad valorem taxes replaced by a PILOT to cover the cost of local services.
The PILOT is calculated at 4% of sheltered rents. The City Hall Artspace Lofts project resulted in an abated amount in the fiscal year end June 30, 2018 of $44,874 under this program.
Note 16 – Related Party Transactions
The City’s Housing Department and the Dearborn Housing Commission were established in 1963 for developing subsidized housing for low-income residents. The Housing Department’s staff operates and administers the Senior Citizen Housing Program, which includes two City-owned buildings, and the Housing and Urban Development (HUD) buildings Sisson Manor, Kennedy Plaza and Townsend Towers, as well as the Section 8 rental assistance program. The Dearborn Housing Commission reports the financial information for the HUD programs separately. The Housing Commission was billed $797,156 for reimbursement of direct salary and benefits relating to the HUD and Section 8 rental assistance programs for the fiscal year ended June 30, 2018. In addition, the Housing Commission was billed $100,000 for reimbursement of shared costs and operating expenses which represent indirect de minimis fees.
109 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 17 – Change in Accounting
During the current year, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pensions, which addresses reporting by governments that provide postemployment benefits other than pensions (OPEB) to their employees and for governments that finance OPEB for employees of other governments. This OPEB standard requires the City to recognize on the face of the financial statements its net OPEB liability. The Statement also enhances accountability and transparency through revised note disclosures and required supplemental information (RSI).
Net Position 06/30/17 as Adjustments for Net Position previously Implementation 06/30/17 reported of GASB 75 as restated
Facilities fund $ 82,151,450 $ (5,594,870) $ 76,556,580 Information Systems fund 6,548,303 (2,471,257) 4,077,046 Other governmental activities 83,592,422 (106,594,009) (23,001,587) Governmental activities 172,292,175 (114,660,136) 57,632,039
Water fund 89,066,561 (23,321,298) 65,745,263 Sewer fund 204,117,255 (6,818,112) 197,299,143 Housing fund 9,709,925 (5,985,732) 3,724,193 Business-type activities 302,893,741 (36,125,142) 266,768,599
Government-wide $ 475,185,916 $ (150,785,278) $ 324,400,638
Note 18 – Subsequent Events
On September 20, 2018 the City of Dearborn issued $23 million of 2018 Unlimited Tax General Obligation Sewer Bonds to be used for Combined Sewer Overflow (CSO) construction projects. The debt service for these bonds will be paid using the 2018 Voted CSO Tax Millage, which passed at the August 2018 election. To cover the debt service for this bond issuance, the 2018 Voted CSO Tax Millage was set at 0.22 mills for the Winter 2018 Property Tax bill.
On September 25, 2018 the City issued $20 million of 2018 Limited Tax General Obligation Pension Bonds (federally taxable). The proceeds from the bonds were used to fund the General Employees’ Retirement system Chapter 22 Pension Plan.
110 City of Dearborn, Michigan Notes to Financial Statements June 30, 2018
Note 19 – Upcoming Reporting Changes
In November 2016, the Governmental Accounting Standards Board issued GASB Statement No. 83, Certain Asset Retirement Obligations, which establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for asset retirement obligations. The City is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the City's financial statements for the year ending June 30, 2019.
In January 2017, the Governmental Accounting Standards Board issued GASB Statement No. 84, Fiduciary Activities, which establishes criteria for identifying fiduciary activities of all state and local governments. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. The City is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the City’s financial statements for the year ending June 30, 2020.
In June 2017, the Governmental Accounting Standards Board issued GASB Statement No. 87, Leases, which improves accounting and financial reporting for leases by governments. This statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The City is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the City’s financial statements for the year ending June 30, 2021.
In March 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. This statement establishes criteria to improve the information that is disclosed in the notes to the government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The City is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the City's financial statements for the year ending June 30, 2019.
In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, which simplifies accounting for interest cost incurred before the end of construction and requires those costs to be expensed in the period incurred. As a result, interest cost incurred before the end of a construction period will not be capitalized and included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of the standard will be applied prospectively and result in increased interest expense during periods of construction. The City is currently evaluating the impact this standard will have on the financial statements when adopted. The provisions of this statement are effective for the City's financial statements for the year ending June 30, 2021.
111 Required Supplementary I nformation
112 City of Dearborn, Michigan Chapter 21 Policemen’s and Firemen’s Retirement System
Schedule of Contributions
Actuarially Contribution FY Ended Determined Actual Deficiency June 30, Contribution Contribution (Excess) Covered Payroll
2009 - 2018 $ - $ - $ - $ -
Additional information as of June 30, 2017, the latest actuarial valuation, follows:
Notes to Schedule of Contributions
Actuarial cost method Fully funded retiree only plan
Asset valuation method 5-year smoothed market
Amortization method Level dollar
Amortization period 5 years
Actuarial assumptions: Investment rate of return 6.00% Cost of living adjustments 3.00%
Mortality rates were based on 110% of the male RP-2000 combined healthy life mortality table and 100% of the female RP-2000 combined healthy life mortality table adjusted for mortality improvements to 2020 using projection scale BB.
For disabled participants, the tables used are the RP 2000 mortality table, projected to 2020 using projection scale BB, set forward 10 years.
113 City of Dearborn, Michigan
Schedule of Changes in Employer’s Net Pension Liability and Related Ratios
Fiscal year ended June 30, 2014 2015
Total Pension Liability Interest on the Total Pension Liability $ 1,080,946 $ 990,509 Difference between expected and actual experience of the Total Pension Liability - 34,361 Assumption Changes - 832,813 Benefit Payments and Refunds (2,465,877) (2,279,928) Net Change in Total Pension Liability (1,384,931) (422,245) Total Pension Liability - Beginning 16,675,028 15,290,097 Total Pension Liability - Ending (a) $ 15,290,097 $ 14,867,852
Plan Fiduciary Net Position Pension Plan Net Investment Income $ 3,108,996 $ 181,557 Benefit Payments and Refunds (2,465,877) (2,279,928) Pension Plan Administrative Expense (13,694) (14,444) Net Change in Plan Fiduciary Net Position 629,425 (2,112,815) Plan Fiduciary Net Position - Beginning 28,452,003 29,081,428 Plan Fiduciary Net Position - Ending (b) $ 29,081,428 $ 26,968,613
Net Pension Liability (Assets) - ending (a) - (b) $ (13,791,331) $ (12,100,761) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 190.20% 181.39% Net Pension Liability as a Percentage of Covered Employee Payroll N/AN/A
Schedule of I nvestment Returns
FY Ended June 30, Annual Return* 2014 11.32% 2015 0.60% 2016 1.02% 2017 8.87% 2018 4.08%
* Annual money-weighted rate of return, net of investment expenses.
Pension schedules are intended to disclose information for ten years. Additional years will be added as they become available. .
114 Chapter 21 Policemen’s and Firemen’s Retirement System
2016 2017 2018
$ 968,468 $ 843,395 $ 584,705
(767,527) (942,664) (248,496) - - (359,820) - (2,065,187) (1,910,207) (1,778,459) (1,864,246) (2,369,296) (1,442,250) 14,867,852 13,003,606 10,634,310 $ 13,003,606 $ 10,634,310 $ 9,192,060
$ 278,885 $ 2,161,183 $ 1,013,365 (2,065,187) (1,910,207) (1,778,459) (13,288) (11,830) (12,446) (1,799,590) 239,146 (777,540) 26,968,613 25,169,023 25,408,169 $ 25,169,023 $ 25,408,169 $ 24,630,629
$ (12,165,417) $ (14,773,859) $ (15,438,569)
193.55% 238.93% 267.96%
N/AN/AN/A
115 City of Dearborn, Michigan Chapter 22 General Employees Retirement System
Schedule of Contributions
Actual Actuarially Contribution Contribution as a FY Ended Determined Actual Deficiency Percentage of June 30, Contribution Contribution (Excess) Covered Payroll Covered Payroll 2009$ 3,867,437 $ 3,922,488 $ (55,051) $ 18,502,302 21.2% 2010 3,744,981 3,715,499 29,482 17,443,657 21.3% 2011 3,880,924 4,206,874 (325,950) 17,340,783 24.3% 2012 3,860,007 3,888,554 (28,547) 15,071,915 25.8% 2013 4,181,017 4,810,851 (629,834) 15,972,281 30.1% 2014 3,956,836 3,980,163 (23,327) 13,007,069 30.6% 2015 3,743,710 3,804,508 (60,798) 12,433,033 30.6% 2016 3,537,464 3,646,206 (108,742) 11,430,114 31.9% 2017 3,718,752 3,767,771 (49,019) 11,528,291 32.7% 2018 4,481,601 4,520,402 (38,801) 10,081,502 44.8%
Additional information as of June 30, 2017, the latest actuarial valuation, follows:
Notes to Schedule of Contributions
Actuarial cost method Entry age normal Amortization method Level dollar Remaining amortization period 18 years Asset valuation method 5-year smoothed market 80%/120% corridor Actuarial assumptions: Investment rate of return* 7.00% Projected salary increases* 3.00% - 6.30% including inflation
* Includes inflation at 2.75% price inflation assumption used
Cost of living adjustment N/A
Assumed retirement Age - Age 60 with 10 years of service Age 55 with 25 years of service
Mortality – For calculation of the beginning and end of year TPL, mortality rates are based on the RP-2000 Combined Healthy Mortality Table for males and females, adjusted for mortality improvements to 2020 using projection scale BB. 100% of the rates are used for post-retirement purposes, 60% for pre-retirement purposes.
The mortality tables were updated for the 2015 valuation pursuant to an experience study of the period 2006 – 2013.
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117 City of Dearborn, Michigan
Schedule of Changes in Employer’s Net Pension Liability and Related Ratios
Fiscal year ended June 30, 2014 2015
Total Pension Liability Service Cost $ 1,517,855 $ 1,463,932 Interest on the Total Pension Liability 11,983,300 12,268,658 Difference between expected and actual experience of the Total Pension Liability - (1,318,646) Assumption Changes 1,861,488 - Benefit Payments and Refunds (11,365,962) (11,433,468) Net Change in Total Pension Liability 3,996,681 980,476 Total Pension Liability - Beginning 170,210,955 174,207,636 Total Pension Liability - Ending (a) $ 174,207,636 $ 175,188,112
Plan Fiduciary Net Position Employer Contributions $ 3,980,163 $ 3,804,508 Employee Contributions 536,150 505,681 Pension Plan Net Investment Income 19,334,481 716,111 Benefit Payments and Refunds (11,365,962) (11,433,468) Pension Plan Administrative Expense - (40,136) Net Change in Plan Fiduciary Net Position 12,484,832 (6,447,304) Plan Fiduciary Net Position - Beginning 137,062,419 149,547,251 Plan Fiduciary Net Position - Ending (b) $ 149,547,251 $ 143,099,947
Net Pension Liability (Assets) - ending (a) - (b) $ 24,660,385 $ 32,088,165 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 85.84% 81.68% Covered Employee Payroll $ 13,007,069 $ 12,433,033 Net Pension Liability as a Percentage of Covered Employee Payroll 189.59% 258.09%
Schedule of I nvestment Returns
FY Ended June 30, Annual Return* 2014 14.43% 2015 0.46% 2016 (0.52%) 2017 10.38% 2018 5.52%
* Annual money-weighted rate of return, net of investment expenses.
Pension schedules are intended to disclose information for ten years. Additional years will be added as they become available.
118 Chapter 22 General Employees Retirement System
2016 2017 2018
$ 1,406,866 $ 1,324,548 $ 1,287,938 12,334,306 12,538,642 12,599,353
688,134 480,342 (407,550) - 4,553,695 - (11,526,386) (11,613,053) (12,056,834) 2,902,920 7,284,174 1,422,907 175,188,112 178,091,032 185,375,206 $ 178,091,032 $ 185,375,206 $ 186,798,113
$ 3,646,206 $ 3,767,771 $ 4,520,402 467,245 451,138 427,812 (701,395) 13,691,060 7,609,795 (11,526,386) (11,613,053) (12,056,834) (28,932) (27,568) (36,589) (8,143,262) 6,269,348 464,586 143,099,947 134,956,685 141,226,033 $ 134,956,685 $ 141,226,033 $ 141,690,619
$ 43,134,347 $ 44,149,173 $ 45,107,494
75.78% 76.18% 75.85% $ 11,430,114 $ 11,528,291 $ 11,584,835
377.37% 382.96% 389.37%
119 City of Dearborn, Michigan Chapter 23 Police and Fire Revised Retirement System
Schedule of Contributions
Actual Actuarially Contribution Contribution as a FY Ended Determined Actual Deficiency Percentage of June 30, Contribution Contribution (Excess) Covered Payroll Covered Payroll 2009$ 6,474,732 $ 6,473,115 $ 1,617 $ 20,874,282 31.0% 2010 5,982,235 6,004,270 (22,035) 19,494,383 30.8% 2011 6,918,132 7,144,368 (226,236) 20,429,991 35.0% 2012 7,584,183 7,456,838 127,345 18,878,071 39.5% 2013 7,778,049 7,455,603 322,446 17,178,809 43.4% 2014 8,838,087 8,738,708 99,379 16,420,322 53.2% 2015 9,298,618 9,193,439 105,179 15,763,013 58.3% 2016 9,153,909 9,090,948 62,961 14,722,316 61.7% 2017 9,333,396 9,436,959 (103,563) 13,780,369 68.5% 2018 11,581,759 12,501,034 (919,275) 13,345,686 93.7%
Additional information as of June 30, 2017, the latest actuarial valuation, follows:
Notes to Schedule of Contributions
Actuarial cost method Entry age normal Amortization method Level dollar Remaining amortization period 13 years Asset valuation method 5-year smoothed market 80%/120% corridor Actuarial assumptions: Investment rate of return* 7.00% Projected salary increases* 3.00% - 6.50% including inflation
* Includes inflation at 2.75%
Cost of living adjustment Varies by labor contract
Assumed retirement Age – 25 years of service, any age 10 years of service, age 55
For calculation of the beginning and end of year TPL; mortality rates were based on the RP-2000 Combined Healthy Mortality Table for males (multiplied by 110%) and females (multiplied by 100%), adjusted for mortality improvements to 2020 using projection scale BB.
The mortality tables were updated for the 2015 valuation pursuant to an experience study of the period 2006 – 2013.
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121 City of Dearborn, Michigan
Schedule of Changes in Employer’s Net Pension Liability and Related Ratios
Fiscal year ended June 30, 2014 2015
Total Pension Liability Service Cost $ 4,192,556 $ 3,854,655 Interest on the Total Pension Liability 22,709,018 23,542,045 Benefit Changes - - Difference between expected and actual experience of the Total Pension Liability - (429,811) Assumption Changes 3,480,799 - Benefit Payments and Refunds (18,236,765) (19,210,018) Net Change in Total Pension Liability 12,145,608 7,756,871 Total Pension Liability - Beginning 320,249,941 332,395,549 Total Pension Liability - Ending (a) $ 332,395,549 $ 340,152,420
Plan Fiduciary Net Position Employer Contributions $ 8,738,708 $ 9,193,439 Employee Contributions 781,333 735,288 Pension Plan Net Investment Income 36,418,105 838,284 Benefit Payments and Refunds (18,236,765) (19,210,018) Pension Plan Administrative Expense - (60,739) Other - - Net Change in Plan Fiduciary Net Position 27,701,381 (8,503,746) Plan Fiduciary Net Position - Beginning 253,906,584 281,607,965 Plan Fiduciary Net Position - Ending (b) $ 281,607,965 $ 273,104,219
Net Pension Liability (Assets) - ending (a) - (b) $ 50,787,584 $ 67,048,201 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 84.72% 80.29% Covered Employee Payroll $ 16,420,322 $ 15,763,013 Net Pension Liability as a Percentage of Covered Employee Payroll 309.30% 425.35%
Schedule of I nvestment Returns
FY Ended June 30, Annual Return* 2014 14.57% 2015 0.28% 2016 -0.64% 2017 10.73% 2018 5.25%
* Annual money-weighted rate of return, net of investment expenses.
Pension schedules are intended to disclose information for ten years. Additional years will be added as they become available.
122 Chapter 23 Police and Fire Revised Retirement System
2016 2017 2018
$ 3,655,514 $ 3,513,973 $ 4,018,651 24,070,844 24,593,122 25,092,709 - - 5,515,313
(243,214) 1,006,214 2,467,804 - 10,829,368 - (19,937,083) (20,479,978) (21,406,454) 7,546,061 19,462,699 15,688,023 340,152,420 347,698,481 367,161,180 $ 347,698,481 $ 367,161,180 $ 382,849,203
$ 9,090,948 $ 9,436,959 $ 12,501,034 696,462 687,669 700,192 (1,664,166) 27,486,853 14,694,627 (19,937,083) (20,479,978) (21,406,454) (50,774) (44,080) (58,614) - - (291,433) (11,864,613) 17,087,423 6,139,352 273,104,219 261,239,606 278,327,029 $ 261,239,606 $ 278,327,029 $ 284,466,381
$ 86,458,875 $ 88,834,151 $ 98,382,822
75.13% 75.81% 74.30% $ 14,722,316 $ 13,780,369 $ 14,049,066
587.26% 644.64% 700.28%
123 City of Dearborn, Michigan Municipal Employees Retirement System of Michigan ( MERS)
Schedule of Contributions
Actual Actuarially Contribution Contribution as a FY Ended Determined Actual Deficiency Percentage of June 30, Contribution Contribution (Excess) Covered Payroll Covered Payroll 2010$ 371,921 $ 371,921 $ - $ 2,866,665 13.0% 2011 460,742 461,883 (1,141) 3,622,893 12.7% 2012 525,387 525,387 - 4,877,608 10.8% 2013 589,294 589,294 - 5,988,508 9.8% 2014 711,350 711,350 - 7,038,775 10.1% 2015 791,756 791,756 - 7,998,743 9.9% 2016 1,000,445 1,000,445 - 9,949,848 10.1% 2017 1,131,533 1,131,533 - 11,014,566 10.3% 2018 1,232,976 1,685,369 (452,393) 12,951,006 13.0%
The information presented above was determined as part of the actuarial valuations for the years then ended. Additional information as of December 31, 2017, the latest actuarial valuation, follows:
Actuarial cost method Entry age normal Amortization method Level percentage of payroll Amortization period 5-21 years (varies by department) Asset valuation method 5-year smoothed market
Actuarial assumptions: Investment rate of return* 7.75% Projected salary increases* 3.75%
* Includes inflation at 2.5%
Cost of living adjustment N/A
Assumed retirement Age - 25 years of service, age 50 15 years of service, age 55
For calculation of the beginning and end of year TPL: a 50% Male – 50% Female blend of the RP 2014 Group Annuity Mortality Table was used.
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125 City of Dearborn, Michigan
Schedule of Changes in Employer’s Net Pension Liability and Related Ratios
Fiscal year ended December 31, 2014 2015
Total Pension Liability Service Cost $ 1,209,895 $ 1,481,314 Interest on the Total Pension Liability 413,899 558,477 Benefit Changes - - Difference between expected and actual experience of the Total Pension Liability - 238,712 Assumption Changes - 37,679 Benefit Payments and Refunds (3,887) (10,201) Net Change in Total Pension Liability 1,619,907 2,305,981 Total Pension Liability - Beginning 4,413,955 6,033,862 Total Pension Liability - Ending (a) $ 6,033,862 $ 8,339,843
Plan Fiduciary Net Position Employer Contributions $ 371,624 $ 460,330 Employee Contributions 743,093 917,355 Pension Plan Net Investment Income 373,756 (123,348) Benefit Payments and Refunds (3,887) (10,201) Pension Plan Administrative Expense (14,087) (16,738) Net Change in Plan Fiduciary Net Position 1,470,499 1,227,398 Plan Fiduciary Net Position - Beginning 5,502,130 6,972,629 Plan Fiduciary Net Position - Ending (b) $ 6,972,629 $ 8,200,027
Net Pension Liability (Assets) - ending (a) - (b) $ (938,767) $ 139,816 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 115.56% 98.32% Covered Employee Payroll 7,711,024 9,452,425 Net Pension Liability as a Percentage of Covered Employee Payroll N/A 1.48%
Pension schedules are intended to disclose information for ten years. Additional years will be added as they become available.
126 Municipal Employees Retirement System of Michigan ( MERS)
2016 2017
$ 1,635,150 $ 1,917,113 732,364 902,090 - 1,365,338
(360,953) (32,862) - - (5,749) (46,177) 2,000,812 4,105,502 8,339,843 10,340,655 $ 10,340,655 $ 14,446,157
$ 1,038,018 $ 1,632,550 550,895 616,906 1,022,036 1,547,083 (5,749) (46,177) (20,052) (24,199) 2,585,148 3,726,163 8,200,027 10,785,175 $ 10,785,175 $ 14,511,338
$ (444,520) $ (65,181)
104.30% 100.45% 11,573,050 12,469,883
N/AN/A
127 City of Dearborn, Michigan Postemployment Healthcare Fund
Schedule of Contributions Actual Actuarially Contribution Contributions as FY Ended Determined Actual Deficiency a Percentage of June 30, Contribution Contribution (excess) Covered Payroll Covered Payroll 2009$ 12,971,247 $ 10,036,049 $ 2,935,198 $ 49,091,039 20.4% 2010 12,997,215 14,051,708 (1,054,493) 49,091,039 28.6% 2011 14,241,851 9,979,789 4,262,062 48,185,248 20.7% 2012 13,974,920 10,968,437 3,006,483 48,185,248 22.8% 2013 13,535,617 14,496,164 (960,547) 40,070,826 36.2% 2014 20,377,082 12,117,877 8,259,205 40,070,826 30.2% 2015 19,854,489 13,539,033 6,315,456 40,134,079 33.7% 2016 18,783,790 13,626,726 5,157,064 40,134,079 34.0% 2017 17,887,412 15,517,342 2,370,070 35,829,343 43.3% 2018 17,411,313 15,287,893 2,123,420 36,427,775 41.9%
Notes to Schedule of Contributions
Actuarial valuation information relative to the determination of contributions:
Actuarially determined contribution amounts are calculated as of June 30 of even numbered years. The valuation date is 12 months prior to the fiscal year beginning of odd numbered fiscal years and 24 months prior to the fiscal year beginning of even numbered fiscal years. The most recent actuarial valuation is as of June 30, 2016.
Methods and assumptions used to determine contribut ion rates:
Actuarial cost method Entry age normal Amortization method Level dollar Remaining amortization Period 19 year, closed Asset valuation method Market value of assets Inflation 2.75% Healthcare cost trend rates Initial trend of 9.00% gradually decreasing to an ultimate trend rate of 3.00% Salary increases 3.00% to 16.00% including inflation Investment rate of return 7.00%, net of OPEB plan investment expense including inflation Retirement age Experienced-based table of rates that are specific to the type of eligibility condition. Last updated for the 2005 valuation pursuant to an experience study of the period 1999-2004 Mortality The RP-2000 Combined Healthy Mortality Table projected 20 years using projection scale BB (adjusted 110% for male public safety members) Other information There were no benefit changes during the year
128 City of Dearborn, Michigan Postemployment Healthcare Fund
Schedule of Changes in the Net OPEB Liability and Related Ratios
Fiscal year ended June 30, 2017 2018
Total OPEB Liability Service Cost $ 2,080,816 $ 2,625,312 Interest on the Total OPEB Liability 15,471,747 15,307,855 Difference between expected and actual - experience of the Total OPEB Liability 586,687 (1,212,420) Assumption Changes 27,406,087 - Benefit Payments and Refunds (12,106,610) (11,316,644) Net Change in Total OPEB Liability 33,438,727 5,404,103 Total OPEB Liability - Beginning 226,037,850 259,476,577 Total OPEB Liability - Ending (a) $ 259,476,577 $ 264,880,680
Plan Fiduciary Net Position Employer Contributions $ 15,095,027 $ 15,287,893 Contributions - Non-Employer Contributing Entities 623,636 373,996 OPEB Plan Net Investment Income 4,883,607 4,776,465 Benefit Payments and Refunds (12,106,610) (11,316,644) OPEB Plan Administrative Expense (76,000) (29,250) Net Change in Plan Fiduciary Net Position 8,419,660 9,092,460 Plan Fiduciary Net Position - Beginning 64,510,886 72,930,546 Plan Fiduciary Net Position - Ending (b) $ 72,930,546 $ 82,023,006
Net OPEB Liability (Assets) - ending (a) - (b) $ 186,546,031 $ 182,857,674 Plan Fiduciary Net Position as a Percentage of Total OPEB Liability 28.11% 30.97% Covered Employee Payroll $ 35,829,343 $ 36,427,775 Net OPEB Liability as a Percentage of Covered Employee Payroll 520.65% 501.97%
OPEB schedules are intended to disclose information for ten years. Additional years will be added as they become available.
129 City of Dearborn, Michigan Postemployment Healthcare Fund
Notes to Schedule of Changes in the Net OPEB Liability
Benefit changes
There were no benefit changes during the year.
Changes in assumptions
There were no assumption changes during the year.
Schedule of I nvestment Returns
FY Ended June 30, Annual Return* 2017 8.38% 2018 6.96%
* Annual money-weighted rate of return, net of investment expense.
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131 City of Dearborn, Michigan Budgetary Comparison Schedule – General Fund Year Ended June 30, 2018
Actual on Variance Accounting Budgeted Amounts (Unaudited) Budgetary Favorable Basis Original Final Basis (Unfavorable) Adjustments Actual Revenues
Taxes and Penalties on Taxes Current property taxes $ 62,520,760 $ 62,736,460 $ 62,472,467 $ (263,993) $ - $ 62,472,467 Property tax administration fee 2,193,567 2,193,567 2,194,552 985 - 2,194,552 Penalties and interest on taxes 919,200 919,200 1,067,906 148,706 - 1,067,906 Payments in lieu of taxes 1,059,200 1,059,200 1,103,876 44,676 - 1,103,876 Total taxes and penalties on taxes 66,692,727 66,908,427 66,838,801 (69,626) - 66,838,801
Licenses and Permits Business licenses and permits 205,000 205,000 196,346 (8,654) - 196,346 Nonbusiness licenses and permits 2,493,515 2,493,515 2,940,916 447,401 - 2,940,916 Total licenses and permits 2,698,515 2,698,515 3,137,262 438,747 - 3,137,262
Intergovernmental Revenues State sources: Sales and use tax 9,050,519 9,050,519 9,665,843 615,324 - 9,665,843 LCSA Local Community Stabilization Act 7,277,000 14,313,355 14,313,355 - - 14,313,355 Liquor licenses 65,000 65,000 59,317 (5,683) - 59,317 Operators' licenses 3,000 3,000 2,707 (293) - 2,707 Judges' salaries 137,172 137,172 137,285 113 - 137,285 Alcohol caseload rebate 19,750 19,750 23,637 3,887 - 23,637 Other state sources 469,527 620,573 449,470 (171,103) - 449,470 Total state sources 17,021,968 24,209,369 24,651,614 442,245 - 24,651,614
Other governmental: Federal sources 728,500 1,682,153 1,214,245 (467,908) - 1,214,245 Local sources 543,000 678,950 797,893 118,943 - 797,893 Total other governmental 1,271,500 2,361,103 2,012,138 (348,965) - 2,012,138 Total intergovernmental revenues 18,293,468 26,570,472 26,663,752 93,280 - 26,663,752
Charges for Services General government: Birth and death records 260,000 260,000 301,844 41,844 - 301,844 City service fee 1,045,900 1,045,900 1,045,900 - - 1,045,900 Other 114,250 114,250 97,132 (17,118) - 97,132 Total general government 1,420,150 1,420,150 1,444,876 24,726 - 1,444,876
Public safety: Inspections 1,387,000 1,387,000 891,930 (495,070) - 891,930 Property maintenance / code enforcement 756,995 756,995 266,530 (490,465) - 266,530 Ambulance services 3,056,328 3,056,328 2,790,697 (265,631) - 2,790,697 Additional police patrols 200,000 200,000 282,882 82,882 - 282,882 Other 2,491,900 2,491,900 1,799,366 (692,534) - 1,799,366 Total public safety 7,892,223 7,892,223 6,031,405 (1,860,818) - 6,031,405
Public works: - Debris and rubbish pickup 175,500 175,500 44,151 (131,349) - 44,151 Parking fees 56,300 56,300 41,995 (14,305) - 41,995 Total public works 231,800 231,800 86,146 (145,654) - 86,146
Recreation and culture: Programs and activities sales 637,219 637,219 568,789 (68,430) - 568,789 Sales 1,534,115 1,534,115 1,225,197 (308,918) - 1,225,197 Use and admission fees 3,788,525 3,788,525 3,011,877 (776,648) - 3,011,877 Total recreation and culture 5,959,859 5,959,859 4,805,863 (1,153,996) - 4,805,863 Total charges for services 15,504,032 15,504,032 12,368,290 (3,135,742) - 12,368,290
Fines and Forfeitures Parking fines 516,000 516,000 633,816 117,816 - 633,816 19th District Court fines 3,945,680 3,945,680 4,038,332 92,652 - 4,038,332 Other fines and forfeits 5,450 5,450 27,810 22,360 - 27,810 Total fines and forfeitures 4,467,130 4,467,130 4,699,958 232,828 - 4,699,958
Miscellaneous Revenue Franchise fees 1,237,258 1,237,258 1,306,887 69,629 - 1,306,887 Rents and lease agreements 5,118,410 5,493,108 5,329,546 (163,562) - 5,329,546 Reimbursement s 99,900 102,900 230,220 127,320 - 230,220 Refunds - - 818 818 - 818 Other revenue 494,882 555,245 495,980 (59,265) - 495,980 Total miscellaneous revenue 6,950,450 7,388,511 7,363,451 (25,060) - 7,363,451
Investment Income 283,600 283,600 579,959 296,359 - 579,959
Total revenues 114,889,922 123,820,687 121,651,473 (2,169,214) - 121,651,473
Other Financing Sources Community Development fund 2,200,000 2,200,000 2,200,000 - - 2,200,000
Total other financing sources 2,200,000 2,200,000 2,200,000 - - 2,200,000
Total revenues and other sources $ 117,089,922 $ 126,020,687 $ 123,851,473 $ (2,169,214) - $ 123,851,473
132 City of Dearborn, Michigan Budgetary Comparison Schedule – General Fund Year Ended June 30, 2018
Actual on Variance Accounting Budgeted Amounts (Unaudited) Budgetary Favorable Basis Original Final Basis (Unfavorable) Adjustments Actual Expenditures
General Government Non-departmental $ 100,000 $ 3,170,000 $ 3,170,000 $ - $ - $ 3,170,000 Council 395,994 395,994 353,167 42,827 (797) 352,370 District Court 3,625,551 3,705,101 3,563,840 141,261 (20) 3,563,820 Mayor 1,068,591 1,084,491 1,080,123 4,368 - 1,080,123 City Clerk 947,824 947,824 815,437 132,387 - 815,437 Law 2,086,352 2,125,752 2,093,734 32,018 (162,828) 1,930,906 Human resources 891,859 903,659 812,462 91,197 (947) 811,515 Public works/building services and maintenance 409,855 330,894 330,894 - - 330,894 Public works/Central garage 946 946 179,764 (178,818) (159,710) 20,054 Assessment 1,083,120 1,124,660 1,056,615 68,045 (41,016) 1,015,599 Public Information 872,298 892,796 814,378 78,418 - 814,378 Finance: Accounting 1,258,396 1,206,198 1,147,340 58,858 - 1,147,340 Purchasing 738,945 738,945 719,015 19,930 - 719,015 Treasurer 780,028 786,228 778,312 7,916 (175) 778,137 Total general government 14,259,759 17,413,488 16,915,081 498,407 (365,493) 16,549,588
Public Safety Police: Operations 40,020,993 40,698,193 40,067,041 631,152 (62,104) 40,004,937 Ordinance enforcement 950,023 960,862 914,956 45,906 - 914,956 Fire: Operations 27,141,273 27,634,381 26,305,354 1,329,027 (28,664) 26,276,690 Civil preparedness 171,145 175,067 175,743 (676) - 175,743 Property maintenance & development services 3,796,501 3,882,301 3,080,143 802,158 (6,972) 3,073,171 Total public safety 72,079,935 73,350,804 70,543,237 2,807,567 (97,740) 70,445,497
Public Works Administrative 562,352 443,201 438,211 4,990 (14) 438,197 Parking system 1,051,315 693,405 436,933 256,472 (2,415) 434,518 Highways 5,871,559 5,940,414 6,384,256 (443,842) (176) 6,384,080 Train station 302,550 302,550 261,133 41,417 - 261,133 Sanitation 5,603,914 5,817,611 5,750,693 66,918 (40,573) 5,710,120 Neighborhood services 1,599,346 1,608,446 1,376,067 232,379 (45) 1,376,022 Line 474,451 437,336 357,623 79,713 (598) 357,025 Total public works 15,465,487 15,242,963 15,004,916 238,047 (43,821) 14,961,095
Recreation and Culture Public works 4,026,156 3,862,226 3,709,716 152,510 (22,504) 3,687,212 Recreation: Administrative 1,420,562 1,420,562 1,283,073 137,489 - 1,283,073 Programs 958,569 945,102 857,650 87,452 (7,765) 849,885 Outdoor pools 816,435 612,401 444,219 168,182 (5,234) 438,985 Community center: Admin/Athletics 2,441,698 2,427,747 2,396,603 31,144 (5,152) 2,391,451 Cultural arts 1,059,977 1,060,201 884,524 175,677 - 884,524 Senior services 680,512 680,512 599,433 81,079 - 599,433 Sports arena 1,226,372 1,240,872 1,102,160 138,712 (4,313) 1,097,847 Camp Dearborn 2,647,280 2,645,379 2,515,331 130,048 (12,518) 2,502,813 Mystic Creek Golf Course 1,704,270 1,711,770 1,561,673 150,097 (826) 1,560,847 Dearborn Hills Golf Course 1,137,544 1,076,941 997,355 79,586 (11,405) 985,950 Historical commission 327,852 312,502 244,370 68,132 - 244,370 Total recreation and culture 18,447,227 17,996,215 16,596,107 1,400,108 (69,717) 16,526,390
Community Improvement Economic & community development 1,240,611 1,118,449 1,005,661 112,788 - 1,005,661 Total community improvement 1,240,611 1,118,449 1,005,661 112,788 - 1,005,661
Utilities - - -
Capital Outlay 135,223 314,684 103,576 211,108 - 103,576
Total expenditures 121,628,242 125,436,603 120,168,578 5,268,025 (576,771) 119,591,807
Other Uses - Transfers out 168,350 12,564,418 12,510,671 53,747 - 12,510,671
Total expenditures and other uses 121,796,592 138,001,021 132,679,249 5,321,772 (576,771) 132,102,478
Net Change in Fund Balances (4,706,670) (11,980,334) (8,827,776) 3,152,558 576,771 (8,251,005)
Fund Balances - Beginning of Year 29,912,515 29,912,515 29,912,515 - - 29,912,515
Reserved for Encumbrances - - 576,771 576,771 (576,771) -
Fund Balances - End of Year $ 25,205,845 $ 17,932,181 $ 21,661,510 $ 3,729,329 $ - $ 21,661,510
133 City of Dearborn, Michigan Notes to Required Supplementary I nformation June 30, 2018
Budgetary Accounting and Accountability
The City’s budget is prepared in compliance with the uniform budgeting provisions of Michigan law. Budgets are adopted for all governmental and proprietary funds.
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
Prior to April 15, the Mayor delivers the proposed budget to the City Council for the fiscal year commencing the following July 1. The budget includes identification of unusual circumstances, a comparative analysis covering the immediate past and the current budgets, together with the proposed budget, and a proposed general appropriations resolution.
1. The proposed budgets are reviewed through a series of meetings with the City Council, Mayor, Finance department, department directors, etc. 2. A public hearing is conducted to obtain taxpayers’ comments. 3. No later than June 13, the City Council shall pass a general appropriations resolution providing the authority to make expenditures and incur obligations on behalf of the City for the ensuing fiscal year.
Appropriations in the General fund are controlled at the department level. Expenditures for all other governmental funds are controlled at the fund level. While the legislative budget is adopted at summary levels, administrative control is maintained at detail levels. Management may amend the budget at the detail level within summary constraints. During the fiscal year, it was necessary to make budget amendments. The budget statements also include budget amendments that were approved subsequent to June 30, 2018. An amendment of $145,596 in the Capital Projects fund was for unrealized losses on land inventory held for resale due to a decline in property market values. Also in the General fund there was an amendment of $87,375 for a contribution to the Facilities fund for water well upgrades at Camp Dearborn.
The City maintains budgetary control through the use of a full encumbrance system. For budgetary purposes, appropriations lapse at fiscal year-end, expect for the portion related to encumbered amounts and those amounts approved for carry forward by the City Council.
Budget to actual statements have been prepared in accordance with generally accepted accounting principles with the following exceptions:
• Encumbrances are included as expenditures. • Project life re-appropriations to the following fiscal year are reported as appropriated reserve carry-forward.
134 Other Supplementary I nformation
135 This Page I ntentionally Left Blank
136 City of Dearborn, Michigan Description of Nonmajor Funds Year Ended June 30, 2018
Special Revenue Funds
These funds are used to account for the proceeds of specific revenue sources (other than major capital projects) requiring separate accounting because of legal or regulatory provisions or administrative action. The combined Special Revenue funds are comprised of the following individual funds:
Major Street & Trunkline Fund and Local Street Fund – Both of these funds are established by state law to account for expenditures of state gas and weight tax collection allocations to the City. Their use is restricted to maintenance and const ruction of roads and streets and related expenditures. Ten percent of revenue may be expended for non-motorized transportation.
Drug Law Enforcement Fund – This fund is used to account for the proceeds of forfeitures resulting from drug law enforcement activities.
Library Fund – This fund accounts for the operations of the City’s three libraries. 1.78 mills of tax revenue is designated for libraries.
Community Development Fund – This fund accounts for entitlement funds received through the Federal Community Development Block Grant Program. The City has participated in this program since its enactment by Congress in 1977.
Designated Purposes Fund – This fund accounts for expenditures of various civic projects, which are financed by specific charges for services and by private contributions.
Capital Projects Fund
The City has one capital project fund. The Capital Projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by business-type/proprietary funds).
Enterprise Funds
These funds report operations that provide services to citizens financed primarily by a user charge or activities where the periodic measurement of net income is deemed appropriate for capital maintenance, public policy, management control, accountability or other purposes.
Seniors Apartment Operating Fund – This fund accounts for operation of the City’s Housing Department which administers the Senior Citizen Housing Program. The fund also directly accounts for operation of two senior citizen apartm ent buildings, Hubbard Manor East and Hubbard Manor West, which consist of a total of 351 apartments. Administrative and other costs are billed to the Dearborn Housing Commission based on services provided.
137 City of Dearborn, Michigan Description of Nonmajor Funds Year Ended June 30, 2018
I nternal Service Funds
Internal Service funds are used to account for the financing of goods or services provided by an activity to other departments, funds or component units of the City on a cost-reimbursement basis.
I nformation Systems Fund – Computers and related equipment are purchased by this fund for most City departments. Funding for the equipment, as well as technology projects and the operations of the Information Systems department, is received through annual lease fees to the user departments.
Facilities Fund – The repair and maintenance costs for City-owned facilities are accounted for in this fund. Funding for utilities, repair and maintenance and the operations of the Building Services and Powerhouse divisions are received through annual lease fees charged to the user departments.
Fleet Replacement Fund – Replacement vehicles for General fund departments are purchased from this fund and are funded through annual equipment lease fees charged to the departments.
Workers’ Compensation and Employee I nsurance Fund – The workers’ compensation fund accounts for reserves established to support future expenditures for indemnity claims arising from work-related injuries. The City maintains a self-insurance retention in the amount of $600,000 per occurrence. The employee insurance fund handles employee life and dental insurance. Life insurance coverage is provided by an outside insurance company. Dental insurance is on a reimbursement basis with Delta Dental. The employee insurance fund also includes health insurance for both active employees and retirees.
Fleet and General Liability I nsurance Fund – This fund accounts for reserves established for both fleet and general liability insurance and related claims against the City. The City retains the first $1,000,000 per occurrence. The first layer of insurance is $5,000,000 per occurrence. The excess layer is $10,000,000 per occurrence.
Fiduciary Funds Agency funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and for other funds.
Pension Trust Funds – The City operates three defined benefit retirement systems, which are accounted for in three separate funds. The systems cover full-time employees not covered by the defined contribution or Municipal Employees Retirem ent System of Michigan (MERS) plans. The City’s three defined benefit plans are all closed to newly hired employees. The funds include the General Employees’ Retirement System Fund, covering all full-time general employees (excluding sworn police and fire), the Revised Police and Fire Retirement System Fund, which covers police and fire employees hired since 1956, and the Policemen’s and Firemen’s Retirement System Fund, which covers police and fire employees hired prior to the establishment of the revised system.
138 City of Dearborn, Michigan Description of Nonmajor Funds Year Ended June 30, 2018
A defined benefit pension plan administered by MERS was made available to Police personnel hired on or after July 1, 2005 and Fire personnel hired on or after May 1, 2009. This plan may be elected by Police & Fire employees who are otherwise eligible for the City’s defined contribution plan.
Retiree Death Benefit Fund – This fund accounts for reserves established to support future expenditures for death benefit claims. The City is self-insured.
Postemployment Healthcare Fund – This fund accounts for amounts reserved to pay for current and future postemployment health insurance expenses. This fund is equivalent to a trust arrangement and funding is determined by actuarial studies to stabilize budget requirements as a percentage of pay.
Agency Fund – This fund accounts for deposit of monies held by the City government in a trustee capacity or as an agent for individuals, private organizations, other governments and/or other funds.
19th District Court – This fund accounts for monies collected by the court as bonds or for eventual distribution to the City as the district control unit or the State of Michigan.
139 City of Dearborn, Michigan
Major Street & Local Drug Law Trunkline Street Enforcement Library Fund Fund Fund Fund Assets
Cash and cash equivalents $ 2,580,325 $ 4,357,578 $ 599,627 $ 2,111,143 Investments 1,255,908 2,120,941 278,225 1,025,245 Accounts receivable (Net) 23,075 68,203 - 429 Property taxes receivable - - - 3,136 Accrued interest receivable 6,743 11,386 1,494 5,505 Due from other funds - 275,855 - - Due from other governments 1,277,818 374,602 - 149,131 Land held for resale - - - -
Total assets 5,143,869 7,208,565 879,346 3,294,589
Liabilities, Deferred Inflows of Resources and Fund Balances
Liabilities: Accounts payable 102,790 513,070 8,374 99,910 Accrued liabilities - - - 58,201 Deposits/refunds payable - - - - Due for tax appeals - - - 41,425 Due to other funds 275,855 - - 201 Due to other governments - - 237 -
Total liabilities 378,645 513,070 8,611 199,737
Deferred Inflows of Resources: Unavailable revenue - - - 9,782
Fund Balances: Restricted for: Law enforcement activities - - 870,735 - Road construction, preservation, maintenance 4,765,224 6,695,495 - - Historical museum activities - - - - Community development - - - - Library activities - - - 3,085,070 Committed for: Designated purposes - community programs - - - - Assigned for: Capital projects - - - -
Total fund balances 4,765,224 6,695,495 870,735 3,085,070
Total liabilities, deferred inflows of resources and fund balances $ 5,143,869 $ 7,208,565 $ 879,346 $ 3,294,589
140 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2018
Total Community Designated Capital Nonmajor Development Purposes Projects Governmental Fund Fund Fund Funds
$ - $ 1,293,767 $ 6,973,047 $ 17,915,487 - 350,924 3,393,954 8,425,197 259,557 518 15,038 366,820 - - - 3,136 - 829 18,223 44,180 - - - 275,855 415,778 2,560 2,457 2,222,346 113,627 - 3,665,108 3,778,735
788,962 1,648,598 14,067,827 33,031,756
51,826 2,210 157,551 935,731 - - - 58,201 400 589,675 60,920 650,995 - - - 41,425 50,487 997 - 327,540 - 164 - 401
102,713 593,046 218,471 2,014,293
259,557 - - 269,339
- - - 870,735 - - - 11,460,719 - 570,894 - 570,894 426,692 - - 426,692 - - - 3,085,070
- 484,658 - 484,658
- - 13,849,356 13,849,356
426,692 1,055,552 13,849,356 30,748,124
$ 788,962 $ 1,648,598 $ 14,067,827 $ 33,031,756
141 City of Dearborn, Michigan
Major Street & Local Drug Law Trunkline Street Enforcement Library Fund Fund Fund Fund Revenues Taxes, assessments and penalties on taxes $ 579,000 $ 955,193 $ - $ 5,560,755 Intergovernmental revenues: Federal sources 16,460 969,071 - 42,992 State sources 7,854,682 2,957,057 - 1,076,177 Local sources - - - 84,906 Charges for services - - - 45,312 Fines and forfeits - - 390,155 58,536 Rents and royalties - - - 13,497 Miscellaneous revenue 112,174 100,675 41,303 43,184 Private source contributions - - - 1 Investment income 41,922 67,640 9,526 46,734
Total revenues 8,604,238 5,049,636 440,984 6,972,094
Expenditures General government - - - - Public safety - - 359,825 - Public works 4,077,538 9,074,087 - - Recreation and culture - - - 5,190,750 Community improvement - - - - Utilities - - 46,756 - Capital outlay - - 36,981 538,020 Unrealized loss (gain) on land held for resale - - - -
Total expenditures 4,077,538 9,074,087 443,562 5,728,770
Revenues Over (Under) Expenditures 4,526,700 (4,024,451) (2,578) 1,243,324
Other Financing Sources (Uses) Transfers in 25,000 3,423,982 - - Transfers out (3,356,846) (7,290) - (427,384)
Total other financing sources (uses) (3,331,846) 3,416,692 - (427,384)
Net Change in Fund Balances 1,194,854 (607,759) (2,578) 815,940
Fund Balances - Beginning of Year 3,570,370 7,303,254 873,313 2,269,130
Fund Balances - End of Year $ 4,765,224 $ 6,695,495 $ 870,735 $ 3,085,070
142 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Governmental Funds Year Ended June 30, 2018
Total Community Designated Capital Nonmajor Development Purposes Projects Governmental Fund Fund Fund Funds
$ - $ - $ - $ 7,094,948
292,749 12,800 71,135 1,405,207 - - - 11,887,916 - - - 84,906 - 53,573 55,889 154,774 - - 33,896 482,587 - - - 13,497 5,000 85,278 685,428 1,073,042 - 201,862 - 201,863 - 7,046 119,229 292,097
297,749 360,559 965,577 22,690,837
- 201,955 - 201,955 - 480,000 - 839,825 - - - 13,151,625 - 453,236 - 5,643,986 299,097 - - 299,097 - - - 46,756 - - 1,713,361 2,288,362 - - 145,596 145,596
299,097 1,135,191 1,858,957 22,617,202
(1,348) (774,632) (893,380) 73,635
- 25,500 1,127,363 4,601,845 - - (2,200,000) (5,991,520)
- 25,500 (1,072,637) (1,389,675)
(1,348) (749,132) (1,966,017) (1,316,040)
428,040 1,804,684 15,815,373 32,064,164
$ 426,692 $ 1,055,552 $ 13,849,356 $ 30,748,124
143 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Major Street & Trunkline Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Taxes, assessments and penalties on taxes $ 579,010 $ 579,000 $ (10) $ - $ 579,000 Intergovernmental revenues: State sources 9,247,451 7,854,682 (1,392,769) - 7,854,682 Federal sources 16,460 16,460 - - 16,460 Miscellaneous revenue 310,476 112,174 (198,302) - 112,174 Investment income 12,790 41,922 29,132 - 41,922
Total revenues 10,166,187 8,604,238 (1,561,949) - 8,604,238
Expenditures - Public works 11,917,127 6,146,205 5,770,922 (2,068,667) 4,077,538
Revenues Over (Under) Expenditures (1,750,940) 2,458,033 4,208,973 2,068,667 4,526,700
Other Financing Sources (Uses) Transfers in 25,000 25,000 - - 25,000 Transfers out (3,661,809) (3,356,846) 304,963 - (3,356,846)
Total other financing sources (uses) (3,636,809) (3,331,846) 304,963 - (3,331,846)
Net Change in Fund Balances (5,387,749) (873,813) 4,513,936 2,068,667 1,194,854
Fund Balances - Beginning of Year 3,570,370 3,570,370 - - 3,570,370
Reserved for Encumbrances - 2,068,667 2,068,667 (2,068,667) -
Fund Balances - End of Year $ (1,817,379) $ 4,765,224 $ 6,582,603 $ - $ 4,765,224
144 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Local Street Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Taxes, assessments and penalties on taxes $ 958,290 $ 955,193 $ (3,097) $ - $ 955,193 Intergovernmental revenues: State sources 2,779,111 2,957,057 177,946 - 2,957,057 Federal sources 1,180,794 969,071 (211,723) - 969,071 Miscellaneous revenue 14,848 100,675 85,827 - 100,675 Investment income 23,910 67,640 43,730 - 67,640
Total revenues 4,956,953 5,049,636 92,683 - 5,049,636
Expenditures - Public works 13,458,174 12,251,618 1,206,556 (3,177,531) 9,074,087
Revenues Over (Under) Expenditures (8,501,221) (7,201,982) 1,299,239 3,177,531 (4,024,451)
Other Financing Sources (Uses) Transfers in 3,725,896 3,423,982 (301,914) - 3,423,982 Transfers out (13,913) (7,290) 6,623 - (7,290)
Total other financing sources (uses) 3,711,983 3,416,692 (295,291) - 3,416,692
Net Change in Fund Balances (4,789,238) (3,785,290) 1,003,948 3,177,531 (607,759)
Fund Balances - Beginning of Year 7,303,254 7,303,254 - - 7,303,254
Reserved for Encumbrances - 3,177,531 3,177,531 (3,177,531) -
Fund Balances - End of Year $ 2,514,016 $ 6,695,495 $ 4,181,479 $ - $ 6,695,495
145 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Drug Law Enforcement Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Fines and forfeits $ 390,200 $ 390,155 $ (45) $ - $ 390,155 Miscellaneous revenue 41,320 41,303 (17) - 41,303 Investment income 9,590 9,526 (64) - 9,526
Total revenues 441,110 440,984 (126) - 440,984
Expenditures Public safety 439,568 371,449 68,119 (11,624) 359,825 Utilities 42,000 46,756 (4,756) - 46,756 Capital outlay 47,000 36,981 10,019 - 36,981
Total expenditures 528,568 455,186 73,382 (11,624) 443,562
Revenues Over (Under) Expenditures (87,458) (14,202) 73,256 11,624 (2,578)
Other Financing Sources (Uses) Transfers in - - - - - Transfers out - - - - -
Total other financing sources (uses) - - - - -
Net Change in Fund Balances (87,458) (14,202) 73,256 11,624 (2,578)
Fund Balances - Beginning of Year 873,313 873,313 - - 873,313 - Reserved for Encumbrances - 11,624 11,624 (11,624) -
Fund Balances - End of Year $ 785,855 $ 870,735 $ 84,880 $ - $ 870,735
146 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Library Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Taxes, assessments and penalties on taxes $ 5,577,400 $ 5,560,755 $ (16,645) $ - $ 5,560,755 Intergovernment revenues: Federal sources 113,000 42,992 (70,008) - 42,992 State sources 1,066,129 1,076,177 10,048 - 1,076,177 Local sources 72,000 84,906 12,906 - 84,906 Charges for Services 42,300 45,312 3,012 - 45,312 Fines and forfeits 63,000 58,536 (4,464) - 58,536 Rents and royalties 8,000 13,497 5,497 - 13,497 Private source contributions - 1 1 - 1 Miscellaneous revenue 38,750 43,184 4,434 - 43,184 Investment income 13,580 46,734 33,154 - 46,734
Total revenues 6,994,159 6,972,094 (22,065) - 6,972,094
Expenditures Recreation and culture 5,398,432 5,199,668 198,764 (8,918) 5,190,750 Capital outlay 553,895 538,246 15,649 (226) 538,020
Total expenditures 5,952,327 5,737,914 214,413 (9,144) 5,728,770
Revenues Over (Under) Expenditures 1,041,832 1,234,180 192,348 9,144 1,243,324
Other Financing Sources (Uses) Transfers in - - - - - Transfers out (427,384) (427,384) - - (427,384)
Total other financing sources (uses) (427,384) (427,384) - - (427,384)
Net Change in Fund Balances 614,448 806,796 192,348 9,144 815,940
Fund Balances - Beginning of Year 2,269,130 2,269,130 - - 2,269,130
Reserved for Encumbrances - 9,144 9,144 (9,144) -
Fund Balances - End of Year $ 2,883,578 $ 3,085,070 $ 201,492 $ - $ 3,085,070
147 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Community Development Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Intergovernmental revenues: Federal sources $ 4,080,491 $ 292,749 $ (3,787,742) $ - $ 292,749 Miscellaneous revenue 5,000 5,000 - - 5,000
Total revenues 4,085,491 297,749 (3,787,742) - 297,749
Expenditures Community improvement 2,389,691 326,495 2,063,196 (27,398) 299,097
Total expenditures 2,389,691 326,495 2,063,196 (27,398) 299,097
Revenues Over (Under) Expenditures 1,695,800 (28,746) (1,724,546) 27,398 (1,348)
Other Financing Sources (Uses) Transfers in - - - - - Transfers out - - - - -
Total other financing sources (uses) - - - - -
Net Change in Fund Balances 1,695,800 (28,746) (1,724,546) 27,398 (1,348)
Fund Balances - Beginning of Year 428,040 428,040 - - 428,040
Reserved for Encumbrances - 27,398 27,398 (27,398) -
Fund Balances - End of Year $ 2,123,840 $ 426,692 $ (1,697,148) $ - $ 426,692
148 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Designated Purposes Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Intergovernmental revenues: Federal sources $ 12,800 $ 12,800 $ - $ - $ 12,800 Charges for services 53,573 53,573 - - 53,573 Miscellaneous revenue 85,278 85,278 - - 85,278 Investment income 7,046 7,046 - - 7,046 Private source contributions 201,862 201,862 - - 201,862
Total revenues 360,559 360,559 - - 360,559
Expenditures General government 338,120 201,955 136,165 - 201,955 Public safety 622,667 480,000 142,667 - 480,000 Recreation and culture 931,538 493,322 438,216 (40,086) 453,236
Total expenditures 1,892,325 1,175,277 717,048 (40,086) 1,135,191
Revenues Over (Under) Expenditures (1,531,766) (814,718) 717,048 40,086 (774,632)
Other Financing Sources (Uses) Transfers in 25,500 25,500 - - 25,500 Transfers out (73,990) - 73,990 - -
Total other financing sources (uses) (48,490) 25,500 73,990 - 25,500
Net Change in Fund Balances (1,580,256) (789,218) 791,038 40,086 (749,132)
Fund Balances - Beginning of Year 1,804,684 1,804,684 - - 1,804,684
Reserved for Encumbrances - 40,086 40,086 (40,086) -
Fund Balances - End of Year $ 224,428 $ 1,055,552 $ 831,124 $ - $ 1,055,552
149 City of Dearborn, Michigan Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Capital Projects Fund Year Ended June 30, 2018
Final Actual on Variance Accounting Budget Budgetary Favorable Basis (Unaudited) Basis (Unfavorable) Adjustments Actual Revenues Intergovernmental revenues: Federal sources $ 71,135 $ 71,135 $ - $ - $ 71,135 Charges for services 266,343 55,889 (210,454) - 55,889 Miscellaneous revenue 1,029,829 685,428 (344,401) - 685,428 Fines and forfeits 33,896 33,896 - - 33,896 Investment income 22,654 119,229 96,575 - 119,229
Total revenues 1,423,857 965,577 (458,280) - 965,577
Expenditures Capital outlay 12,802,352 3,382,368 9,419,984 (1,669,007) 1,713,361 Unrealized loss on land held for resale 145,596 145,596 - - 145,596
Total expenditures 12,947,948 3,527,964 9,419,984 (1,669,007) 1,858,957
Revenues Over (Under) Expenditures (11,524,091) (2,562,387) 8,961,704 1,669,007 (893,380)
Other Financing Sources (Uses) Transfers in 1,285,408 1,127,363 (158,045) - 1,127,363 Transfers out (2,200,000) (2,200,000) - - (2,200,000)
Total other financing sources (uses) (914,592) (1,072,637) (158,045) - (1,072,637)
Net Change in Fund Balances (12,438,683) (3,635,024) 8,803,659 1,669,007 (1,966,017)
Fund Balances - Beginning of Year 15,815,373 15,815,373 - - 15,815,373
Reserved for Encumbrances - 1,669,007 1,669,007 (1,669,007) -
Fund Balances - End of Year $ 3,376,690 $ 13,849,356 $ 10,472,666 $ - $ 13,849,356
150 This Page I ntentionally Left Blank
151 City of Dearborn, Michigan
Information Fleet Systems Facilities Replacement Fund Fund Fund Assets Current assets: Cash and cash equivalents $ 3,060,564 $ 14,569,360 $ 3,796,461 Investments - short- term 1,489,652 7,081,528 1,847,832 Accounts receivable (Net) - 1,156 - Accrued interest receivable 7,998 38,051 9,922 Due from other governments 642,285 600,000 - Prepaid it ems - - - Total current assets 5,200,499 22,290,095 5,654,215 Noncurrent assets Restricted cash: Construction and equipment - 23,136,770 - Capital assets (Net) 3,290,414 80,576,825 11,991,455 Total noncurrent assets 3,290,414 103,713,595 11,991,455 Total assets 8,490,913 126,003,690 17,645,670
Deferred Outflows of Resources - Pensions 189,965 442,151 -
Liabilities Current liabilities: Accounts payable 144,313 1,275,871 236,772 Accrued interest payable - 143,433 - Accrued liabilities 16,458 50,050 - Accrued vacation and sick 45,448 93,180 - Due for tax appeals - - - Unearned revenue 77,000 - - Due to other governments - - 6 Due to other funds 90 3,195 - Current portion of long-term debt - 1,037,175 - Total current liabilities 283,309 2,602,904 236,778 Noncurrent liabilities: Long- term debt, net of current portion - 28,321,116 - Net pension liability 1,583,717 3,685,869 - Net OPEB liabilit y 2,300,945 5,158,188 - Other liabilities 91,363 102,921 - Claims payable - - - Total noncurrent liabilities 3,976,025 37,268,094 - Total liabilities 4,259,334 39,870,998 236,778
Deferred Inflows of Resources - Pensions 2,511 5,882 - Deferred Inflows of Resources - OPEB 13,993 31,370 -
Net Position Net investment in capital assets 3,290,414 74,355,304 11,991,455 Unrestricted 1,114,626 12,182,287 5,417,437 Total net position $ 4,405,040 $ 86,537,591 $ 17,408,892
152 Combining Statement of Net Position I nternal Service Funds June 30, 2018
Fleet & Workers' General Compensation Liability and Employee Insurance Insurance Fund Fund Total
$ 6,127,621 $ 4,033,231 $ 31,587,237 1,597,825 1,963,073 13,979,910 13,031 - 14,187 13,391 10,541 79,903 - - - 1,242,285 130,473 - 130,473 7,882,341 6,006,845 47,033,995
- - - 23,136,770 - - - 95,858,694 - - - 118,995,464 7,882,341 6,006,845 166,029,459
- - - 632,116
296,378 357,854 2,311,188 - - - 143,433 - - - 66,508 - - - 138,628 - - 492,840 492,840 - - - 77,000 - - - 6 - - 153,648 156,933 - - - 1,037,175 296,378 1,004,342 4,423,711
- - - 28,321,116 - - - 5,269,586 - - - 7,459,133 - - - 194,284 1,489,156 3,005,000 4,494,156 1,489,156 3,005,000 45,738,275 1,785,534 4,009,342 50,161,986
- - - 8,393 - - - 45,363
- - - 89,637,173 6,096,807 1,997,503 26,808,660 $ 6,096,807 $ 1,997,503 $ 116,445,833
153 City of Dearborn, Michigan
Information Fleet Systems Facilities Replacement Fund Fund Fund Operating Revenues Intergovernmental revenues: Federal sources $ - $ 6,125 $ 773,637 State sources 109,421 - - Local sources - 250,027 - Charges for services 2,019,434 4,618,925 - Rents and royalties 619,937 8,429 2,596,813 City contributions for insurance premiums - - - Miscellaneous revenue 336 105,328 203,908 Private source contributions - 689,450 - Total operating revenues 2,749,128 5,678,284 3,574,358
Operating Expenses Personnel services 1,250,545 2,759,656 - Contractual services 822,888 88,582 - Utilities - 1,352,846 - Repair and maintenance - 558,591 - Cost of sales - - 16,240 Depreciation 433,755 2,620,424 1,834,150 Insurance and bonds - - - Insurance benefits - - - Claims and judgments - - - Other operating expense - - - Total operating expenses 2,507,188 7,380,099 1,850,390
Operating Income (Loss) 241,940 (1,701,815) 1,723,968
Nonoperating Revenues (Expenses) Investment income 49,881 224,504 53,056 Other interest - (168,574) - Gain/(loss) on disposal of assets - (105,000) (116,900) Other nonoperating expense - (900) - Total nonoperating revenues (expenses) 49,881 (49,970) (63,844)
Income (Loss) before Operating Transfers 291,821 (1,751,785) 1,660,124
Transfers Transfers in 36,639 11,788,486 - Transfers out (466) (55,690) - Net transfers 36,173 11,732,796 -
Net Income (Loss) 327,994 9,981,011 1,660,124
Net Position - Beginning of Year (1) 4,077,046 76,556,580 15,748,768
Net Position - End of Year $ 4,405,040 $ 86,537,591 $ 17,408,892
(1) Net position - Beginning of year has been restated in order to adopt GASB 75 (see Note 17). 154 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position I nternal Service Funds Year Ended June 30, 2018 Fleet & Workers' General Compensation Liability and Employee Insurance Insurance Fund Fund Total
$ - $ - $ 779,762 - - - 109,421 - - - 250,027 - - - 6,638,359 - - - 3,225,179 19,227,941 - 19,227,941 1,653,192 2,614,030 4,576,794 - - - 689,450 20,881,133 2,614,030 35,496,933
- - - 4,010,201 591,128 - 1,502,598 - - - 1,352,846 - - 482,671 1,041,262 - - - 16,240 - - - 4,888,329 63,700 1,038,375 1,102,075 47,758 - 47,758 19,430,722 667,677 20,098,399 144,253 91,617 235,870 20,277,561 2,280,340 34,295,578
603,572 333,690 1,201,355
79,969 60,552 467,962 - - - (168,574) - - - (221,900) - - - (900) 79,969 60,552 76,588
683,541 394,242 1,277,943
- - - 11,825,125 - - - (56,156) - - - 11,768,969
683,541 394,242 13,046,912
5,413,266 1,603,261 103,398,921
$ 6,096,807 $ 1,997,503 $ 116,445,833
155 City of Dearborn, Michigan
Information Fleet Systems Facilities Replacement Fund Fund Fund Cash Flows from Operating Activities Receipts from customers $ 2,639,371 $ 4,630,733 $ 3,370,450 Payments to suppliers (841,368) (1,113,579) 109,431 Payments to employees (1,197,229) (2,741,488) - Internal activity 90 9,550 1,205 Claims paid - - - Other receipts 336 1,042,930 203,908 Other payments - - - Net cash provided (used) by operating activities 601,200 1,828,146 3,684,994
Cash Flows from Noncapital Financing Activities Transfers in 36,639 11,788,486 - Transfers out (466) (55,690) - Net cash provided (used) by noncapital financing activities 36,173 11,732,796 -
Cash Flows from Capital and Related Financing Activities Principal paid on debt - (3,485,005) - Proceeds on the issuance of long term debt - 18,043,318 - Prepaid interest on debt - (86,279) - Acquisition and construction of capital assets (675,643) (9,005,952) (3,323,454) Net cash provided (used) by capital and related financing activities (675,643) 5,466,082 (3,323,454)
Cash Flows from Investing Activities Net sale (purchase) of investments (63,210) (2,470,849) (203,965) Investment income 46,992 202,976 49,022 Net cash provided (used) by investing activities (16,218) (2,267,873) (154,943)
Net Increase (Decrease) in Cash and Cash Equivalents (54,488) 16,759,151 206,597
Cash and Cash Equivalents - Beginning of Year 3,115,052 20,946,979 3,589,864
Cash and Cash Equivalents - End of Year $ 3,060,564 $ 37,706,130 $ 3,796,461
Cash and Cash Equivalents - Unrestricted $ 3,060,564 $ 14,569,360 $ 3,796,461 Cash and Cash Equivalents - Restricted - 23,136,770 -
Cash and Cash Equivalents - End of Year $ 3,060,564 $ 37,706,130 $ 3,796,461
156 Combining Statement of Cash Flows I nternal Service Funds Year Ended June 30, 2018
Fleet & Workers' General Compensation Liability and Employee Insurance Insurance Fund Fund Total
$ 19,226,288 $ 2,614,030 $ 32,480,872 (468,187) (1,326,456) (3,640,159) - - (3,938,717) - 85,605 96,450 (18,813,118) (1,427,677) (20,240,795) 1,653,192 - 2,900,366 (144,253) (91,617) (235,870)
1,453,922 (146,115) 7,422,147
- - 11,825,125 - - (56,156)
- - 11,768,969
- - (3,485,005) - - 18,043,318 - - (86,279)
- - (13,005,049)
- - 1,466,985
(598,213) (51,654) (3,387,891) 74,977 56,857 430,824 (523,236) 5,203 (2,957,067)
930,686 (140,912) 17,701,034
5,196,935 4,174,143 37,022,973
$ 6,127,621 $ 4,033,231 $ 54,724,007
$ 6,127,621 $ 4,033,231 $ 31,587,237 - - 23,136,770
$ 6,127,621 $ 4,033,231 $ 54,724,007
157 City of Dearborn, Michigan
Information Fleet Systems Facilities Replacement Fund Fund Fund Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ 241,940 $ (1,701,815) $ 1,723,968
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 433,755 2,620,424 1,834,150 Change in assets and liabilities: Accounts receivable - 3,379 - Due from other funds - 6,355 1,205 Due from other governments (109,421) - - Prepaid it ems - - - Accounts payable 19,170 841,522 125,665 Accrued liabilities (37,650) 44,918 - Customer deposits payable - (8,000) - Due to other funds 90 3,195 - Due to other governments - - 6 Claims payable - - - Net Pension Liability and related deferrals 209,635 423,480 - Net OPEB Liability and related deferrals (156,319) (405,312) -
Net cash provided (used) by operating activities $ 601,200 $ 1,828,146 $ 3,684,994
158 Combining Statement of Cash Flows I nternal Service Funds Year Ended June 30, 2018
Fleet & Workers' General Compensation Liability and Employee Insurance Insurance Fund Fund Total
$ 603,572 $ 333,690 $ 1,201,355
- - 4,888,329
(1,653) - 1,726 - - 7,560 - - (109,421) 342,018 - 342,018 234,537 298,353 1,519,247 - - 7,268 - - (8,000) - 85,605 88,890 - (103,763) (103,757) 275,448 (760,000) (484,552) - - 633,115 - - (561,631)
$ 1,453,922 $ (146,115) $ 7,422,147
159 City of Dearborn, Michigan
General Revised Policemen's & Employees' Police & Fire Firemen's Retirement Retirement Retirement System Fund System Fund System Fund Assets Current assets: Cash and cash equivalents $ 282,798 $ 448,558 $ 30,062 Investments - short- term 765,580 1,867,516 86,384 Receivables: Accrued interest receivable 41,985 93,677 14,558 Due from brokers and other 119,798 171,341 - Due from other funds 2,500 - - Total current assets 1,212,661 2,581,092 131,004
Noncurrent assets - investments: Certificates of deposit 6,492 10,298 690 Fixed income mutual funds 53,565,335 89,632,351 13,227,385 Common stock 34,637,185 87,510,990 3,775,108 Real estate properties 7,262,684 13,914,765 - Mutual funds and other 45,089,357 91,011,137 7,503,489 Total noncurrent assets 140,561,053 282,079,541 24,506,672 Total assets 141,773,714 284,660,633 24,637,676
Liabilities Accounts payable 83,095 194,252 7,047 Total liabilities 83,095 194,252 7,047
Net Position - restricted for pensions $ 141,690,619 $ 284,466,381 $ 24,630,629
160 Combining Statement of Net Position Fiduciary Pension & Other Employee Benefits Funds June 30, 2018
Postemployment Death Benefit Healthcare Fund Fund Total
$ 811,288 $ 862,306 $ 2,435,012 376,249 1,432,787 4,528,516
2,121 234,379 386,720 - - 499,089 790,228 - - - 2,500 1,189,658 3,028,561 8,142,976
18,625 19,796 55,901 - - 35,501,371 191,926,442 - - 43,845,725 169,769,008 - - - 21,177,449 - - - 143,603,983 18,625 79,366,892 526,532,783 1,208,283 82,395,453 534,675,759
1,000 372,447 657,841 1,000 372,447 657,841
$ 1,207,283 $ 82,023,006 $ 534,017,918
161 City of Dearborn, Michigan
General Revised Policemen's & Employees' Police & Fire Firemen's Retirement Retirement Retirement Additions System Fund System Fund System Fund Investment income: Interest and dividends $ 1,346,912 $ 2,966,013 $ 554,122 Net increase/(decrease) in value of investments 6,654,156 12,683,090 506,933 Investment expenses (391,273) (954,476) (47,690) Net investment income (loss) 7,609,795 14,694,627 1,013,365
Contributions: Employer 4,520,402 12,501,034 - Employee 427,812 700,192 - Reimbursement s - - - Total contributions 4,948,214 13,201,226 - Total additions 12,558,009 27,895,853 1,013,365
Deductions Benefit payments 12,004,218 20,645,724 1,778,459 Refunds of contributions 52,616 760,730 - Claims and judgments - 291,433 - Administrative expenses 36,589 58,614 12,446 Total deductions 12,093,423 21,756,501 1,790,905
Change in Net Position 464,586 6,139,352 (777,540)
Net Position - Beginning of Year 141,226,033 278,327,029 25,408,169
Net Position - End of Year $ 141,690,619 $ 284,466,381 $ 24,630,629
162 Combining Statement of Changes in Fiduciary Net Position Fiduciary Pension & Other Employee Benefits Funds Year Ended June 30, 2018
Ret iree Postemployment Death Benefit Healthcare Fund Fund Total
$ 13,414 $ 1,992,956 $ 6,873,417
- - 2,936,205 22,780,384 - - (152,696) (1,546,135) 13,414 4,776,465 28,107,666
- - 15,287,893 32,309,329 12,231 - 1,140,235 - - 373,996 373,996 12,231 15,661,889 33,823,560 25,645 20,438,354 61,931,226
51,000 11,316,644 45,796,045 - - - 813,346 - - - 291,433 - - 29,250 136,899 51,000 11,345,894 47,037,723
(25,355) 9,092,460 14,893,503
1,232,638 72,930,546 519,124,415
$ 1,207,283 $ 82,023,006 $ 534,017,918
163 City of Dearborn, Michigan Combining Statement of Net Position Fiduciary Agency Funds June 30, 2018
District Agency Court Fund Fund Total Assets Cash and cash equivalents $ 3,780,084 $ 55,800 $ 3,835,884 Accounts receivable (Net) 18,069 224,206 242,275 Total assets $ 3,798,153 $ 280,006 $ 4,078,159
Liabilities Accounts payable $ 324,805 $ 5,800 $ 330,605 Payroll deductions payable 244,994 - 244,994 Deposits/refunds payable 2,227,185 - 2,227,185 Due to other governments 771,537 274,206 1,045,743 Other liabilities 229,632 - 229,632 Total liabilities $ 3,798,153 $ 280,006 $ 4,078,159
164 City of Dearborn, Michigan Statement of Changes in Assets and Liabilities Fiduciary Agency Funds Year Ended June 30, 2018
Agency Fund:
Balance Balance June 30, 2017 Additions Deductions June 30, 2018 Assets Cash and cash equivalents $ 4,265,428 $ 306,551,119 $ 307,036,463 $ 3,780,084 Accounts receivable (Net) 10,091 22,522 14,544 18,069 Due from other governments 4 - 4 - Total assets $ 4,275,523 $ 306,573,641 $ 307,051,011 $ 3,798,153
Liabilities Accounts payable $ 535,862 $ 137,398,566 $ 137,609,623 $ 324,805 Deposits/refunds payable 2,756,807 8,742,178 9,271,800 2,227,185 Payroll deductions payable 204,689 4,722,267 4,681,962 244,994 Due to other governments 778,050 151,013,643 151,020,156 771,537 Other liabilities 115 4,696,987 4,467,470 229,632 Total liabilities $ 4,275,523 $ 306,573,641 $ 307,051,011 $ 3,798,153
District Court Fund:
Balance Balance June 30, 2017 Additions Deductions June 30, 2018 Assets Cash and cash equivalents $ 55,800 $ 6,215,317 $ 6,215,317 $ 55,800 Accounts receivable (Net) 276,988 1,398,562 1,451,344 224,206 Total assets $ 332,788 $ 7,613,879 $ 7,666,661 $ 280,006
Liabilities Accounts payable $ 27,675 $ 4,711,830 $ 4,733,705 $ 5,800 Due to other governments 305,113 2,902,049 2,932,956 274,206 Total liabilities $ 332,788 $ 7,613,879 $ 7,666,661 $ 280,006
Total - All Fiduciary Agency Funds:
Balance Balance June 30, 2017 Additions Deductions June 30, 2018 Assets Cash and cash equivalents $ 4,321,228 $ 312,766,436 $ 313,251,780 $ 3,835,884 Accounts receivable (Net) 287,079 1,421,084 1,465,888 242,275 Due from other governments 4 - 4 - Total assets $ 4,608,311 $ 314,187,520 $ 314,717,672 $ 4,078,159
Liabilities Accounts payable $ 563,537 $ 142,110,396 $ 142,343,328 $ 330,605 Payroll deductions payable 204,689 4,722,267 4,681,962 244,994 Deposits/refunds payable 2,756,807 8,742,178 9,271,800 2,227,185 Due to other governments 1,083,163 153,915,692 153,953,112 1,045,743 Other liabilities 115 4,696,987 4,467,470 229,632 Total liabilities $ 4,608,311 $ 314,187,520 $ 314,717,672 $ 4,078,159
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166 City of Dearborn, Michigan Statistical and Continuing Disclosures Section
This part of the City of Dearborn 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.
Page
CONTENTS
Financial Trends ...... 168-179 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.
Revenue Capacity...... 180-191 These schedules contain information to help the reader assess the factors affecting the City’s ability to generate its property taxes.
Debt Capacity ...... 192-202 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.
Demographic and Economic Information ...... 203-204 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place and to help make comparisons over time and with other governments.
Operating Information ...... 206-211 These schedules contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.
167 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Governmental activities Net investment in capital assets $ 122,778,610 $ 125,057,087 $ 126,568,635 $ 133,330,927 Restricted 34,250,362 34,203,674 9,491,161 12,654,851 Unrestricted 42,313,022 36,180,495 46,286,480 38,769,382 Total net position $ 199,341,994 $ 195,441,256 $ 182,346,276 $ 184,755,160
Business-type activities Net investment in capital assets $ 186,175,486 $ 139,515,797 $ 144,425,891 $ 153,591,879 Restricted 17,411,175 21,003,170 9,525,175 13,815,795 Unrestricted 42,209,231 44,559,441 68,270,100 72,201,183 Total net position $ 245,795,892 $ 205,078,408 $ 222,221,166 $ 239,608,857
Primary government in total Net investment in capital assets $ 308,954,096 $ 264,572,884 $ 270,994,526 $ 286,922,806 Restricted 51,661,537 55,206,844 19,016,336 26,470,646 Unrestricted 84,522,253 80,739,936 114,556,580 110,970,565 Total net position $ 445,137,886 $ 400,519,664 $ 404,567,442 $ 424,364,017
168 Net Position by Component Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 145,372,597 $ 157,690,864 $ 181,189,047 $ 191,870,660 $ 198,367,487 $ 208,505,984 14,849,367 13,885,585 13,361,366 14,815,686 15,889,698 17,421,022 41,245,404 41,733,653 (14,703,939) (31,237,828) (41,965,010) (179,895,815) $ 201,467,368 $ 213,310,102 $ 179,846,474 $ 175,448,518 $ 172,292,175 $ 46,031,191
$ 167,961,227 $ 184,669,553 $ 193,596,164 $ 211,580,077 $ 233,173,005 $ 224,075,598 13,093,011 15,018,846 25,781,055 14,905,135 19,142,203 10,979,271 77,459,857 74,490,345 60,779,679 62,577,385 50,578,533 16,470,087 $ 258,514,095 $ 274,178,744 $ 280,156,898 $ 289,062,597 $ 302,893,741 $ 251,524,956
$ 313,333,824 $ 342,360,417 $ 374,785,211 $ 403,450,737 $ 431,540,492 $ 432,581,582 27,942,378 28,904,431 39,142,421 29,720,821 35,031,901 28,400,293 118,705,261 116,223,998 46,075,740 31,339,557 8,613,523 (163,425,728) $ 459,981,463 $ 487,488,846 $ 460,003,372 $ 464,511,115 $ 475,185,916 $ 297,556,147
169 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Expenses General government $ 18,905,374 $ 12,376,173 $ 12,225,979 $ 11,993,709 Public safety 56,413,381 57,738,469 62,196,288 59,102,614 Public works 17,062,196 18,683,274 18,119,188 17,494,663 Health and welfare 899,100 382,038 373,951 (2,766) Recreation and culture 20,056,955 21,540,832 22,010,768 20,718,911 Community improvement 2,840,908 2,726,471 5,281,873 6,013,857 Interest on long-term debt 692,610 575,506 436,484 252,423 Total expenses 116,870,524 114,022,763 120,644,531 115,573,411
Program revenues Charges for services General government 4,060,655 3,433,331 3,568,250 3,890,329 Public safety 7,183,233 6,058,870 8,746,633 8,044,980 Public works 808,008 240,855 192,735 81,308 Health and welfare 187,589 220,888 151,598 7,820 Recreation and culture 6,198,247 6,228,878 6,178,886 6,227,984 Community improvement 41,900 15,942 28,632 23,511 Total charges for services 18,479,632 16,198,764 18,866,734 18,275,932
Operating grants and contributions 9,668,790 11,580,040 11,248,838 10,805,625 Capital grants and contributions 1,354,205 3,054,980 3,605,055 10,211,453 Total program revenues 29,502,627 30,833,784 33,720,627 39,293,010 Net (expense) revenue (87,367,897) (83,188,979) (86,923,904) (76,280,401)
General revenues Property taxes 74,177,428 70,861,323 65,008,877 64,815,389 Intergovernmental revenues 9,154,795 8,087,313 8,257,255 8,374,116 Investment earnings 2,800,349 825,396 252,343 75,276 Miscellaneous 339,860 310,711 291,734 241,611 Total general revenues 86,472,432 80,084,743 73,810,209 73,506,392
Transfers (1,152,914) (796,502) 18,715 5,182,893 Change in net position $ (2,048,379) $ (3,900,738) $ (13,094,980) $ 2,408,884
170 Changes in Governmental Net Position Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 13,049,241 $ 15,580,246 $ 16,125,892 $ 18,899,385 $ 23,538,913 $ 16,576,427 52,835,042 60,883,155 62,447,337 70,143,987 70,825,489 87,342,059 19,718,230 19,658,290 22,756,920 21,761,119 24,598,364 27,479,082 1,270 274 - - - - 20,761,965 19,580,632 23,646,790 22,605,162 22,703,075 24,423,187 2,966,945 3,423,885 2,541,722 7,359,131 1,671,366 1,728,336 188,610 66,307 - - - - 109,521,303 119,192,789 127,518,661 140,768,784 143,337,207 157,549,091
4,109,909 4,682,807 4,640,656 5,096,832 4,429,170 4,743,453 7,681,405 8,712,212 9,455,854 9,111,385 11,067,966 10,830,169 228,766 389,269 704,128 2,114,110 1,180,388 1,001,809 2,151 1,575 - - - - 6,154,944 7,476,466 7,958,928 8,600,034 9,037,016 9,379,063 6,063 764,477 28,248 28,876 27,000 32,177 18,183,238 22,026,806 22,787,814 24,951,237 25,741,540 25,986,671
11,012,688 11,686,487 9,423,726 10,471,797 12,723,977 13,591,525 11,552,900 14,350,620 13,129,607 11,898,958 4,918,468 6,368,490 40,748,826 48,063,913 45,341,147 47,321,992 43,383,985 45,946,686 (68,772,477) (71,128,876) (82,177,514) (93,446,792) (99,953,222) (111,602,405)
77,177,876 75,003,853 78,864,715 79,733,317 73,176,009 73,721,119 8,670,195 8,879,861 10,103,356 9,061,672 23,066,529 25,098,577 93,240 35,566 44,036 156,269 403,476 871,687 458,812 82,330 308,125 97,578 109,177 241,551 86,400,123 84,001,610 89,320,232 89,048,836 96,755,191 99,932,934
(915,438) (1,030,000) 14,540,831 - 41,688 68,623 $ 16,712,208 $ 11,842,734 $ 21,683,549 $ (4,397,956) $ (3,156,343) $ (11,600,848)
171 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Expenses Housing $ 3,458,115 $ 4,325,517 $ 3,300,533 $ 2,990,211 Golf course 1,453,587 1,400,042 1,372,503 1,259,035 Parking 2,176,678 2,163,670 2,111,898 2,084,662 Sewer 18,675,598 17,339,277 23,319,895 30,328,151 Water 14,551,370 13,489,834 15,331,842 15,398,293 Total expenses 40,315,348 38,718,340 45,436,671 52,060,352
Program revenues Charges for services Housing 3,280,655 2,986,372 3,099,199 3,151,693 Golf course 1,200,615 1,180,309 1,049,788 1,008,256 Parking 1,369,973 1,212,763 1,257,440 1,579,888 Sewer 26,435,810 23,143,181 25,420,282 27,025,311 Water 18,010,410 16,161,503 16,348,307 17,532,486 Total charges for services 50,297,463 44,684,128 47,175,016 50,297,634
Capital grants and contributions 1,295,426 - 4,840,836 1,176,183 Total program revenues 51,592,889 44,684,128 52,015,852 51,473,817 Net (expense) revenue 11,277,541 5,965,788 6,579,181 (586,535)
General revenues Property taxes 7,413,464 9,834,080 15,647,451 16,147,491 Intergovernmental revenues - - - - Investment earnings 1,946,237 841,748 292,533 103,383 Miscellaneous 1,554,583 1,168,875 127,128 1,492,129 Total general revenues 10,914,284 11,844,703 16,067,112 17,743,003
Gain (loss) on sale of capital assets - 675,523 (18,977) 5,414,116
Special items- loss on abandoned assets - (60,000,000) (5,465,843) -
Transfers 1,152,914 796,502 (18,715) (5,182,893) Change in net position $ 23,344,739 $ (40,717,484) $ 17,142,758 $ 17,387,691
Change in Primary Government net position Change in Governmental net position $ (2,048,379) $ (3,900,738) $ (13,094,980) $ 2,408,884 Change in Business- type net position 23,344,739 (40,717,484) 17,142,758 17,387,691 Total Change in Primary Government net position $ 21,296,360 $ (44,618,222) $ 4,047,778 $ 19,796,575
172 Changes in Business-type Net Position Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 2,495,464 $ 3,617,191 $ 2,834,958 $ 2,850,550 $ 3,071,420 $ 2,763,651 1,060,839 964,229 450,449 - - - 2,032,506 2,075,909 989,904 - - - 35,166,346 34,387,772 38,884,885 40,204,876 36,459,511 33,233,673 16,084,791 16,293,822 14,887,593 19,418,369 20,528,144 16,729,369 56,839,946 57,338,923 58,047,789 62,473,795 60,059,075 52,726,693
2,547,145 2,576,516 2,685,340 2,772,198 2,597,320 2,771,901 773,775 809,909 474,448 - - - 1,586,944 1,516,758 844,313 - - - 29,703,949 29,303,558 29,350,068 31,998,691 28,573,296 28,418,154 19,304,119 19,215,410 18,902,308 20,677,506 22,462,582 23,214,100 53,915,932 53,422,151 52,256,477 55,448,395 53,633,198 54,404,155
3,270,702 719,455 15,426,763 97,530 122,274 - 57,186,634 54,141,606 67,683,240 55,545,925 53,755,472 54,404,155 346,688 (3,197,317) 9,635,451 (6,927,870) (6,303,603) 1,677,462
16,398,838 15,333,304 14,820,721 14,986,612 17,456,378 18,280,760 ------124,935 48,487 64,528 168,881 349,666 789,334 1,125,983 2,450,175 1,057,749 678,076 2,370,391 364,887 17,649,756 17,831,966 15,942,998 15,833,569 20,176,435 19,434,981
(6,644) - - - - -
------(36,287,463)
915,438 1,030,000 (14,540,831) - (41,688) (68,623) $ 18,905,238 $ 15,664,649 $ 11,037,618 $ 8,905,699 $ 13,831,144 $ (15,243,643)
$ 16,712,208 $ 11,842,734 $ 21,683,549 $ (4,397,956) $ (3,156,343) $ (11,600,848) 18,905,238 15,664,649 11,037,618 8,905,699 13,831,144 (15,243,643)
$ 35,617,446 $ 27,507,383 $ 32,721,167 $ 4,507,743 $ 10,674,801 $ (26,844,491)
173 City of Dearborn, Michigan
As of June 30, 2009 2010 2011 (1) 2012 General fund Reserved $ 4,565,604 $ 2,773,477 $ - $ - Unreserved 23,822,046 19,649,622 - - Nonspendable - - 203,754 247,488 Restricted - - - - Assigned - - 5,707,125 5,075,442 Unassigned - - 15,657,636 14,483,393 Total general fund $ 28,387,650 $ 22,423,099 $ 21,568,515 $ 19,806,323
All other governmental funds Reserved $ 34,249,675 $ 33,578,417 $ - $ - Unreserved, reported in: Special revenue funds 3,434,493 1,359,711 - - Capital projects fund 5,060,572 3,118,999 - - Nonspendable - - 13,282,980 6,449,092 Restricted - - 9,491,161 12,654,851 Committed - - 3,180,165 2,889,803 Assigned - - 8,419,529 6,847,754 Total all other governmental funds $ 42,744,740 $ 38,057,127 $ 34,373,835 $ 28,841,500
(1) Governmental fund balance classifications were modified by the implementation of GASB Statement No. 54, Fund Balance Reporting and Governmental fund-type Definitions, in 2011.
174 Fund Balances, Governmental Funds Last Ten Fiscal Years (accrual basis of accounting)
As of June 30, 2013 2014 2015 2016 2017 2018
$ - $ - $ - $ - $ - $ ------234,932 252,586 512,981 505,131 600,693 515,837 - - - - - 543,768 737,573 - - 435,600 1,417,297 2,550,029 4,249,826 677,696 18,962,626 22,934,549 30,392,398 29,303,490 24,518,228 19,730,404 $ 19,197,558 $ 23,622,735 $ 32,322,676 $ 32,358,650 $ 29,912,515 $ 21,661,510
$ - $ - $ - $ - $ - $ -
------6,740,441 7,347,232 7,216,969 - - - 14,015,744 13,148,516 12,802,976 14,016,493 15,071,356 16,414,110 3,170,572 3,392,589 3,195,036 3,618,910 1,177,435 484,658 7,645,525 3,682,673 6,238,449 11,347,219 15,815,373 13,849,356 $ 31,572,282 $ 27,571,010 $ 29,453,430 $ 28,982,622 $ 32,064,164 $ 30,748,124
175 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Revenues Taxes, assessments and penalties on taxes $ 74,417,614 $ 66,898,007 $ 68,634,837 $ 65,586,461 Licenses and permits 1,629,179 1,456,321 2,606,186 2,164,269 Intergovernmental revenues: Federal sources 2,477,958 5,554,459 6,344,198 12,117,043 State sources 16,144,911 14,994,366 15,174,605 15,645,123 Local sources - - 25,000 90,000 Other sources 234,800 205,886 181,390 772,087 Charges for services 8,581,834 8,112,023 8,919,439 8,543,324 Fines and forfeits 5,088,268 3,907,176 4,150,768 4,338,557 Rents and royalties 5,756,594 5,621,711 5,869,862 4,785,360 Miscellaneous revenue 796,671 806,946 700,242 700,511 Private source contributions 251,375 245,192 48,882 68,372 Investment income 2,800,349 825,396 252,343 75,276 Total revenues 118,179,553 108,627,483 112,907,752 114,886,383
Expenditures General government 16,600,757 13,266,973 12,742,209 12,147,029 Public safety 51,391,481 53,784,103 54,255,155 55,340,145 Public works 19,685,018 18,925,016 18,958,399 18,658,991 Health and welfare 899,511 394,537 345,274 10,427 Recreation and culture 16,068,221 18,877,609 18,533,939 16,430,423 Community improvement 2,061,008 2,235,666 2,038,767 2,035,755 Utilities 4,320,227 323,085 305,438 281,736 Loss on land held for resale - - 2,500,000 5,739,000 Capital outlay 5,872,343 4,855,404 2,938,196 7,770,659 Debt service - principal 3,165,000 3,296,683 3,294,095 3,381,696 Debt service - interest and fiscal charges 755,191 610,853 473,257 361,520 Total expenditures 120,818,757 116,569,929 116,384,729 122,157,381
Revenues Over (Under) Expenditures (2,639,204) (7,942,446) (3,476,977) (7,270,998)
Other Financing Sources (Uses) Transfers in 12,380,950 8,682,846 12,901,955 14,048,394 Transfers out (11,983,864) (11,392,564) (13,962,854) (14,071,923) Total other financing sources (uses) 397,086 (2,709,718) (1,060,899) (23,529)
Net Change in Fund Balances (2,242,118) (10,652,164) (4,537,876) (7,294,527)
Fund Balances - Beginning of year 73,374,508 71,132,390 60,480,226 55,942,350
Fund Balances - End of year $ 71,132,390 $ 60,480,226 $ 55,942,350 $ 48,647,823
Debt service as a percentage of noncapital expenditures 3.48% 3.54% 3.45% 3.41%
176 Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 78,061,215 $ 75,146,320 $ 79,071,900 $ 79,819,086 $ 73,432,161 $ 73,933,749 2,002,495 1,607,365 2,015,394 2,201,714 3,931,380 3,137,262
10,987,722 11,862,765 9,039,418 4,444,926 3,479,240 2,619,452 15,883,980 16,805,010 17,248,743 18,091,844 32,755,759 36,539,530 828,235 714,299 861,492 642,928 743,019 882,799 ------9,046,524 11,393,096 12,246,098 12,694,892 12,892,223 12,523,064 4,167,059 4,757,661 4,843,476 5,160,346 4,717,143 5,182,545 4,606,920 5,048,921 5,468,228 5,740,784 4,943,584 5,343,043 2,482,511 3,605,457 5,345,015 7,459,324 2,563,442 3,106,947 41,023 37,398 101,193 1,040,829 15,965 201,863 95,057 36,925 45,136 158,353 404,192 872,056 128,202,741 131,015,217 136,286,093 137,455,026 139,878,108 144,342,310
14,697,735 15,669,944 15,715,360 18,046,089 23,001,629 16,751,543 56,702,499 55,474,235 57,726,769 61,005,989 62,994,767 71,285,322 17,620,568 21,413,107 24,223,671 26,512,738 26,500,232 28,112,720 194 - - - - - 18,803,949 19,772,959 20,317,658 20,980,745 22,693,697 22,170,376 2,476,715 2,683,368 2,400,773 4,584,030 1,300,582 1,304,758 374,885 393,639 250,020 37,429 47,481 46,756 451,500 251,778 607,726 2,667,982 123,356 145,596 10,356,592 12,360,720 6,069,029 4,054,858 2,622,645 2,391,938 3,450,598 1,432,650 - - - - 230,051 102,911 - - - - 125,165,286 129,555,311 127,311,006 137,889,860 139,284,389 142,209,009
3,037,455 1,459,906 8,975,087 (434,834) 593,719 2,133,301
7,373,659 8,695,075 5,863,854 2,900,000 10,565,044 6,801,845 (8,289,097) (9,731,076) (4,256,580) (2,900,000) (10,523,356) (18,502,191) (915,438) (1,036,001) 1,607,274 - 41,688 (11,700,346)
2,122,017 423,905 10,582,361 (434,834) 635,407 (9,567,045)
48,647,823 50,769,840 51,193,745 61,776,106 61,341,272 61,976,679
$ 50,769,840 $ 51,193,745 $ 61,776,106 $ 61,341,272 $ 61,976,679 $ 52,409,634
3.26% 1.37% 0.00% 0.00% 0.00% 0.00%
177 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Assets Current assets: Cash and cash equivalents$ 9,070,122 $ 12,964,653 $ 55,444,100 $ 56,444,046 Investments, short-term - - - - Accounts Receivable (Net) 180,871 217,236 311,122 310,900 Property taxes receivable 8,100 36,590 96,464 25,662 Unbilled accounts receivable 3,452,578 2,721,972 2,388,135 2,573,752 Accrued interest receivable 257,238 257,998 266,843 141,090 Due from other governments 150,000 412,328 - 48,637 Due from other funds 2,573 - 2,550 - Inventories 410,288 410,287 185,287 185,960 Total current assets 13,531,770 17,021,064 58,694,501 59,730,047 Noncurrent assets: Restricted cash and investments: Construction and equipment 11,082,093 17,021,308 3,760,211 6,290,064 Debt service 6,071,919 9,354,234 2,100,296 1,901,803 Investments, long-term 19,784,972 14,749,500 7,188,882 2,953,337 Capital assets (Net) 288,342,896 268,356,736 294,927,700 294,869,058 Total noncurrent assets 325,281,880 309,481,778 307,977,089 306,014,262 Total assets 338,813,650 326,502,842 366,671,590 365,744,309
Deferred Outflows of Resources: Pensions - - - -
Liabilities Current liabilities: Accounts payable 4,139,459 4,161,371 5,847,106 5,088,290 Accrued interest payable 969,634 1,071,114 1,052,796 1,037,490 Accrued liabilities 17,482 215,481 326,681 646,900 Due to other governments 158,973 731,868 101,641 273,850 Due to other funds 237 2,274 - 21,540 Liabilities payable from restricted assets 7,424,423 5,634,823 - - Current portion of long-term debt 8,710,000 13,125,000 12,859,403 13,123,403 Total current liabilities 21,420,208 24,941,931 20,187,627 20,191,473 Noncurrent liabilities: Liabilities payable from restricted assets - - 1,760,211 - Current portion of long term debt payable with restricted assets - - 476,546 491,546 Accrued interest payable with restricted assets - - 110,750 93,553 Long-term debt, net of current portion 162,048,508 185,962,103 208,397,658 202,297,273 Net pension liability - - - - Net OPEB liability - - - - Other liabilities 8,635,684 11,671,986 7,565,882 86,793 Total noncurrent liabilities 170,684,192 197,634,089 218,311,047 202,969,165 Total liabilities 192,104,400 222,576,020 238,498,674 223,160,638
Deferred Inflows of Resources: Pensions - - - - OPEB - - - -
Net Position Net investment in capital assets 117,584,388 69,269,633 73,670,639 79,448,382 Restricted for: Construction 11,082,093 11,386,485 2,000,000 6,290,064 Debt service 6,071,919 9,354,234 7,525,175 7,525,731 Unrestricted 11,970,850 13,916,470 44,977,102 49,319,494 Total net position$ 146,709,250 $ 103,926,822 $ 128,172,916 $ 142,583,671
178 Statement of Net Position, Sewer Fund Last Ten Fiscal Years (accrual basis of accounting)
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 58,221,954 $ 57,200,895 $ 55,955,900 $ 55,802,391 $ 34,863,106 $ 32,058,598 - - - - 12,992,616 12,520,784 4,449,552 4,298,326 4,157,926 4,109,667 4,258,765 4,236,172 52,325 44,847 15,571 23,919 29,358 15,407 2,659,408 2,415,116 2,668,870 2,569,629 2,718,419 2,291,436 81,851 28,542 20,864 41,594 56,855 81,872 1,040,689 297,410 797,354 550,679 265,850 1,258,843 1,235 - - - - - 185,960 185,960 185,960 185,960 185,960 185,960 66,692,974 64,471,096 63,802,445 63,283,839 55,370,929 52,649,072
5,189,520 7,082,451 19,690,371 9,390,374 11,923,686 31,459,968 1,702,056 1,494,425 1,267,931 581,031 340,250 308,188 2,208,641 3,262,168 - - 649,418 - 294,709,088 298,712,306 306,227,602 318,480,273 332,437,245 303,754,047 303,809,305 310,551,350 327,185,904 328,451,678 345,350,599 335,522,203 370,502,279 375,022,446 390,988,349 391,735,517 400,721,528 388,171,275
- - 396,887 754,891 464,509 318,531
6,780,371 6,094,726 7,412,269 3,670,126 4,638,710 4,719,779 1,010,803 989,484 898,834 916,027 927,977 1,104,222 403,440 356,867 461,731 210,813 161,117 144,208 145,365 222,435 128,149 14,131 49,707 34,184 27,858 - - - - 92 ------13,390,903 14,327,471 13,322,612 12,093,537 12,792,872 13,367,603 21,758,740 21,990,983 22,223,595 16,904,634 18,570,383 19,370,088
------
509,046 545,000 550,000 81,250 82,500 85,000
75,379 55,426 35,431 15,281 13,250 11,187 193,395,991 184,895,846 177,308,944 176,046,207 173,785,852 187,118,182 - - 1,613,478 2,196,509 2,390,732 2,655,386 - - - - - 5,673,876 96,217 120,266 2,132,396 2,238,609 2,226,065 53,261 194,076,633 185,616,538 181,640,249 180,577,856 178,498,399 195,596,892 215,835,373 207,607,521 203,863,844 197,482,490 197,068,782 214,966,980
- - 29,573 - - 4,232 - - - - - 34,506
87,922,193 99,488,989 115,596,046 130,340,530 145,858,521 132,728,230
5,189,520 7,082,451 19,690,371 9,390,374 11,923,686 2,000,000 7,903,491 7,936,395 6,090,684 5,514,761 7,218,517 8,979,271 53,651,702 52,907,090 46,114,718 49,762,253 39,116,531 29,776,587 $ 154,666,906 $ 167,414,925 $ 187,491,819 $ 195,007,918 $ 204,117,255 $ 173,484,088
179 City of Dearborn, Michigan
Fiscal year ended June 30, 2012 2013 2014 Adjusted General fund essential services expenditures $ 47,294,307 $ 49,047,097 $ 49,122,282
Adjusted total General fund expenditures 91,067,956 99,333,734 95,539,743
Percentage of general operating millage used to fund essential services 51.9330% 49.3761% 51.4155%
180 Percentage of Operating Millage Used to Fund Essential Services Last Seven Fiscal Years (modified accrued basis of accounting)
Fiscal year ended June 30, 2015 2016 2017 2018
$ 51,827,274 $ 54,905,523 $ 56,078,261 $ 63,111,874
108,150,190 108,095,972 122,918,158 131,959,294
47.9216% 50.7933% 45.6224% 47.8268%
181 City of Dearborn, Michigan Revenue Sharing Payments State of Michigan Last Ten Fiscal Years
Fiscal Year Ending Revenue Sharing June 30, Payments
2009$ 9,096,839 2010 8,005,487 2011 8,175,957 2012 8,323,647 2013 8,560,579 2014 8,794,688 2015 8,954,051 2016 8,946,866 2017 9,377,452 2018 9,665,843
2019 9,963,990 (adopted budget)
Source: City of Dearborn Finance Department
182 City of Dearborn, Michigan History of Sewage System Rates Last Ten Fiscal Years
Sewer Fiscal Year Ending Rates Effective Commodity Quarterly Sewer Capacity Charges Range June 30, July 1, Rat e From 5/8 inches To 24 inches
2009 2008$ 28.02 $ 24.47 $ 14,682.00 2010 2009 28.61 25.02 15,012.00 2011 2010 30.38 26.53 15,918.00 2012 2011 31.95 28.84 17,304.00 2013 2012 34.50 31.18 18,708.00 2014 2013 36.50 33.04 19,824.00 2015 2014 37.60 34.03 20,418.00 2016 2015 38.80 35.12 21,072.00 2017 2016 36.40 32.95 19,770.00 2018 2017 38.20 34.60 20,760.00
2019 2018 32.10 54.01 32,406.00 (1)
Source: City of Dearborn ordinance
(1) For FY2019, the sewer rate methodology was updated. The revenue required from rates is now budgeted to be received 40% from fixed charges and 60% from variable charges.
183 City of Dearborn, Michigan
Real Property Taxable Value
Tax Fiscal Industrial Year Year Resident ial Commercial Industrial Facilities Tax (IFT) Total Real 2008 2009$ 2,237,411,169 $ 1,078,505,875 $ 386,616,568 $ 84,142,200 $ 3,786,675,812 2009 2010 2,073,697,890 1,073,858,148 379,912,154 88,710,450 3,616,178,642 2010 2011 1,809,480,588 1,022,068,377 373,251,848 83,977,286 3,288,778,099 2011 2012 1,642,189,926 842,185,870 376,592,798 83,314,750 2,944,283,344 2012 2013 1,493,557,022 806,912,049 371,313,141 72,943,140 2,744,725,352 2013 2014 1,494,285,985 770,994,515 369,937,519 67,406,900 2,702,624,919 2014 2015 1,518,215,789 734,768,227 363,094,110 68,712,098 2,684,790,224 2015 2016 1,554,402,595 744,087,986 356,541,464 58,977,450 2,714,009,495 2016 2017 1,569,415,409 737,568,148 388,286,348 23,977,450 2,719,247,355 2017 2018 1,610,417,859 756,536,397 386,760,404 24,067,450 2,777,782,110
2018 2019 1,671,918,046 785,075,237 410,402,494 23,809,191 2,891,204,968
Note: Under Michigan law, the revenue base is Taxable Value.
Note: Assessed value is determined by the City Assessor. The State of Michigan reviews the City's assessment and assigns a factor to adjust the Assessor's numbers. The State multiplies this factor by the assessed value to arrive at the State Equalized Valuation (SEV). All reported assessed values are equal to the SEV, since the factor for Dearborn is 1.00.
Tax Base Composition
A breakdown of the City's tax year 2018 (fiscal year 2019) taxable valuation is as follows:
By Type Taxable Valuation Percent of total Real Propert y $ 2,891,204,968 85.71% Personal Property 482,000,750 14.29%
Total $ 3,373,205,718 100.00%
By Class Taxable Valuation Percent of total Ad Valorem Commercial $ 785,075,237 23.27% Industrial 410,402,494 12.17% Resident ial 1,671,918,046 49.56% Personal 390,282,650 11.57% Total Ad Valorem 3,257,678,427 96.57%
Special Act Commercial 13,792,990 0.41% Industrial 9,300,000 0.28% Resident ial 716,201 0.02% Personal 91,718,100 2.72% Total Special Act 115,527,291 3.43%
Total $ 3,373,205,718 100.00%
Source: City of Dearborn Departments of Assessment, Finance and Economic & Community Development
184 Taxable Value and Assessed Value of Taxable Propert y Last Ten Fiscal Years
Personal Property Taxable Value Taxable Direct Tax Increment as a % Industrial Tax Financing Total of Facilities Tax Total Taxable Rate Captured Assessed Personal (IFT) Total Personal Value (mills) Valuation Assessed Value Value $ 661,018,000 $ 447,515,900 $ 1,108,533,900 $ 4,895,209,712 16.72$ 58,088,358 $ 5,038,391,863 97.16% 587,415,200 480,184,400 1,067,599,600 4,683,778,242 17.50 58,144,958 4,893,125,847 95.72% 573,416,016 443,260,515 1,016,676,531 4,305,454,630 19.58 86,654,278 4,437,941,179 97.01% 540,699,600 375,335,058 916,034,658 3,860,318,002 21.90 201,946,630 3,930,903,952 98.20% 523,915,150 436,501,550 960,416,700 3,705,142,052 26.86 187,301,154 3,749,986,245 98.80% 552,866,800 398,524,200 951,391,000 3,654,015,919 25.90 183,491,553 3,686,871,400 99.11% 593,338,700 428,540,550 1,021,879,250 3,706,669,474 26.60 191,780,589 3,772,790,150 98.25% 601,898,700 464,460,750 1,066,359,450 3,780,368,945 26.45 199,814,464 3,984,927,350 94.87% 378,163,650 165,127,900 543,291,550 3,262,538,905 26.69 145,967,206 3,586,575,925 90.97% 367,565,200 150,996,350 518,561,550 3,296,343,660 26.44 149,113,385 3,728,929,950 88.40%
390,282,650 91,718,100 482,000,750 3,373,205,718 26.57 147,330,713 3,842,804,400 87.78%
185 City of Dearborn, Michigan
Millage Rates - Direct City Taxes Overlapping Taxes
General Tax Fiscal Operating Garbage & Total Direct Community Year Year (1) Debt Rubbish Library Taxes County (2) College (3)
Dearborn School District
2008 2009 13.6275 2.0525 1.0400 - 16.7200 8.7266 3.0000 2009 2010 13.6200 2.7000 1.1800 - 17.5000 8.7266 3.0000 2010 2011 13.6200 4.5800 1.3800 - 19.5800 8.7266 3.0000 2011 2012 15.0000 5.2100 1.6900 - 21.9000 8.7266 3.0000 2012 2013 18.5000 5.4200 1.9400 1.0000 26.8600 8.9266 3.0000 2013 2014 18.5000 4.4900 1.9100 1.0000 25.9000 8.9266 3.0000 2014 2015 18.5000 4.2900 2.2700 1.5400 26.6000 9.3366 4.0000 2015 2016 18.5000 4.2500 2.1600 1.5400 26.4500 10.3127 4.0000 2016 2017 18.5000 4.2500 2.1600 1.7800 26.6900 11.3366 4.0000 2017 2018 18.5000 4.2500 1.9100 1.7800 26.4400 9.3360 4.0000
2018 2019 18.5000 4.4700 1.9100 1.6900 26.5700 5.6483* 4.0000
* County Winter Millage not available at time of schedule preparation.
Westwood School District
2008 2009 13.6275 2.0525 1.0400 - 16.7200 8.7266 2.4769 2009 2010 13.6200 2.7000 1.1800 - 17.5000 8.7266 2.4769 2010 2011 13.6200 4.5800 1.3800 - 19.5800 8.7266 2.4769 2011 2012 15.0000 5.2100 1.6900 - 21.9000 8.7266 2.2408 2012 2013 18.5000 5.4200 1.9400 1.0000 26.8600 8.9266 2.2408 2013 2014 18.5000 4.4900 1.9100 1.0000 25.9000 8.9266 3.2408 2014 2015 18.5000 4.2900 2.2700 1.5400 26.6000 9.3366 3.2408 2015 2016 18.5000 4.2500 2.1600 1.5400 26.4500 10.3127 3.2408 2016 2017 18.5000 4.2500 2.1600 1.7800 26.6900 11.3366 3.2408 2017 2018 18.5000 4.2500 1.9100 1.7800 26.4400 9.3360 3.2408
2018 2019 18.5000 4.4700 1.9100 1.6900 26.5700 5.6483* TBD *
* County Winter Millage not available at time of schedule preparation.
Note: Michigan law restricts the maximum millage that may be levied by the City without a vote of our residents as follows: General Garbage Operating Debt & Rubbish 2017 16.0000* no limit 1.9100 * Maximum millage rate under state law is 16.0000 mills; Dearborn Charter now limits this to 15.0000 mills.
(1) 2018 General operating millage rate of 18.5000 is made up of 15 mills of general operating under Dearborn charter and an additional 3.500 mills of voted operating as approved by voters on August 2, 2016.
(2) County rate includes all Wayne County, Huron Clinton Metropolitan Park Authority and Wayne County Transit Authority (Smart) tax rates.
(3) Henry Ford Community College is part of the Dearborn school system. Westwood school taxpayers pay a Wayne County Community College rate.
(4) A homeowner's Principal Residence Exempt ion (P.R.E. ) grants up to 18 mills of school tax relief to qualified homeowners (Public Act 105 of 2003, MCL 211.7cc). It is administered by the local assessor and affect s the local tax bill. An independent state homestead property tax credit (MCL 206.508 et seq.) to qualified homeowners and renters is administered directly by the Michigan Department of Treasury as additional tax relief.
(5) Dearborn School's P.R.E rate includes a "Homestead Supplemental" rate. This is applied to P.R.E. tax parcels only.
Source: City of Dearborn Departments of Assessment and Finance
186 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years
Overlapping Taxes Total Tax Total Tax Overlapping Intermediate State Rate Before Rat e Taxes Total Tax School Education School School P.R.E. School Rat e District Tax (SET) Taxes P.R.E. (5) (4) (5) Non - P.R.E. Non - P.R.E.
3.4643 6.0000 37.9109 7.7946 45.7055 22.1800 60.0909 3.4643 6.0000 38.6909 8.9954 47.6863 22.3400 61.0309 3.4643 6.0000 40.7709 9.9012 50.6721 22.8400 63.6109 3.4643 6.0000 43.0909 10.9582 54.0491 23.3600 66.4509 3.4643 6.0000 48.2509 11.9800 60.2309 23.8100 72.0609 3.4643 6.0000 47.2909 11.5200 58.8109 23.3500 70.6409 3.4643 6.0000 49.4009 11.5200 60.9209 23.3500 72.7509 3.4643 6.0000 50.2270 11.1700 61.3970 23.0000 73.2270 3.4643 6.0000 51.4909 10.6850 62.1759 22.8200 74.3109 5.4643 6.0000 51.2403 10.9900 62.2303 22.8200 74.0603
5.4643 6.0000 TBD * 10.9900 TBD * 22.8200 TBD *
3.4643 6.0000 37.3878 - 37.3878 18.0000 55.3878 3.4643 6.0000 38.1678 - 38.1678 18.0000 56.1678 3.4643 6.0000 40.2478 - 40.2478 18.0000 58.2478 3.4643 6.0000 42.3317 - 42.3317 18.0000 60.3317 3.4643 6.0000 47.4917 - 47.4917 18.0000 65.4917 3.4643 6.0000 47.5317 - 47.5317 18.0000 65.5317 3.4643 6.0000 48.6417 - 48.6417 18.0000 66.6417 3.4643 6.0000 49.4678 - 49.4678 18.0000 67.4678 3.4643 6.0000 50.7317 - 50.7317 18.0000 68.7317 5.4643 6.0000 50.4811 - 50.4811 18.0000 68.4811
5.4643 6.0000 TBD * - TBD * 18.0000 TBD *
187 City of Dearborn, Michigan Principal Property Taxpayers Next Year, Current Year and Nine Years Previous
2018 2017 2008 (1)
Percent Percent Percent Taxpayer Taxable Value Rank of total Taxable Value Rank of total Taxable Value Rank of total Ford Motor Company $ 542,162,850 1 16.07%$ 504,332,530 1 15.30%$ 1,021,833,774 1 20.88% AK Steel Corporation (Severstal Steel) 135,903,063 2 4.03% 191,435,645 2 5.81% 209,883,925 2 4.29%
Dearborn Industrial Generation 58,280,300 3 1.73% 62,730,850 3 1.90% 56,889,400 3 1.16% DTE Energy Company * 74,511,005 4 2.21% 61,879,320 5 1.88% 27,239,755 7 0.56% Ford Motor Land Development Corp 43,277,574 5 1.28% 38,109,688 4 1.16% - - 0.00%
Fairlane Town Center 36,204,608 6 1.07% 35,152,954 6 1.07% 43,704,400 5 0.89% The ACG (AAA of Michigan) 15,533,575 7 0.46% 16,229,350 7 0.49% 33,811,623 6 0.69%
Urbcam Michigan LLC 15,253,368 8 0.45% 15,399,921 8 0.47% - - - ITC Transmisson 12,393,764 9 0.37% ------
Dearborn Schaefer Office Co LLC 12,334,000 10 0.37% 12,334,000 9 0.37% - - - 600 Town Center Realty - - - 11,580,000 10 0.35% - - -
Hallwood Management Company ------45,551,087 4 0.93% CNL Hospitality Corporation ------24,304,000 8 0.50%
Automotive Components Holdings ------24,154,394 9 0.49% IBM Corporation ------19,137,600 10 0.39%
Total - ten largest taxpayers 945,854,107 28.04% 949,184,258 28.80% 1,506,509,958 30.78% Total - all other taxpayers 2,427,351,611 71.96% 2,347,159,402 71.20% 3,388,699,754 69.22% Total - all taxpayers $ 3,373,205,718 100.00%$ 3,296,343,660 100.00%$ 4,895,209,712 100.00%
Notes:
Taxes are billed and collected as current beginning in July of one year through February of the follow ing year. Taxable values include Ad Valorem and Industrial Facilties Tax (Act 198) taxable values.
Abated Industrial Facilities Taxable Value for the 2008 tax year applicable to Ford Motor Company was $32,293,225 Real and $100,426,850 Personal Property; AK Steel (formerly Severstal Steel Company) was $1,916,500 Real and $93,766,775 Personal Property; and Dearborn Industrial Generation (DIG) was $3,012,650 Real and $49,095,400 Personal Property.
Total Abated OPRA (Obsolete Property Rehabilitation Act) value for 2017 taxable year applicable to Urbcam Michigan LLC was $13,534,800.
Abated Industrial Facilities Taxable Value for the 2017 tax year applicable to Ford Motor Company was $616,325 Real and $5,862,875 Personal Property; AK Steel Company was $5,850,000 Real and $68,379,875 Personal Property.
* Detroit Edison and Michigan Consolidated Gas are reported as one combined taxpayer DTE Energy Company.
Total Abated Industrial Facilities Taxable Value for 2018 taxable year applicable to Ford Motor Company was $8,065,500.
Total Abated Industrial Facilities Taxable Value for 2018 taxable year applicable to AK Steel Company was $89,048,100.
Total Abated OPRA (Obsolete Property Rehabilitation Act) value for 2018 taxable year applicable to Urbcam Michigan LLC was $13,746,690.
(1) FY 2008 City of Dearborn Comprehensive Annual Financial Report.
Source: City of Dearborn Department of Assessment
188 City of Dearborn, Michigan Principal Sewage Utility Customers
Fiscal Year Ended June 30, 2018 Estimated Sewage Estimated Volumes Sewage Disposal Taxpayer (in cubic feet) (1) Rank Charges Billed (2)
AK Steel 69,218,000 1 $ 2,644,128
Ford Motor Co. & Headquarters 47,619,000 2 1,819,046
Ford Rouge Plant 32,457,100 3 1,239,861
Beaumont Health- Oakwood 12,691,900 4 484,831
Dearborn Schools 6,932,100 5 264,806
Henry Ford Village 5,014,300 6 191,546
Detroit Water and Sewage Department 4,142,800 7 158,255
TPC Michigan Golf Course 3,589,000 8 137,100
U of M Dearborn 3,854,500 9 147,242
Fairlane Town Center w/Movies 3,183,400 10 121,606
Total - ten largest sewage customers 188,702,100 $ 7,208,421
Notes:
(1) Sewage customers reported - some utility customers have high water volumes, but do not have their sewage treated (i.e. TPC Michigan golf course).
(2) Sewage disposal charges billed includes commodity, capacity and IWCC charges (passed through from Detroit Water and Sewer Department based on meter size) and sewer base charges applied to fireline charges without any consumption.
Source: City of Dearborn DPW Water Division
189 City of Dearborn, Michigan
Collection Period Collections July 1 to Tax Tax Levy as Respective Percent Delinquent February 28 Year Adjusted Tax Year Collected Tax 2008-2009 2008$ 67,878,443 $ 64,778,326 95.4%$ 3,100,117 2009-2010 2009 65,094,601 62,269,344 95.7% 2,825,257 2010-2011 2010 59,300,885 58,071,881 97.9% 1,229,004 2011-2012 2011 60,471,585 60,354,797 99.8% 116,788 2012-2013 2012 69,894,003 69,778,678 99.8% 115,325 2013-2014 2013 69,457,743 69,328,891 99.8% 128,852 2014-2015 2014 71,605,915 71,512,013 99.9% 93,902 2015-2016 2015 72,316,120 72,173,975 99.8% 142,145 2016-2017 2016 65,040,062 64,928,988 99.8% 111,074 2017-2018 2017 65,197,614 65,112,330 99.9% 85,284
2018-2019 2018 65,112,330 in process of collection
Collections Tax Delinquent Fiscal Year Prior Fiscal Year Tax 2017-2018 Years Total 2008$ 3,100,117 $ - $ 3,170,139 $ 3,170,139 2009 2,825,257 - 3,094,706 3,094,706 2010 1,229,004 - 670,489 670,489 2011 116,788 725 200,846 201,571 2012 115,325 - 188,669 188,669 2013 128,852 405 217,824 218,229 2014 93,902 404 178,338 178,742 2015 142,145 3,649 144,502 148,151 2016 111,074 71,510 54,190 125,700 2017 85,284 42,608 - 42,608
190 Property Taxes Levied, Collected and Outstanding Last Ten Fiscal Years
Cumulative Delinquent Collections & Adj. Delinquent Tax Balance as of (Current and Percent Collections/Adj. June 30, 2018 Delinquent) Collected $ 3,098,739 $ 1,378 $ 67,877,065 100.0% 2,822,396 2,861 65,091,740 100.0% 1,225,117 3,887 59,296,998 100.0% 107,839 8,949 60,462,636 100.0% 89,751 25,574 69,868,429 100.0% 110,254 18,598 69,439,145 100.0% 71,692 22,210 71,583,705 100.0% 124,302 17,843 72,298,277 100.0% 91,484 19,590 65,020,472 100.0% 42,610 42,674 65,154,940 99.9%
Delinquent Balance as of Adjustments June 30, 2018 $ 71,400 $ 1,378 272,310 2,861 (554,628) 3,887 93,732 8,949 98,918 25,574 107,975 18,598 107,050 22,210 23,849 17,843 34,216 19,590 (2) 42,674
191 City of Dearborn, Michigan
Tax Year 2008 2009 2010 2011 2012 Fiscal Year 2009 2010 2011 2012 2013
Taxable Value $ 4,895,209,712 $ 4,683,778,242 $ 4,305,454,630 $ 3,860,318,002 $ 3,705,142,052
State Equalized Value (1) $ 5,038,391,863 $ 4,893,125,847 $ 4,437,941,179 $ 3,930,903,952 $ 3,749,986,245
True Cash Value (2) $10,076,783,726 $ 9,786,251,694 $ 8,875,882,358 $ 7,861,807,904 $ 7,499,972,490
Population (3) 101,665 98,146 98,604 100,249 101,216
Per Capita Taxable Value $ 48,150 $ 47,723 $ 43,664 $ 38,507 $ 36,606
Per Capita State Equalized Value $ 49,559 $ 49,856 $ 45,008 $ 39,211 $ 37,049
Per Capita True Cash Value $ 99,118 $ 99,711 $ 90,015 $ 78,423 $ 74,099
(1) Assessed value is determined by the City Assessor. The State of Michigan reviews the City’s assessment and assigns a factor to adjust the Assessor’s numbers. The State multiplies this factor by the assessed value to arrive at the State Equalized Valuation (SEV). All reported assessed values are equal to the SEV, since the factor for Dearborn is 1.00.
(2) The True Cash Value is twice the State Equalized Value.
3) Population statistics are the SEMCOG estimates as of July 1 as published in Southeast Michigan Council of Government’s “Population and Households in Southeast Michigan, July, 2017” except the 2010 population is from the U.S. Census Bureau.
192
Per Capita Debt Statistics Last Ten Fiscal Years
2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2019
$ 3,654,015,919 $ 3,706,669,474 $ 3,780,368,945 $ 3,262,538,905 $ 3,296,343,660 $ 3,373,205,718
$ 3,686,871,400 $ 3,772,790,150 $ 3,984,927,350 $ 3,586,575,925 $ 3,728,929,950 $ 3,842,804,400
$ 7,373,742,800 $ 7,545,580,300 $ 7,969,854,700 $ 7,173,151,850 $ 7,457,859,900 $ 7,685,608,800
102,566 101,130 102,284 102,284 101,584 not yet available
$ 35,626 $ 36,653 $ 36,960 $ 31,897 $ 32,449 not yet available
$ 35,946 $ 37,306 $ 38,959 $ 35,065 $ 36,708 not yet available
$ 71,893 $ 74,613 $ 77,919 $ 70,130 $ 73,416 not yet available
193 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012
Governmental activities: General obligation bonds $ 17,024,420 $ 13,703,672 $ 10,277,268 $ 6,765,244
Business type activities: General obligation bonds 164,795,189 194,324,037 218,182,845 213,248,466 Revenue bonds 17,092,083 15,011,788 13,589,363 11,665,007 Total business type activities 181,887,272 209,335,825 231,772,208 224,913,473 Total debt of the government $ 198,911,692 $ 223,039,497 $ 242,049,476 $ 231,678,717
Total residential personal income $ 2,254,828,035 $ 2,295,862,702 $ 2,252,509,776 $ 2,308,132,976 Ratio of total debt to personal income 8.82% 9.71% 10.75% 10.04%
Total population* 101,665 98,146 98,604 100,249
Total debt per capita $ 1,957 $ 2,273 $ 2,455 $ 2,311
Note: The City of Dearborn has no installment purchase agreements, special assessment bonds or capital leases.
* Population statistics are the SEMCOG estimates as of July 1 as published in Southeast Michigan Council of Government's "Population and Households in Southeast Michigan, July, 2017" except the 2010 population is from the US Census Bureau.
194 Ratios of Outstanding Debt Last Ten Fiscal Years
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
$ 3,180,981 $ 1,626,558 $ 5,773,651 $ 4,410,742 $ 14,799,978 $ 29,358,291
205,531,240 198,808,356 186,498,731 185,775,993 184,537,216 198,706,783 9,584,711 7,549,455 5,276,637 2,978,812 2,593,812 2,203,812 215,115,951 206,357,811 191,775,368 188,754,805 187,131,028 200,910,595 $ 218,296,932 $ 207,984,369 $ 197,549,019 $ 193,165,547 $ 201,931,006 $ 230,268,886
$ 2,330,397,184 $ 2,009,473,072 $ 2,150,226,060 $ 2,179,774,324 $ 2,202,685,940 $ 2,198,887,264 9.37% 10.35% 9.19% 8.86% 9.17% 10.47%
101,216 102,566 101,130 102,284 102,284 101,584
$ 2,157 $ 2,028 $ 1,953 $ 1,889 $ 1,974 $ 2,267
195 City of Dearborn, Michigan
Limited Tax General Obligat ion Tax Supported Less Pledged Debt Net General Fiscal Year Bonds (LTGO) Bonds (UTGO) Service Funds Bonded Debt Taxable Value 2009$ 20,115,036 $ 161,704,572 $ 10,570,738 $ 171,248,870 $ 4,895,209,712 2010 17,850,032 190,177,677 17,459,104 190,568,605 4,683,778,242 2011 15,486,423 212,973,690 7,065,354 221,394,759 4,305,454,630 2012 12,936,896 207,076,814 7,329,970 212,683,740 3,860,318,002 2013 10,297,179 198,415,042 8,003,480 200,708,741 3,705,142,052 2014 7,567,239 192,867,674 7,054,980 193,379,933 3,654,015,919 2015 5,773,651 186,498,731 5,408,184 186,864,198 3,706,669,474 2016 4,410,741 185,775,993 5,030,261 185,156,473 3,780,368,945 2017 14,799,978 184,537,216 6,974,016 192,363,178 3,262,538,905 2018 29,358,291 198,706,783 8,773,880 219,291,194 3,296,343,660
* Population statistics are the SEMCOG estimates as of July 1 as published in Southeast Michigan Council of Governments' "Population and Households in Southeast Michigan, July, 2017" except the 2010 population is from the U.S. Census Bureau.
196 Ratios of General Bond Debt Outstanding Last Ten Fiscal Years
Debt as a Percentage of Taxable Debt per Value Population * Capita 3.50% 101,665 $ 1,684 4.07% 98,146 1,942 5.14% 98,604 2,245 5.51% 100,249 2,122 5.42% 101,216 1,983 5.29% 102,566 1,885 5.04% 101,130 1,848 4.90% 102,284 1,810 5.90% 102,284 1,881 6.65% 101,584 2,159
197 City of Dearborn, Michigan
Fiscal Year Ended June 30, 2009 2010 2011 2012 Valuation base State equalized valuation - excluding IFT values $ 4,506,733,763 $ 4,324,230,997 $ 3,910,703,378 $ 3,472,254,144 Plus: equivalent valuation of Act 198 exemptions 531,658,100 568,894,850 527,237,801 458,649,808 Plus: equivalent valuation for revenue sharing - - - - Total valuation $ 5,038,391,863 $ 4,893,125,847 $ 4,437,941,179 $ 3,930,903,952
Legal debt limitation - 10% of total valuation $ 503,839,186 $ 489,312,585 $ 443,794,118 $ 393,090,395
Calculation of debt subject to limit: Total debt 198,911,692 223,039,498 242,049,476 231,678,717 Less: Revenue bonds not subject to limit (17,092,083) (15,011,788) (13,589,363) (11,665,007) Less: CSO bonds not subject to limit - - - - Less: Amount available for repayment of general obligation bonds (285,649) (37,387) (383) (83,453)
Net debt subject to limit 181,533,960 207,990,323 228,459,730 219,930,257 Legal debt margin $ 322,305,226 $ 281,322,262 $ 215,334,388 $ 173,160,138
Net debt subject to limit as % of debt limit 36.03% 42.51% 51.48% 55.95%
(1) The Home Rule City Act 279 of 1909 provides for the inclusion of state revenue sharing and exclusion of CSO-related debt in the calculation of debt subject to limit. The schedule is amended to reflect these items prospectively starting in fiscal year 2017.
198 Computation of Legal Debt Margin Last Ten Fiscal Years
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 (1) 2018
$ 3,240,541,555 $ 3,220,940,300 $ 3,275,537,502 $ 3,461,489,150 $ 3,397,470,575 $ 3,553,866,150 509,444,690 465,931,100 497,252,648 523,438,200 189,105,350 175,063,800 - - - - - 351,347,021 359,522,579 $ 3,749,986,245 $ 3,686,871,400 $ 3,772,790,150 $ 3,984,927,350 $ 3,937,922,946 $ 4,088,452,529
$ 374,998,625 $ 368,687,140 $ 377,279,015 $ 398,492,735 $ 393,792,295 $ 408,845,253
218,296,932 207,869,331 197,549,019 193,165,547 201,931,006 230,268,886 (9,584,711) (7,434,416) (5,276,637) (2,978,812) (2,593,812) (2,203,812) - - - - - (184,537,216) (198,706,783)
(207,390) (13,002) - - - -
208,504,831 200,421,913 192,272,382 190,186,735 14,799,978 29,358,291 $ 166,493,794 $ 168,265,227 $ 185,006,633 $ 208,306,000 $ 378,992,317 $ 379,486,962
55.60% 54.36% 50.96% 47.73% 3.76% 7.18%
199 City of Dearborn, Michigan Computation of Direct and Overlapping Bonded Debt General Obligation Bonds Year Ended June 30, 2018
Net Percentage Amount Bonded Debt Applicable to Applicable to Government Unit Outstanding Government Government Per Capita (2)
Direct - City of Dearborn $ 29,358,291 100.00% $ 29,358,291 $ 289
Overlapping (1):
Dearborn School District 141,507,500 93.12% 131,771,784 1,297
Westwood School District 700,000 10.30% 72,100 1
Wayne County at large 279,763,774 8.04% 22,493,007 221
Total Overlapping Debt 421,971,274 36.58% 154,336,891 1,519
Grand Total $ 451,329,565 40.70% $ 183,695,182 $ 1,808
Sources:
(1) Overlapping debt figures supplied by the Municipal Advisory Council of Michigan. The percentage of overlapping bonded debt related to each governmental unit was established using the taxable value of assessed property. Percentages were estimated by calculating the portion of each governmental unit's taxable property located within the boundaries of t he City and dividing it by the unit's total taxable value.
(2) Population of 101,584 as estimated in the Sout heast Michigan Council of Governments' "Population and Households in Southeast Michigan, July, 2017".
200 City of Dearborn, Michigan Sewage Disposal System Limited Tax Revenue Bonds Revenue Bond Coverage Last Ten Fiscal Years
Debt Service Requirement Net Revenue Fiscal Gross Operating Available for Year Revenues Expenses (1) Debt Service Principal Interest Total Coverage
2009$ 28,718,870 $ 17,580,453 $ 11,138,417 $ 2,050,000 $ 608,438 $ 2,658,438 419%
2010 24,693,350 20,129,951 4,563,399 2,100,000 558,825 2,658,825 172%
2011 29,363,798 19,954,770 9,409,028 2,160,000 500,563 2,660,563 354%
2012 28,592,158 22,456,600 6,135,558 1,985,000 443,000 2,428,000 253%
2013 31,305,485 24,711,722 6,593,763 2,045,000 374,213 2,419,213 273%
2014 31,672,504 22,944,467 8,728,037 2,115,000 299,225 2,414,225 362%
2015 29,717,431 26,176,943 3,540,488 2,180,000 221,700 2,401,700 147%
2016 30,362,086 24,458,855 5,903,231 2,200,000 141,725 2,341,725 252%
2017 29,047,847 26,321,106 2,726,741 325,000 61,125 386,125 706%
2018 28,637,553 24,567,296 4,070,257 330,000 53,000 383,000 1,063%
(1) Total operating expenses exclusive of depreciat ion.
201 City of Dearborn, Michigan Water Supply System Limited Tax Revenue Bonds Revenue Bond Coverage Last Eight Fiscal Years
Debt Service Requirement Net Revenue Fiscal Gross Operating Available for Year Revenues Expenses (1) Debt Service Principal Interest Total Coverage
2011$ 16,958,944 $ 14,105,230 $ 2,853,714 $ 58,000 $ 10,686 $ 68,686 4,155%
2012 17,566,222 14,057,576 3,508,646 60,000 18,013 78,013 4,498%
2013 19,604,108 14,614,823 4,989,285 55,000 18,627 73,627 6,776%
2014 19,244,518 14,804,877 4,439,641 55,000 17,252 72,252 6,145%
2015 18,585,514 15,078,170 3,507,344 55,000 15,877 70,877 4,948%
2016 20,738,377 17,621,317 3,117,060 60,000 14,470 74,470 4,186%
2017 22,544,946 18,680,246 3,864,700 60,000 13,345 73,345 5,269%
2018 23,361,742 15,702,524 7,659,218 60,000 11,845 71,845 10,661%
(1) Total operating expenses exclusive of depreciation.
202 City of Dearborn, Michigan Demographic and Economic Statistics Last Ten Fiscal Years
Per Capita Personal Unemployment Fiscal Year Population (1) Personal Income Income (2) Rate (3) 2009 101,665 $ 2,254,828,035 $ 22,179 12.2% 2010 98,146 2,295,862,702 23,391 10.0% 2011 98,604 2,252,509,776 22,844 8.8% 2012 100,249 2,308,132,976 23,024 7.3% 2013 101,216 2,330,397,184 23,024 7.4% 2014 102,566 2,009,473,072 19,592 6.5% 2015 101,130 2,150,226,060 21,262 5.6% 2016 102,284 2,179,774,324 21,311 4.5% 2017 102,284 2,202,685,940 21,535 2.9% 2018 101,584 2,198,887,264 21,646 3.5%
(1) Population statistics are the SEMCOG estimates as of July 1 as published in the Southeast Michigan Council of Governments' "Population and Households in Southeast Michigan, July, 2017" except the 2010 population is from the U.S. Census Bureau.
(2) U. S. Census Bureau; 2016 American Community Survey for Dearborn, Michigan
(3) State of Michigan through Department of Labor and Economic Growth - Labor Market Information.
203 City of Dearborn, Michigan Principal Employers Current Year and Nine Years Previous
2017 (1) 2008 (2)
Percentage Percentage Employees Rank of Total Employees Rank of Total
Ford Motor Company 42,740 1 65.50% 47,091 1 65.95%
Beaumont Health (Oakwood Hospital Corporation) 9,436 2 14.46% 7,441 2 10.42%
School District of the City of Dearborn 3,781 3 5.79% 2,751 4 3.85%
AK Steel (Severstal North America, Inc.) 3,400 4 5.21% 2,096 6 2.94%
AAA Michigan 1,850 5 2.84% 2,000 7 2.80%
Henry Ford Community College 1,000 6 1.53% - --
The Edison Institute 800 7 1.23% - --
The University of Michigan, Dearborn 800 8 1.23% - --
City of Dearborn 744 9 1.14% - --
The Edward Village 700 10 1.07% - --
Visteon - - - 4,300 3 6.02%
Lear Corporation - - - 2,500 5 3.50%
United Techonologies Auto - - - 1,266 8 1.77%
Dearborn Stamping Plant - - - 1,000 9 1.40%
UM Child Development Cent er - - - 963 10 1.35%
65,251 100.00% 71,408 100.00%
Sources:
(1) 2017 Michigan Manufacturers Directory, 2017 Crain's Book of Lists and Manta Company Intelligence Website.
(2) FY 2009 City of Dearborn Comprehensive Annual Financial Report.
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205 City of Dearborn, Michigan
As of July 1, Functions/programs 2009 2010 2011 Primary government Governmental activities: General government 183.59 180.81 182.37 Public safety 442.57 433.20 432.60 Public works 58.67 60.73 54.91 Health and welfare 19.39 4.72 3.72 Recreation and culture 282.61 288.04 278.80 Community improvement 17.03 18.00 14.75 Total governmental activities 1,003.86 985.50 967.15
Business-type activities: Housing 24.51 24.51 23.51 Golf course 24.20 23.30 20.39 Parking 6.43 6.43 6.43 Sewer 17.44 17.44 16.53 Water 53.72 52.72 51.31 Total business-type activities 126.30 124.40 118.17 Total primary government 1,130.16 1,109.90 1,085.32
Component unit East Dearborn Downtown Development Authority 1.00 1.00 2.00 Total employees 1,131.16 1,110.90 1,087.32
A full- time employee is scheduled to work 2,080 hours per year (including vacation, sick and paid time off leaves).
Full-time-equivalent employment is calculated by dividing total labor hours by 2,080.
(1) The Golf Course and Parking funds were consolidated into the General fund in 2015.
(2) The Telecommunications fund was consolidated into the General fund in 2017.
206 Full-Time-Equivalent Government Employees Last Ten Fiscal Years
As of July 1, 2012 2013 2014 2015 (1) 2016 2017 (2) 2018
171.31 165.19 165.09 167.16 167.62 172.93 173.22 428.42 433.06 417.22 438.82 449.00 448.59 476.64 48.13 43.14 42.85 46.80 47.52 47.60 47.60 1.00 1.00 1.00 1.00 1.00 1.00 1.00 242.50 238.46 267.31 279.01 275.37 276.39 268.92 13.40 11.10 7.50 8.53 9.53 9.60 9.60 904.76 891.95 900.97 941.32 950.04 956.11 976.98
23.00 21.00 21.00 21.54 20.74 21.24 24.62 20.02 13.36 12.99 - - - - 6.43 6.43 6.43 - - - - 17.00 18.20 18.20 23.06 23.06 23.06 25.06 52.97 49.09 48.59 47.12 49.12 50.00 54.81 119.42 108.08 107.21 91.72 92.92 94.30 104.49 1,024.18 1,000.03 1,008.18 1,033.04 1,042.96 1,050.41 1,081.47
1.50 1.50 1.50 1.50 1.50 2.65 2.40 1,025.68 1,001.53 1,009.68 1,034.54 1,044.46 1,053.06 1,083.87
207 City of Dearborn, Michigan
Fiscal Year Ended June 30, Functions/programs 2009 2010 2011 2012 Public safety Police patrol units 51 51 58 61 Fire stations 4 4 4 4 Emergency response vehicles 6 6 6 6 Fire suppression vehicles 10 10 10 10 Public works Miles of streets Major streets 73.01 73.01 73.01 73.01 Local streets 194.24 194.24 194.24 194.24 Recreation and culture Parks and recreation City Parks acreage 309.90 309.90 310.00 310.00 Number of parks in the City 42 42 42 42 Camp Dearborn (Milford) acreage 626 626 626 626 Regional Parks 1 1 1 1 Golf course 1 1 1 1 Ice surfaces 2 2 2 2 Libraries Branches 4 4 4 4 Collection - number of volumes 299,265 293,888 276,590 228,162 Utilities Water Miles of water mains 387.93 387.93 387.93 387.93 Fire hydrants 2,834 2,834 2,834 2,838 Sewer Miles of sanitary sewers 72.76 72.76 72.76 72.76 Miles of storm sewers 144.56 144.56 144.56 144.56 Miles of combined sewers 404.00 404.00 404.00 404.00
Source: City of Dearborn Annual Administrative Report and various City departments `
208 Capital Asset Statistics Last Ten Fiscal Years
Fiscal Year Ended June 30, 2013 2014 2015 2016 2017 2018
51 58 58 58 54 57 4 4 5 5 5 5 5 6 6 7 7 7 7 7 11 11 11 11 13 12
73.01 73.01 73.01 73.01 73.01 73.01 194.24 194.24 194.24 194.24 194.24 194.24
310.00 310.00 310.00 310.00 310.00 310.00 42 42 42 42 42 42 626 626 626 626 626 626 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
3 3 3 3 3 3 3 223,220 223,511 221,316 217,655 210,437 214,401
387.93 371.07 370.34 372.81 372.04 371.92 2,838 2,858 2,886 3,020 3,016 3,016
72.76 73.63 73.98 74.53 74.64 75.18 144.56 210.16 189.34 206.96 209.96 210.86 404.00 348.52 348.37 347.69 347.30 346.13
209 City of Dearborn, Michigan
Fiscal Year Ended June 30, Functions/programs 2009 2010 2011 2012 Election data Registered voters 58,245 58,147 58,156 59,032 District court Number of court cases 80,189 73,079 79,779 77,805 Building and safety Permits issued 6,525 6,769 6,769 7,009 Permit inspections conducted 17,186 15,223 15,301 14,741 Police Calls for service 56,591 62,162 62,624 54,164 Traffic citations 14,961 14,403 18,873 21,509 Parking citations 38,732 34,061 34,639 29,022 Fire Fire incidents 2,081 2,107 2,221 2,942 Emergency medical services incidents 7,184 7,502 7,768 7,901 Public works Miles of street resurfaced 5.03 2.60 7.09 2.60 Curbside refuse collected (tons) 39,043 35,884 27,510 34,962 Curbside compost collected (tons) 8,072 7,881 7,653 7,631 Curbside recyclables collected (tons) 3,912 3,642 4,989 3,889 Leaf collection (cubic yards) 20,325 28,209 18,268 18,943 Recreation Passholder visits 206,035 218,405 211,738 285,055 Library Collection - number of volumes 299,265 293,888 276,590 228,162 Circulation - number of transactions 870,252 907,385 874,771 751,668 Number of visitors 511,809 511,737 477,827 420,271 Water Number of customers billed 32,826 32,696 32,662 32,826 Total consumption (100 cubic feet) 6,676,634 6,278,524 6,298,102 6,993,560 Sewer Sewer water conveyed to Detroit (100 cubic feet) 12,193,727 10,352,858 9,745,433 11,331,781
Source: City of Dearborn Annual Administrative Report and various City departments
210 Operating I ndicators Last Ten Fiscal Years
Fiscal Year Ended June 30, 2013 2014 (1) 2015 (2) 2016 2017 2018
60,117 60,275 58,219 58,603 60,288 61,574
77,020 79,406 70,279 75,146 71,359 72,544
6,344 5,729 6,324 6,151 6,240 6,486 13,689 12,520 13,612 13,071 13,403 15,851
66,668 71,194 71,790 75,103 77,952 81,632 18,045 18,652 26,382 19,623 17,469 20,817 31,476 35,001 18,424 21,784 22,108 19,911
3,099 2,799 2,927 3,025 3,185 3,276 7,942 10,301 11,674 11,823 12,219 11,823
3.99 5.74 7.50 2.72 3.79 3.86 31,226 31,255 33,940 32,627 34,077 37,476 6,258 7,232 6,550 6,269 6,435 7,151 5,671 6,281 5,161 5,910 6,110 4,816 20,450 21,134 22,526 18,021 28,581 22,754
180,520 193,059 215,461 226,433 223,059 229,181
223,220 223,511 221,316 217,655 210,437 214,401 662,312 610,229 537,739 515,544 481,356 480,890 402,934 385,723 406,885 374,763 359,571 374,374
32,396 32,568 32,567 32,561 32,547 32,564 6,197,018 6,337,347 6,022,481 6,311,771 6,450,687 6,269,237
9,614,895 10,775,389 10,697,630 10,697,630 10,697,630 9,881,000
(1) The City of Melvindale Fire Department was consolidated into the City of Dearborn Fire Department in 2014. 1,348 incidents (223 Fire; 1,125 EMS) were recorded in Melvindale in 2014. An additional 137 mutual aid runs for other governments were performed during the year.
(2) The Great Lakes Water Authority established a simplified sewer rate schedule in FY2015. The City of Dearborn pays a flat monthly rate, based on its shares of the system’s sewer flows. The share is updated every three years, so the rate is calculated on the same estimated flows for FY2015-17. FY2018 begins the next three-year estimated flow calculation period.
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212
City of Dearborn, Michigan
Federal Awards Supplemental I nformation June 30, 2018
City of Dearborn, Michigan
Contents
Independent Auditor’s Reports:
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1-2
Report on Compliance For Each Major Federal Program ; Report on Internal Control Over Compliance 3-4
Schedule of Expenditures of Federal Awards 5-6
Reconciliation of Basic Financial Statements Federal Revenue with Schedule of Expenditures of Federal Awards 7
Notes to Schedule of Expenditures of Federal Awards 8
Schedule of Findings and Questioned Costs 9 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Independent Auditor's Report
To Management, the Honorable Mayor, and Members of the City Council City of Dearborn, Michigan
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dearborn, Michigan (the "City") as of and for the year ended June 30, 2018 and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated November 15, 2018. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. 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 a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
1 To Management, the Honorable Mayor, and Members of the City Council City of Dearborn, Michigan
Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
November 15, 2018
2 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance
Independent Auditor's Report
To the Honorable Mayor and Members of the City Council City of Dearborn, Michigan
Report on Compliance for Each Major Federal Program We have audited the City of Dearborn, Michigan's (the "City") compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on the City's major federal program for the year ended June 30, 2018. The City's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for the City's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the "Uniform Guidance"). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2018. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance.
3 To the Honorable Mayor and Members of the City Council City of Dearborn, Michigan
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
November 15, 2018
4 City of Dearborn, Michigan Schedule of Expenditures of Federal Awards
Year Ended June 30, 2018
Pass-through Entity Total Amount CFDA Identifying/ Provided to Federal Federal Agency/Pass-through Agency/Program Title Number Grant Number Subrecipients Expenditures
U.S. Department of Housing and Urban Development: Direct Programs - CDBG Entitlement Grants Cluster: Community Development Block Grant Program 14.218 N/A $ 75,000 $ 2,047,643 Neighborhood Stabilization Program 1 14.218 N/A - 6,348
Total CDBG Entitlement Grants Cluster 2,053,991
Passed through Michigan State Housing Development Authority - Home Investment Partnerships Program - Home Resource Fund: Grant Year M2012 14.239 M-12-DC-26-0213 - 29,424 Grant Year M2013 14.239 M-13-DC-26-0213 - 95,684 Grant Year M2014 14.239 M-14-DC-26-0213 - 46,131
Total Home Investment Partnerships Program - 171,239
Total U.S. Department of Housing and Urban Development 2,225,230
U.S. Department of Agriculture - Emergency Food Assistance Cluster - Passed through County of Wayne, Michigan - Emergency Food Distribution Program 10.569 N/A - 25,891
U.S. Department of Justice: JAG Program Cluster - Passed through Wayne Co Sheriff's Dept: 2015 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2015-DJ-BX-0911 - 3,780 2016 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2016-DJ-BX-0989 - 22,338
Total JAG Program Cluster - 26,118
Direct programs: Bullet Proof Vest Program 16.607 n/a - 18,000 Equitable Sharing of Federally Forfeited Property 16.922 n/a - 199,736 2012 COPS Hiring Program 16.710 2012-UM-WX-0100 - 22,068 2014 COPS Hiring Program 16.710 2014-UM-WX-0043 - 166,887 - Total COPS Hiring Program - 188,955
Total U.S. Department of Justice - 432,809
Highway Safety Cluster - U.S. Department of Transportation - Passed through Michigan Department of State Police and Downriver Community Conference - Drive Michigan Safely Task Force 20.600 PT-17-16 - 23,795
National Endowment for the Humanities: Passed through Arts Midwest - The Big Read Program 45.024 FY18 - 19949 - 12,800
Passed through Michigan Department of Education: Library of Michigan Library Services and Technology Act Grant Program 45.310 n/a - 42,763 Library of Michigan Library Services and Technology Act Grant Program 45.310 n/a - 1,000
Total Library of Michigan Library Services and Technology Act Grant Program - 43,763
Total National Endowment for the Humanities 56,563
See notes to schedule of expenditures 5 of federal awards. City of Dearborn, Michigan Schedule of Expenditures of Federal Awards (Continued)
Year Ended June 30, 2018
Pass-through Entity Total Amount CFDA Identifying/ Provided to Federal Federal Agency/Pass-through Agency/Program Title Number Grant Number Subrecipients Expenditures
U.S. Environmental Protection Agency - Passed through Downriver Community Conference - Brownfields Revolving Loan 66.818 BF 0093501-5 $ - $ 95,280
U.S. Department of Homeland Security: Federal Emergency Management Agency: Direct programs: 2014 Assistance to Firefighters Grant 97.044 EMW-2014-FO-06747 - 71,135 2015 Assistance to Firefighters Grant 97.044 EMW-2015-FO-05125 - 94,170 2015 Assistance to Firefighters Grant 97.044 EMW-2015-FP-00315 - 50,435 2016 Assistance to Firefighters Grant 97.044 EMW-2016-FV-01059 - 773,637
Total Assistance to Firefighters Grant 989,377
2016 Staffing for Adequate Fire and Emergency Response Grant 97.083 EMW-2016-FH-00183 - 250,265 2016 Countering Violent Extremism Grant Program 97.132 EMW-2016-CA-00184-S01 - 15,562
Passed though Michigan Department of State Police - Civil Preparedness Program 97.042 EMC-2017-EP-00001-S01 - 51,080
FEMA Hazard Mitigation Grant Program - Beaumont Hospital Storm: Sewer Improvements 97.036 FEMA-4195-DR-MI - 455,996 Shutoff Gates and Overflow Structure 97.036 FEMA-4195-DR-MI - 43,429
Total FEMA Hazard Mitigation Grant Program - 499,425
Total U.S. Department of Homeland Security - 1,805,709
Total federal awards $ 75,000 $ 4,665,277
See notes to schedule of expenditures 6 of federal awards. City of Dearborn, Michigan Reconciliation of Basic Financial Statements Federal Revenue with Schedule of Expenditures of Federal Awards Year Ended June 30, 2018
Revenue from federal sources - As reported on financial statements (includes all funds) $ 4,424,009 Add grant receivable not recorded under modified accrual accounting 28,309 Add noncash assistance not reported as federal revenue 25,891 Add federal money classified as forfeited revenue when received 199,736 Add federal revenue classified as miscellaneous revenue on financial statements 5,000 Add program income from a prior year expended in current year 1,348 Less prior year grant receivable not recorded under modified accrual accounting (2,556) Less federal grants received not administered by the City (16,460)
Federal expenditures per the schedule of expenditures of federal awards $ 4,665,277
7 City of Dearborn, Michigan Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2018 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of City of Dearborn, Michigan (the "City") under programs of the federal government for the year ended June 30, 2018. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the "Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Note 2 - Summary of Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. The City has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance.
88 City of Dearborn, Michigan Schedule of Findings and Questioned Costs Year Ended June 30, 2018 Section I - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Noncompliance material to financial statements noted? Yes X None reported Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR 200.516(a)? Yes X No Identification of major programs:
CFDA Number Name of Federal Program or Cluster
14.218 U.S. Department of Housing and Urban Development - Community Development Block Grant Cluster Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? Yes X No
Section II - Financial Statement Audit Findings None
Section III - Federal Program Audit Findings None
9