C O M P R E H E N S I V E A N N U A L F I N A N C I A L R E P O R T JULY 1, 2019 JUNE 30, 2020 Louisville/ Jefferson County Metro Government Commonwealth of Kentucky COMPREHENSIVE ANNUAL FINANCIAL REPORT

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT

LOUISVILLE, KENTUCKY

Fiscal Year Ended June 30, 2020

GREG FISCHER Mayor

Prepared by: Office of Management & Budget LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

INTRODUCTORY SECTION Letters of Transmittal i Profile of the Government vii Government Finance Officers Association Certificates of Achievement xiv Organization Chart xv Mayor, Metro Council, and Office of Management and Budget Officials xvi Metro Louisville District Map xvii FINANCIAL SECTION Independent Auditors’ Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet - Governmental Funds 18 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 19 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 22 Proprietary Funds: Statement of Fund Net Position 23 Statement of Revenues, Expenses, and Changes in Fund Net Position 24 Statement of Cash Flows 25 Fiduciary Funds: Statement of Fiduciary Net Position 26 Statement of Changes in Fiduciary Net Position 27 Component Units: Combining Statement of Net Position 28 Combining Statement of Activities 30 Notes to the Financial Statements 31 Required Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund on Basis of Budgeting 121 Other postemployment benefits – Schedule of Proportionate Share of the Net OPEB Liability 122 Other postemployment benefits – Schedules of Contributions CERS OPEB 123 Pensions  Schedule of Proportionate Share of the Net Pension Liability 124 Pensions  Schedules of Contributions  CERS Pension 126 Pensions – Schedule of Changes in the Net Pension Liability - Single Employer 127 Pensions – Schedule of Contributions - Single Employer 129 Pensions – Schedule of Investment Returns - Single Employer 130 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

Other Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds 132 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 133 Combining Statement of Net Position – Internal Service Funds 134 Combining Statement of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 135 Combining Statement of Cash Flows – Internal Service Funds 136 Combining Statement of Fiduciary Net Position – Agency Funds 137 Combining Statement of Changes in Assets and Liabilities – Agency Funds 138

STATISTICAL SECTION

Summary of Net Position and Changes in Net Position 142 Fund Balance, Governmental Funds 143 Changes in Fund Balance, Governmental Funds 144 General Government Revenues by Source 145 General Fund Tax Revenues by Source 146 Employment, Income and Occupational Tax Revenues 147 Principal Withholding Taxpayers 148 Assessed and Estimated Actual Value of Taxable Property – Metro Government 149 Assessed and Estimated Actual Value of Taxable Property – Urban Services District 150 Property Tax Rates – Direct and Overlapping Governments 151 Principal Property Tax Payers 152 Property Tax Levies and Collections 153 Legal Debt Margin 154 Direct and Overlapping Governmental Activities Debt 155 Ratios of Outstanding Debt by Type 156 Ratios of General Bonded Debt Outstanding 157 Pledged Revenue Coverage 158 Demographic & Economic Indicators - Population Growth 159 Principal Employers 160 Number of Government Employees by Function/Program 161 Miscellaneous Operating Indicators and Capital Asset Information 162 OFFICE OF THE MAYOR LOUISVILLE, KENTUCKY

GREG FISCHER MAYOR

December 23, 2020

To all whom Metro Government serves,

I am pleased to present the Comprehensive Annual Financial Report of Louisville/Jefferson County Metro Government (“Metro Government”) for the fiscal year ending on June 30, 2020. This financial report details how Metro Government has managed the resources with which we have been entrusted.

FY20 presented Metro Government and the residents whom we serve with unprecedented challenges no one could have foreseen at its start. The onset of a worldwide pandemic and resulting economic downturn, coupled with civil unrest, have led to dramatic shifts in the focus of our service delivery, requiring Metro Government to balance the need to address these challenges with our commitment to progress on our strategic plan and providing excellent services city-wide.

Upon notification of the arrival of the COVID-19 virus in the United States, Metro Government agencies, including Louisville Metro Public Health and Wellness and the Mayor’s Office, worked with community partners to conduct mock exercises and create a plan of action to ensure that the community was prepared to address the pandemic. A few of our initiatives include:

 A new public COVID-19 Dashboard to track the city’s alert levels, case counts, hospitalization data, race and ethnicity data, the Daily Incidence Rate, and testing data,  The One Louisville: COVID-19 Response Fund, which has helped provide rent, food, childcare, and transportation assistance to more than 3,000 low-income households,  Small business, eviction prevention, and other assistance programs utilizing dedicated funds from the Coronavirus Aid, Relief, and Economic Security Act.

In addition to the challenges presented by the ongoing public health crisis, Louisville, like many other cities, was faced with ongoing civil unrest following the tragic death of resident Breonna Taylor, as well as an increase in gun violence. Metro Government responded by committing to reimagining public safety and providing greater transparency and accountability in an effort to rebuild trust between our police department and the larger community. A few of the initiatives implemented so far include:

 A top-to-bottom review of Louisville Metro Police Department (“LMPD”) policies and procedures with an outside consulting firm,  Increased officer pay, increased recruitment of women, Black, and other minority officers, as well as a proposed housing incentive for officers to live in low-income census tracks, all in an effort to build a public safety unit that reflects the larger community that it serves,  Breonna’s Law, an ordinance that includes the banning of “No-Knock” warrants, sets guidelines for the execution of search warrants by LMPD, and requires the use of body cameras when warrants are served.

WWW.LOUISVILLEKY.GOV LOUISVILLE METRO HALL 527 WEST JEFFERSON STREET LOUISVILLE, KENTUCKY 40202 502.574.2003

i Through these ongoing challenges, we continue to work toward our strategic plan; to become a city of lifelong learning, an even more compassionate, equitable and resilient city; to maintain a vibrant economy; to provide a safe and healthy locale for residents and visitors alike; and to be innovative and operationally excellent. A few of the programs implemented and investments made include:

 The $38 million Dixie Highway Project reached its completion, providing a transformation of one of Louisville’s busiest thoroughfares,  Investments in West Louisville, such as the new Beecher Terrace community and Norton Sports Health and Learning Complex began or continued construction,  “Build Back Better, Together” initiative launched in mid-2020 to help aid in the city’s economic recovery by focusing on seven key areas: arts and culture, built and natural environments, economy, education and talent development, health and safety, hospitality, sports and Bourbonism, and social infrastructure and impact,  A new state-of-the-art complex opened in October 2019 for Louisville Metro Animal Services (“LMAS”) dedicated to the rescue and adoption of stray animals. The facility includes an in-house surgery center, helping make the services provided by LMAS more efficient and cost effective.

Because of our continued investments in improvements city-wide and our focus on growing business clusters, Louisville remains attractive to business, despite the economic challenges brought on by the pandemic. Our ability to attract new companies and help existing business grow earned the city first place in Site Selection’s annual Ohio River Corridor rankings. Additionally, Louisville was added to Glassdoor’s 25 Best Cities for Jobs in 2020.

Fiscally, we were able to increase our unassigned General Fund balance from $70.9 million to $71.1 million—its highest level. This, in addition to Louisville’s resilient economy and stewardship of public resources, allowed the city to maintain its positive credit rating from the three nationally recognized credit rating agencies: Fitch Ratings, Inc. (AAA); Moody’s Investors Service (Aa1) and Standard & Poor’s (AA).

In FY21 and beyond, we will continue to face challenges due to increased pension funding requirements and the economic aftereffects of the pandemic, but we remain committed to improving our fiscal position.

This is the tenth Comprehensive Annual Financial Report that I have presented to the residents of Louisville. We will rely on the fundamental economic strength we have built in past years to create a strong fiscal recovery as we move out of the pandemic, hopefully in the coming months. As we look to the future, we know that we can continue to grow, both economically and compassionately, to build back a better city for all our residents.

Sincerely,

Greg Fischer Mayor

WWW.LOUISVILLEKY.GOV LOUISVILLE METRO HALL 527 WEST JEFFERSON STREET LOUISVILLE, KENTUCKY 40202 502.574.2003

ii OFFICE OF MANAGEMENT AND BUDGET LOUISVILLE, KENTUCKY

GREG FISCHER DANIEL FROCKT CHIEF FINANCIAL OFFICER MAYOR

December 23, 2020

To all whom Metro Government serves:

As the chief financial officer of Louisville/Jefferson County Metro Government (“Metro Government”), I have the distinct pleasure of submitting the Comprehensive Annual Financial Report (“CAFR”) for the fiscal year ended June 30, 2020.

Responsibility for the accuracy, completeness, and fairness of the data, including all disclosures, rests with the management of Metro Government. I have overseen completion of this CAFR, and to the best of my knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to report fairly the financial position and results of operations of this government. All disclosures necessary to enable the reader to gain an understanding of the government’s financial activities are included. There were no changes to any Metro Government’s financial policies that had a significant impact on the current year’s financial statements.

On January 6, 2003, the Jefferson County Fiscal Court and the City of Louisville governments merged and formed a new entity called Louisville/Jefferson County Metro Government. Metro Government is a public body corporate and politic, duly created and existing as a political subdivision of the Commonwealth of Kentucky under the Constitution and laws of the Commonwealth.

Metro Government is governed by an elected mayor and Metro Council, which is composed of 26 council members. All executive and administrative powers of the consolidated local government are vested in the Office of the Mayor. As outlined in the organizational chart included in this report, the administration of Metro Government has divided operations among a team of senior staff, including a deputy mayor reporting directly to the mayor. Among the services that Metro Government provides are: public safety, streets and roads, sanitation, health and social services, culture and recreation, public improvements, planning and zoning, and other administrative services.

An annual appropriated budget is adopted for the General Fund on a cash basis, which differs from the basis used for financial reporting under Generally Accepted Accounting Principles (“GAAP”). On or before May 1 of each year, in accordance with state statute and local ordinance, the mayor proposes an Executive Budget to Metro Council.

On or before June 30 of each year, in accordance with state statute, Metro Council adopts the Executive Budget as it may have been amended, as the approved budget for the fiscal year beginning July 1. An affirmative vote of a majority of Metro Council is required to enact the proposed appropriations, to amend the budget once it has been approved, or to approve any supplemental appropriations. All budget adjustments at the department level must be approved by the chief financial officer consistent with the approved budget. The capital improvements budget for Metro Government is prepared annually to include a program of proposed capital expenditures for the ensuing fiscal year.

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iii FY20 was a year of two unequal halves in more than one way. The decade long expansion from the Great Recession continue for the first nine months with wage growth up 7.2% compared to the prior year. This was a leading reason for an FY20 mid-year reforecast upward of General Fund revenues by $19 million (from an original budget of $623 million to an estimated $642 million).

Then COVID-19 struck.

And Breonna Taylor was shot dead.

The COVID-19 pandemic had an immediate effect with a decrease of 110,000 jobs in the Louisville Metropolitan Statistical Area (“Louisville MSA”) between March and April according to the Bureau of Labor Statistics. After 9 months of wage growth at 7.2%, Metro Government saw a severe contraction of negative 7.1% for the final 3 months, ending the year with growth of 3.2% ($303.3 million in FY20 compared to $293.6 million in FY19), but a definitively lower wage and employment base for FY21. The Louisville MSA ended June with 616,000 jobs compared to 678,000 jobs from June 2019 (a decrease of 9.1%). In addition to wage and job losses, Net Profits fell as well from $68.1 million in FY19 to $44.6 million in FY20 (a decrease of 34.5%) due to the slowing economy as well as a tax deadline shift from April 15th to July 15th (following the IRS deadlines). Had there not been a timing shift for Net Profits, it was estimated that the decrease would have been 17.6% from FY19 (adding back an estimated shift of $11.5 million of Net Profits into FY21).

The unevenness of the year was underscored not only through the economy, but with sustained protests against structural racism and for justice for Breonna Taylor’s death. The public protests ran concurrently with the public health response to the pandemic and continue as of this writing. It has spurred a public discussion throughout the community on the role of government, its policies, its investment and budgetary decisions, and future opportunities to mitigate the impact of structural racism including a Mayoral Executive Order declaring Racism a Public Health Crisis.

Metro Government’s unfunded CERS net pension liability grew by 12% in FY20 to $1.148 billion from $1.025 billion in FY19, while the unfunded CERS net OPEB liability decreased slightly from $301 million to $296 million for the same period. In the spring of 2020, the Kentucky General Assembly adopted Senate Bill 249 which froze CERS pension rates for hazardous and non-hazardous duty personnel during FY21 and lengthened the time period to amortize the unfunded pension liability from 24 years to 30 years. After the FY21 pension rate freeze, the retirement board adopted 12% rate increases for both hazardous and nonhazardous personnel for FY22 on December 3, 2020, resuming the series of 12% increases that began in FY19. Please see Notes 16 & 17 for a full description of both unfunded liabilities. Against the backdrop of a weak and slowly recovering economy due to the COVID-19 pandemic and sustained pension rate increases, it is highly likely that Metro Government will either need to curtail operations or increase revenues. Thus far, Metro Government has shrunk its full-time employment base from 5,571 employees on December 1, 2017 to 5,059 on December 1, 2020—a reduction of 512 civil servants during the first three years of the pension and OPEB increases.

The adopted year-end ordinance provides Metro Government with its largest Unassigned Fund Balance in dollar terms ($71.1 million—an increase of a little more than $200,000 from FY19). However, when measured as a percentage of General Fund revenues, it converts to 9.3% down from 13.5% at the end of FY10—part of a longer- term trend. Metro Government’s Unassigned Fund Balance policy calls for one to two months of General Fund revenues or 8.3% to 16.7%, placing FY20’s balance on the lower end of the policy.

The year-end ordinance also committed $26 million of General Fund for COVID-19 pandemic response and for general governmental purposes in FY21. This funding was made available by the ability for Metro Government to recover public safety/public health salaries originally funded with General Fund to CARES (Coronavirus Aid, Relief, and Economic Security Act) funding. Metro Government was one of less than 40 direct city recipients of CARES funding with a grant of $133.8 million. Metro Government expended $40.4 million of that total by the close of FY20 and budgeted the remaining funds in FY21.

While it is positive to have the commitment of $26 million of General Fund from FY20 into FY21, the absolute amount of funding pales in comparison to the community needs, especially upon the expiration of CARES funding on December 30, 2020 and the eventual end to eviction and utility shutoff moratoria. The needs for the public health response (e.g. testing, tracing, PPE, vaccine distribution, quarantine provisions), human service needs (e.g. assistance with food, shelter, and utilities), and small business assistance will easily exceed $100 million under current estimates.

iv FY20 continued the change in debt issuance process for Metro Government as it pivoted from immediate long-term debt issuance to fund annual capital projects to the use of a line of credit as interim financing prior to long-term debt issuance. This change in process was enacted to reduce the interest cost differential associated with unexpended bond proceeds. The combined FY19-FY21 capital budgets have authorized just over $215 million in debt-funded projects, however Metro Government’s combined issuances in October 2019 and November 2020 total $81.2 million of principal or approximately $90 million inclusive of premiums. This leaves approximately $125 million of debt-funded capital projects authorized but unissued. This trend is likely to continue due to a lack of personnel to manage the amount of debt-funded capital projects being authorized. The second of these two issuances to fund the combined three years of capital projects took place in November 2020 when Metro Government issued a $40.4 million tax-exempt General Obligation bonds to fully fund the amount accessed on the line of credit. The 20-year bond was purchased by J.P. Morgan Securities, LLC at a True Interest Cost of 1.46%.

Metro Government’s combined outstanding principal associated with General Obligation bonds and lease revenue bonds is $494 million, by comparison (see Note 7 for a full description) a little more than a third of the combined net pension liability and net OPEB liability. For comparison purposes, the amount of General Obligation bonds and lease revenue bonds at the end of FY18 was $565 million. The above listed debt issuance for $40.4 million (Series 2020A) was sold competitively in conformance with Metro Government’s Debt Management Policy, which states that the resulting aggregate annual net debt service should be less than 10% of the General Fund operating expenses and greater than 55% of the outstanding principal should be paid within 10 years.

While Metro Government has tightened the slack in its debt-funded capital project funds as noted above (the assets in the Capital Project Fund decreased from $59.7 million in FY19 to $38.1 million in FY20), overall cash balances have increased primarily due to the nature of the upfront $133.8 million CARES grant, of which $40.4 million was expended in FY20. This is visible in the Committed Fund Balance of the Special Revenue Fund on the balance sheet, growing from $10.7 million at the end of FY19 to $111.3 million at the end of FY20, as well as in Restricted Money Market Mutual Funds which have grown from $700,000 in FY19 to $100.7 million in FY20 (please see Note 2 on Cash Deposits and Investments).

At the end of FY20, two of Metro Government’s component units, the Transit Authority of River City (“TARC”) and the Board of Health, had negative net positions of $21.9 million and $15.4 million, respectively. This was due, in large part, to accounting for unfunded OPEB and pension liabilities. These negative net positions have grown from last fiscal year’s totals of negative $4.5 million for TARC and negative $11.0 million for Board of Health.

Metro Government’s Risk Fund, a self-insurance fund for items such as workers’ compensation, auto liability, property damage, unemployment, etc., saw its funding ratio of 88% at the close of FY20 (inclusive of a $12 million settlement with the Estate of Breonna Taylor, $5 million of which came from the Risk Fund) compared to 84% at the close of FY18. Additionally, Metro Government’s self-insured Health Fund increased its balance sheet from 16 days of operating expenses in FY18 to 133 days of operating expenses at FY20’s close. This growth is related in part to plan design changes emphasizing wellness and a revised formulary and in part to a ban on elective surgeries this past spring due to the COVID-19 pandemic which dramatically reduced health claims in the final quarter of FY20.

To gather a more complete understanding of the fiscal condition of Metro Government, this letter should be read in conjunction with the Management’s Discussion & Analysis, beginning on page 3 of this report.

FINANCIAL INFORMATION

Management is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of Metro Government are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the presentation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: a) the cost of a control should not exceed the benefits likely to be derived, and b) the valuation of costs and benefits requires estimates and judgments by management.

Single Audit. As a recipient of federal and state funding, Metro Government is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management.

Metro Government is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2CFR200 (Uniform Guidance). Information related to this single audit, including the Schedule of Expenditures of Federal

v vi Profile of the Government The City of Louisville, located in Jefferson County, is the largest city in the Commonwealth of Kentucky. Situated along the banks of the Ohio River in the central region of the state, Louisville is located approximately 100 miles south of Indianapolis, 100 miles southwest of Cincinnati, and 170 miles northeast of Nashville.

Founded in 1778 by General George Rogers Clark libraries. In addition to these services, Louisville and named for King Louis XVI of France, Louisville Metro also reports for various component units, is one of the oldest cities west of the Appalachian including the Louisville Water Company, Parking Mountains. Its location at the Falls of the Ohio Authority of River City Inc., Transit Authority of River helped spur growth as riverboats had to be City Inc., Riverport Authority, Metropolitan Sewer unloaded and moved downriver at the Falls in order District, KentuckianaWorks, Kentucky Science Center to continue their journey, leading more and more Inc., Board of Health, Affordable Housing Trust Fund, individuals to visit and stay. Louisville was formally and Waterfront Development Corporation. Each incorporated in 1828. Modern-day Louisville covers year, the mayor and council must work to produce an area of approximately 397 sq. miles, which and to approve a budget that funds these essential includes approximately 380 sq. miles of land and 17 services and work to accomplish the goal of creating sq. miles of water. Because of its central location, a city of life-long learning, great jobs, and wellness Louisville is influenced by both Southern and and compassion. This cyclical process begins each Midwestern cultures and is sometimes referred to year nearly as soon as the previous budget is signed as either one of the northernmost Southern cities or by the mayor. In August, each department is tasked southernmost Northern cities in the United States. with a review of its strategic plan. In December, In 2003, Louisville merged with Jefferson County departments report on the status of its strategic to form the Louisville-Jefferson County Metro plans. The budget process formally begins with the Government and is now referred to as Louisville dissemination of questionnaires designed to help Metro. Louisville Metro operates under a mayor- the Office of Management and Budget (“OMB”) council form of government. The mayor is elected understand departmental objectives. After analysis to a four-year term via an at-large, partisan election. of these questionnaires, follow-up meetings are Council members are also chosen to four-year terms conducted between departments and OMB. In March but in partisan elections according to the district and early April, budgetary objectives are presented of their residence. There are 26 council districts. to the mayor. The mayor’s recommended budget is Louisville Metro is responsible for providing a broad presented to the council in late April. This is followed array of services to residents, including police and by department budget hearings before the council fire protection, ambulance services, infrastructure in May and June. The council has until July 1 of each maintenance, solid waste and recycling collection, year to pass a budget, which is then signed by the as well as amenities, such as public parks and mayor. vii Local Economy In recent years, Louisville Metro’s economy has experienced a period of unparalleled growth with more than 80,000 new jobs created, $15 billion in capital investment, and 2,700 businesses opened. While factors such as the ongoing pandemic are affecting the current economic condition, Louisville Metro’s central location and diverse population have helped create and maintain a welcoming environment for businesses large and small.

From its earliest days, Louisville Metro has capitalized Louisville economic engine are healthcare and on its prime location to serve as shipping hub. In manufacturing. Louisville Metro is home to major addition to serving as a riverport, it was also the innovative healthcare providers including Baptist founding site of the Louisville and Nashville Railroad. Healthcare Systems, Norton Healthcare, and the With access to river and rail transportation as well as University of Louisville Hospital. Humana, a Fortune three major interstates and Louisville Muhammad Ali 100 company and leading provider of health International Airport, Louisville Metro has much to insurance, is also headquartered in Louisville Metro. offer as a major transportation hub. Manufacturers such as Ford and Haier, a GE company also have major operations in Louisville Metro. Ford Employment demographics in the city reflect this. operates two plants in the Louisville Metro area. The United Parcel Service is currently the largest local Louisville Assembly Plant is on a 180-acre site with employer with a workforce of more than 23,000. more than 3,000,000 sq. ft. of production space and Louisville Metro’s central location has also proven houses production for the Ford Escape and Lincoln attractive to other logistics and customer service MKC models among others. The Ford Kentucky Truck companies such as Amazon, whose employment Plant is located in the eastern end of Metro on a 500- count is approximately 6,500 in the area. acre site and features 6,000,000 sq. ft. of production Additionally, the Jefferson Riverport International space. This plant produces larger vehicles such as the (“Riverport”) is home to more than 100 companies Ford F250. GE Appliances, a Haier company, also has engaged primarily in manufacturing or logistics and a major manufacturing site with a 1,000-acre campus distribution. As an added incentive, Riverport offers in its own ZIP Code. financial incentives for importers and exporters of raw materials, semi-finished and finished goods A driving force in the supply of workforce to these because of its status as a Foreign-Trade Zone. and other employers is Louisville’s educational system. Louisville Metro is home to the Jefferson Other industries that play a major role in the County Public Schools (“JCPS”), which is Kentucky’s

viii Local Economy (Cont’d) largest public-school system and the 29th largest graduate, doctoral, and first professional programs. school district in the United States. JCPS serves This includes the School of Medicine, which is 98,000 students at 169 schools and offers advanced home to a state-of-the-art research facility, the learning and college readiness programs to help School of Dentistry, and the Brandeis School of students transition successfully to secondary Law. U of L is also home to several highly celebrated education and future careers. Division I athletic teams.

Those who wish to continue their education in Bellarmine University sits on a 175-acre campus Louisville Metro find many options for certificates in the heart of Louisville. This private university and degrees alike. Louisville Metro is home to public offers more than 60 majors in the arts and sciences, and private secondary institutions offering training business, education, communication, nursing and and certifications in technology and healthcare, health field. These include baccalaureate, master’s, as well as baccalaureate, graduate and doctoral and doctoral degrees. educational opportunities. Jefferson Community and Technical College (“JCTC”) The University of Louisville (“U of L”) is a public is part of the state-wide Kentucky Community and university established in 1798 with three campuses Technical College System. JCTC is home to more than that house 12 colleges and schools. Approximately 11,000 students, who earn certificates and associate 22,000 students have the opportunity to study more degrees in fields such as healthcare, technology, and than 70 baccalaureate programs, as well as manufacturing.

ix Recreation and Entertainment Louisville Metro is more than just an economic engine. It is also a city that knows how to have fun. Recreational and cultural events occur year-round to the delight of locals and tourists alike.

Everyone worldwide turns their eyes to Louisville on Bats. The team plays their home games in one of the the first Saturday in May as hundreds of thousands finest minor league baseball parks in the country, come to be a part of the Kentucky Derby and the Slugger Field. The park was opened in downtown Run for the Roses. Derby Day is the culmination of Louisville in the year 2000 and is owned by Louisville a month-long series of more than 70 celebratory Metro Government (“Metro Government”). events known as the Kentucky Derby Festival. The series begins each April with Thunder Over Louisville, Louisville City Football Club (“LouCity”) is the one of the nation’s largest annual fireworks shows. newest addition to the local sports scene. Starting Other events include the Pegasus Parade, Great play in 2015, the team competes in the United Steamboat Race, Tour de Lou (bicycle race), and Soccer League (“USL”), the second-highest division Waterfront weekly music events. The city also hosts of professional soccer teams in the United States. the Kentucky Derby Festival Marathon and Mini- LouCity became the first USL team to win back- Marathon in the week preceding the Kentucky Derby. to-back championships, winning the USL Cup The Kentucky Derby Festival Marathon is ranked championships in 2017 and 2018. Initially, the among the nation’s top 100 races by USA Track team played in Slugger Field. However in 2020, and Field and attracts around 15,000 participants LouCity moved into Lynn Family Stadium, an 11,000- annually. seat state-of-the-art facility in the Butchertown neighborhood. Metro Government’s purchase of Sports also provide major attraction to the the land in 2018 contributed to the stadium project. recreational scene in Louisville. Kentucky is In 2021, the stadium will also be home to Racing synonymous with college basketball, and the U of L Louisville, an expansion franchise in the top-tier Cardinals continue year after year to enjoy success in National Women’s Soccer League. not only basketball, but also in a variety of Division I sports. The basketball, football, and baseball teams The bourbon industry is also in a period of expansion maintain a continued presence in rankings and post- and rebirth and that is evident in Louisville Metro, season tournament play. The football and basketball which is referred to by some as Bourbon City. teams play in state-of-the-art facilities Cardinal There are many active distillers in Louisville Metro, Stadium and the KFC Yum! Center, respectively. Jefferson County, and the surrounding counties, as well as many distillery tours and experiences in the Louisville Metro is also home to a Triple-A minor downtown Louisville area alone. To accompany these league affiliate of the Cincinnati Reds, the Louisville fine spirits, Louisville can also provide x Recreation and Entertainment Cont’d incomparable culinary experiences. Louisville bridge turned pedestrian bridge connecting Metro has been hailed as one of the up and coming Waterfront Park to Jeffersonville, Indiana. The Big “foodie” towns in America. Four Bridge sees more than 1,000,000 walkers, runners, and cyclists each year. Also prominent in The energy gained by dining on Louisville’s fine new the downtown waterfront is the Belle of Louisville, a Southern cuisine can be utilized to explore its many National Historic Landmark recognized as the oldest outdoor treasures. The Louisville Zoo, which opened river steamboat in operation. in 1969, provides fun for all ages with award winning exhibits and annual special events. Louisville Metro Louisville Metro is also home to a thriving arts and is noted for its extensive and well-designed parks music scene that includes multiple annual festivals. system, which consists of 120 parks covering more than 13,000 acres. Eighteen of Louisville Metro’s The Old Louisville neighborhood is host to the St. parks were designed by well-known landscape James Court Art Show, a large, well-attended architect Frederick Law Olmsted, who also designed regional festival showcasing local, national and New York’s Central Park, and his firm. Currently international artists. in process is an estimated 100-mile trail system known as the Louisville Loop (“Loop”). This trail The Forecastle Festival was founded in 2002 and has will eventually circle the city and provide a link grown from a neighborhood music event to one of between neighborhoods providing new recreation the country’s most anticipated summer festivals. opportunities to residents. There are 48.85 miles of the Loop completed to date. Louisville Metro also hosts three other weekend music festivals that have come to be known as the In addition to parks operated by Metro Louisville Trifesta: Louder Than Life, Hometown Government, Louisville Metro is home to Waterfront Rising, and Bourbon & Beyond. Held over a period Park, which is located in the downtown area on the of three weekends in September, each event hosts a banks of the Ohio River. The Big Four Bridge, also different music style with a festival atmosphere located in downtown Louisville, is a former railroad focusing on music, food, and of course, bourbon. xi Growth and Long-Term Initiatives The vision for Louisville Metro is to be a safe city of lifelong learning and great jobs, wellness, and compassion. In 2020, Louisville Metro faced concurrent challenges in the COVID-19 pandemic and the related economic downturn, as well as efforts to address racial justice and equity in response to the Breonna Taylor case.

The COVID-19 public health crisis has been pervasive The death of Ms. Taylor, as well as those of David across the United States, affecting every part of McAtee, George Floyd, Ahmaud Arbery and many American life from health and well-being to the others, sparked protests across the nation demanding economy. At this writing, Louisville Metro had changes to policing and to address systemic racism approximately 19,646 confirmed cases and 336 still present across the nation. In response, Metro deaths to date. While the pandemic continues, Government began implementing reforms through Louisville Metro worked to create initiatives to stave Breonna’s Law, multiple police policy changes, a the impact of the crisis on the lives of residents. top-to-bottom review of LMPD and other efforts. Multiple city departments, including the Office of Additional steps were taken as part of a Metro Resilience and Community Services and Louisville Government’s settlement with Ms. Taylor’s estate, Forward, our economic development agency, including: worked quickly to design and implement programs Housing Credit Program to incentivize officers to live for the distribution of local and federal relief funds, within a Qualified Census Tract [1] as their primary including those targeted to eviction prevention, residence. The initiative will provide officers with a small business assistance, and help for those directly pathway to home ownership and improve community affected by COVID-19. In addition, Louisville Metro connections. Public Health and Wellness has worked tirelessly to create awareness and provide public education The retention of social workers by Louisville Metro regarding the pandemic, as well as to monitor for officer support and assistance on applicable compliance with COVID-related business restrictions dispatched runs which will be initially funded through and contact tracing to help stem the spread of the forfeitures. virus. The encouragement of LMPD officers to volunteer In the midst of the pandemic, Louisville Metro two hours a pay period, during their regular work became the focus of national attention prompting shift, at an organization in the community they serve. protest and civil unrest related to the case of Breonna Taylor. Ms. Taylor, a Louisville resident, was The amendment of LMPD Standard Operating fatally shot on March 13, 2020 as Louisville Metro Procedure (“SOP”) 8.1 regarding search warrants Police (“LMPD”) were executing a search warrant at to require increased scrutiny over the acquisition her apartment as part of a larger drug investigation. execution of said warrants to include the requirement xii Growth and Long-Term Initiatives Cont’d for a designated Commanding Officer and EMS on- OneWest: OneWest is a community development scene for forced entry searches. corporation committed to elevating Louisville Metro through commercial development growth in west The implementation of accountability reforms Louisville. This project supports OneWest’s campaign including, but not limited to, tools to help identify to develop commercial, retail and mixed-use projects and track all use of force incidents, citizen complaints, in the area. investigations and other key factors. Enterprise Resource Planning Project: This Louisville Metro will help continue the work of is the second of a multi-year plan to fund the continuous improvement through the Build Back implementation of a new ERP system. The system will Better, Together Initiative (https://louisvilleky.gov/ replace Metro Government’s financial system, Oracle government/build-back-better-together). This Financials, and the human resource information program will confront pressing needs and outline system, PeopleSoft, which was implemented during longer-term specific strategies with the vision of a the merger in 2003. more prosperous and just future for all Louisvillians. Though Louisville Metro has faced unprecedented Louisville Metro is also investing in capital projects to and uncertain circumstances in recent times, Metro improve the quality of life of residents as well as the Government strives to continually fulfill its goal to services Metro Government provides. Investments be a city of compassion. Our employees have shown are currently being made in the following: courage and strength each day to help fulfill our Road and Sidewalk Improvements: Continuing mission: “Louisville Metro Government is the catalyst projects from previous fiscal years, Public Works plans for creating a world-class city that provides all its to pave/resurface approximately 160 lane miles on citizens with safe and vibrant neighborhoods, great Louisville Metro-owned roads, as well as addressing jobs, a strong system of education and innovation, sidewalks that have been reported as impassable. and a high quality of life.”

Louisville Affordable Housing Trust Fund: Furthering the goal to increase and preserve affordable housing choices. xiii xv LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT

Fiscal Year Ended June 30, 2020

HONORABLE GREG FISCHER ...... MAYOR ELLEN HESEN...... DEPUTY MAYOR

METRO COUNCIL MEMBERS JESSICA GREEN...... DISTRICT 1 BARBARA SHANKLIN...... DISTRICT 2 KEISHA DORSEY...... DISTRICT 3 BARBARA SEXTON SMITH...... DISTRICT 4 DONNA PURVIS...... DISTRICT 5 DAVID JAMES, President...... DISTRICT 6 PAULA McCRANEY...... DISTRICT 7 BRANDON COAN...... DISTRICT 8 BILL HOLLANDER...... DISTRICT 9 PAT MULVIHILL...... DISTRICT 10 KEVIN KRAMER...... DISTRICT 11 RICK BLACKWELL...... DISTRICT 12 MARK FOX...... DISTRICT 13 CINDI FOWLER...... DISTRICT 14 KEVIN TRIPLETT...... DISTRICT 15 SCOTT REED...... DISTRICT 16 MARKUS WINKLER...... DISTRICT 17 MARILYN PARKER...... DISTRICT 18 ANTHONY PIAGENTINI...... DISTRICT 19 STUART BENSON...... DISTRICT 20 NICOLE GEORGE...... DISTRICT 21 ROBIN ENGEL...... DISTRICT 22 JAMES PEDEN...... DISTRICT 23 MADONNA FLOOD...... DISTRICT 24 DAVID YATES...... DISTRICT 25 BRENT ACKERSON...... DISTRICT 26

OFFICE OF MANAGEMENT AND BUDGET DANIEL FROCKT ...... CHIEF FINANCIAL OFFICER MONICA L. HARMON...... DIRECTOR OF FINANCE

xvi LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT

Metro Louisville District Map

For Metro Council District Information about your area of town, visit the MyLouisville tool at: louisvilleky.gov/city-services/mylouisville

xvii

Crowe LLP Independent Member Crowe Global

INDEPENDENT AUDITOR'S REPORT

Honorable Greg Fisher, Mayor, and The Louisville Metro Council Louisville, Kentucky

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Louisville/Jefferson County Metro Government (“Metro Government”), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Metro Government’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Waterfront Development Corporation, the Kentucky Science Center, Inc., KentuckianaWorks, Family Health Centers, Inc., a component unit of the Board of Health, and the Louisville Metro Affordable Housing Trust Fund, Inc. which represent approximately 1.6% of total component unit assets, 0.9% of total component unit net position and 8.7% of total component unit program revenues. Those statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, are based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Metro Government, as of

1 June 30, 2020 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis, as listed in the table of contents, and the required supplemental information including the budgetary comparison information, the schedule of proportionate share of the net OPEB liability and schedule of contributions for the County Employees’ Retirement System, the schedule of proportionate share of the net pension liability and schedule of contributions for the County Employees’ Retirement System, and the schedule of changes in net pension liability, schedule of contributions and schedule of investment returns for the Policemen’s and Firefighter’s pension funds, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Metro Government’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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, based on our audit, the procedures performed as described above, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Crowe LLP

Louisville, Kentucky December 23, 2020

2 Management’s Discussion & Analysis LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) For the Year Ended June 30, 2020

As management of Louisville/Jefferson County Metro Government (“Metro Government”), we offer readers of Metro Government’s financial statements this narrative overview and analysis of the financial activities of Metro Government for the fiscal year ended June 30, 2020. We encourage our readers to consider the information presented here in conjunction with additional information that we have furnished in our letters of transmittal (pages i-vi), the financial statements, the notes to the financial statements, and required and other supplemental information, which follow this section.

Financial Highlights  Total assets plus deferred outflows of resources of the primary government exceeded total liabilities and deferred inflows of resources by approximately $449.8 million at the close of FY20. This amount includes a deficit of approximately $(393.6) million in unrestricted net position. Total net position increased by $21.0 million from FY19, which had a net position of $428.7 million.  The increase in Government-wide net position is primarily the result of the receipt of the CARES Covid Relief Funding. While the total received was $133.8 million, only $40.4 million had be spent by June 30, 2020. This unearned revenue was offset by increases in pension obligations.  Metro Government’s net position includes an equity interest in Louisville Water Company of $981.5 million, compared to $949.8 million in FY19.  At the end of FY20, Metro Government’s governmental funds reported a combined ending fund balance of $267.8 million, a increase of $26.5 million from FY19's $241.2 million.  At the end of FY20, unassigned General Fund balance was $71.1 million or approximately 11.7% of total FY20 General Fund expenditures. This compares to FY19 unassigned fund balance of $70.9 million or approximately 10.5% of General Fund expenditures.  GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance was published on May 8, 2020 providing reporting relief to governments. This allowed for the postponement of implementing provisions by a year or more. Metro Government elected to postpone all implementations in FY20. City Highlights  The developments over the past year required Metro Government to shift efforts to respond to a major pandemic and address the civil unrest stemming from the accidental death of Breonna Taylor and the Black Lives Matter movement. Both efforts commanded a high level of public and national interest. Development of programs for response to the pandemic and action to reform police procedures and oversight were undertaken.  Metro Animal Services completed construction of the Harshaw Family Foundation Animal Shelter in October 2019. This provided for the consolidation of all animal services operations at one location and allow for efficiencies with a modern facility. Parks & Recreation completed a sprayground in Sheppard Park, which added nearly $500,000 to the Parks & Recreation infrastructure. FY20 saw the fifth consecutive year of a commitment to increase investment in Louisville Metro's infrastructure with an ongoing focus on road and sidewalk improvements, which totaled approximately $6.5 million in capitalized assets. The capital appropriation of over $23 million ensures continuing long term improvements.  By deferring issuance of new debt, advances from General Fund for capital spending increased receivables $16.5 million. In addition, General Fund also recognized $10.7 million more in Revenue Commission receivables. Inventories increased more than $600,000, due in large part to increasing to Metro Goverment's salt reserves, which brought the amount in Salt Reserve Inventory to more than $3 million. Metro Government’s equity interest in Louisville Water Company ("LWC") increased by approximately $31.7 million. Metro Government also received $18.7 million in dividend income from LWC in FY20.  Metro Government continued its focus on solutions for neighborhoods through outreach, investment for both residential and economic development, and provisions of public health equity.  Leadership addressed planned spending reductions for FY20 to address increased funding requirements for the second of five anticipated 12% increases in employee pensions. The state announced it will be deferring the third 12% annual increase in FY21 because of COVID. This relief, along with receipt of

3 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

funding for COVID-19, temporarily alleviated some anticipated budget pressures. The temporary reductions only offered a brief respite as Metro Government will still need to address budgetary challenges in the coming fiscal years.  Metro Government selected new software to replace current financial and human resources systems. The implementation is scheduled to be completed during the spring of 2022. Other investments in technology address improved cybersecurity as well civic technology. Overview of the Financial Statements

Management’s Discussion and Analysis ("MD&A") is provided to serve as an introduction to the financial section of the Comprehensive Annual Financial Report ("CAFR"). Along with the MD&A, the financial section also consists of: the Basic Financial Statements, the Notes to the Financial Statements ("Notes"), the Required Supplementary Information (“RSI”), and the Other Supplementary Information ("SI"). The Basic Financial Statements include: the Government-wide Financial, the Fund Financial, the Proprietary Fund, the Fiduciary Fund, and the Component Unit statements.

Government-wide Financial Statements

The Government-wide Financial Statements, comprised of the Statement of Net Position (page 15) and the Statement of Activities (page 16), provide information about the activities of Metro Government as a whole and present a longer-term view of its finances.

One of the most important questions raised about Metro Government’s finances is whether it, as a whole, is better or worse off as a result of the year’s activities. Government-wide Financial Statements help answer the question as to whether the year's activities have left Metro Government's financial position better or worse off.

Government-wide Financial Statements are reported using the economic resources measurement focus and use the full accrual basis of accounting, which is similar to the accounting 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 Metro Government’s net position as of June 30, 2020, and the changes in net position during the fiscal year.

Metro Government’s net position results from the difference between assets (what the citizens own) plus deferred outflows of resources and liabilities (what the citizens owe) plus deferred inflows of resources. Net position is one way we measure Metro Government’s financial health or financial position. Increases or decreases in Metro Government’s net position over time are one indicator of whether its financial health is improving or deteriorating. Additional non-financial factors should be considered in assessing the overall health of Metro Government, such as changes in the property tax base and the condition of its capital assets (roads, buildings, etc.).

Metro Government’s basic services are reported in the governmental activities section of the Government-wide Financial Statements. This includes public safety, public works, community services, parks and recreation, and general administration. Revenue from occupational taxes, property taxes, fines, and state and federal grants finance most of these activities. If a fee is charged to customers to help cover all or most of the cost of certain services it provides, those activities are considered to be business-type activities in most cases. Metro Government did not report any business-type activities in FY20.

Metro Government includes the following as discretely presented component units: LWC; Parking Authority of River City, Inc.; Transit Authority of River City; Louisville and Jefferson County Riverport Authority; Louisville and Jefferson County Metropolitan Sewer District; KentuckianaWorks; Kentucky Science Center, Inc.; Board of Health ("BOH"); Affordable Housing Trust Fund; and Waterfront Development Corporation. Metro Government is financially accountable for these legally separate component units, and in the case of LWC, 100% of its stock is owned by Metro Government. Most of the component units issue its own respective audited financial statements. BOH does not issue audited financial statements due to little financial activity, but its component unit, Family Health Centers, Inc., does issue its own audited financial statements. All of the component units' financial statements, including the accompanying MD&A, should be read in conjunction with Metro Government’s financial statements.

4 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

Fund Financial Statements

The Fund Financial Statements, which include Governmental, Proprietary, and Fiduciary funds, provide detailed information about Metro Government’s most significant funds. For Governmental Fund activities, these fund financial statements, which begin on page 18, tell how these services were financed in the short term as well as what remains for future spending.

Some funds are required to be established by state law or bond covenants. However, other funds are established as needed to help control and manage money for particular purposes or to show that Metro Government is meeting legal responsibilities for using certain taxes, grants, and other money. Metro Government’s three types of funds use different accounting approaches, which are discussed further in Note 1.

Governmental Funds: Most of Metro Government’s basic services are reported in Governmental Funds, which are broken down into General Fund, Special Revenue, Capital Projects, and Nonmajor Governmental funds. The focus of Governmental Funds is on how money flows into and out of those funds as well as showing the year-end balances that are available for spending. These funds are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

Revenue is recognized in the accounting period in which it becomes available and measurable while expenditures are recognized in the period in which the fund liability is incurred. Governmental Fund Statements provide a detailed short-term view of Metro Government’s general government operations and the basic services it provides. Governmental Fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance Metro Government’s programs.

The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is further shown in two reconciliations within the Basic Financial Statements.

Proprietary Funds: Proprietary Funds are reported in the same way that business-type activities are reported in the Statement of Net Position and the Statement of Activities, using the economic resources measurement focus and the accrual basis of accounting.

Metro Government’s Proprietary Funds include Internal Service Funds, which are Metro Government’s Insurance and Risk Management Fund and the Louisville/Jefferson County Revenue Commission, a blended component unit, to report activities that provide supplies and services to Metro Government’s other programs and activities.

The ending balances in these funds are consolidated with those of the Governmental Funds into the Governmental Activities column of the Government-wide Financial Statements.

Fiduciary Funds: Fiduciary Funds are used to account for resources held for the benefit of parties outside Metro Government. These funds are not reflected in the Government-wide Financial Statements because the resources of these funds are not available to support Metro Government’s own activities or programs. The measurement focus and basis of accounting for Fiduciary Funds are the same as that of the Proprietary Funds.

Notes to the Financial Statements Notes provide additional information that is essential to a full understanding of the information provided in the Government-wide and Fund Financial statements. Notes begin on page 31.

Other Information In addition to the Basic Financial Statements and accompanying Notes, this report also presents RSI and SI. RSI includes a budget-to-actual comparison of Metro Government’s General Fund along with historical information on the funding activity and employer contributions for Metro Government’s pension and other postemployment benefits ("OPEB"). RSI begins on page 120.

Metro Government presents SI, which consists of Combining Financial Statements for the Nonmajor Governmental, Internal Service, and Agency funds. SI begins on page 131.

5 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

Government-wide Financial Analysis Net position serves as a useful indicator of a government’s financial condition over time. Metro Government’s assets plus deferred outflows of resources exceeded liabilities plus deferred inflows of resources by $449.8 million at June 30, 2020. Metro Government’s net position includes the $981.5 million equity interest in LWC. LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF NET POSITION June 30 (amounts in thousands)

Total Percentage Governmental Activities Change 2020 2019 2019-2020 Current and other assets $ 528,459 $ 409,557 29.0% Equity interest in LWC 981,522 949,813 3.3% Capital assets 1,063,481 1,047,044 1.6% Total assets 2,573,462 2,406,414 6.9%

Deferred outflows of resources 346,769 355,156 (2.4)%

Long-term liabilities 2,251,336 2,139,415 5.2% Other liabilities 84,027 92,802 (9.5)% Total liabilities 2,335,364 2,232,217 4.6%

Deferred inflows of resources 135,089 100,605 34.3%

Net invested in capital assets 773,412 765,166 1.1% Restricted 69,973 16,939 313.1% Unrestricted (393,606) (353,358) 11.4% Total net position $ 449,779 $ 428,747 4.9%

Current and other assets increased by 29.0% from FY19 to FY20. Over that same time, cash and investments increased by 18.6%, a $42.0 million change that was primarily due to the receipt of The Coronavirus Aid, Relief, and Economic Security ("CARES") Act. Funding from the CARES Act provided Metro Government with means to address community response to the pandemic. Net capital assets increased by $16.4 million from FY19 to FY20. This net increase was due to a $15.4 million increase in construction in progress and the ongoing increase of $13.3 million investment in infrastructure improvements, primarily in roads and sidewalks. These increases were offset by a $4.1 net decrease of machinery, equipment, and vehicles. A change in short-term liabilities, which includes accounts payable, accrued payroll, accrued interest, and amounts due to other governmental agencies, decreased by $(8.6) million to $82.8 million. The primary factor for this change was a $(10.3) million decrease in amounts due to other governmental agencies. This is the direct result of a fourth-quarter deferral of occupational taxes that occurred when the filing deadline was changed from April 2020 to July 2020. This change coincided with the federal filing deadline. The action was in response to the coronavirus restrictions and resulted in a material decline in collections. The remaining change was a decrease of $1.8 million distributed between payroll and accounts payables with no one factor materially driving the increase. Long-term liabilities increased $111.9 million or 5.2%, which was the result of Metro Government's $119.1 million increase in net pension liability, which was offset by a $(5.3) million reduction of net OPEB liability. The net pension liability and net OPEB liability for FY20 is a combined $1.5 billion as compared to $1.3 billion for FY19. The reader should refer to Notes 16 and 17 for a more detailed breakout of the pension and OPEB obligations. This amount, while substantial, should be expected given the payroll growth and current liabilities anticipated by Kentucky Retirement System ("KRS"). It is anticipated these employment liabilities will continue to see some volatility until the KRS board experiences normalized returns and stabilized benefit plans. Metro Government’s Net Investment in Capital Assets reports the amount invested in capital assets (e.g. land, buildings, and infrastructure) less any related debt outstanding used to acquire those assets. Metro Government uses these capital assets to provide services to its citizens. These assets are not available for future spending and cannot be liquidated to repay the related debt.

6 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

Metro Government reviews third-party restrictions to determine amounts that will be classified as restricted net position each year. In FY20, Metro Government's restricted net position increased $50.0 million, a 295% increase. This is a result of the CARES grant funds of which $93 million had not yet been expended to that effort. A summary of Metro Government’s changes in net position is shown below. LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF ACTIVITIES For the Years Ended June 30 (amounts in thousands)

Total Governmental Percentage Amount Activities Change Change 2020 2019 2019-2020 2019-2020 Revenues Program revenues: Charges for services $ 70,530 $ 99,294 (29.0)% $ (28,764) Operating grants and contributions 135,523 95,616 41.7% 39,907 Capital grants and contributions 16,039 37,165 (56.8)% (21,126) General revenues: Property taxes 176,363 171,508 2.8% 4,855 Occupational taxes 422,402 432,693 (2.4)% (10,291) Gain on equity interest in LWC 31,708 32,856 (3.5)% (1,148) Other 136,995 45,549 200.8% 91,446 Total revenues 989,561 914,682 8.2% 74,879 Expenses General Government & Administrative Functions 170,789 173,914 (1.8)% (3,124) Public Safety 230,863 226,945 1.7% 3,918 Louisville Metro Police Department 232,629 229,351 1.4% 3,278 Develop Louisville 24,263 35,196 (31.1)% (10,933) Economic Development/APCD 27,773 33,886 (18.0)% (6,113) Codes and Regulations 14,091 13,742 2.5% 349 Parks & Recreation 40,815 46,569 (12.4)% (5,754) Office of Resilience and Community Service 35,278 30,144 17.0% 5,134 Public Health & Wellness/OSHN 40,254 40,600 (0.9)% (346) Public Works & Assets 87,416 92,512 (5.5)% (5,096) Louisville Free Public Library 27,305 27,810 (1.8)% (505) Louisville Zoo 21,359 30,732 (30.5)% (9,373) Interest on long-term debt 15,693 16,690 (6.0)% (997) Total expenses 968,530 998,090 (3.0)% (29,560) Increase (decrease) in net position 21,031 (83,408) 104,439 Net position—beginning 428,747 512,155 (83,408) Net position—ending $ 449,779 $ 428,747 $ 21,031

Metro Government experienced a change in normal patterns of revenue and expenditure activities due to the coronavirus pandemic. There was an increase in Government-wide net position of $21.0 million in FY20 as compared to a decrease in net position of $83.4 million in FY19. While property taxes saw a modest increase as a result of increasing assessments, occupational taxes experienced a $10.3 million decrease due to the previously mentioned deferred fourth-quarter filing requirements. While these taxes are a major revenue source for Metro Government, the driver of the $74.9 million or 8.2% increase in revenue was due to an increase in other general revenues. In FY20, general revenues other than property and occupational taxes and the gain on equity interest in LWC went from $45.0 million in FY19 to $137 million in FY20. The majority of the FY20 amount comes from the more than $93 million in CARES Act funding that was earned in FY20 but will be spent in FY21.

7 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

While Metro Government expended approximately $40 million of CARES Act funding for eligible expenditures under the funding guidelines, the remaining $93 million is reflected as a deferred inflow of resources in the Government Funds. Charges for services decreased by $28.8 million from FY19 to FY20, going from $99.3 million to $70.5 million in FY20. This was mainly due to the fact that many operations serving the public were either shut down or provided limited services because of the coronavirus restrictions. Metro Government experienced an increase of $39.9 million in operating grants and contributions for various programs from last fiscal year to this one. This again refers back to the CARES funding. Capital grants and contributions decreased by $21.1 million with the completion of several capital projects. Develop Louisville experienced a decline of approximately $12 million in capital grants and contributions due to the completion of several projects, including the Dixie Highway Corridor, Russell Choice Neighborhood, and Rental Repair and Rehab. The Louisville Zoo and the Louisville Free Public Library experienced decreases in capital grants and contributions of $5.2 and $1.3 million, respectively. These were related to capital projects completed in FY19, which their related foundations had provided significant funding. Additionally, grants and contributions are often inconsistent from one year to the next based on available funding and resources available to devote to the shared revenues. Metro Government experienced an overall decrease in expenses of $29.6 million, or 3.0%, from FY19 to FY20. A primary factor in all agency spending decline was the impact of the pandemic. Customer-driven agencies, such as Parks & Recreation and the Louisville Zoo, which, like most customer-driven agencies, were both operationally impacted by the pandemic restrictions, saw declines over from FY20 to FY19 by $5.8 million and $9.4 million, respectively. Limited services resulted in decreases in personnel costs as well as the services and supplies. Parks & Recreation was able to offset some of the declines with golf and outdoor park activities, which were open through most of the pandemic restrictions. Develop Louisville and Economic Development also experienced reduction in spending as expenses decreased from FY19 to FY20 by $10.9 million and $6.1 million, respectively. The major contributor to Develop Louisville's reduction in spending was the completion of the Dixie Highway Project. Economic Development experienced an increase in loan activity, specifically from the Metro Loans program, which generated an increase of over $2 million in the Special Revenue Funds. This coincided with reduced spending in the General Fund primarily because of the deferral of TIF payments. As would be expected due to the need for increased public safety response, LMPD and the Public Safety division had a combined increase in expenses of $7.3 million. The Public Safety division includes, among others, Louisville Fire, Emergency Medical Services ("EMS"), and Emergency Management/MetroSafe. Both personnel and supplies were higher than FY19's total to allow for a better response to the pandemic needs. The Office of Resilience and Community Services also experienced an increase in expenses from the prior fiscal year, going from $30.1 million in FY19 to $35.3 million FY20. This increase in funding and expenditure was to improve Metro Government's response to community needs by those directly impacted by the coronavirus pandemic. These changes in expenses were all inclusive of the 12% increase over FY19 pension cost for personnel during the fiscal year.

8 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

The following charts provide more information on Metro Government’s operating results. Expenses and Program Revenue, Governmental Activities – for the year ended June 30, 2020 (in thousands):

Revenues by Source, Governmental Activities – for the year ended June 30, 2020:

9 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

Financial Analysis of Governmental Funds

At the close of FY20, Metro Government’s Governmental Funds reported a combined ending fund balance of $267.8 million. This is a decrease of $(26.5) million from FY19. Metro Government reports fund balance as nonspendable, restricted, committed, assigned, or unassigned. Refer to Note 1 for further information on the classification of the fund balances. Metro Government had $71.1 million of unassigned fund balance available in the General Fund at June 30, 2020. The General Fund unassigned fund balance, which is Metro Government’s main operating fund, represents approximately 11.7% of total General Fund expenditures for FY20. This compares to 10.5% of total General Fund expenditures for FY19.

The total fund balance in the General Fund increased $44.7 million during FY20. Metro Council committed $43 million in additional funds in FY20, which is in addition to previously committed funds of $14.4 million as of June 30, 2019. These commitments increased significantly due to the limited ability to execute a number of recurring programs during FY20 that were deferred to FY21. Overall, the General Fund experienced a $13.2 million (or 1.8%) decline in revenues from FY19 to FY20. The primary factor for this decline was the aforementioned deferred filing of occupational taxes. This postponement in filing adversely impacted the collection of occupational taxes, resulting in a $10.3 million shortfall. Charges for services also declined by $11.7 million due to pandemic restrictions on operations.

FY20 General Fund expenditures were $(64.8) million lower than FY19, which was a 9.6% decline. Expenditures of $40.4 million were shifted from General Fund to Special Revenue Fund for recovery from the CARES Act. The impact of the pandemic shifted recoverable expenditures and reduced operations due to restrictions to limit in person contact. An additional impact was experienced in Metro Corrections with limited incarcerations to minimize inmate populations. Youth Detention Services changed its operation model upon execution of an agreement with the state. The department's new focus is only on transportation of minors to state operated detention facilities. This resulted in a $4.5 million decrease or 83.6%. in General Fund expenditures. Other Elected Officials, Air Pollution Control District ("APCD"), and Office of Resilience and Community Services saw increases in expenditures of $1.2 million, $1.9 million and $1.7 million, respectively. Other Elected Officials experienced increases in both personnel and operating costs for legal and increased primary expenses with coronovirus restrictions. APCD had unanticipated increased personnel expenses as compared to FY19 while Office of Resilience and Community Services was in receipt of a Community Foundation grant to address the citizens needs during the pandemic. The net change in fund balance for the Special Revenue Fund decreased $(4.1) million during FY20. This coming off a $17.7 million increase in the net change in fund balance in FY19. The primary activity for the Special Revenue Fund is grant programs, which can vary significantly in awards and donations from one year to the next. Fund balance for the Capital Projects Fund decreased $(13.7) million during FY20 as compared to a $(64.8) million decrease in FY19. Metro Government adopted a practice of utilizing General Fund dollars to pay for capital projects that will be funded by bonds and reimburse the General Fund when needed. By utilizing a Line of Credit, Metro Government is able to delay the long-term debt issues thereby reducing the cost of interest. This has reduced our restricted cash while at the same time it has pushed additional principal payments for debt further out. These projects consist of various ongoing infrastructure improvements, technology upgrades, and equipment upgrades as well as a continuing commitment to fund development in the west end with projects such as One West, Russell Choice Neighborhood, and ongoing funding for the Louisville Affordable Housing Trust Fund.. General Fund Budgetary Highlights The Budgetary Comparison schedule presented in the RSI section, which begins on page 120, highlights the original and final adopted FY20 budgets for Metro Government (adjusted for financial reporting purposes) as compared to the actual revenues and expenditures shown in the General Fund. Metro Council approved several immaterial budget amendments during FY20. The most significant budget amendments relate to appropriation of fund balances for prior year's assigned and committed funds. The FY19 committed funds accounted for 2.0% of the FY20 adopted budget. Metro Government uses the cash basis for budgeting. Therefore, the referenced schedule also includes adjustments to convert the modified accrual reporting in the Governmental Funds to the cash basis reporting in the Budgetary Comparison schedule. The adopted FY20 budget saw a 3.9% decrease over the revised FY19 budget. The decrease was to address shortfalls due to the anticipated pension increases. Reductions were achieved by implementing a midyear change to Youth Detention Services. It became a transitional custodial agency, with the state resuming their long term custodial responsibilities.

10 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

In addition, personnel cuts were made in many administrative agencies, EMS decreased the number of ambulances in service and Louisville Fire shifted services by reducing the number of personnel in specialty equipment. On a comparative basis, using Generally Accepted Accounting Principles (“GAAP”), revenues were under budget by $28.3 million while expenditures fell below budget by $97.3 million. The significant decline in revenues was driven by three revenue classifications. The primary decline in intergovernmental revenues of $12.9 million (or 28.7%) was a loss of revenue from correctional population declines and the loss of revenue for the detention of youth, as well as the previously discussed occupational taxes. Charges for services experienced declines due to limited services allowed during the last four months of the fiscal year. This decline of $8.8 million encompassed the Louisville Zoo, Parks & Recreation, and Codes & Regulations. EMS experienced declines in revenues resulting from suburban fire districts providing its own ambulance services, which were previously served by Metro Government. The award of a certificate of need to the last two districts in 2020 of a three-year process has redirected revenues to non-Metro Government agencies. The final revenue decline arose with the deferred revenue collection for occupational taxes from the fourth quarter of 2020 to the first quarter of 2021 due to coronavirus-related decisions. In Finance, we restated the published budget to align with GAAP adjustments for occupational taxes and debt service principal. The annual budget appropriation for occupational taxes are net of the amount of debt service paid by Revenue Commission. Increasing this budgeted revenue line item to total collected, a large variance to budget is eliminated. The Budget Department reflects debt service for principal in the General Fund for an expenditure that the Accounting Department records in Nonmajor Governmental Funds. All but three agencies (APCD, Parks & Recreation, and Human Relations Commission) fell below the GAAP-adjusted budget by a combined $97.0 million. The primary cause of the budgetary savings was due to the recovery of personnel and operating expenditures totaling $40.4 million from funding from the CARES Act. Public safety agencies accounted for $34.7 million of these expenses. Louisville Free Public Library, Parks & Recreation, and Louisville Zoo also experienced a decrease in expenditures as a result of closures and/or limited operations due to coronavirus restrictions. The decrease in expenditures in Parks & Recreation and Louisville Zoo were offset by $3.9 million from unbudgeted blended component units: Belle of Louisville (operations of $2.7 million), Parks Foundation (operations of $600,000), and Louisville Zoo Foundation (operations of $300,000). Economic Development was under budget by $3.3 million, which was attributed to unspent Redevelopment Authority contract services and deferred TIF payments. Develop Louisville experienced large savings of $5.9 million in part due to delayed outlays for market rate housing and planned expenditure for revitalization of vacant and abandoned property. These funds have been committed for FY21. The reader may access current and prior year budgets by visiting the link here. Capital Assets Metro Government held $1,063.5 million of capital assets, net of accumulated depreciation, at June 30, 2020. Depreciation expenses for FY20 totaled $49.8 million.

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CAPITAL ASSETS (net of accumulated depreciation) JUNE 30 (amount in thousands)

Total Percentage Change 2020 2019 2019-2020 Land $ 351,761 $ 350,815 0.3% Land improvements 31,123 32,882 (5.4)% Buildings 258,392 265,810 (2.8)% Machinery and equipment 51,476 56,144 (8.3)% Vehicles 28,250 27,690 2.0% Collections and works of art 737 782 (5.8)% Infrastructure 192,905 179,579 7.4% Construction in progress 148,838 133,342 11.6% Total $ 1,063,481 $ 1,047,044 1.6%

11 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

Metro Government purchased approximately $9.3 million of various heavy machinery and vehicles for Public Works & Assets, Facilities and Fleet Management, EMS, and LMPD. The majority of these purchases were financed through a portion of the General Obligation Bonds issued during the fiscal year. As of June 30, 2020, Metro Government saw the completion the Metro Animal Services Animal Shelter, which was dedicated in October 2019. Metro Government also continues its commitment to improvements to infrastructure with additional funds dedicated to various street paving, walking trails, and sidewalk projects as well as the district focused areas, such as West Broadway and East Market Street. FY20 capital funds are also planned with $12.0 million continued investment in the housing market with a fourth year of funding Affordable Housing Trust Fund and Louisville Cares. Another $10.0 million on the Norton Sports Health Athletics and Learning, a Louisville Urban League project. For more detailed information, please refer to the disclosures in the reader should refer to relevant footnotes in Note 1 Summary of Significant Accounting Policies, Note 4 Capital Assets, and Note 7 Long-Term Debt. Debt Administration For the year ended June 30, 2020, Metro Government has outstanding debt as shown in the following table:

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT OUTSTANDING DEBT ADMINISTRATION JUNE 30 (amounts in thousands)

Total Percentage Change 2020 2019 2019-2020 General obligation debt $ 465,582 $ 469,911 (0.9)% Revenue bonds 28,715 31,688 (9.4)% Capital Lease obligations 20,313 20,499 (0.9)% Total $ 514,610 $ 522,098 (1.4)%

During FY20, the total debt of Metro Government decreased by $7.5 million. Metro Government continues to utilize available resources, including the use of a Line of Credit up to $50 million to meet short-time needs. At the end of the fiscal year, $45 million had been drawn. In addition, Metro Government issued General Obligation Bonds, Series 2019A (Tax-Exempt) to finance a portion of the capital projects authorized in the FY19 budget, which had progressed and required additional capital funding beyond general fund resources. For more detail on long-term debt activity please refer to Note 7.

The strong financial position of Metro Government is recognized by the nation's most respected credit rating agencies - Moody's, S&P Global, and Fitch, all three of which have rated Metro Government among the highest rated large cities in the United States, with Aa1, AA, and AAA ratings, respectively. These ratings were updated in October 2020 for the bonds sold in November 2020. Moody's and Fitch maintained the same ratings but S&P Global expressed concerns about the pressure of the increasing pension rates. The reader may access the credit rating reports here.

Future Economic Factors

The unemployment rate for Metro Louisville at June 30, 2020 was 6.5%, which is below the national unemployment rate of 11.1% for the same period. The Louisville Metropolitan Statistical Area (“MSA”) includes eight surrounding counties in Kentucky and four additional counties in southern Indiana. In June 2020, the MSA had an approximate civilian labor force of 664,100 compared to 674,600 in June 2019. Metro Government’s FY21 budget projected a modest growth rate of only 2.1% of overall revenue with a higher increase of 0.6% growth in General Fund revenues.

Employment and wage growth are both expected to decline due to the economic downturn related to the pandemic. This is expected to result in a decrease of 3.8% in FY21 employee withholding tax revenue. This decline follows 10 straight years of employee withholding tax growth.

12 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) (Continued) For the Year Ended June 30, 2020

When adjusting for the $11.5 million timing shift due to the delay of the April 15th filing deadline for calendar year 2019, corporate net profits filers until July 15th, local corporate net profits are actually expected to decline in FY21 by 21.2%. Insurance premium taxes are expected to decline by 1.1% in FY21 Growth in real and personal property taxes of 6.5% is anticipated in FY21. Slight increases in both the Metro and Urban Services District tax rates for real property are anticipated to allow for the statutory permitted increases under Kentucky Revised Statutes. In addition, approximately $1.3 million in motor vehicle property taxes normally collected in FY20 are forecast to be collected in FY21 due to an extension of the motor vehicle license registration due dates from March through June 2020 to July 2020.

As a result of changes required by the Kentucky Retirement System ("KRS"), the County Employees Retirement System - of which Metro Government is a participant - anticipates a 12% increase in the employer contribution rate for the next four years. The KRS, in response to the coronavirus pandemic, elected to defer the increase in calendar year 2020, but will proceed with the 12% increases in the subsequent four years: 2021-2024. This has and will continue to impact our ability to expand services and programs, as personnel represents 72% of the annual budget. It will be critical to manage this outlay against the need for services and desire to invest in the city's infrastructure for continued growth.

Contacting Metro Government’s Financial Management This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of Metro Government’s finances and to show Metro Government’s accountability for the money it receives. If you have questions about this report or need additional information, contact Metro Government’s Office of Management & Budget, 611 West Jefferson Street, Louisville, KY 40202.

13 Basic Financial Statements Basic Financial Statements

The Basic Financial Statements provide a dual perspective summary overview of the financial position and operating results of the government as a whole (government-wide financial statements) and of all funds (fund financial statements). They also serve as a condensed introduction to the more detailed statements and schedules that follow. The Basic Financial Statements contain the following:

 Government-wide  Statement of Net Position  Statement of Activities  Governmental Funds  Balance Sheet  Statement of Revenues, Expenditures, and Changes in Fund Balances  Required Reconciliations  Governmental Funds Balance Sheet to the Statement of Net Position  Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities  Proprietary Funds  Statement of Fund Net Position  Statement of Revenues, Expenses, and Changes in Fund Net Position  Statement of Cash Flows  Fiduciary Funds  Statement of Fiduciary Net Position  Statement of Changes in Fiduciary Net Position  Discretely Presented Component Units  Combining Statement of Net Position  Combining Statement of Activities

14 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF NET POSITION June 30, 2020

Primary Government Governmental Activities Component Units ASSETS Cash and cash equivalents $ 219,469,988 $ 209,156,992 Investments 47,876,910 31,968,582 Receivables, net of allowance for uncollectible amounts 94,159,244 66,268,277 Capital sublease receivable 4,933,082 - Accrued interest receivable 296,300 583,352 Inventories 4,177,936 12,287,174 Supplies - 140,285 Prepaid items and other assets 106,432 42,672,281 Assets restricted by bond indentures and other legal provisions 157,439,519 219,289,535 Non-utility property - 2,352,120 Land held for sale - 9,749,984 Equity interest in LWC 981,521,517 - Capital assets: Nondepreciable capital assets 509,625,107 683,416,010 Other capital assets, net of accumulated depreciation 553,855,748 4,126,096,749 Total capital assets 1,063,480,855 4,809,512,759 Total assets 2,573,461,783 5,403,981,341

DEFERRED OUTFLOWS OF RESOURCES Unamortized outflows on sale of future revenues - 7,399,512 Unamortized loss on refundings 1,365,942 13,351,813 Swap agreements - 3,985,586 Derivative instruments - 20,822,000 OPEB related deferred outflows 112,982,419 35,681,274 Pension related deferred outflows 232,420,758 76,488,693 Total deferred outflows of resources 346,769,119 157,728,878 Total assets and deferred outflows of resources $ 2,920,230,902 $ 5,561,710,219

LIABILITIES Accounts payable and accrued payroll 60,863,340 91,992,084 Accrued interest payable 3,204,496 19,748,028 Due to other governmental agencies 18,710,106 9,649,745 Unearned revenue - 3,445,980 Other liabilities 1,249,091 15,405,091 Long-term liabilities: Due within one year 78,326,810 72,812,594 Due in more than one year 719,147,972 2,969,123,576 Net OPEB liability 295,693,343 87,839,817 Net pension liability, CERS, LFPF, and LPRF 1,158,168,356 367,342,183 Net pension liability, TARC plan - 1,200,456 Total liabilities 2,335,363,514 3,638,559,554

DEFERRED INFLOWS OF RESOURCES Unamortized inflows on sale of future revenues 7,399,514 - Deferred tax credit receipts 5,693,190 - Deferred inflows on swap agreements and other - 3,330,000 OPEB related deferred inflows 89,157,917 31,258,412 Pension related deferred inflows 32,838,051 7,940,213 Total deferred inflows of resources 135,088,672 42,528,625

NET POSITION Net investment in capital assets 773,411,553 1,783,862,375 Restricted for: Capital projects - 62,089,029 Debt service 3,818,658 90,563,825 Grant programs and other purposes 66,154,459 2,254,688 Total restricted 69,973,117 154,907,542 Unrestricted (393,605,954) (58,147,877) Total net position 449,778,716 1,880,622,040 Total liabilities, deferred inflows of resources and net position $ 2,920,230,902 $ 5,561,710,219

The accompanying notes are an integral part of the financial statements. 15 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF ACTIVITIES For the Year Ended June 30, 2020 Net (Expense) Revenue and Changes in Program Revenues Net Position Operating Capital Charges for Grants and Grants and Governmental Component Functions/Programs Expenses Services Contributions Contributions Activities Unit Primary Government: Governmental activities: General Government: Metro Council $ 7,565,150 $ - $ 9,107 $ - $ (7,556,043) $ - Mayor's Office 2,655,216 - - - (2,655,216) - Jefferson County Attorney 11,170,544 - 34,054 - (11,136,490) - Other Elected Officials 17,142,526 203,687 8,200 - (16,930,639) - Public Protection: Louisville Fire 77,104,766 418,628 2,278,000 644,840 (73,763,298) - Emergency Medical Services 31,638,495 11,734,046 10,000 - (19,894,449) - Emergency Management/MetroSafe 33,576,425 1,850,306 3,412,834 48 (28,313,237) - Metro Corrections 67,063,567 1,438,167 7,469,811 - (58,155,589) - Youth Transportation Services 7,218,188 851 - - (7,217,337) - Metro Animal Services 5,875,037 646,904 206,012 - (5,022,121) - Criminal Justice Commission 868,379 - 208,326 11,797 (648,256) - Firefighters' Pension Fund 3,877,787 - - - (3,877,787) - Policeman's Retirement Fund 3,640,695 - - - (3,640,695) - Louisville Metro Police Department 232,629,244 3,450,632 16,051,608 1,225,764 (211,901,240) - Develop Louisville 24,263,315 886,962 3,506,418 5,669,459 (14,200,476) - Economic Development 20,502,312 2,308,348 3,812,470 1,007,500 (13,373,994) - Air Pollution Control District 7,270,778 2,625,040 624,230 - (4,021,508) - Codes & Regulations 14,091,300 20,248,575 1,237,549 - 7,394,824 - Parks & Recreation 40,814,508 8,278,444 719,180 2,498,476 (29,318,408) - Office of Resilience and Community Services 35,278,222 (2,996,691) 18,870,546 - (19,404,367) - Office of Safe & Healthy Neighborhoods 2,941,631 - 938,928 - (2,002,703) - Public Health & Wellness 37,312,266 1,226,801 8,590,052 - (27,495,413) - Public Works & Assets 87,416,104 2,980,067 20,446,981 3,034,614 (60,954,442) - Office of Civic Innovation and Technology 21,956,701 - - - (21,956,701) - Facilities and Fleet Management 55,329,733 3,039,287 - 346,650 (51,943,796) - Office of Management & Budget 46,281,101 6,846,376 43,557,230 65,904 4,188,409 - Office of Performance Improvement 499,050 - - - (499,050) - Human Resources 6,052,037 - - - (6,052,037) - Related Agencies: Human Relations Commission 1,313,859 - 222,360 - (1,091,499) - Louisville Free Public Library 27,305,444 347,276 1,244,424 300,000 (25,413,744) - Louisville Zoo 21,359,288 4,996,735 2,064,698 1,233,998 (13,063,857) - Internal Audit 823,562 - - - (823,562) - Interest expense 15,692,590 - - - (15,692,590) - Total governmental activities 968,529,820 70,530,441 135,523,018 16,039,050 (746,437,311) -

Component units: Louisville Water Company 182,133,504 200,368,668 - 12,113,950 30,349,114 Parking Authority of River City, Inc 20,907,973 19,044,686 283,269 - (1,580,018) Transit Authority of River City 110,339,859 11,061,663 77,654,963 4,129,312 (17,493,921) Riverport Authority 3,487,673 4,166,263 21,025 - 699,615 Metropolitan Sewer District 316,291,000 319,057,000 10,325,000 9,085,000 22,176,000 Board of Health 47,321,472 29,788,953 8,102,361 - (9,430,158) Other component units 23,067,986 3,587,553 21,897,840 - 2,417,407 Total component units $ 703,549,467 $ 587,074,786 $ 118,284,458 $ 25,328,262 $ 27,138,039

16

(Continued) LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF ACTIVITIES (continued) For the Year Ended June 30, 2020

Primary Government Governmental Activities Component Units Net (expense) / revenue (from preceding page) $ (746,437,311) $ 27,138,039 General Revenues and Transfers: Property taxes, levied for general purposes 176,363,041 - Occupational taxes 422,401,863 - Investment income 5,961,467 13,095,058 Gain on equity interest in LWC 31,708,413 - Dividends 18,709,913 - Amortization of sale of future revenue 532,019 - Other intergovernmental revenue 109,532,772 - Gain/(loss) on sale of assets 50,001 (15,010,450) Other taxes 32,217 - Miscellaneous 2,176,974 - Total General Revenues and Transfers 767,468,680 (1,915,392) Change in net position 21,031,369 25,222,647 Net position - beginning 428,747,347 1,841,664,393 Adjustment for merger - 13,735,000 Net position - beginning, as adjusted 428,747,347 1,855,399,393 Net position - ending $ 449,778,716 $ 1,880,622,040

The accompanying notes are an integral part of the financial statements.

17 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2020

Special Nonmajor Total General Revenue Capital Governmental Governmental Fund Fund Projects Fund Funds Funds ASSETS Cash and cash equivalents $ 72,804,167 $ 12,206,999 $ 11,310,630 $ 7,378,090 $ 103,699,886 Investments 23,954,352 3,182,766 2,961,224 1,961,353 32,059,695 Receivables, net of allowance for uncollectible amounts: Taxes receivable 5,212,154 - - - 5,212,154 Accounts receivable and accrued interest 11,826,698 9,567,309 52,886 - 21,446,893 Loans receivable 673,287 55,693,819 3,064,504 - 59,431,610 Grants receivable - 85,823 - - 85,823 Due from federal government - 7,401,068 - - 7,401,068 Due from state government - 3,847 - - 3,847 Due from Proprietary Funds 42,201,635 - - - 42,201,635 Due from other governmental funds 37,406,647 - - - 37,406,647 Inventories 4,177,936 - - - 4,177,936 Prepaid items 650 30,782 - - 31,432 Restricted assets: Cash and cash equivalents - 18,846,114 17,583,280 3,818,658 40,248,052 Restricted investments - 100,009,958 3,166,249 - 103,176,207 Total assets $ 198,257,526 $ 207,028,485 $ 38,138,773 $ 13,158,101 $ 456,582,885

LIABILITIES Accounts payable $ 13,412,033 $ 8,672,915 $ 5,528,398 $ 112,441 $ 27,725,787 Accrued payroll and withholdings 24,472,559 217,992 - - 24,690,551 Due to other governmental funds - 25,996,211 11,410,436 - 37,406,647 Other liabilities 389,240 - - - 389,240 Total liabilities 38,273,832 34,887,118 16,938,834 112,441 90,212,225 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 5,220,281 93,390,082 - - 98,610,363 Total deferred inflows of resources 5,220,281 93,390,082 - - 98,610,363

FUND BALANCES Nonspendable 4,851,873 55,724,601 3,064,504 - 63,640,978 Restricted for: Debt service reserve - - - 3,818,658 3,818,658 Other capital projects - - 18,135,435 - 18,135,435 Committed 57,398,546 111,347,026 - - 168,745,572 Assigned to: Capital projects - - - 9,227,002 9,227,002 Other purposes 21,399,779 - - - 21,399,779 Unassigned 71,113,215 (88,320,342) - - (17,207,127) Total fund balances 154,763,413 78,751,285 21,199,939 13,045,660 267,760,297 Total liabilities, deferred inflows of resources, and fund balances $ 198,257,526 $ 207,028,485 $ 38,138,773 $ 13,158,101 $ 456,582,885

The accompanying notes are an integral part of the financial statements.

18 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION June 30, 2020

Total fund balances for Governmental Funds $ 267,760,297

Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets of $1,063,480,855, net of accumulated depreciation, reported in the government wide financial statements, less $5,110,556 of capital assets held by internal service funds, used in governmental activities are not financial resources; therefore are not reported in the funds. 1,058,370,299 Equity investment in a component unit is reported as an asset in the government-wide statements, but is not included in the governmental funds. 981,521,517 Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of the internal service funds, including deferred charges, are included in governmental activities in the Statement of Net Position. 22,952,148 Certain revenues are earned but not available and therefore are deferred in the fund financial statements, but are recognized as revenue in the government-wide statements. 98,610,363 Accrued interest payable on long-term liabilities is reported in the government-wide statements, but is not in the funds. (3,204,496) Loss on debt refunding has been deferred in the Statement of Net Position. 1,365,942 Proceeds from sale of future revenues on parking lots and garages has been recognized in the fund statements, but is a deferred inflow in the Statement of Net Position (see Note 15). (7,399,514)

Capita1 sublease receivable and accrued interest receivable. 5,229,382 Long-term liabilities of $800,158,021, including bonds payable, less $56,045,140 reported in internal service funds, are not due and payable in the current period; therefore are not reported in the funds. (744,112,881) OPEB and Pension related liabilities are reported in the government-wide statements but are not reported in the fund financial statements. (1,454,721,550)

Deferred Inflows and Outflows of resources related to pension and OPEB liabilities. 223,407,209

Net position of governmental activities $ 449,778,716

The accompanying notes are integral part of the financial statements.

19 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2020

Nonmajor Total General Special Capital Governmental Governmental Fund Revenue Fund Projects Fund Funds Funds

REVENUES Property taxes $ 174,531,481 $ - $ - $ - $ 174,531,481 Occupational taxes 422,401,863 - - - 422,401,863 Licenses and permits 17,324,319 88,718 - - 17,413,037 Intergovernmental 32,161,785 113,924,435 554,194 9,074,112 155,714,526 Charges for services 42,606,097 2,201,159 743,575 15,345 45,566,176 Fees and fines 4,983,164 777 2,561,078 6,209 7,551,228 Investment income 4,419,838 242,744 1,197,095 101,790 5,961,467 Dividends 18,709,913 - - - 18,709,913 Donations 6,426,764 1,416,097 2,324,133 - 10,166,994 Miscellaneous 1,496,197 484,844 195,933 - 2,176,974 Total revenues 725,061,421 118,358,774 7,576,008 9,197,456 860,193,659

EXPENDITURES Current operating: General Government: Metro Council 6,131,129 - - - 6,131,129 Mayor's Office 2,111,149 45,501 - - 2,156,650 Jefferson County Attorney 9,067,472 - - - 9,067,472 Other Elected Officials 13,243,309 390,156 - - 13,633,465 Public Protection: Louisville Fire 55,683,112 5,927,301 - - 61,610,413 Emergency Medical Services 22,166,477 3,218,220 - - 25,384,697 Emergency Management/MetroSafe 15,500,590 7,106,888 - - 22,607,478 Metro Corrections 50,259,142 4,055,946 - - 54,315,088 Youth Transportation Services 5,498,973 539,738 - - 6,038,711 Metro Animal Services 4,450,345 272,421 - - 4,722,766 Criminal Justice Commission 374,068 285,272 - - 659,340 Firefighters' Pension Fund 2,264,249 - - - 2,264,249 Policeman's Retirement Fund 1,736,245 - - - 1,736,245 Louisville Metro Police Department 169,265,457 19,225,502 - - 188,490,959 Develop Louisville 8,312,468 11,364,176 - - 19,676,644 Economic Development 8,885,405 6,101,494 - - 14,986,899 Air Pollution Control District 3,519,004 2,218,127 - - 5,737,131 Codes & Regulations 11,245,069 159,124 - - 11,404,193 Parks & Recreation 27,327,907 3,065,864 - - 30,393,771 Office of Resilience and Community Services 11,096,967 17,516,787 - - 28,613,754 Office of Safe and Healthy Neighborhoods 1,047,429 1,357,725 - - 2,405,154 Public Health & Wellness 17,628,728 12,400,141 - - 30,028,869 Public Works & Assets 31,499,253 22,921,731 - - 54,420,984 Office of Civic Innovation and Technology 15,974,114 886,305 - - 16,860,419 Facilities and Fleet Management 39,528,710 836,627 - - 40,365,337 Office of Management & Budget 33,612,932 99,811 - 2,500 33,715,243 Office of Performance Improvement 443,704 - - - 443,704 Human Resources 4,748,346 137,098 - - 4,885,444 Related Agencies: Human Relations Commission 910,898 144,634 - - 1,055,532 Louisville Free Public Library 19,095,278 1,222,119 - - 20,317,397 Louisville Zoo 14,771,117 1,101,497 - - 15,872,614 Internal Audit 663,092 2,686 - - 665,778 Debt service principal - - - 48,510,000 48,510,000 Debt service interest and other charges 405,592 - 66,120 19,552,750 20,024,462 Capital outlay - - 71,521,038 2,575,346 74,096,384 Total expenditures 608,467,730 122,602,891 71,587,158 70,640,596 873,298,375 Excess/(deficiency) of revenues over/(under) expenditures 116,593,691 (4,244,117) (64,011,150) (61,443,140) (13,104,716)

20 (Continued) LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2020

Nonmajor Total General Special Capital Governmental Governmental Fund Revenue Fund Projects Fund Funds Funds

OTHER FINANCING SOURCES/(USES) Gain on sale of capital assets - - 50,001 - 50,001 Issuance of bonds - - 40,845,000 - 40,845,000 Premium on bond issuance - - 4,395,489 - 4,395,489 Proceeds from Line of Credit - - 50,000,000 - 50,000,000 Payments for Line of Credit principal - - (45,000,000) - (45,000,000) Transfers in 847,854 484,434 943,585 63,125,412 65,401,285 Transfers out (72,697,802) (366,826) (924,938) (2,083,691) (76,073,257) Total other financing sources/(uses) (71,849,948) 117,608 50,309,137 61,041,721 39,618,518

Net change in fund balances 44,743,743 (4,126,509) (13,702,013) (401,419) 26,513,802 Fund balances--beginning 110,019,670 82,877,794 34,901,952 13,447,079 241,246,495

Fund balance--ending $ 154,763,413 $ 78,751,285 $ 21,199,939 $ 13,045,660 $ 267,760,297

The accompanying notes are an integral part of the financial statements.

21 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2020

Net change in fund balances--total governmental funds $ 26,513,802

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets. This is the amount by which the increase in capital outlay of $78,294,207 in the Statement of Revenues, Expenditures, and Changes in Net Position for Governmental Funds was greater than depreciation of $49,788,158 in the governmental funds, less $1,756,913 of depreciation in the internal service funds, for the current period. 30,262,962

In the Statement of Activities, the change in net position from Metro Government's investment in the LWC is included as investment income, while governmental funds only report the dividend income from the investment. 31,708,413

In the Statement of Activities, only the loss on the disposal of assets is reported, while in the governmental funds, the proceeds from the disposal increase financial resources. Thus, the change in net position differs from the change in fund balance by the basis of the assets disposed. (3,673,824)

Unearned revenues added to the net position in the prior year are deducted in the current year. (3,388,721)

Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 99,142,382

Bond and Line of Credit proceeds of $95,240,489 from new issues provide current financial resources to Governmental Funds, but issuing debt increases the long-term liabilities in the Statement of Net Position. Repayment of $93,576,120 of bond principal, $251,120 of notes payable and capital lease payments are expenditures in the governmental funds, but these items reduce long-term liabilities in the Statement of Net Position. (1,413,249)

The changes in compensated absences, other commitments, and claims and judgments are reported in the Statement of Activities and do not require the use of current financial resources, therefore the changes are not reported as expenditures in governmental funds. (3,243,090)

Internal Service Funds are used by management to charge the costs of certain activities, such as insurance to individual funds. The change in net position of the internal service funds is reported with governmental activities. 8,019,380

Governmental funds report the effect of original issue premiums, discounts, and similar items when debt is first issued, whereas these amounts are recorded on the Statement of Net Position and amortized in the Statement of Activities. 4,265,752

Pension and OPEB related expenses. (167,162,438) Change in net position of governmental activities $ 21,031,369

The accompanying notes are integral part of the financial statements.

22 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF FUND NET POSITION PROPRIETARY FUNDS June 30, 2020 Governmental Activities Internal Service Fund ASSETS Current assets: Cash and cash equivalents $ 115,770,102 Cash and cash equivalents, restricted 14,015,260 Investments 15,817,215 Accounts receivable 666,027 Deposits with paying agents 75,000 Total current assets 146,343,604 Capital assets: Furniture and equipment, net 5,110,556 Total capital assets 5,110,556 Total assets 151,454,160

LIABILITIES Current liabilities: Accounts payable 8,284,993 Refunds payable 162,009 Claims and judgments, current 19,883,810 Accounts payable to related parties, Louisville Metro Government 2,355 Due to other funds 60,997,564 Total current liabilities 89,330,731 Noncurrent liabilities: Claims and judgments 33,478,091 Total noncurrent liabilities 33,478,091 Total liabilities 122,808,822

DEFERRED INFLOWS OF RESOURCES Deferred tax credit receipts 5,693,190 Total deferred inflows of resources 5,693,190

NET POSITION Net investment in capital assets 5,110,556 Restricted for: Insurance reserves 2,513,481 Total restricted 2,513,481 Unrestricted 15,328,111 Total net position 22,952,148 Total liabilities, deferred inflows of resources and net position $ 151,454,160

The accompanying notes are an integral part of the financial statements.

23 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended June 30, 2020

Governmental Activities Internal Service Fund OPERATING REVENUES: Premiums, collections, and other fees $ 63,937,608 Insurance income 13,957,840 Total operating revenues 77,895,448 OPERATING EXPENSES: Professional services 8,089,621 Contractual services 641,193 Other supplies and expenses 336,741 Insurance claims, settlements and losses 66,617,209 Insurance premiums 3,106,371 Depreciation 1,756,913 Total operating expenses 80,548,048 Operating (loss) (2,652,600) NONOPERATING REVENUES: Investment income 8 Total nonoperating revenues 8 Net (loss) before transfers (2,652,592) Transfers in 10,671,972 Change in net position 8,019,380 Total net position--beginning 14,932,768 Total net position--ending $ 22,952,148

The accompanying notes are an integral part of the financial statements.

24 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2020 Governmental Activities Internal Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash received from premiums, collections, and other fees $ 64,054,754 Insurance income 13,955,845 Payments to employees (4,095,085) Payments to suppliers (4,965,966) Contractual services 4,953,015 Claims and judgments paid (64,244,661) Insurance premiums paid (3,106,371) Decrease in cash collected for others (23,543,951) Other payments (6,500) Net cash used by operating activities (16,998,920)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 10,671,972 Net cash provided by noncapital financing activities 10,671,972

CASH FLOWS FROM INVESTING ACTIVITIES Change in investment pool participation 11,717,439 Investment income 8 Net cash provided by investing activities 11,717,447 Net increase in cash and cash equivalents 5,390,499 Cash and cash equivalents-beginning 124,394,863 Cash and cash equivalents-ending $ 129,785,362

Reconciliation of Operating Loss to Net Cash Used By Operating Activities Operating loss $ (2,652,600) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation expense 1,756,913 Increase/(decrease) in cash due to changes in assets and liabilities: Accounts receivable 115,151 Accounts and other payables 5,351,451 Liability for incurred claims 2,416,481 Due to other funds and governmental agencies (17,781,167) Deferred inflows of resources (6,205,149) Net cash used by operating activities $ (16,998,920)

The accompanying notes are integral part of the financial statements.

25 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS June 30, 2020

Pension & Benefit Trust Private-purpose Agency Fund Trust Funds ASSETS Cash and cash equivalents $ 896,008 $ 955,829 $ 13,747,503 Certificates of deposit - - 100,000 Equity mutual funds 16,017,862 250,244 - Bond mutual funds 2,207,242 - - Contributions receivable and other 736,032 880,232 36,258 Interfund receivables - - 18,795,929 Due from other governmental agencies - - 6,116,446 Due from Metro Government 859,851 - - Total assets 20,716,995 2,086,305 38,796,136

DEFERRED OUTFLOWS OF RESOURCES OPEB related deferred outflows 72,900 - Pension related deferred outflows 149,768 - Total deferred outflows of resources 222,668 - Total assets and deferred outflows of resources 20,939,663 2,086,305

- - -

LIABILITIES Accounts payable and accrued liabilities 105,319 446,139 1,076,578 Due to other governmental agencies - - 28,053,729 Refundable deposits - - 9,665,829 Health insurance reimbursement 124,522 - - Net OPEB liability, CERS 188,900 - - Net pension liability, CERS 790,092 - - Total liabilities 1,208,833 446,139 $ 38,796,136

DEFERRED INFLOWS OF RESOURCES OPEB related deferred inflows 69,483 - Pension related deferred inflows 34,044 - Total deferred inflows of resources 103,527 -

NET POSITION Restricted for pension benefits 19,627,303 - Held in trust for private purpose - 1,640,166 Total net position 19,627,303 1,640,166

Total liabilities, deferred inflows of resources and net position $ 20,939,663 $ 2,086,305

The accompanying notes are an integral part of the financial statements.

26 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended June 30, 2020

Pension & Benefit Trust Private-purpose Fund Trust ADDITIONS Contributions: Employer $ 2,390,786 $ - Member - 1,387,776 Total contributions 2,390,786 1,387,776 Investment earnings: Increase in fair value of investments 1,833,669 - Realized gains and losses 1,842,477 - Interest and dividends 140,418 - Total investment earnings 3,816,564 - Investment expense (101,807) - Net investment earning 3,714,757 - Other income 1,639,236 - Total additions 7,744,779 1,387,776 DEDUCTIONS Benefit payments 4,136,777 - Administrative expense 619,946 1,164,615 Health insurance reimbursement 893,876 - Total deductions 5,650,599 1,164,615 Net increase in net position 2,094,180 223,161 Net position--beginning of the year 17,533,123 1,417,005 Net position--end of the year $ 19,627,303 $ 1,640,166

The accompanying notes are an integral part of the financial statements.

27 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF NET POSITION COMPONENT UNITS June 30, 2020

Parking Transit Other Louisville Water Authority of Authority of Riverport Metropolitan Component Company River City, Inc River City Authority Sewer District Board of Health Units Total

ASSETS Current assets: Cash and cash equivalents $ 73,864,968 $ 11,649,193 $ 8,489,397 $ 1,936,657 $ 99,973,000 $ 8,211,053 $ 5,032,724 $ 209,156,992 Investments - - - 3,155,634 100,000 11,113,549 17,599,399 31,968,582 Accounts receivable, net 11,747,881 605,042 8,985,243 168,208 27,227,000 2,451,003 3,814,078 54,998,455 Accrued interest receivable 258,738 - - 3,120 186,000 9,822 125,672 583,352 Contract and assessments receivable, current 550,752 - - - - 44,716 - 595,468 Pledges receivable, current, net ------337,926 337,926 Inventories 5,754,970 - 1,521,273 - 4,977,000 - 33,931 12,287,174 Reserves, current 26,618,995 ------26,618,995 Supplies - - - - - 140,285 - 140,285 Prepaid expenses 2,343,838 141,631 1,335,125 70,019 3,961,000 1,131,897 79,256 9,062,766 Restricted cash and cash equivalents, current - 812,598 - - 17,776,000 - - 18,588,598 Total current assets 121,140,142 13,208,464 20,331,038 5,333,638 154,200,000 23,102,325 27,022,986 364,338,593 Noncurrent assets: Restricted cash and cash equivalents, noncurrent - 15,856,435 - - 25,068,000 5,000,000 616,446 46,540,881 Restricted investments, noncurrent 34,968,113 4,445,781 31,000 - 54,487,000 - 670,059 94,601,953 Pledges receivable, net ------59,368 59,368 Reserves, noncurrent 32,939,108 ------32,939,108 Note receivable - 861,079 - - - - 8,831,092 9,692,171 Issuance costs 1,627,990 ------1,627,990 Contract and assessments receivable, noncurrent 584,889 ------584,889 Regulatory assets and costs 1,753,238 ------1,753,238 Non-utility property 2,352,120 ------2,352,120 Land held for sale - - - 9,749,984 - - - 9,749,984 Other assets 424,229 - - - 29,799,000 - 5,058 30,228,287 Capital assets: Nondepreciable capital assets 109,476,929 15,370,534 3,177,782 7,704,698 538,013,000 864,286 8,808,781 683,416,010 Other capital assets, net of accumulated depreciation 1,151,122,876 113,474,779 74,141,185 7,602,438 2,764,744,000 11,866,328 3,145,143 4,126,096,749 Capital assets, net of accumulated depreciation 1,260,599,805 128,845,313 77,318,967 15,307,136 3,302,757,000 12,730,614 11,953,924 4,809,512,759 Total noncurrent assets 1,335,249,492 150,008,608 77,349,967 25,057,120 3,412,111,000 17,730,614 22,135,947 5,039,642,748 Total assets 1,456,389,634 163,217,072 97,681,005 30,390,758 3,566,311,000 40,832,939 49,158,933 5,403,981,341

DEFERRED OUTFLOWS OF RESOURCES Unamortized outflows on sale of future revenues - 7,399,512 - - - - - 7,399,512 Unamortized loss on refundings 521,813 - - - 12,830,000 - - 13,351,813 Swap agreements - 3,985,586 - - - - - 3,985,586 Derivative instruments - - - - 20,822,000 - - 20,822,000 OPEB related deferred outflows 7,668,379 470,117 8,694,595 37,398 14,331,000 3,851,250 628,535 35,681,274 Pension related deferred outflows 15,266,720 1,004,732 19,081,595 81,204 31,784,000 7,949,201 1,321,241 76,488,693 Total deferred outflows of resources 23,456,912 12,859,947 27,776,190 118,602 79,767,000 11,800,451 1,949,776 157,728,878 Total assets & deferred outflows of resources 1,479,846,546 176,077,019 125,457,195 30,509,360 3,646,078,000 52,633,390 51,108,709 5,561,710,219

The accompanying notes are an integral part of the financial statements.

28 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF NET POSITION(continued) COMPONENT UNITS June 30, 2020

Parking Transit Other Louisville Water Authority of Authority of Riverport Metropolitan Component Company River City, Inc River City Authority Sewer District Board of Health Units Total

LIABILITIES Current liabilities: Accounts payable 13,795,925 953,395 5,145,019 541,792 54,549,000 698,635 1,327,599 77,011,365 Accrued payroll and withholdings 555,280 664,997 - - 9,487,000 3,948,884 324,558 14,980,719 Compensated absences payable, current 1,407,758 - 2,872,000 - - - 223,817 4,503,575 Claims and judgments payable, current - - 2,984,112 - - - - 2,984,112 Capital lease obligation, current - 60,071 135,382 - - - - 195,453 Due to other governmental agencies 1,214,980 - 6,116,446 - - - 2,318,319 9,649,745 Customer advances and deposits payable 6,888,585 179,161 - - 2,954,000 - - 10,021,746 Accrued interest payable 1,910,534 522,494 - - 17,315,000 - - 19,748,028 Notes payable, current 92,454 - - - 2,267,000 - - 2,359,454 Bonds payable, current 15,670,000 3,640,000 - - 43,460,000 - - 62,770,000 Other payables from restricted assets 4,812,845 ------4,812,845 Unearned revenue, current - - 2,052,705 10,000 - - 1,080,375 3,143,080 Total current liabilities 46,348,361 6,020,118 19,305,664 551,792 130,032,000 4,647,519 5,274,668 212,180,122 Noncurrent liabilities: Capital lease, noncurrent - 4,873,011 262,538 - - - - 5,135,549 Unearned revenue 302,900 ------302,900 Compensated absences payable, noncurrent - - 651,982 - - - - 651,982 Claims and judgments payable, noncurrent - - 1,030,216 - - - - 1,030,216 Unamortized debt premiums and discounts 29,545,080 3,490,504 - - - - - 33,035,584 Derivative asset liability - - - - 93,050,000 - - 93,050,000 Notes payable, noncurrent 1,148,245 - - - 283,284,000 - 150,000 284,582,245 Bonds payable, noncurrent 301,605,000 80,780,000 - - 1,942,913,000 - - 2,325,298,000 Bond anticipation note - - - - 226,340,000 - - 226,340,000 Net OPEB liability, CERS 21,229,097 1,191,750 22,204,681 93,332 30,343,000 11,210,785 1,567,172 87,839,817 Net pension liability, CERS 88,788,390 4,983,824 92,870,861 390,334 126,866,000 46,888,956 6,553,818 367,342,183 Net pension liability, TARC Plan - - 1,200,456 - - - - 1,200,456 Other long term liabilities ------570,500 570,500 Total noncurrent liabilities 442,618,712 95,319,089 118,220,734 483,666 2,702,796,000 58,099,741 8,841,490 3,426,379,432 Total liabilities 488,967,073 101,339,207 137,526,398 1,035,458 2,832,828,000 62,747,260 14,116,158 3,638,559,554

DEFERRED INFLOWS OF RESOURCES Other deferred inflows - - - - 3,330,000 - - 3,330,000 OPEB related deferred inflows 7,551,496 422,916 7,864,064 112,606 10,609,000 4,131,866 566,464 31,258,412 Pension related deferred inflows 1,806,460 101,399 1,987,039 172,417 2,581,000 1,158,556 133,342 7,940,213 Total deferred inflows of resources 9,357,956 524,315 9,851,103 285,023 16,520,000 5,290,422 699,806 42,528,625

NET POSITION Net investment in capital assets 932,641,039 47,554,151 76,866,829 15,307,136 684,412,000 15,128,116 11,953,104 1,783,862,375 Restricted for capital projects 35,962,635 9,152,620 - - - - 16,973,774 62,089,029 Restricted for debt service - 10,142,825 - - 80,421,000 - - 90,563,825 Restricted for other purpose ------2,254,688 2,254,688 Unrestricted 12,917,843 7,363,901 (98,787,135) 13,881,743 31,897,000 (30,532,408) 5,111,179 (58,147,877) Total net position 981,521,517 74,213,497 (21,920,306) 29,188,879 796,730,000 (15,404,292) 36,292,745 1,880,622,040 Total liabilities, deferred inflows of resources, and net position $ 1,479,846,546 $ 176,077,019 $ 125,457,195 $ 30,509,360 $ 3,646,078,000 $ 52,633,390 $ 51,108,709 $ 5,561,710,219

The accompanying notes are an integral part of the financial statements.

29 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF ACTIVITIES COMPONENT UNITS For the Year Ended June 30, 2020

Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Grants Louisville Parking Transit Other Charges for Grants and and Water Authority of Authority of Riverport Metropolitan Board of Component Expenses Services Contributions Contributions Company River City, Inc River City Authority Sewer District Health Units Total Function/Program Component Units: Louisville Water Company $ 182,133,504 $ 200,368,668 $ - $ 12,113,950 $ 30,349,114 $ - $ - $ - $ - $ - $ - $ 30,349,114 Parking Authority of River City, Inc. 20,907,973 19,044,686 283,269 - - (1,580,018) - - - - - (1,580,018) Transit Authority of River City 110,339,859 11,061,663 77,654,963 4,129,312 - - (17,493,921) - - - - (17,493,921) Riverport Authority 3,487,673 4,166,263 21,025 - - - - 699,615 - - - 699,615 Metropolitan Sewer District 316,291,000 319,057,000 10,325,000 9,085,000 - - - - 22,176,000 - - 22,176,000 Board of Health 47,321,472 29,788,953 8,102,361 ------(9,430,158) - (9,430,158) Other Component Units 23,067,986 3,587,553 21,897,840 ------2,417,407 2,417,407

703,549,467 587,074,786 118,284,458 25,328,262 30,349,114 (1,580,018) (17,493,921) 699,615 22,176,000 (9,430,158) 2,417,407 27,138,039

Investment income and other 1,359,299 524,143 70,889 55,187 5,275,000 5,054,003 756,537 13,095,058 Loss on sale of assets - - - - (15,008,000) - (2,450) (15,010,450) General Revenues 1,359,299 524,143 70,889 55,187 (9,733,000) 5,054,003 754,087 (1,915,392) Change in net position 31,708,413 (1,055,875) (17,423,032) 754,802 12,443,000 (4,376,155) 3,171,494 25,222,647 Net Position - beginning balance, as previously stated 949,813,104 75,269,372 (4,497,274) 28,434,077 770,552,000 (11,028,137) 33,121,251 1,841,664,393 Adjustment for merger - - - - 13,735,000 - - 13,735,000 Net Position - beginning balance, as adjusted 949,813,104 75,269,372 (4,497,274) 28,434,077 784,287,000 (11,028,137) 33,121,251 1,855,399,393 Net position - ending $ 981,521,517 $ 74,213,497 $ (21,920,306) $ 29,188,879 $ 796,730,000 $ (15,404,292) $ 36,292,745 $ 1,880,622,040

The accompanying notes are an integral part of the financial statements.

30 Notes to the Financial Statements s to the Financial Statements

Notes to the Financial Statements

The Notes to the Financial Statements communicate information essential for fair presentation of the financial statements that is not displayed on the face of the financial statements.

The Notes should focus on the primary goverment, specifically, its governmental activities, major funds, and nonmajor funds in the aggregate.

Information about the government's discretely presented component units are also presented in the Notes.

31 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

Note 1. Summary of Significant Accounting Policies A. Basis of Presentation 36 B. Reporting Entity 36 i. Blended Component Units 36 ii. Discretely Presented Component Units 37 iii. Related Organizations 39 C. Government-Wide and Fund Financial Statements 40 D. Measurement Focus and Basis of Accounting 40 E. Budgets 42 F. Cash Deposits and Investments 43 G. Taxes Receivable 43 H. Interfund Transactions 44 I. Land Held for Sale 44 J. Inventories and Prepaid Items 44 K. Capital Assets and Depreciation 44 L. Compensated Absences 45 M. Long-Term Debt and Obligations 45 N. Claims and Judgments Payable 46 O. Deferred Inflows of Resources and Deferred Outflows of Resources 46 P. Fund Balances 47 Q. Use of Estimates 48 R. Change in Department 49 S. Louisville Water Company Dividends 49 T. Recent Events 49 U. Metropolitan Sewer District Merger 49

Note 2. Cash Deposits and Investments A. Primary Government 50 B. Custodial Credit Risk 51 C. Interest Rate Risk 51 D. Credit Risk 52 E. Concentration of Credit Risk 52 F. Investment in Health Maintenance Organization Partnership 52 G. Fiduciary Funds 53 H. Component Units 55

Note 3. Disaggregation of Accounts Receivable and Accounts Payable 56

32 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

Note 4. Capital Assets A. Metro Government 57 B. Louisville Water Company 58 C. Parking Authority of River City, Inc. 59 D. Transit Authority of River City 59 E. Riverport Authority 59 F. Metropolitan Sewer District 60 G. Board of Health 60 H. Other Component Units 60 i. Kentucky Science Center 60 ii. Waterfront Development Corporation 61 iii. KentuckianaWorks 61 iv. Affordable Housing Trust Fund 61

Note 5. Land Held for Sale 61

Note 6. Risk Management 62

Note 7. Long-Term Debt A. Summary of Long-Term Liability Transactions 64 B. Metro Government 65 i. General Obligation Bonds 66 ii. Lease Revenue Bonds 68 iii. Arbitrage 72 iv. Line of Credit Borrowing 72 v. Memorandum of Agreement with Louisville Arena Authority 75 C. Discretely Presented Component Units 76 i. Louisville Water Company 76 ii. Parking Authority of River City 77 ii. Transit Authority of River City 78 iii. Metropolitan Sewer District 78

Note 8. Capital Lease Obligations A. Metro Government and Parking Authority of River City 84 B. Transit Authority of River City 84

Note 9. Conduit Debt Obligations 85

Note 10. Tax Abatement 86

Note 11. Interfund Receivables, Payables, and Transfers 88

3133 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

Note 12. Customer Contributions for Water Pipeline Construction 89

Note 13. Contingencies and Commitments A. Litigation 89 i. Metro Government 89 ii. Louisville Water Company 89 iii. Transit Authority of River City 89 iv. Metropolitan Sewer District 89 v. Waterfront Development 89 B. Federal and State Grants 90 C. Construction Commitments 90 i. Metro Government 90 ii. Louisville Water Company 90 iii. Metropolitan Sewer District 90

Note 14. Deferred Compensation 90

Note 15. Sale of Future Revenues 91

Note 16. Post-Employment Health Care Benefits A. Employees Participating in CERS 92 i. Plan Description 92 ii. Benefits Provided 92 iii. Funding Policy 93 iv. OPEB Liabilities, OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources 94 v. Actuarial Assumptions Used To Determine the Total OPEB Liability and the Net OPEB Liability 95 vi. Actuarial Assumptions Used to Determine the Actuarially Determined Contribution 96 vii. Discount Rate 97 viii. Changes Since Measurement Date 97 ix. Sensitivity of Metro Government's Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate 97 x. Sensitivity of Metro Government's Proportionate Share of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates 98 xi. OPEB Plan Fiduciary Net Position 98 B. Continued Health Insurance for Retired Police and Firefighters 98

34 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS

Note 17. Defined Benefit Pension Plans A. County Employees' Retirement Systems 99 i. Plan Description 99 ii. Benefits Provided 99 iii.Funding Policy 100 iv. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions 100 v. Actuarial Assumptions for determining the Total Pension Liability and Net Pension Liability 102 vi. Discount Rate 103 vii. Changes Since Measurement Date 103 viii.Sensitivity of Metro Government's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate 103 ix. Pension Plan Fiduciary Net Position 103 B. Single Employer Plans i. Transit Authority of River City 104 a. Plan Description and Benefits 104 b. Summary of Significant Accounting Policies and Plan Asset Matters 105 c. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions 109 ii. Fire and Police Pension Trust Funds - Single Employer Plans 109 a. Plan Descriptions and Benefits 109 b. Summary of Significant Accounting Policies and Plan Asset Matters 111 c. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions 114

Note 18. Implementation of GASB Pronouncements A. Accounting Pronouncements Adopted During the Fiscal Year Ended June 30, 2020 117 B. Future Implementation of GASB Pronouncements 117

Note 19. Subsequent Events A. Metro Government 119 B. Component Units 119 i. Metropolitan Sewer District 119

35 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies Louisville/Jefferson County Metro Government (“Metro Government”) began operations January 6, 2003, and was formed from the merger of the former City of Louisville (founded in 1778 and incorporated in 1828) and Jefferson County, Kentucky (created in 1780). Metro Government operates under a Mayor-Council form of government and provides the following services: public safety, streets and roads, sanitation, health and social services, culture and recreation, public improvements, planning and zoning, and general administrative services. The following is a summary of the significant accounting policies: A. Basis of Presentation The financial statements of Metro Government have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to government units by the Governmental Accounting Standards Board (“GASB”) and the American Institute of Certified Public Accountants (“AICPA”). B. Reporting Entity In accordance with GASB Statements No. 14, The Financial Reporting Entity; No. 39, Determining Whether Certain Organizations Are Component Units; and No. 61, The Financial Reporting Entity: Omnibus, as amended, Metro Government has included in its financial statements the departments, agencies, boards, commissions, authorities, and corporations that comprise the primary government along with its discretely presented component units. These standards require governments to include entities for which there is a financial benefit or burden between the primary government and the component unit or the primary government can impose its will on significant elements of the component unit’s operations. i. Blended Component Units The following component units have been presented as blended component units because the boards of the component units are substantively the same as the primary government, and either there is a financial benefit or burden relationship between Metro Government and the component unit or management of the primary government has operational responsibility for the component unit or the component units provide services exclusively or almost exclusively to the primary government:  Louisville/Jefferson County Revenue Commission (“Revenue Commission”) - Revenue Commission is reported as part of the primary government. Its primary purpose is to collect certain taxes and fees on behalf of Metro Government and to collect and remit debt service requirements on Metro Government’s General Obligation bonds. To a lesser extent, Revenue Commission is the collection agent of certain fees and taxes for other local governmental entities. The commissioners of Revenue Commission consist of the mayor of Metro Government, the president of Metro Council, the superintendent of Jefferson County Public Schools, and three citizen members appointed by the mayor and approved by Metro Council. Revenue Commission is treated as an internal service fund of the primary government since Metro Government is the recipient and beneficiary of Revenue Commission providing services to benefit Metro Government. Amounts held on behalf of other local governmental entities are reflected within a fiduciary fund.

36 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued  Capital Projects Corporation ("CPC") - CPC, a non-profit municipal corporation, was incorporated by the Jefferson County Fiscal Court, succeeded by Metro Government, as its agency and instrumentality in the financing of public improvements and projects of a capital nature. CPC is conducted by a four-member board of directors consisting of Metro Government's mayor, deputy mayor for Development, and the chief financial officer as well as the president of Metro Council. Public Properties Corporation ("PPC") was a non-profit municipal corporation that was incorporated by the City of Louisville, succeeded by Metro Government, which was used to account for certain property acquisitions and improvements financed by proceeds from the sale of various First Mortgage Revenue Bonds. On May 27, 2020, the board of directors for CPC and PPC voted to merge with the surviving corporation being CPC. All assets owned by PPC - $2,166,630 in cash and investmetns - property of CPC. There were no First Mortgage Revenue Bonds outstanding at the time of the merger. CPC undertakes projects and issues bonds at the direction of and pursuant to ordinances adopted by Metro Council and provides services to benefit directly Metro Government. All debt obligations of CPC are serviced with rental payments made by Metro Government as consideration from annually renewable leases of the financed properties by Metro Government.

 Louisville Zoo Foundation, Inc. (“Zoo Foundation”) - Zoo Foundation, a non-profit organization, was incorporated under Internal Revenue Code ("IRC") 501(c)(3) in 1980. Zoo Foundation’s mission is to raise funds for the benefit of the Louisville Zoo. Fundraising initiatives include, but are not limited to, fundraising for the design and construction of new exhibits, support for educational programs, and the administration of endowment funds. Zoo Foundation's business is conducted by a 39-member board of directors, with 32 members appointed by the mayor of Metro Government and seven ex officio members.

 Louisville Metro Parks Foundation, Inc. (“Parks Foundation”) - Parks Foundation, a non-profit organization, was incorporated under IRC 501(c)(3), whose mission is to preserve, protect, promote, and improve Louisville’s recreational opportunities and to support the mission of Metro Parks & Recreation Department through the coordination of financial and volunteer assets. The business of Parks Foundation is conducted by a 25-member board of directors. The director of Metro Parks & Recreation may always serve. Three other directors are appointed by the mayor of Metro Government, including one ex officio member. Up to 20 directors may be elected by a majority vote of the seated directors. Complete stand-alone financial statements for each of the blended component units, with the exception of Parks Foundation, which is not separately audited, may be obtained by contacting Metro Government’s Office of Management and Budget, 611 West Jefferson Street, Louisville, KY 40202. ii. Discretely Presented Component Units The component units column in the government-wide financial statements includes the financial data of Metro Government’s discretely presented component units. They are reported in a separate column to emphasize that they are legally separate from Metro Government. The following 10 component units are included in the reporting entity because the primary government is financially accountable for and is able to impose its will on the organizations. All discretely presented component units have a June 30 fiscal year end except for the Louisville Water Company and Family Health Centers, Inc., a component unit of Board of Health, both of which have December 31 calendar year ends.

 Louisville Water Company (“LWC”) – LWC is a legally separate entity that provides water utility services to the residents of the Louisville Metro area and charges fees for those services. LWC is shown as a discretely presented component unit because Metro Government is the sole shareholder of LWC stock, receives a quarterly dividend, and the mayor appoints LWC’s board of directors, which is then approved by Metro Council. Water services valued at $18,732,033 were provided to Metro Government in lieu of taxes during the year ended December 31, 2019. LWC remitted $18,709,913 in dividends to Metro Government during fiscal year ended June 30, 2020. Complete audited financial statements of LWC can be requested from the Louisville Water Company, 550 South Third Street, Louisville, KY 40202.

37 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued  Parking Authority of River City, Inc. (“PARC”) - PARC, a non-profit corporation, was established by the City of Louisville, succeeded by Metro Government, to serve Metro Government’s existing parking facility needs and to develop strategies for the redevelopment of the downtown riverfront area. PARC serves as an agency and instrumentality of Metro Government in financing the acquisition of on-street and off-street parking facilities. PARC is shown as a discretely presented component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to approve or overrule decisions of PARC in financing of new facilities and equipment. Complete audited financial statements of PARC can be requested from the Parking Authority of River City, 222 South First St., Suite 400, Louisville, KY 40202.  Transit Authority of River City (“TARC”) - TARC, a legally separate entity, was established by the City of Louisville and Jefferson County Fiscal Court, succeeded by Metro Government. TARC operates the mass transit system in the Louisville Metro area. TARC is shown as a discretely presented component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to approve, disapprove, revise, amend, or otherwise alter TARC’s annual budget. Metro Government, from time-to-time, may provide grant funding to TARC, and does administer the Mass Transit Trust Fund (“MTTF”), which receives occupational tax revenues through the Revenue Commission and remits those amounts to TARC. Payments to TARC from MTTF for the fiscal year ended June 30, 2020, totaled $56,540,277. Audited financial statements for MTTF can be requested from Metro Government’s Office of Management and Budget, 611 West Jefferson Street, Louisville, KY 40202. Complete audited financial statements of TARC can be requested from the Transit Authority of River City, 1000 West Broadway, Louisville, KY 40203.  Louisville and Jefferson County Riverport Authority (“Riverport”) - Riverport is a legally separate entity that acquires, develops, and markets land for operation of a Riverport industrial complex. Riverport is shown as a discretely presented component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to impose its will on Riverport’s decisions. Complete audited financial statements can be requested from the Louisville and Jefferson County Riverport Authority, 6900 Riverport Drive, Louisville, KY 40258.  Louisville and Jefferson County Metropolitan Sewer District (“MSD”) - MSD is a legally separate entity that provides sewer services to the residents of the Louisville Metro area and charges fees for those services. MSD is shown as a discretely presented component unit because the mayor appoints a voting majority of its board of directors; Metro Government has the ability to veto, overrule, or modify decisions of MSD regarding expansion of infrastructure and sewage facilities; and Metro Government must approve any rate increases over 7%. Metro Government does not provide any funding to MSD. The amount of free services provided to Metro Government in fiscal year ended June 30, 2020, was approximately $6,600,000. Complete audited financial statements of MSD can be requested from Louisville and Jefferson County Metropolitan Sewer District, 700 West Liberty Street, Louisville, KY 40203.  Board of Health (“BOH”) - BOH is a body politic and corporate. Its mission is to promote and protect equitable physical, mental, and environmental health in the Louisville Metro area through advocacy, education, regulation, and collaboration with public and private entities. BOH is shown as a discretely presented component unit because the mayor serves and appoints all members of its board of directors. Thus, Metro Government has the ability to impose its will on BOH’s decisions. The Family Health Centers, Inc. (“FHC”), which is organized under IRC 501(c)(3) and is a community health center with multiple locations within the Louisville Metro area, is recognized as a component unit of the BOH as the FHC Board of Governors are all appointed by BOH. Unaudited financial statements for BOH and audited financial statements for FHC may be obtained by contacting Metro Government’s Office of Management and Budget, 611 West Jefferson Street, Louisville, KY 40202.

38 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued The following four component units are grouped under “Other Component Units” as non-major based on significance of relationship with Metro Government:

 Kentucky Science Center, Inc. (“KSC”) - KSC is a legally separate, non-profit entity that provides museum exhibits and scientific programs to the public. Financial support is received from admissions, merchandise sales, memberships, parking fees, donations, and an appropriation from Metro Government. KSC is shown as a component unit because the mayor appoints a voting majority of its board of directors. During the year ended June 30, 2020, Metro Government paid $962,500 as an appropriation to the KSC. Complete audited financial statements of KSC can be requested from Kentucky Science Center, 727 West Main Street, Louisville, KY 40202.

 Waterfront Development Corporation (“WDC”) – WDC is a legally separate entity operating as a governmental activity that provides planning, construction services, maintenance, and event production and coordination for public parks along the Ohio River waterfront in the Louisville Metro area. WDC is shown as a component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to impose its will on WDC’s decisions. Waterfront Park Foundation, Inc., which provides supplemental support for WDC, is included in WDC's financial statements. During the year ended June 30, 2020, Metro Government paid $737,000 as an appropriation to WDC, with $28,000 earmarked for the Belle of Louisville. Complete audited financial statements of WDC can be requested from the Waterfront Development Corporation, 129 East River Road, Louisville, KY 40202.  KentuckianaWorks (“KW”) - KW is a legally separate entity operating as a governmental activity that oversees Kentucky career centers in Jefferson, Bullitt, Henry, Oldham, Spencer, Shelby, and Trimble counties. KW is the legally assumed name of the Greater Louisville Workforce Investment Board, Inc. KW is classified as a component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to impose its will on KW's decisions. The KentuckianaWorks Foundation, Inc., which provides supplemental support for KW, is included in KW's financial statements. During the year ended June 30, 2020, Metro Government paid $1,578,200 as an appropriation to KW. Complete audited financial statements can be requested from KentuckianaWorks, 410 West Chestnut Street, Suite 200, Louisville, KY 40202.  Louisville Metro Affordable Housing Trust Fund, Inc. (“AHTF”) - AHTF was organized under IRC 501(c)(3) when it was formed by Metro Council in 2008 by ordinance. The mission of AHTF is to provide affordable housing for individuals who qualify in the Louisville Metro area. AHTF is shown as a component unit because the mayor appoints a voting majority of its board of directors and Metro Government has the ability to impose its will on AHTF’s decisions. During the year ended June 30, 2020, Metro Government budgeted $5,000,000 to AHTF, bringing the cumulative total to $41,000,000. Complete audited financial statements of AHTF can be requested from the Louisville Metro Affordable Housing Trust Fund, Inc., 1469 South Fourth Street, 3rd Floor, Louisville, KY 40208. iii. Related Organizations The following organizations are related to Metro Government, but are not considered component units, because there is no financial accountability, financial benefit, or burden relationship between these organizations and Metro Government. In addition, Metro Government does not impose its will on these organizations:  Louisville Metro Housing Authority (“Housing Authority”) - Housing Authority is a legally separate entity that plans for the construction, operation, and management of low cost housing projects within the Louisville Metro area. The board consists of the mayor and eight other members appointed by the mayor and approved by Metro Council. Financial support is received from the federal government and from fees. Housing Authority serves as its own fiscal agent and Metro Government is not financially accountable for the activities of the entity. Metro Government provided $200,286 in funding to Housing Authority for the year ended June 30, 2020.

39 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued  Louisville Regional Airport Authority (“RAA”) - RAA was created by state statute and is responsible for the operation of Louisville International Airport and Bowman Field, both located in the Louisville Metro area. The board of directors for RAA consists of 11 members: the mayor, seven members appointed by the mayor, and three members appointed by the governor of Kentucky. Metro Government does not provide any funding to RAA.

 Louisville and Jefferson County Convention and Visitors Bureau (“Convention Bureau”) - Convention Bureau is a legally separate entity created by state statute and operates to promote convention and tourism activity in Louisville and Jefferson County. The board consists of nine members, six of whom are appointed by Metro Government and three by the Commonwealth of Kentucky. Metro Government does not provide any funding to Convention Bureau. However, Convention Bureau received $11,017,175 in transient room taxes collected by Revenue Commission for the year ended June 30, 2020.

C. Government-Wide and Fund Financial Statements The government-wide financial statements (the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements with the exception of interfund service provided and used. The primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The Statement of Net Position presents Metro Government’s non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories:  Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding debt that is related to the acquisition, construction, and improvement of capital assets. The outstanding debt is offset by any unspent bond proceeds. Deferred inflows or outflows of resources related to capital assets or debt will also be included in this component.  The restricted component of net position results from restrictions placed by external sources, such as creditors, grantors, and contributors, or imposed by law through constitutional provisions or enabling legislation. In addition, this component is adjusted for the liabilities and deferred inflows of resources that are related to restricted assets.  The unrestricted component of net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. Metro Government has reported its equity interest in LWC as unrestricted net position. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or program, operating grants and contributions, and capital grants and contributions. Internally dedicated resources, such as taxes and other items not properly included among program revenues, are reported instead as general revenues. Metro Government allocates certain indirect costs to be included in the program expense reported for individual functions and activities in the government-wide statement of activities. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. D. Measurement Focus and Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements, except for agency funds. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

40 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued Agency fund financial statements report only assets and liabilities and accordingly have no measurement focus. Agency funds use the accrual basis of accounting to recognize receivables and payables. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Each fund is a separate accounting entity with a self-balancing set of accounts. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible during the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, Metro Government considers revenues to be available if they are measurable and have reasonable certainty to be collected within 60 days from the end of the period. Revenues subject to accrual are: property taxes, intergovernmental, interest revenue, and charges for services. Occupational taxes, fees and fines, and licenses and permits are not subject to accrual because generally those revenues are not measurable until received. Expenditures, generally, are recorded when a liability is incurred, as under accrual accounting. Debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Grant Advances: Metro Government reports grant advances in the government-wide statement of net position and the governmental funds balance sheet. Grant advances reported in these statements result from resources that Metro Government has received for grant projects prior to incurring eligible expenditures. These amounts are recorded as liabilities until Metro Government meets the eligibility requirements because the proceeds could be required to be returned to the grantor if the grant requirements are not satisfied. In a subsequent fiscal period, when the revenue is earned (requirements are satisfied), the liability is removed and revenue is recognized. Governmental Revenue Recognition: Metro Government reports deferred inflows of resources, which are unavailable non-exchange imposed revenues, in the governmental funds balance sheet. Deferred inflows of resources arise when revenue does not meet both the measurable and available criteria for recognition in the current period. Recognition of revenue for non-exchange transactions is not delayed pending completion of routine administrative tasks provided all other eligibility requirements have been met. Revenue recognition is deferred to the subsequent fiscal period when it is received for other revenues received in non-exchange transactions when time requirements have not been met. Operating Revenues/Expenses: Proprietary funds distinguish operating revenues and expenses from non-operating 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. It consists primarily of charges to customers or agencies, cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. All of Metro Government’s proprietary activities, except for the internal service fund (governmental activity), qualify and are reported as discretely presented component units. The primary government does not include a business-type activities column in the government-wide financial statements. Allocation of Restricted and Unrestricted Resources: When both restricted and unrestricted resources are available for use, it is Metro Government’s policy to use restricted resources first, then use unrestricted resources as they are needed. Likewise, fund balances that are committed or assigned would be used first for their approved purposes and unassigned fund balances are used as needed. Fund Classification: Funds are classified into three categories: governmental, proprietary, and fiduciary. Metro Government reports the following major governmental funds:  The General Fund, Metro Government’s primary operating fund, accounts for all of the activities of the general government not required to be accounted for in another fund.  The Special Revenue Fund accounts for the resources of specific revenues that are restricted or committed to spend for specified purposes other than debt service or capital projects. Metro Government reports federal and state grant money in the Special Revenue Fund.  The Capital Projects Fund accounts for the acquisition or construction of general capital assets.

41 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued Non-major Funds are comprised of the Special Purpose Capital Fund, Debt Service Funds, and Capital Projects Funds of certain blended component units. The Special Purpose Capital Fund, which accounts for the acquisition of assets (such as vehicles and data processing equipment), is funded by specific revenue sources. The Debt Service Fund accounts for resources set aside to meet current and future debt service requirements on general long-term debt. The Capital Projects Fund accounts for the acquisition or construction of general capital assets. The Internal Service Fund, a proprietary fund, accounts for the cost of purchased insurance, the operation and administration of Metro Government’s self-insurance programs, and the cost of administering and collecting Metro Government’s occupational taxes. Metro Government reports for the following internal service funds:  The Insurance and Risk Management Fund is used to account for Metro Government’s self-insurance programs, including the employee health care fund.  The Louisville Metro Revenue Commission Fund is used to account for the blended component unit, Revenue Commission, as described in Note 1.B.i. Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments. Metro Government reports the following fiduciary funds:  The Private Purpose Trust Fund is used to account for a discount loan program and funds held for the inmate commissary program.  The Pension & Benefit Trust Fund is used to account for the Firefighters’ Pension Fund and the Policeman’s Retirement Fund. These funds are reported on a calendar year basis as of December 31, 2019, which reflects the reporting period adopted by the respective pension boards.  Agency Funds are used to account for assets that Metro Government holds on behalf of others as their agent, including TARC, the Police Property Room, and others. E. Budgets An annual appropriated budget is adopted for the General Fund on a cash basis, which is not according to GAAP. This budget includes all transfers to capital project funds for which transfers are designated for subsequent years’ capital expenditures or for transfer to other capital or debt service funds or accounts. A reconciliation of revenues and expenses from budgeted to actual amounts in the General Fund is found in the Required Supplementary Information ("RSI") section. Formal budgets are not adopted for the Special Revenue Fund or for the Debt Service Funds because bond indentures and other relevant contractual provisions require specific payments to and from these funds annually. Transfers are budgeted in the General Fund to comply with these requirements. All annual appropriations from the General Fund lapse at year end. Departments may request Metro Council approval for budgetary carry forwards. These amounts are reported as committed or assigned fund balance. On or before May 1 of each year, pursuant to state statute, the mayor proposes an Executive Budget to Metro Council, incorporating an estimate of revenues and recommended appropriations from the General Fund as well as a Capital Budget incorporating available sources of funding. Metro Council may hold hearings and amend the Executive Budget. On or before June 30 of each year, as required by state statute, Metro Council adopts the Executive Budget, as it may have been amended, as the approved budget for the fiscal year beginning July 1. An affirmative vote of a majority of Metro Council is required to change the proposed appropriations or to revise revenue estimates contained in the Executive Budget. An affirmative vote of a majority of Metro Council is also required to amend the budget once it has been approved or to approve any supplemental appropriations, unless delegation is provisionally included in the annual budget ordinance(s). All budget adjustments at the department level must be approved by the chief financial officer consistent with the approved budget.

42 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued 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 appropriations, is utilized in the governmental funds. Encumbrances are not treated as expenditures or liabilities because the commitments will be honored during the subsequent year. Outstanding encumbrances for the governmental funds at June 30, 2020, were as follows:

General Fund $ 13,975,035 Special Revenue Fund 9,897,798 Major Capital Projects 31,049,000 Special Purpose 1,963,735 Total Governmental Funds $ 56,885,568

F. Cash Deposits and Investments Cash and cash equivalents include amounts in demand deposits as well as various short-term investments, which consist of highly liquid investments with maturities of three months or less when purchased. The cash and cash equivalents of Metro Government’s funds are invested in pooled accounts. Funds with negative cash and cash equivalents report the negative amount as due to other funds of Metro Government, and the lending fund reports an offsetting due from other funds of Metro Government. State statutes authorize Metro Government to invest in instruments guaranteed by the U.S. Government or its agencies and in repurchase agreements with banks that conduct business in the state. Metro Government posts its monthly investment report on its website to comply with its investment policy. The direct link is: https://louisvilleky.gov/government/management-budget/louisville-metro-government-investments.

The Firefighters’ Pension Fund and the Policeman’s Retirement Fund have no restrictions on the type of investments that they enter into as long as due diligence is exercised. See Note 2 for additional information. In accordance with GASB reporting standards, investments are reported at fair value. Certain cash and investment amounts are classified on the statement of net position as restricted because applicable bond indentures, external funding sources, or other legal provisions limit their use. G. Taxes Receivable Net taxes receivable that are not expected to be collected within 60 days after the close of the fiscal year, thus not available to pay current liabilities at June 30, 2020, have been recorded as unavailable revenues on the balance sheet of the General Fund as deferred inflows of resources. In the government-wide financial statements, these amounts are recognized as revenues in the fiscal year for which the taxes are levied.

Metro Government’s property tax calendar is as follows: Date Event January 1, year of levy Assessment date for property owners of record October 1, year of levy Taxes levied November 30, year of levy 2% discount allowed December 31, year of levy Gross amount due January 1 - January 31, following year 5% penalty added April 15, following year 10% interest plus 10% penalty added to above

The Jefferson County Clerk's Office collects personal property tax on vehicles when registered. The Jefferson County Sheriff's Office bills and collects all property taxes on real estate and personal property, excluding vehicles. Delinquent property tax bills are turned over to the Jefferson County Clerk annually on May 1. Property tax revenues are recognized when levied to the extent that they result in current receivables.

43 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued

The allowance for uncollectible amounts is composed of taxes receivable which have been deemed uncollectible based on a trend analysis of collections over the past 10 fiscal years. H. Interfund Transactions During the course of operations, certain transactions occur between individual funds for goods or services. These receivables and payables are classified as “due from other funds” or “due to other funds” on the governmental funds balance sheet. These accounts exist solely to balance transactions between funds and are eliminated on the government-wide statement of net position. Interfund services provided and used are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures or expenses initially made from it that are properly applicable to another fund are recorded as expenditures or expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. See Note 11. I. Land Held for Sale Land held for sale is carried on the balance sheet at the lower of carrying value or fair value and no depreciation is charged on it. Land and related costs are capitalized as incurred and charged to operations as related parcels are sold or otherwise transferred. See Note 5. J. Inventories and Prepaid Items Inventories are valued at cost using the first-in, first-out method. The costs of certain inventories are recorded as expenditures when purchased.

In the fund financial statements, reported inventories in the General Fund are equally offset in fund balance as nonspendable, which indicates that they do not constitute “available spendable resources” even though they are a component of total assets.

Payments made to vendors for goods and services that will benefit periods beyond June 30, 2020, are recorded in assets as prepaid items, under the consumption method.

K. Capital Assets and Depreciation Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the governmental activities column in the government-wide financial statements. Metro Government defines capital assets as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year.

All purchased capital assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist, including infrastructure acquired prior to June 30, 1980. Donated capital assets, donated works of art, and similar items, received in a service concession arrangement are reported at acquisition value. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable.

44 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued Depreciation of capital assets for the primary government is computed using the straight-line method over the following estimated useful lives:

Assets Useful life Land Improvements 20 Buildings & Improvements 25-40 Machinery & Equipment 3-12 Vehicles 4-20 Treasures 5-25 Infrastructure 10-40 Technology 5

Information regarding depreciation methods and useful lives of Metro Government’s component units is available in each of the respective component unit’s financial reports. See Note 4. L. Compensated Absences Vested and accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported in the fund’s financial statements as expenditures and a fund liability of the governmental fund that will pay it only when the liability has matured. In the government-wide statement of net position, the total amount of vested or accumulated vacation leave is reported within the liabilities. Vested and accumulated vacation leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. Vacation pay may be accumulated up to 60 days. Earned vacation pay up to a maximum of 40 days is payable upon termination of employment. In accordance with GASB Statement No. 16, Accounting for Compensated Absences, no liability is recorded for sick pay benefits in Metro Government’s fund financial statements or the government-wide financial statements. Sick leave, which has no maximum accumulation, is charged to expense when paid. Accrued sick leave balances are not paid when employees terminate or retire. However, qualified participants in the County Employees’ Retirement System (“CERS”), under certain circumstances, are eligible to convert accrued sick pay benefits into additional credit for years of service. This conversion requires no payment from Metro Government. M. Long-Term Debt and Obligations Long-term debt and other long-term obligations are reported as liabilities in the government-wide financial statements, in the proprietary fund financial statements, and in the component unit financial statements. Bond premiums and discounts are recorded in the statement of net position and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs are reported as expenses and amortized over the term of the related debt. LWC and MSD have adopted GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. This statement permits the capitalization of issuance costs for regulated entities.

Losses on advance refunding issues are reported as deferred outflows of resources and are recognized as an outflow as required by GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Additional details are outlined in Item O below. In the fund financial statements, governmental fund types recognize bond premiums, discounts, and issuance costs during the current period. The face amount of debt issued is reported as other financing sources. Premiums and discounts on debt issuances are reported as other financing sources or other financing uses, respectively, and issuance costs are reported as debt service expenditures. See Note 7.

45 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued N. Claims and Judgments Payable Claims and judgments payable represents estimates for medical, automobile liability, workers’ compensation, and other claims incurred as of June 30, 2020. This liability includes both reported and unreported events. This amount was determined by Metro Government’s management and also includes actuarially determined amounts by Metro Government’s independent insurance administrators. See Note 6.

O. Deferred Inflows of Resources and Deferred Outflows of Resources Metro Government has recorded a net pension liability reflecting the difference between the total pension liabilities and the fiduciary net positions of the single employer defined benefit plans and the CERS plan. For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions and pension expense, information about the fiduciary net position of the single employer defined benefit plan and the CERS plan and additions to/deductions from the single employer defined benefit plan and the CERS plan fiduciary net position have been determined on the same basis as it is reported by the single employer defined benefit plan and the CERS 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. Metro Government has recorded a net other post employment benefits ("OPEB") liability reflecting the difference between the total OPEB liability and the fiduciary net positions of the CERS plan. For purposes of measuring the net OPEB liability, deferred outflows and inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the CERS plan and additions to deductions from the CERS plan fiduciary net position have been determined on the same basis as they are reported by the CERS plan. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value

With the implementation of GASB Statement No. 65, the Statement of Net Position for Metro Government and the Governmental Balance Sheet include deferred inflows or outflows of resources when appropriate. Deferred outflows of resources represent a consumption of net position that applies to future periods. Deferred inflows of resources represent an acquisition of net position that applies to future periods. These amounts will not be recognized as expense or revenue until the applicable period. Metro Government’s governmental activities have deferred outflows of resources reported in the government-wide financial statements, which include unamortized sale of future revenues, unamortized loss on refundings, employer pension and OPEB contributions, and pension and OPEB related deferrals. Metro Government’s deferred inflows reported in the government-wide financial statement include unamortized amounts for the sale of future revenues to a component unit (see Note 15), deferred tax credit receipts, and pension and OPEB related deferrals. Component units have deferred outflows of resources for loss on refundings, swap agreements, pension and OPEB contributions, pension and OPEB related deferrals, and the sale of future revenues. Deferred inflows of resources are reported for swap agreements, pension and OPEB related deferrals, and other deferred inflows. Deferred inflows of resources reported in the governmental fund financial statements include amounts recorded for property tax receivable that do not meet the “available” criteria discussed earlier for the modified accrual basis of accounting in the governmental fund statements.

46 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued P. Fund Balances In the fund financial statements, governmental funds report the following classifications of fund balance:

 Nonspendable – includes amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact. All amounts reported as nonspendable at June 30, 2020, by Metro Government are nonspendable in form. Metro Government has not reported any amounts that are legally or contractually required to be maintained intact.  Restricted – includes amounts restricted by external sources (creditors, laws of other governments, etc.) or by constitutional provision or enabling legislation. Metro Government also maintains restricted fund balance to meet debt service obligations.  Committed – includes amounts that can only be used for specific purposes. Committed fund balance is classified, rescinded, or modified pursuant to ordinances passed by the Metro Council. Committed fund balance for the General Fund and Special Revenue Fund are further classified as follows:

Special Revenue Committed for: General Fund Fund Total General Government $ 14,360,313 $ 97,891,162 $ 112,251,475 Neighborhood Development Funds 3,185,913 - 3,185,913 Office of Management & Budget - 308,168 308,168 Metro Animal Services 188,773 37,423 226,196 Louisville Fire 48,750 - 48,750 Louisville Metro Police Department - 9,607 9,607 Criminal Justice Commission - 189,460 189,460 Metro Corrections - 1,447,603 1,447,603 Public Works & Assets - 2,407,687 2,407,687 Economic Development 1,270,919 3,101,213 4,372,132 Develop Louisville 2,407,359 1,098,836 3,506,195 Air Pollution Control District 132,914 2,794,947 2,927,861 Parks & Recreation 273,658 184,119 457,777 Office of Resilience and Community Services 4,516,838 341,454 4,858,292 Public Health & Wellness 26,000,000 547,647 26,547,647 Office for Safe and Healthy Neighborhoods - 315,492 315,492 Office of Performance Improvement 56,882 - 56,882 Human Resources - 4,480 4,480 Human Relations Commission - 357,730 357,730 Louisville Free Public Library 2,893,821 309,998 3,203,819 Office of Civic Innovation and Technology 2,062,406 - 2,062,406 Committed Fund Balance $ 57,398,546 $ 111,347,026 $ 168,745,572

 Assigned – includes amounts that Metro Government intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Amounts may be assigned by the chief financial officer under the authorization of the Mayor’s Office.

47 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued Amounts classified as assigned have gone before Metro Council subsequent to June 30, 2020 for approval through ordinance. Capital General Projects Non Major Assigned for: Fund Fund Funds Total Capital Projects and other purposes $ - $ - $ 9,227,002 $ 9,227,002 Economic incentives and pending litigation 15,146,585 - - 15,146,585 Internal Service Fund Transfer 1,014,447 - - 1,014,447 General Government 16,161,032 - 9,227,002 25,388,034

Belle of Louisville 16,570 - - 16,570 Economic Development 1,262,630 - - 1,262,630 Parks Foundation 676,067 - - 676,067 Zoo Foundation 3,283,480 - - 3,283,480 Assigned Fund Balance $ 21,399,779 $ - $ 9,227,002 $ 30,626,781

 Unassigned - includes amounts that have not been assigned to other funds or restricted, committed, or assigned to a specific purpose within the General Fund. Metro Government reports all amounts that meet the unrestricted General Fund Balance Policy described below as unassigned.

Metro Government developed and adopted an Unrestricted General Fund Balance Policy (“Financial Stabilization Fund”) on November 14, 2003. The Financial Stabilization Fund is represented by unassigned fund balance. The unassigned fund balance is $71,113,215 at June 30, 2020.

It is Metro Government’s policy to:

 Use restricted resources first when restricted and unrestricted resources are available, then use unrestricted resources as needed. Likewise, fund balances that are committed or assigned would be used first for its approved purposes before using unrestricted fund balances.

 Maintain a Financial Stabilization Fund balance between one and two months of monthly average current year General Fund budgeted expenditures.

 Generate additional revenues or reduce expenditures to maintain or replenish the Financial Stabilization Fund balance to meet the policy amount.

 Utilize the Financial Stabilization Fund balance for one-time capital project or emergency operational expenditures consistent with this policy.

The Financial Stabilization Fund balance may only be used if all of the following conditions exist:

 A rare and extraordinary event (e.g. natural disaster, large and unanticipated reduction, or elimination of state revenue), or the one-time funding of a capital project, or an operating initiative that will result in material, recurring reductions in future operating expenditures, or material, recurring increases in operating revenues.

 Metro Government has made a complete and rational analysis, with justifying evidence, that the Financial Stabilization Fund can be maintained in the future.

Q. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

48 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

1. Summary of Significant Accounting Policies, continued R. Change in Department On January 1, 2020, the Youth Detention Services ceased operating as detention facility for juvenile offenders when the contract between Metro Government and the Commonwealth of Kentucky was renegotiated. Going forward Metro Government’s primary responsibility is to now provide transportation duties. As such, the agency was renamed Youth Transportation Services.

S. Louisville Water Company Dividends LWC has a quarterly dividend policy. A timing difference arises and causes a difference in the dividends paid and received because the reporting period of LWC covers the calendar year ended December 31, 2019 and Metro Government uses a fiscal year end of June 30, 2020. The following table summarizes the quarterly dividends received during Metro Government’s fiscal year: Revenue Commission Dividends Date paid Received September 30, 2019 $ 4,818,705 December 31, 2019 3,678,887 March 31, 2020 5,106,160 June 30, 2020 5,106,161 $ 18,709,913

T. Recent Events In December 2019, a novel strain of coronavirus surfaced in Wuhan, China, and has spread around the world, with resulting business and social disruption. Coronavirus was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. In response, governments and businesses worldwide have restricted access to public facing institutions, those deemed non-essential. These closures have led to significant, adverse changes in macroeconomic conditions – constraints on supply chain, sourcing of inputs and workforce availability. The extent to which the coronavirus impacts results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions required to contain the coronavirus or treat its impact; among others.

U. Metropolitan Sewer District Merger On June 30, 2020, MSD completed a merger with the Oldham County Environmental Authority ("OCEA") pursuant to the terms of an Interlocal Cooperation Agreement ("ILA"). This agreement provided for the transfer of the OCEA wastewater collection and treatment system to MSD and OCEA’s 6,000 customers became customers of MSD.

MSD classified the ILA with OCEA as a merger as no significant consideration was exchanged. GASB Statement No. 69, Government Combinations and Disposals of Government Operations, requires that for government mergers, the combined assets and liabilities should be recognized and measured in the Statement of Net Position as of the beginning of the initial reporting period, or July 1, 2019. MSD recognized an addition of approximately $13.7 million to its beginning net position as a result of the merger. No significant adjustments were made to bring amounts into conformity with MSD’s accounting policies or to adjust for impairment of capital assets resulting from the merger.

49 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments

A. Primary Government The cash and investments for Metro Government, excluding the Pension & Benefit Trust Fund and the Agency Funds, at June 30, 2020, are reflected below:

Government-wide Fiduciary Funds Statement of Net Statement of Net Position Position* Total Cash and cash equivalents $ 219,469,988 $ 955,829 $ 220,425,817 Investments 47,876,910 250,244 48,127,154 Assets restricted by bond indentures and other legal provisions 157,439,519 - 157,439,519 Total $ 424,786,417 $ 1,206,073 $ 425,992,490

*The amount shown in the Fiduciary Funds Statement of Net Position includes only the Private-purpose Trust Fund, which is included with Metro Government's pooled investments.

On June 30, 2020, Metro Government had a cash deposits bank balance, which includes cash and cash equivalents and investments as a part of Metro Government's pooled portfolio, of $287,613,291. Of this amount, $500,000 was covered by the FDIC. The remaining deposits were collateralized by securities held by the pledging financial institution’s trust department or agent but not in Metro Government’s name. The difference between the bank balance and the amount reported is due to outstanding checks and deposits in transit at June 30, 2020.

Metro Government’s pooled portfolio includes investments from all funds with the exception of Fiduciary funds, funds held by the Revenue Commission, and debt related investments restricted in the non-pooled portfolio. The following schedule presents the investments in Metro Government’s pooled portfolio as of June 30, 2020, at fair value, with maturities (using the weighted average method that is rated for credit risk and interest rate risk) and credit risk ratings (from Moody’s Investors Service). The nonrestricted negotiable investments totaled $45,277,154 and consisted of Certificates of Deposit ("CDs"), Money Market Mutual Funds ("MMMF"), Municipals, and U.S. Agency Obligations, which had a weighted average maturity in years of 2.33 and a credit rating of Aaa, Aa1, and Aa2. This amount does not include nonnegotiable CDs totaling $2,850,000. The restricted investments totaled $103,176,207 and consisted of CDs and MMMF, both of which do not have weighted average maturities in years or credit ratings. This restricted investment total is combined with restricted cash and cash equivalents in the Governmental Funds ($40,248,052) and Proprietary Funds ($14,015,260) to account for the $157,439,519 of Assets restricted by bond indentures and other legal provisions shown on the Statement of Net Position.

Investments as of June 30, 2020, that are subject to rating for credit risk and interest rate risk are summarized by maturity below:

Less than 1 Primary Government Fair Value year 1 - 2 years 2 - 4 years 4+ years Nonrestricted Investments Certificates of deposit* $ 4,982,000 $ 1,496,000 $ 1,492,000 $ 1,994,000 $ - Money Market Mutual Funds 126,981 126,981 - - - Municipals 19,085,135 9,666,270 2,587,050 5,383,535 1,448,280 U.S. Agency Obligations 21,083,038 - 2,009,400 17,071,698 2,001,940 Total Nonrestricted 45,277,154 11,289,251 6,088,450 24,449,233 3,450,220

Restricted Investments Certificates of deposit 2,487,000 2,487,000 - - - Money Market Mutual Funds 100,689,207 100,689,207 - - - Total Restricted 103,176,207 103,176,207 - - - Total Investments $ 148,453,361 $ 114,465,458 $ 6,088,450 $ 24,449,233 $ 3,450,220

* Total for fair value of Certificates of Deposit does not include $2,850,000 in nonnegotiable Certificates of Deposit, which is not subject to the fair value disclosure.

50 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments, continued GASB Statement No. 72, Fair Value Measurement and Application requires Metro Government to disclose how fair value of investments and the underlying valuation techniques are measured. Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for these securities or repurchase agreements. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing approach. Matrix pricing is used to value securities based on the securities’ relationship to the benchmark quoted prices.

Fair Value Measurements at June 30, 2020 are shown below:

Quoted Prices in Active Markets Significant Other Significant for Identical Observable Unobservable Assets Inputs Inputs Primary Government (Level 1) (Level 2) (Level 3) Total Nonrestricted Investments Certificates of Deposit* $ - $ 4,982,000 $ - $ 4,982,000 Money Market Mutual Funds 126,981 - - 126,981 Municipals 19,085,135 - - 19,085,135 U.S. Agency Obligations 21,083,038 - - 21,083,038 Total Nonrestricted 40,295,154 4,982,000 - 45,277,154 Restricted Investments Certificates of Deposit - 2,487,000 - 2,487,000 Money Market Mutual Funds 100,689,207 - - 100,689,207 Total Restricted 100,689,207 2,487,000 - 103,176,207 Total Investments $ 140,984,361 $ 7,469,000 $ - $ 148,453,361

* Total for fair value of Certificate of Deposit does not include approximately $2,850,000 in nonnegotiable Certificates of Deposit, which is not subject to the fair value disclosure.

B. Custodial Credit Risk Custodial credit risk for deposits and investments is the risk that, in the event of failure by a financial institution, Metro Government may not be able to recover the value of its deposits and investments or collateral securities that are in the possession of the financial institution. Metro Government’s investment policy dictates that all cash maintained in any financial institution named as a depository be collateralized, the collateral held in the name of Metro Government, and that investments be registered in the name of Metro Government. Collateral must be held by an independent third-party custodian. Metro Government was fully collateralized and all investments were held in its name as of June 30, 2020. Only cash and cash equivalents that are not fully collateralized and are not held in Metro Government’s name are included in this disclosure. C. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of investments will adversely affect the fair value of an investment. Metro Government’s investment policy does limit investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Investments are made based upon prevailing market conditions at the time of the transaction. According to Metro Government’s investment policy, maintenance of adequate liquidity to meet the cash flow needs of Metro Government is essential. Assets categorized as short–term operating funds will be invested in permitted investments maturing in 12 months or less, with an average weighted maturity not to exceed six months. The core portfolio may be invested in permitted investments with a stated maturity of up to five years, with an average weighted maturity not to exceed two years.

51 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments, continued D. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Investments are made under the “prudent investor” standard outlined in Metro Government’s investment policy to ensure that due diligence is exercised in accordance with state law, any negative deviations are reported timely, and reasonable action is taken to control any adverse developments. Metro Government’s investment policy dictates that investments in commercial paper have a credit rating of no less than ‘A1’ (or its equivalent) at the time of purchase.

E. Concentration of Credit Risk Metro Government’s investment policy requires diversification to eliminate the risk of loss from an over-concentration of assets in a specific class of security, a specific maturity, and/or a specific issuer.

The maximum percentage of the portfolio (book value at the date of acquisition) permitted in each eligible security is as follows:

U.S. Treasury Obligations 100% Federal Agency Obligations 100% Federal Agency Obligations (Callable) 50% Repurchase Agreements 100% Commercial Paper *20% Bankers’ Acceptances *20% Collateralized/Insured Certificates of Deposit 50% Uncollateralized Certificates of Deposit *20% Municipal Obligations *10% Money Market Mutual Funds 100%

* The combined amount of these investments shall not exceed 20% of the total book value of the portfolio at the date of acquisition.

The investment policy dictates that Metro Government's portfolio will be further diversified to limit the exposure to any one issuer. No more than 5% of Metro Government’s portfolio will be invested in the securities of any single issuer with the following exceptions:

Maximum U.S. Treasury 100% Each Federal Agency 35% Each Repurchase Agreement Counterparty 25% Money Market Mutual Funds 50%

F. Investment in Health Maintenance Organization Partnership Prior to merger, the Jefferson County Health Department, now the Louisville Metro Government Public Health Department, acquired a 2.6% investment in Passport Health Maintenance Organization ("HMO") Partnership, a managed care alliance that provides for the health care needs of Medicaid clients in the Jefferson County, Kentucky area. As of December 2008, the board of the HMO Partnership approved a return of capital for HMO members. During 2009, the Louisville Metro Government Public Health Department received a complete return of its original capital investment. During 2019, Passport entered into an asset purchase agreement which resulted in a payout to the respective HMO members, of which Metro Government received $1,397,006 for the year ended June 30, 2020. A final payout of $929,994 occurred in the year ending June 30, 2020, resulting in a zero balance at fiscal year end.

In 1997, Metro Government predecessor, City of Louisville, utilized EDI HUD grant funds to acquire non-voting Class B Common Stock from the predecessor of Louisville Development Bankcorp, Inc., which were then assigned to serve as collateral for Section 108 loans. In January, 2020, Liberty Bank and Trust Company acquired all interest in Louisville Development Bankcorp. Under the Share Exchange Agreement, Metro Government received $1,040,000 for the year ended June 30, 2020, resulting in a zero balance at fiscal year end. 52 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments, continued G. Fiduciary Funds MTTF is required to follow investment policies in accordance with Kentucky Revised Statutes 66.480 (see MTTF audit report for additional discussion of allowed investments). The Escrow and Deposit Fund is governed by Metro Government’s investment policy described within this note. MTTF had a bank and book balance of $3,207,693 at June 30, 2020 while the Escrow and Deposit Fund had a fiscal year bank and book balance of $10,539,810. The Private-Pupose Trust Fund had a bank and book balance of $955,829 at fiscal year end June 30, 2020.

The Firefighters’ Pension Fund had a bank balance of $488,433 and book balance of $284,753. The difference is from outstanding checks and deposits at December 31, 2019. Of this amount, $195,274 was collateralized by securities held by the pledging financial institution’s trust department or agent but not in the name of the Firefighters’ Pension Fund. The remaining deposits were covered by the FDIC.

The Policeman’s Retirement Fund had a bank balance of $66,102 and book balance of $65,804. The difference is from outstanding checks and deposits at December 31, 2019. The bank balance was insured by the FDIC, and none was uncollateralized. The Policeman's Retirement Fund's cash and cash equivalent amount of $611,255 is made up of the $65,804 book balance and $545,451 in Money Market Mutual Funds.

The Firefighters’ Pension Fund and the Policeman’s Retirement Fund are each governed by a board of trustees, which is ultimately responsible for the appropriateness of its investment policies and the execution of those policies to meet the funds’ investment objectives. Both boards, in conjunction with investment managers and financial advisors, work to determine the appropriate asset mix within each investment type pursuant to asset allocation parameters set by its own board.

Investments are to be made with care, skill, and prudence under the market circumstances prevailing at the time with the primary objectives of preserving principal, producing a combination of income and liquidity sufficient to meet monthly pension payment requirements, and, on a long-term basis, producing real total returns sufficient to meet the lifetime pension requirements.

Trustees of the Firefighters’ Pension Fund and the Policeman’s Retirement Fund desire a balanced portfolio diversified appropriately among the three primary asset classes of marketable securities: liquid reserves, fixed income securities, and common stock. Allowable investments include domestic and international common stocks, government and corporate bonds, and short-term fixed income securities maturing in one year or less.

All fixed income investments in the Firefighters’ Pension Fund and the Policeman’s Retirement Fund must be rated Baa or greater at the time of purchase. The Firefighters’ Pension Fund and the Policeman’s Retirement Fund categorize their fair value measurements within the fair value hierarchy established by GAAP.

The total amount of securities for each fund are categorized as Level 1 inputs.

53 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments, continued Metro Government’s fiduciary fund investments rated for credit risk and interest rate risk are summarized in the table below as of June 30, 2020:

Weighted Average Maturity in Investment Type Fair Value Years Credit Rating Private-purpose Trust Equity Mutual Funds $ 250,244 - NA

Firefighters’ Pension Fund Bond Mutual Funds $ 2,207,242 - NA Equity Mutual Funds 9,523,840 4.17 NA Total $ 11,731,082 Portfolio weighted average maturity 4.17

Policeman’s Retirement Fund Equity Mutual Funds $ 6,494,022 - NA Total $ 6,494,022 Portfolio weighted average maturity -

MTTF Certificates of Deposit $ 100,000 - NA

Total Investments for Fiduciary Funds $ 18,575,348

Cash and Cash Equivalents $ 11,846,196 Money Market Mutual Funds 3,753,144 Total Cash and Cash Equivalents for Fiduciary Funds* $ 15,599,340

* Amounts not subject to fair value measurement

54 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

2. Cash Deposits and Investments, continued H. Component Units Summarized information for the investments that are rated for credit risk and interest rate risk held by Metro Government’s discretely presented component units is included in the table below:

Weighted Average Investment Type Fair Value Maturity in Years Credit Rating LWC U.S. Treasuries $ 73,539,930 1.05 NA Money Market Mutual Funds 33,337,465 0.08 Aaa Repurchase Agreements 8,223,978 7.99 Aaa Total $ 115,101,373 Portfolio weighted average maturity 1.27

PARC U.S. Government Money Market Funds $ 27,804,964 0.11 Aaa-mf

Riverport U.S. Treasuries $ 250,505 0.09 Aaa

MSD U.S. Treasury Bills $ 12,434,049 0.05 Aaa U.S. Agency Securities 24,822,674 0.07 Aaa Municipal Bonds 17,230,350 1.07 Aaa-Aa Money Market Funds 103,367,427 0.08 Aaa Total $ 157,854,500 Portfolio weighted average maturity 4.27

KSC Bond Mutual Funds $ 153,411 5.27 NA Money Market Funds 7,657 0.11 Aaa-mf Equity Mutual Funds 508,991 NA NA Total $ 670,059 Portfolio weighted average maturity 5.02

WDC Money Market $ 12,397,067 N/A N/A Equities 182,079 N/A N/A Mutual Funds 2,863,267 N/A N/A Total $ 15,442,413

BOH Money Market Funds $ 232,672 N/A N/A Equity Mutual Funds 10,477,563 N/A N/A Fixed income 5,266,520 N/A N/A Total $ 15,976,755

55 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

3. Disaggregation of Accounts Receivable and Accounts Payable Accounts receivable are amounts owed to Metro Government at the end of each fiscal year. Those amounts to be received within one year are considered current. All others are considered non-current.

Accounts receivable at June 30, 2020, for Metro Government’s individual major funds, non-major funds, internal service funds, and fiduciary funds in the aggregate, including allowance for uncollectible amounts, are as follows:

Funds Special Capital Internal Component Receivables General Revenue Projects Service Fiduciary Total Units Taxes $ 10,431,455 $ - $ - $ - $ - $ 10,431,455 $ - Accounts 11,826,698 9,567,309 52,886 666,027 1,652,522 23,765,442 59,432,275 Loans 673,287 78,936,649 3,981,943 - - 83,591,879 - Notes ------9,692,171 Grants - 85,823 - - - 85,823 - Other Governments - 7,404,915 - - - 7,404,915 - Proprietary Funds 42,201,635 - - - - 42,201,635 - Other Governmental Funds 37,406,647 - - - - 37,406,647 - Gross Receivables 102,539,722 95,994,696 4,034,829 666,027 1,652,522 204,887,796 69,124,446 Allowance for Uncollectibles (5,219,301) (23,242,830) (917,439) - - (29,379,570) (2,856,169) Net Receivables $ 97,320,421 $ 72,751,866 $ 3,117,390 $ 666,027 $ 1,652,522 $ 175,508,226 $ 66,268,277

Accounts payable are amounts owed by Metro Government at the end of each fiscal year. Those liabilities to be paid within one year are considered current. All others are considered non-current.

The amounts detailed for Internal Service exclude amounts due to Metro Government or its component units. Accounts payable at June 30, 2020, for Metro Government’s individual major funds, non-major funds, internal service funds, and fiduciary funds in the aggregate, are as follows:

Funds Special Capital Internal Component Payables General Revenue Projects Nonmajor Service Fiduciary Total Units Accounts $ 13,412,033 $ 8,672,915 $ 5,528,398 $ 112,441 $ 8,284,993 $ 1,628,036 $ 37,638,816 $ 77,011,365 Accrued Payroll 24,472,559 217,992 - - - - 24,690,551 14,980,719 Other Governmental Funds - 25,996,211 - - - - 25,996,211 9,649,745 Other Payables 389,240 - - - 164,364 - 553,604 37,725,699 Total $ 38,273,832 $ 34,887,118 $ 5,528,398 $ 112,441 $ 8,449,357 $ 1,628,036 $ 88,879,182 $ 139,367,528

56 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

4. Capital Assets A. Metro Government Capital asset activity for the year ended June 30, 2020 was as follows:

Primary Government Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets not being depreciated: Land $ 350,814,858 $ 945,847 $ - $ 351,760,705 Land improvements 8,584,139 - - 8,584,139 Construction in progress 133,342,250 26,244,811 (10,749,398) 148,837,663 Works of art 447,600 - (5,000) 442,600 Total capital assets not being depreciated 493,188,847 27,190,658 (10,754,398) 509,625,107

Other capital assets: Land improvements 101,065,990 607,982 - 101,673,972 Buildings 472,661,776 3,245,306 (1,961,902) 473,945,180 Machinery and equipment 145,499,976 9,272,973 (3,613,828) 151,159,121 Vehicles 106,905,614 6,466,776 (3,876,148) 109,496,242 Collections and works of art 2,543,888 46,340 (13,500) 2,576,728 Infrastructure 1,150,302,267 33,817,925 (90,200) 1,184,029,992 Total other capital assets 1,978,979,511 53,457,302 (9,555,578) 2,022,881,235

Less accumulated depreciation for: Land improvements (76,768,302) (2,367,232) - (79,135,534) Buildings (206,851,636) (9,697,942) 996,731 (215,552,847) Machinery and equipment (89,355,508) (11,542,723) 1,214,859 (99,683,372) Vehicles (79,215,573) (5,688,833) 3,658,282 (81,246,124) Collections and works of art (2,209,721) (86,485) 13,500 (2,282,706) Infrastructure (970,723,343) (20,404,943) 3,382 (991,124,904) Total accumulated depreciation (1,425,124,083) (49,788,158) 5,886,754 (1,469,025,487) Other capital assets, net 553,855,428 3,669,144 (3,668,824) 553,855,748 Governmental activities capital assets, net $ 1,047,044,275 $ 30,859,802 $ (14,423,222) $ 1,063,480,855

57 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

4. Capital Assets, continued Depreciation expense was charged to governmental activities as follows:

General Government: Metro Council $ 589 Other Elected Officials 333,990 Human Resources 1,054 Louisville Fire 869,909 Emergency Medical Services 386,510 Emergency Management / MetroSafe 5,672,973 Metro Corrections 148,579 Youth Transportation Services 51,138 Criminal Justice Commission 45,046 Metro Animal Services 37,325 Louisville Metro Police Department 505,634 Economic Development 2,059,711 Develop Louisville 10,231 Air Pollution Control District 169,005 Parks & Recreation 3,395,350 Public Health & Wellness 233,076 Public Works & Assets 20,383,525 Department of Information Technology 1,091,633 Facilities and Fleet Management 5,622,676 Office of Management & Budget 4,715,239 Louisville Free Public Library 2,250,492 Louisville Zoo 1,797,078 Human Relations Commission 7,395 Total Depreciation Expense $ 49,788,158

B. Louisville Water Company Capital asset activity for the LWC for the year ended December 31, 2019 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 12,081,522 $ 1,479,834 $ - $ 13,561,356 Construction in progress 111,433,422 89,875,987 (105,393,836) 95,915,573 Total capital assets not being depreciated 123,514,944 91,355,821 (105,393,836) 109,476,929 Other capital assets: Buildings 208,902,428 11,148,556 (768,648) 219,282,336 Machinery and equipment 112,406,224 8,858,797 (1,274,301) 119,990,720 Infrastructure 1,334,869,788 86,962,003 (4,194,617) 1,417,637,174 Total other capital assets 1,656,178,440 106,969,356 (6,237,566) 1,756,910,230 Total accumulated depreciation (566,913,150) (43,000,026) 4,125,822 (605,787,354) Other capital assets, net 1,089,265,290 63,969,330 (2,111,744) 1,151,122,876 Capital assets, net $ 1,212,780,234 $ 155,325,151 $ (107,505,580) $ 1,260,599,805

58 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

4. Capital Assets, continued C. Parking Authority of River City, Inc. Capital asset activity for PARC for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 11,461,424 $ - $ - $ 11,461,424 Construction in progress 1,157,398 4,707,288 (1,955,576) 3,909,110 Total capital assets not being depreciated 12,618,822 4,707,288 (1,955,576) 15,370,534 Other capital assets: Buildings and improvements 182,563,579 1,203,394 (33,561) 183,733,412 Machinery and equipment 9,366,251 615,318 (45,700) 9,935,869 Total other capital assets 191,929,830 1,818,712 (79,261) 193,669,281 Total accumulated depreciation (75,552,977) (4,676,554) 35,029 (80,194,502) Other capital assets, net 116,376,853 (2,857,842) (44,232) 113,474,779 Capital assets, net $ 128,995,675 $ 1,849,446 $ (1,999,808) $ 128,845,313

D. Transit Authority of River City Capital asset activity for TARC for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 3,177,782 $ - $ - $ 3,177,782 Other capital assets: Buildings 49,016,007 94,193 (15,762) 49,094,438 Machinery and equipment 20,492,042 1,710,831 (262,218) 21,940,655 Vehicles 115,392,771 533,580 (547,665) 115,378,686 Office and computer equipment 8,926,719 1,220,682 (11,538) 10,135,863 Total other capital assets 193,827,539 3,559,286 (837,183) 196,549,642 Total accumulated depreciation (112,296,017) (10,933,861) 821,421 (122,408,457) Other capital assets, net 81,531,522 (7,374,575) (15,762) 74,141,185 Capital assets, net $ 84,709,304 $ (7,374,575) $ (15,762) $ 77,318,967

E. Riverport Authority Capital asset activity for Riverport for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land and improvements $ 7,704,698 $ - $ - $ 7,704,698 Other capital assets: Buildings 29,771,477 - - 29,771,477 Other 169,771 - - 169,771 Total other capital assets 29,941,248 - - 29,941,248 Total accumulated depreciation (21,903,076) (435,734) - (22,338,810) Other capital assets, net 8,038,172 (435,734) - 7,602,438 Capital assets, net $ 15,742,870 $ (435,734) $ - $ 15,307,136

59 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

4. Capital Assets, continued F. Metropolitan Sewer District Capital asset activity for MSD for the year ended June 30, 2020 was as follows:

Beginning Ending Balance* Increases Decreases Balance Capital assets not being depreciated: Construction in progress $ 460,501,000 $ 219,100,000 $ (141,588,000) $ 538,013,000 Other capital assets: Buildings 1,821,245,000 86,856,000 (78,351,000) 1,829,750,000 Machinery and equipment 87,253,000 2,190,000 (306,000) 89,137,000 Infrastructure 2,104,232,000 91,522,000 - 2,195,754,000 Total other capital assets 4,012,730,000 180,568,000 (78,657,000) 4,114,641,000 Total accumulated depreciation (1,317,718,000) (95,828,000) 63,649,000 (1,349,897,000) Other capital assets, net 2,695,012,000 84,740,000 (15,008,000) 2,764,744,000 Capital assets, net $ 3,155,513,000 $ 303,840,000 $ (156,596,000) $ 3,302,757,000

* Beginning balance changes from prior year are due to merger with Oldham County Environmental Authority.

G. Board of Health Capital asset activity for the BOH for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 477,220 $ - $ - $ 477,220 Construction in progress 300,693 475,893 (389,520) 387,066 Total capital assets not being depreciated 777,913 475,893 (389,520) 864,286 Other capital assets: Land improvements 188,055 - - 188,055 Building and improvements 30,174,497 215,762 - 30,390,259 Equipment 6,908,696 317,495 - 7,226,191 Total other capital assets 37,271,248 533,257 - 37,804,505 Total accumulated depreciation (24,170,501) (1,767,676) - (25,938,177) Other capital assets, net 13,100,747 (1,234,419) - 11,866,328 Capital assets, net $ 13,878,660 $ (758,526) $ (389,520) $ 12,730,614

H. Other Component Units i. Kentucky Science Center Capital asset activity for the KSC for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Exhibits in progress $ 103,660 $ 168,108 $ (43,660) $ 228,108 Other capital assets: Leasehold improvements 6,025,908 - - 6,025,908 Machinery and equipment 734,298 8,786 (8,073) 735,011 Museum exhibits 13,843,153 265,289 (24,758) 14,083,684 Total other capital assets 20,603,359 274,075 (32,831) 20,844,603 Total accumulated depreciation (17,533,477) (653,274) 30,381 (18,156,370) Other capital assets, net 3,069,882 (379,199) (2,450) 2,688,233 Capital assets, net $ 3,173,542 $ (211,091) $ (46,110) $ 2,916,341

60 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

4. Capital Assets, continued ii. Waterfront Development Corporation Capital asset activity for the WDC for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 8,580,673 $ - $ - $ 8,580,673 Other capital assets: Park maintenance equipment 846,433 6,117 - 852,550 Total other capital assets 846,433 6,117 - 852,550 Total accumulated depreciation (328,207) (68,253) - (396,460) Other capital assets, net 518,226 (62,136) - 456,090 Capital assets, net $ 9,098,899 $ (62,136) $ - $ 9,036,763

iii. KentuckianaWorks Capital asset activity for the KW for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Other capital assets: Equipment $ 113,026 $ - $ - $ 113,026 Total other capital assets 113,026 - - 113,026 Total accumulated depreciation (107,756) (5,270) - (113,026) Other capital assets, net 5,270 (5,270) - - Capital assets, net $ 5,270 $ (5,270) $ - $ -

iv. Affordable Housing Trust Fund Capital asset activity for the AHTF for the year ended June 30, 2020 was as follows:

Beginning Ending Balance Increases Decreases Balance Other capital assets: Equipment $ 3,804 $ - $ - $ 3,804 Total other capital assets 3,804 - - 3,804 Total accumulated depreciation (2,616) (368) - (2,984) Other capital assets, net 1,188 (368) - 820 Capital assets, net $ 1,188 $ (368) $ - $ 820

5. Land Held for Sale Land held for sale in the amount of $9,749,984 is all held by Riverport Authority at June 30, 2020. Land held for sale is stated at cost, which does not exceed its net realizable value.

The activity for the Riverport Authority land held for sale, which is associated with the development along the Ohio River, for the fiscal year ended June 30, 2020 was as follows:

Balance Balance July 1, 2019 Increases Decreases June 30, 2020 Riverport Authority land held for sale $ 10,568,930 1,252,054 (2,071,000) $ 9,749,984

61 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

6. Risk Management Metro Government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; professional liability exposures; injuries to employees; and natural disasters. The Insurance and Risk Management Fund (“Risk Fund”), an internal service fund, was established in 1976 to consolidate all of the former City of Louisville’s insurance or self-insurance under a comprehensive risk management program. Under merger, this program now includes all Metro Government departments, PARC, WDC, and the former Jefferson County Fiscal Court Risk Management Fund established in 1974. The Risk Fund consists of a comprehensive self-insurance program relating to the following:  Automobile Liability: Self-insured up to $500,000 per occurrence. Excess coverage is purchased through the Louisville Area Governmental Self-Insurance Trust (“LAGIT”).  Workers’ Compensation (covering all employees): Self-insured up to $2,000,000 per occurrence. Excess coverage is purchased above this retained level.  Unemployment Compensation: Completely self-insured.  Group Health Coverage: Eligible Metro Government employees participated in group health coverage through three Preferred Provider Organization (“PPO”) plans offered through Metro Government’s health self-insurance fund. In addition to the plans offered to all eligible Metro Government employees, eligible members of the Fraternal Order of Police may participate in two additional PPO plans offered through Metro Government’s health self-insurance fund. All of the PPO plans are administered by Humana, Inc.  General Liability: Various general liability exposures (including public official liability, law enforcement liability, medical professional liability, employer’s liability, cyber liability, and employment practices liability) are self-insured up to a $500,000 deductible per occurrence, except as noted hereafter. Employer’s liability has a $1,500,000 per occurrence deductible ($1,000,000 limit of liability above a $500,000 self-insured retention is provided by an underlying commercial excess insurance policy). Cyber liability coverage has a $150,000 per event deductible. Excess coverage is purchased through LAGIT.  Automobile Physical Damage: Excess coverage is purchased for catastrophic losses through Louisville Area Governmental General Insurance Trust (“LAGGIT”) above a $100,000 self-insured retention per occurrence.  Real and Business Personal Property: Metro Government’s property exposures are self-insured up to $250,000 per occurrence, except for flood coverage which carries a deductible of $250,000 in addition to the amount of insurance available under the National Flood Insurance Program, whether purchased or not. Excess coverage is purchased on a blanket loss limit, shared member basis, under LAGGIT for up to $750 million, subject to certain sub-limits for specific exposures. Revenues for this fund come from either Metro Government’s General Fund or from interagency charges developed through an independent actuarial study each year. Revenues are forecasted to match expenses, which include estimated incurred losses for both known and incurred but not reported claims, premiums for excess insurance coverage to complement the self-insurance programs, various taxes and assessments, and administrative operating expenses.

It is Metro Government’s policy to fund its reserves for all property and liability exposures by charging to expense the estimated reserve amounts anticipated for claims reported during the fiscal year in which the claim occurs.

62 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

6. Risk Management, continued The higher rates have mitigated the ongoing increases in claims and have resulted in a better position to improve reserves. Metro Government continues to assess the funding needs as well as work towards an enterprise-wide risk management solution. An additional expense is charged at the end of the fiscal year for claims which may have occurred during the fiscal year but have not yet been reported. In addition to the comprehensive self-insurance programs mentioned above, Metro Government purchases various types of primary insurance coverage, including government crime coverage (employee dishonesty and faithful performance coverage), aircraft and watercraft liability and hull coverage, and long-term disability coverage for full-time employees. The claims and judgments liability of $53,361,901, reported in the Risk Fund at June 30, 2020, is based on the requirements of GASB Statement No. 30, Risk Financing Omnibus. Claims liabilities are estimates of the ultimate cost of reported claims (including future claim adjustment expenses) and an estimate for claims incurred but not reported based on historical experience. Claims liabilities include specific incremental claim adjustment expenses and allocated loss adjustments, and are reduced for estimated recoveries on unsettled claims. Changes in the Risk Fund’s claims liability amount in fiscal years 2018, 2019, and 2020 were as follows:

Claims and Year ending Beginning Changes in June 30 Balance Estimates Claim Payments Ending Balance 2018 $ 42,446,077 $ 73,763,086 $ (73,299,788) $ 42,909,375 2019 42,909,375 80,412,728 (72,376,683) 50,945,420 2020 50,945,420 66,617,209 (64,200,728) 53,361,901

The claim and judgments liability associated with the health self-insurance fund as of June 30, 2020, is $2,641,000, while assets total $22,579,622. Total risk management assets were $54,393,737, while unfunded current liabilities are $22,264,731. The total assets of the risk fund increased from $59.9 million on June 30, 2019 to $77.0 million as of June 30, 2020.

Metro Government is also a member of LAGIT (for general liability exposures) and LAGGIT (for property exposures), which are separate risk-sharing mechanisms formed for public entities located in Jefferson County, Kentucky. The administrative responsibility for actual operations of LAGIT and LAGGIT is through Risk and Insurance Solutions, LLC. Metro Government provides financial services for LAGIT and LAGGIT. Independently audited financial statements for each trust are availabe by contacting Metro Government's Director of Finance.

Metro Government’s annual accounting and investment service fees for LAGIT and LAGGIT were $53,209 and $44,847, respectively. Metro Government has delegated certain administrative functions for LAGIT and LAGGIT to Risk and Insurance Solutions, LLC. Risk and Insurance Solutions, LLC was paid $79,500 and $36,225 for services provided to LAGIT and LAGGIT, respectively.

Total assets in LAGGIT decreased $3,349,853 or 52.83% as of June 30, 2020. Total net position of the trust decreased from $4,499,233 to $2,983,741 as of June 30, 2020. Assets of LAGIT increased $3,828,126 or 20.50% as of June 30, 2020. Total net position of LAGIT decreased $3,070,549 from $3,974,357 as of June 30, 2019 to $903,808 as of June 30, 2020.

LWC, Riverport, KSC, MSD, and TARC have established and administered various insurance and self-insurance programs in the areas of automobile liability, general liability, employee dishonesty, workers’ compensation, and real and personal property with various retentions and deductibles to protect their assets. Excess insurance for automobile liability and general liability, as well as real and personal property, are maintained through LAGIT and LAGGIT for MSD and TARC. Metro Government, by contract, is responsible for KSC’s primary general liability exposures; therefore, KSC is also a member of LAGIT.

63 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt A. Summary of Long-Term Liability Transactions Long-term liability activity for the year ended June 30, 2020 was as follows (in thousands):

Additions Amounts and Due Beginning Accreted Ending Within Balance Interest Reductions Balance One Year GOVERNMENTAL ACTIVITIES* Bonds and notes payable General obligation debt $ 449,365 $ 40,845 $ (45,545) $ 444,665 $ 41,450 Revenue bonds 31,650 - (2,965) 28,685 3,080 Bonds and notes payable 481,015 40,845 (48,510) 473,350 44,530 Net of bond premiums and discounts 20,583 4,392 (4,028) 20,947 - Total bonds and notes payable 501,598 45,237 (52,538) 494,297 44,530 Other liabilities: Line of Credit 15,000 50,000 (45,000) 20,000 - Capital lease 20,499 - (185) 20,314 247 Memorandum of Agreement (LAA) 189,658 8,620 (10,800) 187,478 10,800 Claims and judgments 50,945 66,617 (64,201) 53,361 19,884 Compensated absences 21,702 24,140 (23,817) 22,025 2,866 Net OPEB liability 300,992 - (5,299) 295,693 - Net pension liability 1,039,021 119,147 - 1,158,168 - Total other liabilities 1,637,817 268,524 (149,302) 1,757,039 33,797 Governmental activities long-term liabilities $ 2,139,415 $ 313,761 $ (201,840) $ 2,251,336 $ 78,327 COMPONENT UNITS Bonds and notes payable LWC $ 269,466 $ 155,540 $ (106,490) $ 318,516 $ 15,762 KSC - 150 - 150 - PARC 87,920 - (3,500) 84,420 3,640 MSD^ 2,105,157 892,839 (802,710) 2,195,286 45,577 MSD BAN 226,340 226,340 (226,340) 226,340 - Bonds and notes payable 2,688,883 1,274,869 (1,139,040) 2,824,712 64,979 Net of bond premiums and discounts 97,938 28,419 (18,864) 107,493 - Total bonds and notes payable 2,786,821 1,303,288 (1,157,904) 2,932,205 64,979 Other liabilities: Capital lease^ 7,832 - (321) 7,511 345 Claims and judgments 3,716 5,165 (4,867) 4,014 2,984 Compensated absences 5,309 6,458 (6,611) 5,156 4,504 Other long-term liabilities 303 93,621 - 93,924 - Net OPEB liability 90,720 - (2,880) 87,840 - Net pension liability CERS 311,189 56,153 - 367,342 - TARC pension plan 2,103 - (903) 1,200 - Total other liabilities 421,172 161,397 (15,582) 566,987 7,833 Component units long-term liabilities $ 3,207,993 $ 1,464,685 $ (1,173,486) $ 3,499,192 $ 72,812

*For the Governmental Activities, compensated absences are generally liquidated by the General Fund. ^Beginning balance changes from prior year are due to MSD's merger with Oldham County Environmental Authority.

64 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued B. Metro Government Upon merger, Metro Government assumed all long-term debt of the former City of Louisville and Jefferson County. Prior to merger, the City and County each issued General Obligation bonds, First Mortgage and Lease Revenue bonds, and notes to provide funds for the acquisition and construction of major capital facilities or to refund prior bond issues. The General Obligation bonds are direct obligations and pledge the full faith and credit of Metro Government. All General Obligation and Lease Revenue debt were issued at fixed interest rates.

There are $473,350,000 of General Obligation and Lease Revenue bonds and notes outstanding at June 30, 2020. The amount does not consider the net liability for bond premiums and discounts in the amount of $20,947,297.

The bonds and notes are direct general obligation of Metro Government. The full faith, credit, and taxing power of Metro Government are irrevocably pledged for the prompt payment of the principal of premium, if any, and interest.

The bonds and notes are payable from taxes levied on all taxable property of Louisville Metro without limitation as to rate or amount.

The occupational license tax and net profits license tax collected by the Revenue Commission are what is used to pay the direct General Obligations of Metro Government. Revenue Commission is the fiscal agent for General Obligation bonded debt issued by the City of Louisville before January 6, 2003, and by Metro Government thereafter. Metro Government is the fiscal agent for General Obligation bonded debt issued before January 6, 2003, by Jefferson County Fiscal Court.

Metro Government’s General Fund is contingently liable as guarantor of the General Obligation bonded debt.

On October 29, 2019, Metro Government issued General Obligation Bonds, Series 2019A ("Series 2019A") to finance the acquisition, construction, and equipping of various public projects as described in Metro Government's 2018-19 Capital Project Budget set forth in Ordinance No. 109, Series 2018 and the acquisition, installation, and maintenance of equipment and vehicles for various departments and agencies of Metro Government.

The Series 2019A bonds were issued at a premium with the par amount of $40,845,000 and a premium of $4,395,000. The Series 2019A bonds are payable in semi-annual principal installments ranging from $600,000 to $5,020,000 beginning August 1, 2020, at coupon interest rates ranging from 2.25% to 5.00% with an All-in True Interest Cost rate of 1.961760%.

65 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued i. General Obligation Bonds General Obligation bonds and notes outstanding at June 30, 2020 are as follows:

Maturity Debt Original Issue Interest During Year Outstanding Description of Issue Amount Rate End June 30 June 30 Louisville/Jefferson Co. Metro Government General Obligation Bonds: Series 2009A (Refunding) $ 8,150,000 3.00% to 4.00% 2023 $ 2,225,000 Series 2009F (BAB’s & RZEDB’s) 63,250,000 4.40 to 5.65 2030 62,385,000 Series 2010C (QECB’s) 7,400,000 4.70 2028 7,400,000 Series 2010D (Refunding) 34,805,000 3.00 to 4.00 2024 12,475,000 Series 2010E (Refunding) 6,495,000 2.25 to 4.00 2024 2,515,000 Series 2013A (Library construction) 10,250,000 2.00 to 3.50 2033 7,210,000 Series 2013B (Refunding) 16,685,000 1.50 to 5.00 2025 9,930,000 Series 2014D (Improvements) 9,910,000 2.00 to 5.00 2035 8,045,000 Series 2014F (Refunding) 19,650,000 2.00 to 4.00 2027 14,550,000 Series 2015A (Capital Projects) 52,660,000 3.13 to 5.00 2035 24,340,000 Series 2015B (Capital Projects) 12,290,000 3.00 to 4.13 2046 11,135,000 Series 2015B OMNI (Special Projects) 22,640,000 1.40 to 4.33 2048 22,340,000 Series 2016 Center City (Capital Projects) 89,495,000 2.50 to 5.00 2049 88,245,000 Series 2016A (Capital Projects) 57,990,000 2.15 to 5.00 2037 44,330,000 Series 2017A (Capital Projects) 62,320,000 2.50 to 5.00 2038 52,625,000 Series 2017B (Capital Projects) 5,020,000 3.00 to 3.50 2048 4,735,000 Series 2018A (Capital Projects) 15,975,000 3.375 to 4.00 2039 15,675,000 Series 2018B (Capital Projects) 14,730,000 2.85 to 3.85 2031 13,660,000 Series 2019A (Capital Projects) 40,845,000 2.25 to 5.00 2040 40,845,000 Total General Obligation Bonds 444,665,000 Net of premiums and discounts 20,916,869 Total Net General Obligation Bonds $ 465,581,869 Debt service requirements to maturity for General Obligation bonds and notes, without premiums, are as follows:

Year end June 30 Principal Interest Total 2021 $ 41,450,000 $ 17,386,932 $ 58,836,932 2022 40,425,000 15,531,715 55,956,715 2023 35,710,000 13,796,312 49,506,312 2024 32,610,000 12,240,749 44,850,749 2025 30,580,000 10,787,408 41,367,408 2026-2030 122,740,000 35,244,046 157,984,046 2031-2035 56,385,000 18,234,751 74,619,751 2036-2040 49,325,000 9,277,748 58,602,748 2041-2045 25,730,000 3,151,056 28,881,056 2046-2048 9,710,000 435,624 10,145,624 Totals $ 444,665,000 $ 136,086,341 $ 580,751,341

Each of Metro Government’s General Obligation bonds and notes (“the Bonds and Notes”) are publicly traded debt. The Bonds and Notes constitute general obligations of Metro Government and the full faith, credit, and taxing power of Metro Government is irrevocably pledged to the prompt payment of principal of, premium, if any, and interest on the Bonds and Notes when due. Revenue Commission, which collects occupational taxes and any other amounts received by Metro Government, is authorized to apply revenues to the Bonds and Notes and all other general obligation debt, in the manner and subject to all the terms and conditions of the bond ordinance.

66 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued The tax proceeds are irrevocably pledged for the purpose of paying the interest on (and premium, if any) and principal of the Bonds and Notes and shall never be used for any other purpose. Metro Government covenants and pledges with the registered holders of the Bonds and Notes that it will levy the special annual tax in each year at whatever rates may be necessary from time to time in order to produce the amounts required in each year, to the extent funds are not otherwise provided, to pay the principal of, premium, if any, and interest on the Bonds and Notes and such other General Obligation Debt when due.

Events of Default: Each of the following events in the bond ordinances is defined as and shall constitute an event of default:

(a) Failure to pay any installment of interest on the Bonds and Notes when the same shall become due and payable or within 30 days thereafter (or within such period, shorter than 30 days, if any, as may be permitted in the Bonds and Notes);

(b) Failure to pay the principal of, or premium, if any, on any Bond when due and payable, at maturity or on redemption; and

(c) Default by Metro Government in the due or punctual performance or observance of any other covenants, pledges, conditions, provisions or agreements of Metro Government contained in the Bond Ordinance or in the Bonds and Notes, and the continuance thereof for a period of 30 days; provided that if such default can be corrected but not within such 30-day period, it shall not constitute an event of default if corrective action is instituted by Metro Government within such period and diligently pursued until the default no longer exists.

Enforcement of Remedies: Any bondholder may enforce and compel performance on the happening and continuance of any event of default, then and in every case any bondholder, either at law or in equity, by suit, action, mandamus, or other proceedings, may enforce and compel performance by Metro Government and its officers and agents of all duties imposed under the Act, under other applicable law, if any, under the Bonds and Notes, and under the bond ordinance, including the levying and collection of sufficient taxes and the application thereof to the payment of principal of and interest (and premium, if any) on the Bonds and Notes in accordance with the provisions of the bond ordinance and the Bonds and Notes.

The bond registrar shall as promptly as practicable mail, to the issuer and the holders of bonds, written notice of the occurrence of any event of default known to the bond registrar. The bond registrar shall not, however, be subject to any liability to any bondholder by reason of its failure to mail any notice.

No delay or omission of any holder of the Bonds and Notes to exercise any right or power arising on any default shall impair any right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy afforded by this and every additional power and remedy, if any, afforded by the terms of the Bonds and Notes to the holders of the Bonds and Notes may be exercised from time to time and as often as may be deemed expedient by the bondholders.

Any bondholder may waive any past default under this bond ordinance or under the Bonds and Notes and the consequences. In case of any such waiver, the issuer, the bond registrar, and such bondholder shall be restored to their former positions, but no such waiver shall extend to any subsequent or other default, or impair any right.

If any bondholder shall have proceeded to enforce any right due to any event of default and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the bondholder, then and in every case the issuer, the bond registrar, and the bondholder shall, subject to any determination in such proceeding, be restored to their former positions and rights, and all rights of such bondholder shall continue as if no such proceedings had been taken.

67 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued No remedy by the terms of this bond ordinance or the Bonds and Notes conferred on or reserved to the holders of the Bonds and Notes is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this bond ordinance as now or hereafter existing at law or in equity or by statute.

ii. Lease Revenue Bonds There are $28,685,000 of Lease Revenue bonds outstanding at June 30, 2020. This does not include $30,428 in deferred premiums. The Lease Revenue bonds are collateralized by mortgages on improvements to facilities acquired or constructed with debt proceeds. Annual debt service requirements are provided from the General Fund in amounts pursuant to contracts and lease arrangements. Metro Government pledged revenues of $4,324,979 for debt service coverage in 2020.

Lease Revenue bonds outstanding, including accreted interest, at June 30, 2020, are as follows: Maturity Debt Original Issue Interest During Year Outstanding Description of Issue Amount Rate End June 30 June 30 Jefferson County Capital Projects Corporation Lease Revenue Bonds: 4.000% to 2007A Current Interest Bonds $ 58,855,000 4.375% 2028 $ 28,685,000 Net of premiums and discounts 30,428 Total Net Lease Revenue Bonds $ 28,715,428

Debt service requirements to maturity for Lease Revenue Bonds, excluding bond discount, are as follows:

Year end June 30 Principal Interest Total 2021 $ 3,080,000 $ 1,241,379 $ 4,321,379 2022 3,210,000 1,112,019 4,322,019 2023 3,350,000 975,594 4,325,594 2024 3,490,000 833,219 4,323,219 2025 3,645,000 680,531 4,325,531 2026-2028 11,910,000 1,057,000 12,967,000 Totals $ 28,685,000 $ 5,899,742 $ 34,584,742

The Lease Revenue Refunding Bonds, Series 2007A (the “CPC Series 2007A bonds”) were issued pursuant to the terms of a Mortgage and Trust Indenture (the “Indenture”) and a lease agreement by and between CPC and Metro Government concerning the leased premises. The lease operates on an annually renewable basis which provides for rental payments sufficient to pay maturing principal of, premium if any, and interest on the bonds outstanding under the Indenture each year.

The CPC Series 2007A bonds are publicly traded and are subject to mortgage liens and lease terms as further described below.

68 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued In the Indenture, CPC, in order to secure debt service principal and interest payments, grants a security interest in and pledges and assigns to the trustee as a trust estate all of CPC’s right, title and interest in, to and under: (i) the leased premises and the sites thereof, more particularly described in the Indenture, all structures, buildings, fixtures situated thereon, the proceeds and issues of the foregoing, and any item of fixtures or other property acquired in substitution therefor, as a renewal or replacement of or as a modification, improvement or accession to such fixtures or other property; (ii) the lease and the Commonwealth of Kentucky’s Administrative Office of the Courts (“AOC”) Contract and Sublease and amendments and additions thereto, if any, and all lease and AOC contract and sublease rental payments and other amounts due thereunder, CPC agreeing that Metro Government shall pay directly to the trustee the stipulated rentals accruing under the lease each year, that the same will be and remain in force on the dates stipulated in the lease, provided that all sums when so paid to the trustee or received by the trustee will be by the trustee held, treated and applied in strict accordance with the terms of the Indenture and CPC assigns all of the right, title and interest which CPC may have in and to the AOC contract and sublease, to the trustee as additional security for the CPC Series 2007A bonds; (iii) all moneys and securities from time to time held by the trustee under the terms of the Indenture; and (iv) any and all other property of every nature from time to time conveyed, mortgaged, pledged, assigned, or transferred as and for additional security by CPC to the Trustee; and (vi) all proceeds of the foregoing.

Metro Government will continue the lease from CPC on an annual basis until the final maturity of the bonds, unless cancelled by affirmative act of Metro Government pursuant to the lease agreement. Metro Government will pay rentals in each year during which the lease is renewed in an amount sufficient to pay interest on and principal. Metro Government also will continue to sublease to the AOC pursuant to the existing or modified AOC contract and sublease.

The CPC Series 2007A bonds are not payable from or secured by any other revenues, funds, or assets of CPC or Metro Government and do not constitute an indebtedness of CPC or Metro Government within the meaning of any constitutional or statutory provisions. Neither the faith and credit nor the taxing power of Metro Government is pledged to the payment of the principal of and premium, if any, and interest on the CPC Series 2007A bonds. CPC has no taxing power.

Defaults and Remedies: The Indenture provides that the trustee shall be vested with all the rights, powers, and duties of a trustee permitted to be secured pursuant to the act, and any right of bondholders to secure appointment of a trustee is abrogated.

Events of Default: Each of the following events is declared an “event of default” under the Indenture:

(a) CPC shall default in the payment of the principal of any bond when and as the same shall become due, whether at maturity or upon call for redemption or otherwise;

(b) CPC shall default in the payment of any installment of interest on any of the bonds when and as the same shall become due; or

(c) An Event of Default shall have occurred under the lease; or

(d) CPC shall fail or refuse to comply with the provisions of the act, or shall default in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Indenture, any authorizing resolution of CPC or the bonds, and such failure, refusal or default shall continue for a period of 45 days after written notice thereof by the trustee or by the holders of not less than 5% in principal amount of the outstanding bonds.

69 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Remedies: In the event a default specified in bullet points (a) and (b) occur, the trustee shall proceed, or upon the happening and continuance of any event of default specified in bullet points (c) and (d) above the trustee may proceed and upon the request of the holders of not less than 25% in principal amount of the outstanding bonds, the trustee shall proceed, in its own name, subject to certain provisions set forth in the Indenture, to protect and enforce its rights and the rights of the bondholders by such of the following remedies, as the trustee, being advised by counsel, shall deem effectual to protect and enforce such rights:

[1] by acceleration of the obligation and enforcement of the mortgage lien on the real properties and the security interest in the personal properties granted in the Indenture, and the enforcement of any other liens with respect to the leased premises, the prior project and any additional projects, and in such event the trustee may take over possession, custody and control of the mortgaged and/or pledged properties and may operate same and/or institute action and carry out decretal sale of such mortgaged real properties or any other sale of such pledged personal properties, with due regard to state and federal law and the covenants contained in the lease for the benefit of the bondholders; provided, however, that no sale shall result in a deficiency judgment of any type or in any amount against Metro Government or against CPC other than from the trust estate, and until any such sale Metro Government shall have the right, by providing for the discharge of the outstanding bonds and interest thereon pursuant to the Indenture and payment of all trustee’s costs, to purchase and to receive unencumbered fee simple title to the leased premises, and any other facilities subjected to the lien of the Indenture, to the extent set out in the lease; and provided further that in the event of any such enforcement of the liens by the trustee resulting in such a decretal sale, or any other sale, there shall first be paid from the proceeds of such sale all expenses incident to the enforcement and thereafter the CPC Series 2007A bonds (and interest) then outstanding shall be paid and retired pro rata;

[2] by mandamus or other suit, action or proceeding at law or in equity to enforce all rights of the bondholders, including the right to require CPC to enforce fully the lease and any agreements relating to the prior project or any applicable additional projects, and to charge, collect and fully account for all pledged receipts, and to require CPC to carry out any and all other covenants or agreements with the bondholders and to perform its duties under the Act;

[3] by bringing suit upon the bonds;

[4] by action or suit in equity, require CPC to account as if it were the trustee of an express trust for the bondholders;

[5] by action or suit, enjoin any acts or things which may be unlawful or in violation of the rights of the bondholders;

[6] by declaring all bonds due and payable and if all defaults shall be made good, then, with the written consent of the holders of not less than 50% in principal amount of the outstanding bonds, by annulling such declaration and its consequences;

[7] if all bonds are declared due and payable, by selling investment obligations and other assets of CPC pledged under the Indenture (to the extent not theretofore set aside for redemption of the bonds for which call has been made), and enforcing all choses in action of CPC pledged under the Indenture for the use and benefit of the holders of the bonds; and

[8] by enforcing any other remedies as may be provided in connection with the prior projects or additional projects financed by additional bonds.

Nothing contained in the Indenture shall in any way or manner affect Metro Government’s beneficial interest in the leased premises while the bonds are outstanding, consisting of the right of Metro Government to acquire and receive unencumbered fee simple title to the leased premises when all the bonds and interest thereon have been discharged, if Metro Government provides for such discharge prior to sale as stipulated in the Indenture.

70 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued In the enforcement of any rights and remedies under the Indenture, the trustee shall be entitled to sue for, enforce payment on and receive any and all amounts then or during any default becoming, and at any time remaining, due from CPC for principal, interest, or otherwise, under any provision of the Indenture or of the CPC Series 2007A bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in the bonds, together with any and all costs and expenses of collection and of all proceedings under the Indenture and under the bonds, without prejudice to any other right or remedy of the trustee or of the bondholders, and to recover and enforce a judgment or decree against CPC for any portion of such amounts remaining unpaid, with interest, costs and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable.

Notice of Event of Default: The trustee shall give to the bondholders notice of each event of default within 90 days after knowledge of the occurrence, unless such event of default shall have been remedied or cured before the giving of such notice; provided that, except in the case of default in the payment of the principal or of interest of any of the bonds, or in the making of any payment required to be made into the bond fund, the trustee shall be protected in withholding such notice if and so long as its board, its executive committee, or a trust committee of members or responsible officers of trustee in good faith determines that the withholding of such notice is in the interest of the bondholders.

Terms of Lease and Rentals Payable: Metro Government covenants and agrees that it will continue to lease the prior project from CPC and CPC covenants and agrees to continue to lease the prior project to the Metro Government at an agreed and stipulated rental equal to (i) the aggregate of the debt service principal and interest payments which are due and payable during the lease period, (ii) the cost of operation and maintenance of the prior project, (iii) the cost of insuring and maintaining the bond project and the lease agreement, and (iv) any other related expenses of the prior project. Metro Government shall have an exclusive option to renew the lease from year to year, for periods of one year at a time, until sufficient rentals have been paid to retire or defease all of the bonds. The rentals under the lease shall be payable semiannually at least one business day prior to June 1 and December 1 of each year in sufficient amounts and in sufficient time to pay the interest and principal requirements. No further rentals shall be required. Lease will terminate on default of Metro Government.

It shall constitute an event of default under the lease if either:

(i) Metro Government shall fail to pay the rentals due for the rental of the prior project at the times therein stipulated and such failure shall continue for a period of five days and

(ii) Metro Government shall breach any other covenant contained in the lease and such breach or default shall continue for a period of 30 days after notice of such breach or default and demand for cure thereof has been given in writing by either (a) the trustee or (b) the bondholders representing at least 10% of the aggregate outstanding principal amount of the bonds.

Upon the occurrence of any such event of default, the lease shall be immediately terminated, and all rights and any further options to renew the lease on the part of Metro Government shall be terminated and forfeited to CPC, provided that the obligation of Metro Government to pay rentals due for the current rental year, to maintain insurance on the prior project and to operate, maintain, repair, replace, renovate and improve same, shall continue until the expiration of the latest effective year of the lease. Upon the termination of the lease as a result of an event of default as described above, Metro Government shall immediately surrender possession of the prior project to CPC and the trustee. In the event that Metro Government does not so deliver possession of the prior project, Metro Government shall be liable for payment of a pro-rata portion of the rental payments due thereunder attributable to the number of days during which Metro Government fails to so deliver possession such payment to be in addition to Metro Government’s duty to continue rental payments and other duties until the expiration of the then effective annual lease term.

71 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued iii. Arbitrage Pursuant to the Internal Revenue Code of 1986, as amended, Metro Government computes rebatable arbitrage on each of its outstanding bonds a minimum of every five years and at maturity. Metro Government has covenanted to rebate excess earnings on invested bond proceeds to the U.S. Treasury for each five-year computation period in accordance with the law. There was no arbitrage rebate liability for Metro Government at June 30, 2020. iv. Line of Credit Borrowing On June 1, 2019, Metro Government entered into a borrowing agreement with U.S. Bank National Association ("U.S. Bank") that established a line of credit, secured by General Fund revenues and the proceeds of take-out bonds, whereby Metro Government can borrow up to a maximum of $50,000,000. Metro Government intends to use the line of credit as an interim financing vehicle for various capital projects to be taken out by the issuance of one or more series of long term bonds. The line of credit bears interest at a per annum variable rate of 80% of 1-month LIBOR plus 45 basis points, which was 0.5798% at June 30, 2020. Per the terms and conditions agreed upon with U.S. Bank, interest will be payable quarterly on the last business day of November, February, May, and August, with the first interest payment paid on November 29, 2019. The line of credit matures June 28, 2021. Metro Government took three draws on the line of credit in fiscal year 2020 ($17,000,000 on August 27, 2019; $13,000,000 on December 6, 2019; and $20,000,000 on March 25, 2020) for a total amount of $50,000,000. After a $45,000,000 principal payment on January 14, 2020, Metro Government had an outstanding balance of $20,000,000 at June 30, 2020. The outstanding balance is reflected in the Government-wide Statement of Net Position in the line item "Long-term liabilities, Due in more than one year." The line of credit is a direct placement of debt. The change in the liability recognized for the Line of Credit by Metro Government at June 30, 2020 is as follows:

Beginning of Year Increases Decreases End of Year 2020 $ 15,000,000 $ 50,000,000 $ (45,000,000) $ 20,000,000

It has events of default with financial consequences including the possiblility of declaring the outstanding amount of the loans and obligations under the agreement to be immediately due and payable as further described below. Events of Default. The occurrence of any of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall be an “Event of Default,” unless waived in writing by the lender:

(a) Metro Government shall fail to pay the principal of or interest on any loan when due;

(b) Metro Government shall fail to pay any obligation (other than the obligation to pay the principal of or interest on any loan) when due and such failure shall continue for three business days;

(c) any representation or warranty made by or on behalf of Metro Government in the agreement or in any other related document or in any certificate or statement delivered hereunder or thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered;

(d) Metro Government shall default in the due performance or observance of any of the covenants: maintain its existence, maintain compliance with documents, shall not alter agreement without consent of the lender, shall not assert immunity with respect to the obligation, or use the proceeds for purposes not previously agreed upon; or

72 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued (e) Metro Government shall default in the due performance or observance of any other term, covenant or agreement contained in this agreement or any other related document and such default shall remain unremedied for a period of 30 days after the occurrence thereof;

(f) Metro Government shall (i) have entered involuntarily against it an order for relief under the bankruptcy code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the bankruptcy code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in this agreement;

(g) a custodian, receiver, trustee, examiner, liquidator, or similar official shall be appointed for Metro Government or any substantial part of its property, or a proceeding described above shall be instituted against Metro Government and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of 30 or more days;

(h) a debt moratorium, debt restructuring, debt adjustment, or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any debt of Metro Government by Metro Government or any governmental authority with appropriate jurisdiction;

(i) any material provision of any of this agreement or any of the related documents shall cease to be valid and binding on Metro Government or declared to be null and void by any governmental authority or Metro Government or any agent or trustee on behalf of Metro Government shall contest any such material provision or deny that it has any or further liability under any of the related documents;

(j) dissolution or termination of the existence of Metro Government;

(k) Metro Government shall (i) default on the payment of the principal of or interest on any parity debt including, without limitation, any regularly scheduled payments on swap contracts that constitute parity debt, beyond the period of grace, if any, provided in the instrument or agreement under which such parity debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any parity debt contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such parity debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such parity debt;

(l) any final, unappealable judgment, or judgments, writ or writs, or warrant or warrants of attachment, or any similar process or processes, which are not covered in full by insurance, with written acknowledgement of such coverage having been provided by the provider of such insurance coverage to the lender, in an aggregate amount in excess of $5,000,000 shall be entered or filed against Metro Government or against any of its property and remain unpaid, unvacated, unbonded, or unstayed for a period of 60 days;

(m) any “event of default” under any related document (as defined respectively therein) shall have occurred;

73 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued (n) any two of Fitch, Moody’s, or S&P shall have downgraded its rating of any long-term unenhanced General Obligation debt of Metro Government to below “A-” (or its equivalent), “A3” (or its equivalent), or “A-” (or its equivalent) respectively, or shall have been suspended or withdrawn its rating of the same; or

(o) A period of 60 days shall have lapsed after the date on which interest in excess of $5,000,000 shall have been paid on the loans pursuant to the terms hereunder, and an ordinance modifying the 6% interest rate limitation set forth in the Ordinance to the maximum non-usurious interest rate permitted by applicable law shall not have been adopted by Metro Council.

Consequences of an Event of Default. If an event of default shall occur and be continuing, the lender may take one or more of the following actions at any time and from time to time (regardless of whether the actions are taken at the same or different times):

(i) by written notice to Metro Government, terminate the commitment of the lender hereunder to make revolving loans and such commitment shall thereupon terminate; provided that, for the avoidance of doubt, no commitment fee shall accrue until such event of default is cured to the satisfaction of the Lender or waived;

(ii) by written notice to Metro Government, declare the outstanding amount of the loans and obligations under this agreement to be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and an action therefor shall immediately accrue;

(iii) either personally or by attorney or agent without bringing any action or proceeding, or by a receiver to be appointed by a court in any appropriate action or proceeding, take whatever action at law or in equity may appear necessary or desirable to collect the amounts due and payable under the related documents or to enforce performance or observance of any obligation, agreement or covenant of Metro Government under the related documents, whether for specific performance of any agreement or covenant of Metro Government or in aid of the execution of any power granted to the lender in the related documents;

(iv) cure any default, event of default, or event of nonperformance hereunder or under any related document; provided, however, that the lender shall have no obligation to effect such a cure; and

(v) exercise, or cause to be exercised, any and all remedies as it may have under the related documents and as otherwise available at law and at equity.

Notwithstanding the provisions of above, (i) the lender shall not cause the loans to become immediately due and payable by Metro Government as described in such clause (ii) until seven days after the occurrence of an event of default specified above in sections (a), (f), (g), (h), (j), (k), or (m) hereof; and (ii) the lender shall notify Metro Government of an acceleration at least 180 days prior thereto in the case of any event of default not specified in the immediately preceding clause (i). Notwithstanding the foregoing sentence of this paragraph, (x) if any other holder of parity debt or any counterparty under any swap contract related thereto has the right to cause such parity debt to be immediately due and payable (whether by repurchase, mandatory tender, mandatory redemption, acceleration or otherwise) on a date earlier than, or pursuant to a notice period that is shorter than what is set forth in the first sentence of this paragraph in connection with a default related to such parity debt, then the lender shall automatically have such right or shorter notice period, as applicable, or (y) if any other holder, credit enhancer or liquidity provider of parity debt or any counterparty under any swap contract related thereto causes any such parity debt to become immediately due and payable (whether by repurchase, mandatory tender, mandatory redemption, acceleration or otherwise), then the Lender may immediately, without notice, avail itself of the remedies set forth in clause (ii) of Section 6.02(a) and/or declare or cause to be declared the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder to be immediately due and payable.

74 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Effect of Event of Default. The related notes, loans, and other obligations, as applicable, shall be immediately due and payable upon becoming subject to payment by Metro Government pursuant to an event of default hereof, as applicable. From and after the occurrence and during the continuance of an event of default, all amounts owing to the lender and all amounts owing to the noteholders hereunder and amounts owing on any related notes and loans, as applicable and all other obligations of Metro Government hereunder shall bear interest at the default rate, payable on demand.

v. Memorandum of Agreement with Louisville Arena Authority On December 5, 2017, the Kentucky Economic Development Authority issued $377,765,000 of refunding bonds. The refunding was issued as $202,125,000 of Series 2017A (Tax-Exempt) fixed-rate revenue bonds and $175,640,000 of Series 2017B (Taxable) bonds. Proceeds refinanced the entire Louisville Arena Project Revenue Bonds, Series 2008 and included an advance refunding of the tax-exempt portion of the debt, with a call date of June 1, 2019. The proceeds of the original bond issue were used to fund the acquisition, development, construction, and financing of the Arena Project in downtown Louisville, a public project intended for multiple uses as a public recreational, cultural, and sports facility.

Pursuant to Metro Government Ordinance 131, Series 2017 (“Arena Ordinance”), Metro Government entered into a second amended and restated Memorandum of Agreement to pay an annual payment of $10,800,000 each year until the first of three events occur: associated state TIF payments to the Arena Authority cease, the final payment of the Refunding Bonds, or September 30, 2054. Metro Government determined that it is more likely than not that the third event will occur and Metro Government will make annual payments through September 30, 2054. As of June 30, 2020, Metro Government has paid an aggregate of $93,466,699 to the Authority since the original agreement in fiscal year 2007. Metro Government made payments of $10,800,000 during the year ended June 30, 2020. The memorandum of agreement is considered a direct placement of debt.

Metro Government has recorded a liability of $187,478,222 in the Statement of Net Position for this debt obligation. The amount of the liability recognized is the best estimate of the discounted present value of the future outflows expected to be incurred as a result of the agreement. Metro Government calculated the present value of these future outflows using a rate of 4.544796%, which is the Authority’s All-In True Interest Cost rate for the related debt.

The change in the liability recognized for nonexchange financial guarantees by Metro Government at June 30, 2020 is as follows:

Beginning of Year Increases Decreases End of Year 2020 $ 189,658,625 $ 8,619,597 $ (10,800,000) $ 187,478,222

75 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued The present value of the estimated requirements to the maturity of this liability are as follows:

Future Year end Estimated Present Value June 30 Payment of Payments 2021 $ 10,800,000 $ 10,330,500 2022 10,800,000 9,881,410 2023 10,800,000 9,451,843 2024 10,800,000 9,040,950 2025 10,800,000 8,647,920 2026-2030 54,000,000 37,916,823 2031-2035 54,000,000 30,361,264 2036-2040 54,000,000 24,311,275 2041-2045 54,000,000 19,466,849 2046-2050 54,000,000 15,587,754 2051-2055 54,000,000 12,481,634 Total $ 378,000,000 $ 187,478,222

C. Discretely Presented Component Units i. Louisville Water Company Bonds payable at December 31, 2019, consist of the following:

Maturity During Debt Original Issue Interest Year End Outstanding Description of Issue Amount Rate December 31 December 31 Water System Revenue Bonds Series 2014 $ 63,195,000 2.50% to 5.00% 2031 $ 52,360,000 Series 2015 119,445,000 2.00 to 5.00 2035 109,375,000 Series 2019 155,540,000 2.75 to 5.00 2035 155,540,000 Total Water System Revenue Bonds 317,275,000 Net of premiums and discounts 29,575,080 Total Net Water System Revenue Bonds $ 346,850,080

Annual debt service requirements to maturity for Water System Revenue Bonds are as follows:

Year end December 31 Principal Interest Total 2020 $ 15,670,000 $ 12,607,061 $ 28,277,061 2021 17,435,000 11,584,969 29,019,969 2022 19,155,000 10,751,219 29,906,219 2023 19,400,000 9,832,769 29,232,769 2024 19,430,000 8,903,419 28,333,419 2025-2029 95,315,000 32,319,145 127,634,145 2030-2034 78,475,000 15,284,443 93,759,443 2035 52,395,000 4,181,992 56,576,992 Totals $ 317,275,000 $ 105,465,017 $ 422,740,017

The Water System Revenue Bond resolution contains a rate covenant requiring that the schedule of rates and charges, and the rules and regulations for water services will not be revised so as to result in a decrease of revenues. Also, future adjustments to water rates and charges are required, as necessary, so that annual net revenues will not be less than 130% of the maximum Aggregate Bond Service for each Bond Fiscal Year in respect of all outstanding bonds. All revenues of LWC are pledged for the revenue bonds.

76 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued LWC’s notes payable at December 31, 2019 consist of the following:

Maturity Debt Interest During Year Outstanding Description of Issue Rate End December 31 Kentucky Infrastructure Authority, Drinking Water State Revolving Fund Loan Program 2.00% 2031 $ 1,240,699

Annual debt service requirements to maturity for LWC’s notes payable are as follows:

Year end December 31 Principal Interest Total 2020 $ 92,454 $ 24,354 $ 116,808 2021 94,312 22,496 116,808 2022 96,208 20,600 116,808 2023 98,142 18,666 116,808 2024 100,114 16,694 116,808 2025-2029 531,580 52,462 584,042 2030-2031 227,889 5,726 233,615 Totals $ 1,240,699 $ 160,998 $ 1,401,697

ii. Parking Authority of River City, Inc. PARC’s First Mortgage Revenue Bonds payable at June 30, 2020, consist of the following:

Maturity Debt Original Issue Interest During Year Outstanding Description of Issue Amount Rate end June 30 June 30 First Mortgage Revenue Bonds Series 2009A $ 39,265,000 3.50% to 5.75% 2040 $ 950,000 Series 2009B 16,110,000 3.25 to 4.13 2021 670,000 Series 2010B 16,220,000 3.90 to 6.38 2041 14,470,000 Series 2013A 10,095,000 3.00 to 5.00 2033 7,300,000 Series 2013B 17,080,000 3.00 to 5.00 2032 10,650,000 Series 2016A 18,700,000 3.00 to 5.00 2046 18,155,000 Series 2016B 32,875,000 2.25 to 5.00 2046 32,225,000 Total First Mortgage Revenue Bonds 84,420,000 Net of premiums and discounts 3,490,504 Total Net First Mortgage Revenue Bonds $ 87,910,504

Annual debt service requirements to maturity for PARC revenue bonds are as follows:

Year end June 30 Principal Interest Total 2021 $ 3,640,000 $ 3,352,233 $ 6,992,233 2022 3,785,000 3,224,924 7,009,924 2023 3,910,000 3,086,459 6,996,459 2024 4,055,000 2,920,584 6,975,584 2025 3,895,000 2,747,333 6,642,333 2026-2030 21,970,000 11,050,516 33,020,516 2031-2035 21,085,000 6,435,244 27,520,244 2036-2040 19,820,000 2,599,463 22,419,463 2041-2045 2,235,000 88,716 2,323,716 2046 25,000 900 25,900 Totals $ 84,420,000 $ 35,506,372 $ 119,926,372

77 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Each of PARC's First Mortgage Revenue bonds are publicly traded debt. The bonds are secured by and payable on a parity with certain outstanding bonds and notes issued under the indenture solely from: a first mortgage lien on the various public parking garages constituting a part of the Consolidated Project financed by PARC, the revenues and rents derived from an annually renewable lease whereby the Consolidated Project is leased to Metro Government at rentals sufficient to amortize all outstanding parity bonds, the net revenues from the operation of the Consolidated Project, the net revenues derived from Metro Government's on-street parking meters (which are pledged by Metro Government to secure its obligations under the lease), and contractual revenues from several corporate sources (including but not limited to the PARC Agreements, all of which have been assigned to the Trustee).

iii. Transit Authority of River City TARC entered into a line of credit borrowing agreement with Fifth Third Bank that established an unsecured line of credit whereby TARC can borrow up to $15,000,000. The interest rate is LIBOR plus 2.40% (3.07% at June 30, 2020). There were $3,000,000 of draws and payments on the line of credit during the fiscal year. There was no outstanding balance for this line of credit as of June 30, 2020. TARC's line of credit has a maturity date of November 30, 2021.

iv. Metropolitan Sewer District MSD’s various bonds outstanding at June 30, 2020, are listed in the following table (in thousands):

Maturity Debt Original Issue Interest During Year Outstanding Description of Issue Amount Rate End June 30 June 30 Sewer and Drainage System Revenue Bonds: Series 2009C $ 180,000 5.98% 2040 $ 180,000 Series 2010A 330,000 6.25 2043 330,000 Series 2011A 263,360 3.00 to 5.00 2034 246,225 Series 2013A 115,790 4.00 2036 115,790 Series 2013B 119,515 4.00 to 5.00 2038 112,575 Series 2013C 100,000 3.00 to 5.00 2044 99,250 Series 2014A 80,000 4.00 to 5.00 2045 79,750 Series 2015A 175,000 3.13 to 5.00 2046 173,160 Series 2015B 81,750 2.65 to 5.00 2038 71,515 Series 2016A 150,000 3.00 to 5.00 2047 149,290 Series 2016B 28,315 2.00 to 5.00 2036 23,915 Series 2016C 67,685 5.00 2023 50,515 Series 2017A 175,000 3.00 to 5.00 2048 161,895 Series 2017B 35,725 5.00 2025 32,885 Series 2018A 60,380 4.00 2038 60,380 Series 2019A 30,910 4.00 2023 24,770 Total Sewer and Drainage System Revenue Bonds 1,911,915 Net of premiums and discounts 74,458 Total Net Sewer and Drainage System Revenue Bonds $ 1,986,373

78 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Annual debt service requirements to maturity for Sewer and Drainage System Revenue Bonds are as follows (in thousands):

Year end June 30 Principal Interest Total 2021 $ 43,460 $ 90,909 $ 134,369 2022 45,630 88,739 134,369 2023 47,905 86,460 134,365 2024 46,740 84,067 130,807 2025 49,025 81,778 130,803 2026-2030 271,610 369,473 641,083 2031-2035 254,760 318,120 572,880 2036-2040 513,850 236,027 749,877 2041-2045 494,350 91,739 586,089 2046-2048 144,585 9,083 153,668 Totals $ 1,911,915 $ 1,456,395 $ 3,368,310

MSD long-term revenue bonds are publicly issued to provide sufficient funding for sewer and drainage projects approved for construction. MSD has pledged all revenues to the payment of principal and interest on its outstanding revenue bonds. Federal tax regulations generally require the periodic payment to the U.S. Treasury of investment earnings on the proceeds of an issue of tax-exempt municipal bonds to the extent those earnings exceed the yield on the bonds. Such payments, known as arbitrage rebates, are normally payable every fifth year following the issuance date and upon the retirement date. MSD has arbitrage calculations performed as needed by an independent third party to comply with these regulations. As of June 30, 2020 and 2019, MSD's accrued liability for arbitrage rebates were $626,441 and $483,905, respectively.

A debt service coverage ratio covenant has been established under the 1993 Sewer and Drainage System Revenue master Bond Resolution. MSD was in compliance with the ratio covenant as of June 30, 2020.

On August 19, 2019, MSD issued $30,910,000 of revenue refunding bonds, Series 2019. The proceeds of the Series 2019 bonds, together with certain amounts in the debt service account, were used to currently refund the outstanding amount of principal on Series 2009B and pay the cost of issuance on the Series 2019 bonds. The refunding reduces debt service payments by $5,107,297 over the next four years (a net present value savings of $2,573,449).

On March 25, 2020, MSD entered into a Forward Delivery Bond Purchase agreement to refund the remaining principal of the Series 2011A bonds. Under the terms of the agreement, MSD has authorized the issuance, on a direct placement, forward-delivery basis, of Series 2021A refunding bonds. The bonds will be dated and delivered on August 17, 2021.

General Obligation Bonds: MSD merged with the Oldham County Environmental Authority ("OCEA") on June 30, 2020. MSD assumed OCEA's general obligation bond debt in the merger. The balance of the bonds outstanding as of the beginning of the reporting period July 1, 2019 and the merger date, June 30, 2020 was $13,256,062 and $12,452,783, respectively.

MSD agreed to support OCEA's payment of debt service for the supported bonds subject to the terms of an Assistance Agreement dated June 30, 2020. Upon the occurrence of an uncured event of default under the Assistance Agreement, OCEA is entitled to exercise any and all remedies at law or in equity.

79 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued A comparative summary of current and long-term general obligation bond activity follows (in thousands):

Maturity Debt Original Issue Interest During Year Outstanding General Obligation Bonds Amount Rate End June 30 June 30 Series 2009 $ 7,335 2.00% to 4.00% 2023 $ 1,155 Series 2014 9,790 3.00% to 3.20% 2035 7,865 Series 2017 3,750 2.08% 2030 3,433 Total General Obligation bonds 12,453 Net of premiums and discounts - Total net bonds payable $ 12,453

Commercial Paper: On June 25, 2018, the MSD Board adopted a Program Note Resolution authorizing the issuance of one or more series of sewer and drainage system subordinated program notes in an aggregate principal amount not to exceed $500,000,000 for the purpose of financing eligible sewer and drainage projects and to refund program notes or subordinate lien bond anticipation notes. Program notes issued under the Program Note Resolution are subordinate and junior in all respects to revenue bonds issued under the General Bond Resolution. Program notes are issued as senior subordinated debt secured on a parity with the bond anticipation notes.

On July 10, 2018, MSD introduced its Sewer and Drainage System Subordinate Program Notes Series 2018 Commercial Paper sub-Series consisting of $250,000,000 Commercial Paper Notes, Series 2018A-1 and $250,000,000 Commercial Paper Notes Series 2018A-2. The commercial paper notes will be used for the purpose of: financing the cost of improvements or additions to MSD and refinancing other Program Notes. Program Notes are issued as Senior Subordinated Debt, secured, on a parity with the Series 2018 Bond Anticipation Notes and any other outstanding or hereafter issued Senior Subordinate Debt, by a subordinate and junior lien on the revenues of MSD, subject to the prior and senior lien on such revenues of all bonds issued and outstanding under the bond resolution. Moody's Investors Service, Inc. and Standard and Poor's Rating Services assigned ratings of P-1 and A-1+, respectively, to the Commercial Paper Notes on June 29, 2018.

As of June 30, 2020, MSD had $255,000,000 in commercial paper notes outstanding. Interest rates on the notes outstanding range from 0.18% to 0.65% and maturities range from 28 to 127 days. The outstanding notes had an average interest rate of 0.30% and an average maturity of 59 days. A direct purchase note of $100,000 is outstanding as of June 30, 2020 in accordance with the terms of the JPMCB Note Purchase Agreement. This note has a maturity date of June 24, 2021 and carries a variable interest rate based on 90-day LIBOR.

The following table summarizes the outstanding and available balance of the commercial paper program for the year ended June 30, 2020 (in thousands):

Authorized Amount Unissued Issuance Description amount Outstanding Portion Series 2018A-1 $ 250,000 $ 155,000 $ 95,000 Series 2018A-2 250,000 100,000 150,000 Totals $ 500,000 $ 255,000 $ 245,000

MSD issued its Series 2020A revenue bonds on July 30, 2020 to refund $225,000,000 in commercial paper notes. MSD has classified all outstanding commercial paper notes as long-term debt in accordance with GASB 62 as it intends to redeem a portion of the notes with long-term bond proceeds and reissue the remaining maturing commercial paper notes in accordance with the refinacing terms of the Revolving Credit Agreements.

80 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued The following table summarizes transactions of the commercial paper program for the year ended June 30, 2020 (in thousands):

Beginning of Issue Description Year Increases Decreases End of Year Series 2018A-1 $ 60,000 $ 405,000 $ (310,000) $ 155,000 Series 2018A-2 60,000 365,000 (325,000) 100,000 Total $ 120,000 $ 770,000 $ (635,000) $ 255,000

State Revolving Fund Loan ("SRF"): MSD entered into an assistance agreement with the State Revolving Fund ("SRF") by the Kentucky Infrastructure Authority ("KIA") on December 20, 2019 for a SRF loan in an amount not to exceed $24,200,000 to finance the rehabilitation of aging infrastructure at its Hite Creek Water Quality Treatment Center. Interest will be payable semi-annually at a fixed rate of 2% per annum commencing after funds are first drawn on the loan. The loan will be repaid over a period not to exceed 20 years from the date the project is placed in operation. MSD has not drawn on this loan as of June 30, 2020.

MSD entered into an assistance agreement with the KIA on December 20, 2019 for a SRF loan in an amount not to exceed $3,870,000 to finance the rehabilitation of 47,000 linear feet of sewer lines. Interest will be payable semiannually at a fixed rate of 2% per annum commencing after funds are first drawn on the loan. The loan will be repaid over a period not to exceed twenty years from the date the project is placed in operation. MSD has not drawn on this loan as of June 30, 2020.

MSD entered into an assistance agreement with the KIA on June 30, 2020, as part of its merger with OCEA, to assume eight existing SRF loans extended to the OCEA with total outstanding principal in the amount of $13,705,711. These loans financed various sewer system infrastructure projects in the OCEA service area. Six of these loans are for completed projects and principal repayment has begun. Two loans are financing projects that are still under construction. Principal repayment will begin once the projects are placed in operation. Interest will be paid semiannually at fixed rates ranging from 1.75% to 3% per annum. The loans will be repaid over a period not to exceed 20 years.

At June 30, 2020, MSD had the following SRF direct placement debt outstanding (in thousands):

Maturity Debt Loan Drawn Interest During Year Outstanding Loan Number Amount Amount Rate End June 30 June 30

A98-04 $ 6,498 $ 6,498 3.80% 2021 $ 454 A09-41 2,395 2,395 3.00 2033 1,659 A10-04 2,843 2,843 2.00 2033 1,974 A10-05 1,000 1,000 3.00 2033 715 A10-06 121 121 2.00 2033 81 A10-07 2,538 2,538 2.00 2034 1,821 A11-15 671 671 2.00 2033 465 A12-29 6,500 6,500 1.75 2037 5,520 A17-028 6,300 2,013 1.75 * 2,013 A18-010 2,000 1,116 1.75 ** 1,116 Total loans payable $ 15,818

*Loan is partially drawn. Final payment will be 20 years following project completion currently scheduled for FY23 **Loan is partially drawn. Final payment will be 20 years following project completion currently scheduled for FY21

Line of Credit: MSD secured an uncommitted $25,000,000 line of credit in October 2015. As of June 30, 2020, MSD does not owe anything on its line of credit. There was no activity on the line of credit in fiscal year 2020.

81 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Bond Anticipation Notes: On September 19, 2019, MSD issued $226,340,000 of Sewer and Drainage System Subordinated Bond Anticipation Notes, Series 2019 Notes with a coupon rate of 3.0% and an effective interest rate of 1.37%. The proceeds of the notes were used to refinance the 2018 Notes. The 2018 Notes matured on November 1, 2019. The Series 2019 Notes were closed on September 26, 2019 and mature on October 23, 2020. For further information on the Series 2020 Notes, please refer to Note 19.B.i. on page 119.

Swaps and other derivative contracts: On June 30, 2020, MSD had the following derivative instruments outstanding (in thousands):

Initial Current Banking Notional Notional Effective Payment Institution Amount Amount Date Term Date Terms Receipt Terms 67% of 30-day Wells Fargo $ 180,716 $ 180,716 6/15/2013 5/15/2033 4.4215% LIBOR 67% of 30-day Bank of America 56,433 45,284 11/16/2009 5/15/2033 4.4215% LIBOR $ 237,149 $ 226,000

SIFMA = Securities Industry and Financial Markets Association A comparative summary of the change in fair value of the swaps for the years ended June 30, 2020 and 2019 are show below:

June 30, 2020 June 30, 2019 Fair value - beginning of year $ (73,040) $ (59,443) Change in fair value (20,415) (13,597) Fair value - end of the year $ (93,455) $ (73,040)

Fair values at June 30, 2020 for the non-credit adjusted, at-market portion of the derivatives follows:

Clean Accrued Wells Fargo, N.A. $ (16,655) $ (86) Bank of America, N.A. (4,167) (22) $ (20,822) $ (108)

MSD’s swaps are measured at fair value using significant other observable inputs (Level 2) with a mid-market derivative valuation using a 67% of 30-day LIBOR Fixed Payer Swap rate.

MSD originally entered into these interest rate swaps as a hedging derivative instrument in anticipation of refinancing the 1999 series bonds at their call date. The swaps remain in the portfolio to lower interest rate risk associated with the Bond Anticipation Note. The total of investment derivatives are recorded as interest rate swaps on the Combining Statement of Net Position, Component Units. All changes in fair value of the derivatives are recorded as a separate component of non-operating revenue/expense. MSD’s two outstanding swaps are structured so that the notional amount of the swap decreases over time corresponding to the proposed payoff of the BAN.

82 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

7. Long-Term Debt, continued Credit risk: MSD has implemented steps to safeguard it against the risks associated with the aforementioned swap transactions. If the counter-party does not maintain A1/A+ ratings from Moody’s and Standard and Poor’s, the swaps contain provisions that require them to be marked to market weekly with monthly statements sent to MSD and the value will be collateralized with U.S. Treasury and Agency securities with the securities held by a tri-party custodian approved by MSD. All costs of collateralization will be borne by the downgraded party who must post the collateral. In addition, the October 2002 (A and B) swaps were awarded to multiple firms to further mitigate the credit risk associated with the transactions.

Credit Ratings Banking Institution Moody’s Standard & Poor’s Bank of America, N.A. P-1 A-1 Wells Fargo Bank, N.A. P-1 A-1+

The agreements also provide for automatic termination if MSD’s unenhanced bond rating is downgraded below BBB/Baa. MSD’s obligations under all of its outstanding swap agreements are unsecured and subordinate to all bonds issued and outstanding. The positive and negative fair values of the swap agreements were provided by a third-party financial advisor. The net swap payments made in fiscal years 2020 and 2019 were $6,468,589 and $7,724,335, respectively.

83 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

8. Capital Lease Obligations A. Metro Government and PARC Metro Government has an agreement with Johnson Controls, Inc. (“JCI”) to implement and finance capital improvements to enhance energy efficiency and decrease related utility expense. It is intended that the improvements will generate energy cost savings sufficient to make the lease payments or from guaranteed payments from JCI to the extent that energy costs savings are not achieved based on an annual energy savings calculation. Metro Government’s internal reporting units are utilizing 80.46% of the project improvements, and PARC’s properties are utilizing 19.54% of the overall project improvements. The Energy Savings Performance Contract called for the project to be financed through a separate lease purchase agreement with payments made annually through August 2038. Payments for the Energy Savings Project are to be made from energy cost savings achieved through the capital improvements or from guaranteed payments from JCI should the desired energy costs savings not be achieved. At June 30, 2020, Metro Government recorded a capital lease liability for the capital lease commitment and a capital sublease receivable for $4,933,082, reflecting payments that will come from PARC’s share of the project. Upon certain events of default, the capital lease may be subject to financial consequences such as liquidated damages. At June 30, 2020, capital assets with net book value of $20,312,989 were recorded on the Government-wide Statement of Net Position, reflecting Metro Government's share of project. Future minimum lease payments are shown below for total payments on the lease, as well as the net financial commitment of Metro Government and from PARC sublease:

Metro Fiscal year Total Government PARC 2021 $ 1,961,655 $ 1,578,348 $ 383,307 2022 1,995,836 1,605,850 389,986 2023 2,025,914 1,630,050 395,864 2024 2,059,755 1,657,279 402,476 2025 2,093,471 1,684,407 409,064 2026-2030 11,231,909 9,037,194 2,194,715 2031-2035 12,907,451 10,385,335 2,522,116 2036-2039 13,595,107 10,938,623 2,656,484 Total 47,871,098 38,517,086 9,354,012 Less amounts representing interest payments (22,625,027) (18,204,097) (4,420,930) Present value of net minimum lease payments $ 25,246,071 $ 20,312,989 $ 4,933,082 Less current portion (307,426) (247,355) (60,071) $ 24,938,645 $ 20,065,634 $ 4,873,011

B. Transit Authority of River City

TARC entered into an agreement with Fifth Third Bank to lease 20 paratransit vehicles under a capital lease. The lease agreement contains a bargain purchase option at the end of the lease term. Amortization of assets held under capital leases is included with depreciation expense. Total assets under capital lease net of accumulated depreciation were $397,920 at June 30, 2020. Future minimum payments required under the lease together with their present value as of June 30, 2020 are as follows:

Minimum Lease Year ending June 30 Payment 2021 $ 135,382 2022 140,841 2023 121,697 Total minimum lease payments $ 397,920

84 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2019

9. Conduit Debt Obligations Metro Government occasionally issues Industrial Revenue Bonds and other conduit debt obligations to assist local private-sector entities in financing new or expanded industrial, commercial, or residential facilities deemed to be in the public interest. GASB defines a conduit debt obligation as a debt instrument having all of the following characteristics:  There are at least three parties involved: an issuer, a third-party obligor, and a debt holder or a debt trustee.  The issuer and the third-party obligor are not within the same financial reporting entity.  The debt obligation is not a parity bond of the issuer, nor is it cross-collateralized with other debt of the issuer.  The third-party obligor or its agent, not the issuer, ultimately receives the proceeds from the debt issuance.  The third-party obligor, not the issuer, is primarily obligated for the payment of all amounts associated with the debt obligation (debt service payments).  The issuer's commitment related to the debt service payments is limited. An issuer would not recognize a conduit debt obligation as a liability. However, an issuer would recognize a related liability and expense or expenditure if the recognition criteria are met. While conduit debt obligation is outstanding, the issuer would evaluate at least annually whether those criteria are met. The conduit debt obligation bonds are collateralized by the facilities financed with the bond proceeds and are payable solely from a pledge of revenues to be derived from those facilities. The bonds and related interest do not represent or constitute an indebtedness of Metro Government or a pledge of faith and credit of Metro Government or any political subdivision thereof. Accordingly, the bonds and related assets are not included in Metro Government’s financial statements. Since the merger which formed Metro Government in January 2003, Metro Council has authorized $4,578,524,467 of conduit debt obligations through June 30, 2020. During the year ended June 30, 2020, Metro Council authorized approximately $621,000,000 of conduit debt obligations. It is not the policy of Metro Government to require the reporting subsequent to issue, thus the aggregate principal amount outstanding at June 30, 2020, could not be determined.

85 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

10. Tax Abatement Pursuant to GASB Statement No. 77, Tax Abatement Disclosures, Metro Government is required to disclose certain information about tax abatements as defined in the statement. GASB No. 77 defines a tax abatement as a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the city or its citizens. As of June 30, 2020, Metro Government provides tax abatements through seven programs - Kentucky Jobs Retention Act ("KJRA"), Kentucky Business Investment Program (“KBI”), Kentucky Industrial Revitalization Act (“KIRA”), Manufacturing Tax Moratorium, Property Assessment/Reassessment Moratorium, Tax Increment Financing (“TIF”), and the Churchill Downs Incorporated Project.

 KJRA is designed to encourage automobile and household appliance manufacturers operating in Kentucky to retain existing jobs in the state by granting tax incentives for investment in facility modernization. To qualify for this incentive, the organization must have operated in Kentucky for the last five consecutive years, have an existing workforce of at least 1,000 full-time employees, have KJRA total project investment of at least $100,000,000, and have been previously approved for a Kentucky economic development incentive. The KJRA incentives are realized through up to 100% credit against Kentucky corporate income tax and/or the limited liability entity tax and wage assessments up to 5% of the gross wages of each employee as a result of the project (including up to 1% required local participation).

 KBI provides a wage incentive of up to 1% of the gross wages of each employee for qualified businesses in the Louisville Metro area. An eligible company must be engaged in one of the following activities: manufacturing or agribusiness, operate a regional or national headquarters, or certain nonretail service or technology activities. The minimum requirements for an eligible project are: create a minimum of 10 new, full-time jobs for Kentucky residents; incur at least $100,000 in eligible costs; and meet a minimum level of wages and benefits. The tax incentives involved with this program are available for up to 10 years. The authority for this program is established in Kentucky Revised Statute 154.32.

 KIRA provides a wage incentive up to 1% of the required local participation of gross wages of each employee. Eligible companies must invest in the rehabilitation of manufacturing or agribusiness operations that are in imminent danger of permanently closing or that have closed temporarily and meet the following criteria: employ or intend to employ a minimum of 25 full-time employees engaged in manufacturing or agribusiness operations at the same facility, whether acquired, owned, or leased, located and operating within Kentucky on a permanent basis for a reasonable period of time preceding the request for approval. The tax incentives remain in place until the authorized incentive amount is realized or for the term of the tax incentive agreement, whichever occurs first. The authority for this program is established in Kentucky Revised Statute 154.26.

 Property Assessment/Reassessment Moratorium program allows the waiver of the local incremental tax value of real property tax for added improvements from the assessment of a structure for five years. The following properties are eligible: structures older than 25 years if improvements are at least 25% of the property’s value and structures older than 25 years and in a qualifying target area if improvements are at least 10% of the property’s value. This program is established by Louisville Metro Ordinance 154.

86 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

10. Tax Abatement, continued  TIF enables Metro Government to finance certain redevelopment costs with the incremental tax revenue generated by the net increase in assessed valuation resulting from the redevelopment. TIF also allows for the abatement of up to 100% of incremental property taxes and occupational license taxes or fees for periods of up to 20 or 30 years depending on the type of development area. A TIF may be granted but may not be activated until sometime later in its grant period. Some agreements require Metro Government to make infrastructure changes and/or make best effort to facilitate the project’s progress. There are currently 14 TIFs active and 23 TIFs approved. Payments are made by appropriation rather than a tax liability reduction. Authority for the program is contained in Kentucky Revised Statute 65.7041 et seq. and Kentucky Revised Statute 154.30.

 The City of Louisville (the "City"), prior to merger, entered into an agreement which the City issued Industrial Building Revenue Bonds, authorized under Louisville Metro Ordinance 85, Series 2002, to finance construction of improvements at Churchill Downs, while simultaneously Churchill Downs conveys to the City the land, improvements, fixtures, machinery and equipment, and other tangible personal property. The City simultaneously entered into a lease, dated January 1, 2002, of the same in which the borrower is obligated to remit rental payments sufficient to pay the debt service on bonds and assume the responsibilities of the borrower. The lessee has an option to purchase any part or all of the property for $1.00 at the end of the 30-year lease or on any first day of each month during the term of the lease with a 15-day notice. Pursuant to Kentucky Revised Statute 103.285, the leased premises are exempt from taxations by the City (lessor) so long as the City holds title to the property. Under the terms of the lease, the lessee shall make payment to Jefferson County School District in lieu of taxes equal to the amounts which would have been due and payable by lessee absent the application of Kentucky Revised Statute 103.285. This tax relief shall continue until the debt is extinguished or the property is transferred back to the borrower.

Metro Government has reported abatement amounts for all known program participants during the year. A summary of the taxes forgone on Metro Government’s abatement programs for the year ended June 30, 2020 are as follows:

Abatement Abatement Name Tax Abated Source Amount Kentucky Jobs Retention Act, Kentucky Business Investment Program, & Kentucky Industrial Louisville Metro Revenue Revitalization Act* Occupational License Fees Commission $ 3,924,221 Jefferson County Property Property Assessment/Reassessment Moratorium Property Tax Valuation Administrator 773,724 Property Tax & Economic Development Tax Increment Financing Occupational License Fees Department 3,106,836 Property Tax & Personal Jefferson County Property Churchill Downs Incorporated Project Property Tax Valuation Administrator 685,153

*Amounts for the three programs are combined.

87 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

11. Interfund Receivables, Payables, and Transfers Interfund receivable and payable balances at June 30, 2020 are as follows:

Interfund Interfund Fund Receivable Payable General $ 42,201,635 $ - Agency: Revenue Commission 14,015,260 - Mass Transit 4,780,669 - Internal Service: Revenue Commission - 60,997,564 Totals $ 60,997,564 $ 60,997,564

Interfund transfers during the fiscal year ended June 30, 2020 were as follows:

Transfers in: Non-major Governmental Funds Total General Special Capital General Governmental Proprietary Total Transfers out: Fund Revenue Fund Projects Fund Obligation CPC Funds Fund Transfers General Fund $ - $ 385,096 $ 894,291 $ 60,788,282 82,939 $ 62,150,608 $ 10,547,194 $ 72,697,802 Special Revenue Fund 192,754 - 49,294 - - 242,048 124,778 366,826 Capital Projects Fund 655,100 99,338 - 170,500 - 924,938 - 924,938 Non-major Governmental Funds PPC - - - - 2,083,691 2,083,691 - 2,083,691 Total $ 847,854 $ 484,434 $ 943,585 $ 60,958,782 $ 2,166,630 $ 65,401,285 $ 10,671,972 $ 76,073,257

During fiscal year 2020, the boards of directors for CPC and PPC authorized a merger between the two corporations with CPC being the surviving corporation and PPC dissolving. In doing so, the assets of PPC were transferred to CPC. Seeing as how both corporations fall under the category of Non-major Governmental Funds, it became necessary this year to break out the interfund transfers within the Non-major Governmental Fund section.

Transfers are used to move revenues from the fund that the statute or budget is required to collect to the fund that statute or budget is required to expend, move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and move unrestricted revenues collected in the General Fund to finance various programs in other funds in accordance with budgetary authorizations.

In addition to the interfund receivable and payable balances above, during fiscal year 2020, Metro Government used General Fund dollars and funds from the Line of Credit (see Note 7.B.iv) to pay for capital purchases within the fiscal year. These capital purchases made through the General Fund are to be reimbursed by the issuance of General Obligation Bonds, Series 2020A, which were issued on November 4, 2020 in fiscal year 2021 (see Note 19.A). Some General Fund dollars were also not fully reimbursed by the CARES funding, which reside in the Special Revenue Fund.

To account for these reimbursements, Metro Government used the "Due from other governmental funds" line item on the General Fund section of the Governmental Funds Balance Sheet, with a corresponding "Due to other governmental funds" in the Special Revenue and Capital Projects funds.

The amount shown in the "Due from other governmental funds" on the General Fund was $37,406,647 as of June 30, 2020, while the "Due to other governmental funds" for Special Revenue and Capital Project funds were $25,996,211 and $11,410,436, respectively.

88 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

12. Customer Contributions for Water Pipeline Construction LWC requires consumers to make a deposit for the cost of construction of pipelines and special services. These advances are refundable, within certain time limits up to 20 years, under the terms of the various contracts. The customer advances and deposits payable account reflects the liability for probable refunds of construction advances at some future date. When the period during which the refund can be made has expired, any balance is transferred to contributions in aid of construction. The net increase in contributions in aid of construction during the year totaled $12,113,950 and is shown on the component unit’s Statement of Activities as a capital contribution.

13. Contingencies and Commitments A. Litigation i. Metro Government Metro Government has been named as a defendant in various legal actions. The ultimate outcome of these various legal actions cannot be determined with certainty. Management does not anticipate that such actions will have a material impact on the financial statements of Metro Government.

ii. Louisville Water Company LWC is involved in litigation, which has arisen out of operations in the ordinary course of business. LWC accrues losses from litigation as a liability based on estimates. While it is not possible to forecast the outcomes of litigation, it is the opinion of the LWC’s management, based on evaluations by outside counsel, that they will not have a material adverse effect on the financial statements of LWC.

iii. Transit Authority of River City TARC is subject to various legal actions and general asserted and unasserted claims arising in the ordinary course of its business. Litigation is subject to many uncertainties; the outcome of individual litigated matters is not predictable with assurance. While it is reasonably possible that some of these foregoing matters may be decided unfavorably to TARC within the next year, it is the opinion of management that the ultimate liability, if any, with respect to these matters will not materially affect the financial position of TARC.

iv. Metropolitan Sewer District MSD is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the MSD’s management that resolution of these matters will not have a material adverse effect on the financial statements of MSD.

v. Waterfront Development WDC is subject to legal actions which are handled by Metro Government’s Risk Management Department and the Jefferson County Attorney’s Office. Claims that are less than $500,000 are paid by Metro Government and claims in excess of $500,000 are paid out of the LAGIT. In one such claim, a restaurant sub-tenant alleged that it mistakenly overpaid rent to WDC and its sub-landlord. The sub-landlord had previously filed a lawsuit to evict the sub-tenant, who has vacated the premises. WDC intends to vigorously defend all legal actions and believes that the resolution of such claims would not have a material effect on the financial position of WDC or its results of operations.

89 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

13. Contingencies and Commitments, continued

B. Federal and State Grants In the course of operations, Metro Government receives grant funds from various federal and state government agencies to be used for designated purposes only. The grant programs are subject to audit by agents of the granting authorities to ensure compliance with conditions surrounding the granting of funds. If a grantor’s review indicates that the funds have not been used for the intended purpose, the grantor may request a refund of monies advanced or refuse to reimburse Metro Government for its expenditures. In management’s opinion, any liability for any refunds or reimbursements which may arise as a result of audits of grant funds would not have a material impact on the financial position of Metro Government. Continuation of Metro Government’s grant programs is predicated upon the grantor’s satisfaction that the funds provided are being spent as intended and the grantor’s intent to continue their programs. C. Construction Commitments i. Metro Government Metro Government has active construction projects including improvements to major roadways, government buildings, parks, and other various ongoing projects. The remaining committed budget for these projects is $57,271,912 - with $16,244,077 coming from bond proceeds - as of June 30, 2020.

ii. Louisville Water Company The estimated cost to complete construction projects under contract was approximately $97.7 million at December 31, 2019.

iii. Metropolitan Sewer District The value of construction contracts signed where work has not yet been performed amounted to $144,323,365 at June 30, 2020.

14. Deferred Compensation Metro Government, LWC, MSD, and Board of Health offer its employees deferred compensation plans created in accordance with IRC, Section 457. MSD also offers their employees a deferred compensation plan created in accordance with IRC, Section 401(k). The plans, available to all employees, permit 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.

GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, allows entities with little or no administrative involvement who do not perform the investing function for these plans to omit plan assets and related liabilities from the statement of net position. Metro Government, LWC, MSD, and BOH do not show these assets and liabilities on their respective statements of net position.

90 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

15. Sale of Future Revenues During fiscal year 2013, Metro Government transferred two parking lots to PARC. The two lots were located on the south side of Jefferson Street between 7th and 8th Streets (the “Mud Lot”) and behind City Hall on the south side of Market Street between 6th and 7th Streets (the “City Hall Lot”). The lots were transferred at an adjusted net book value of $1,280,389.

During fiscal year 2013, the board of directors of CPC approved a resolution to transfer the parking garages located at 415 South 6th Street (the “Louisville Gardens Garage”) and 536 West Market Street (the “Market Street Garage”) to PARC. The garages were recorded on Metro Government’s books at a net book value of $3,261,362.

In addition to the transfers of assets, there was an intra-entity sale of revenues. The valuation of the sale of future revenues was based on the premise that Metro Government was a primary user of the parking facilities and was committing to continued usage of the parking facilities over the remaining useful life of the assets.

The original value of the future revenues was estimated at $11,148,249, with $9,459,611 allocated to the parking lots and $1,688,638 allocated to the garages. These amounts are reported as a deferred inflow of resources to be amortized over the duration of the transfer agreement. The amount of amortized gain on the future revenue reported at June 30, 2020 was $532,019.

GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, allows for a deferred inflow of resources for Metro Government and the deferred outflow of resources for PARC that will be amortized over the life of the agreement. The remaining unamortized balance is $7,399,514 at June 30, 2020.

91 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits A. Employees Participating in CERS i. Plan Description CERS hazardous and nonhazardous insurance funds, along with the Kentucky Employees Retirement System ("KERS") hazardous and nonhazardous funds, are operated by Kentucky Retirement Systems ("KRS").

The CERS insurance funds are cost-sharing multiple-employer defined benefit OPEB plans for members that cover all regular full-time members employed in hazardous and nonhazardous duty positions at Metro Government. The plans provide for health insurance benefits to plan members. OPEB may be extended to beneficiaries of plan members under certain circumstances.

All eligible retired Metro Government employees receive health care benefits after retirement. The benefits offered are dependent on the length of service of the employee and the retirement system in which the former employee participated.

Employer contribution rates are established annually by the KRS Board of Trustees. KRS issues separate stand-alone financial statements for the statewide multiple employer cost-sharing plan that provides other postemployment benefits for local government employees participating in CERS.

Under the provisions of Kentucky Revised Statute, Section 61.701, the board of trustees of KRS administers the KRS Insurance Fund. The KRS Insurance Fund was established as a single insurance fund to provide group hospital and medical benefits to retirees drawing a benefit from the three pension funds administered by KRS: KERS; CERS; and the State Police Retirement System ("SPRS"). The assets of the KRS Insurance Fund are commingled for investment purposes.

ii. Benefits Provided KRS set the employer rate allocable to the health insurance benefits for nonhazardous employees at 4.76% for Fiscal Year 2020. The rates for nonhazardous employees were 5.26% and 4.70% in 2019 and 2018, respectively. KRS set the employer rate for hazardous employees at 9.52% in 2020. The rate for hazardous employees was 10.47% for 2019 and 9.35% for 2018. The contribution rates are created by statute and were 100% funded during 2020, 2019, and 2018. The following information was extracted from the KRS CAFR for the fiscal year ended June 30, 2019. The KRS Insurance Fund pays a prescribed contribution for whole or partial payment of required premiums to purchase hospital and medical insurance. The KRS Insurance Fund pays the same proportion of hospital and medical insurance premiums for the spouse and dependents of retired hazardous members killed in the line of duty. For members participating prior to July 1, 2003, years of service and respective percentages of the maximum contribution are as follows:

Portion Paid by KRS Insurance Years of Service Fund 20+ years 100% 15-19 years 75 10-14 years 50 4-9 years 25 Less than 4 years -

92 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued iii. Funding Policy As a result of the 2004 House Bill 290 enacted by the Kentucky General Assembly, medical insurance benefits are calculated differently for members who began participating on, or after, July 1, 2003. Members participating on or after July 1, 2003 and before September 1, 2008 are required to earn at least 10 years of service credit in order to be eligible for insurance benefits at retirement. Members participating on or after September 1, 2008 are required to earn at least 15 years of service credit in order to be eligible for insurance benefits at retirement. The monthly health insurance contribution will be $10 for each year of earned service increased by the Consumer Price Index ("CPI") prior to July 1, 2009, and by 1.5% annually from July 1, 2009.

Once members reach a minimum vesting period of 10 years, non-hazardous employees whose participation began on, or after, July 1, 2003, earn $10 per month for insurance benefits at retirement for every year of earned service without regard to a maximum dollar amount. Hazardous employees earn $15 per month with the same participation dates. In addition, a hazardous employee’s spouse receives $10 per month for insurance benefits for each year of a deceased employee’s earned hazardous service. This dollar amount is subject to adjustment annually based on the retiree cost of living adjustment, which is updated annually due to change in the CPI for all urban consumers.

Health insurance benefits are not protected under the inviolable contract provisions of Kentucky Revised Statutes 16.652, 61.692, and 78.852. The Kentucky General Assembly reserves the right to suspend or reduce this benefit if, in its judgment, the welfare of the Commonwealth so demands.

In prior years, the employers’ required medical insurance contribution rate was being increased annually by a percentage that would result in advance-funding the medical liability on an actuarially determined basis using the entry age normal cost method within a 20-year period measured from 1987. In November 1992, the board of trustees adopted a fixed percentage contribution rate and suspended future increases under the current medical premium funding policy until the next experience study could be performed. In May 1996, the board of trustees adopted a policy to increase the insurance contribution rate by the amount needed to achieve the target rate for full entry age normal funding within 20 years.

The following table presents the schedule of funding progress for the KRS Insurance Fund as a whole (in thousands):

Unfunded as a Actuarial Value AAL Entry Age % of Covered System of Assets Normal Funded Covered Payroll Payroll KERS Non-Haz $ 991,427 $ 2,733,065 36.3% $ 1,485,854 117.2% KERS Haz 525,315 426,705 123.1% 160,600 (61.4)% CERS Non-Haz 2,523,249 3,567,947 70.7% 2,424,796 43.1% CERS Haz 1,313,659 1,732,879 75.8% 553,541 75.7% SPRS 197,395 276,809 71.3% 49,515 160.4% Total Insurance Funds $ 5,551,045 $ 8,737,405 63.5% $ 4,674,306 68.2%

Plan members are required to contribute 5% for participants in the nonhazardous plan and 8% for the hazardous plan of creditable compensation if hired before Sept. 1, 2008. Plan members who began participating on or after Sept. 1, 2008 are required to contribute 1% of additional creditable compensation to be credited to the Insurance Fund. This additional amount is non-refundable to the member. Employers are required to contribute at an actuarially determined rate by the KRS Board of Trustees to be necessary for the actuarial soundness of the systems, as required by Kentucky Revised Statute 61.565 and 61.752. The rate for the fiscal year ending June 30, 2020 was 24.06% (of which 4.76% was for the Insurance Fund) for employees in the nonhazardous plan and 39.58% (9.52% for the Insurance Fund) for employees in the hazardous plan.

93 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued The contribution requirements of employers and plan members are established and may be amended by the KRS Board of Trustees. Per Kentucky Revised Statute Section 78.545(33), normal contribution and past service contribution rates shall be determined by the KRS Board of Trustees on the basis of an annual valuation last preceding July 1 of a new biennium. The KRS Board of Trustees may amend contribution rates as of the first day of July of the second year of a biennium, if it is determined on the basis of a subsequent actuarial valuation that amended contribution rates are necessary to satisfy requirements determined in accordance with actuarial bases adopted.

Metro Government's contribution to CERS for the fiscal year ending June 30, 2020 is outlined in the table below.

Employer Contribution Contributions Implicit Subsidy Rate Nonhazardous $ 6,882,044 $ 2,091,317 4.76% Hazardous 14,495,154 142,009 9.52% Total $ 21,377,198 $ 2,233,326

The OPEB contributions do not include the implicit subsidy amount.

Contributions of Metro Government's component units met the funding requirements for fiscal year 2020 as follows:

Employer Net OPEB Component Units Contributions Implicit Subsidy Liability LWC* $ 1,832,878 $ 369,183 $ 21,229,097 TARC 2,004,154 476,772 22,204,681 PARC 84,207 25,589 1,191,750 Riverport 6,876 2,004 93,332 MSD 2,252,382 651,513 30,343,000 WDC 47,204 14,344 668,053 KW 63,530 19,306 899,119 BOH*^ 849,122 216,375 11,210,785 Total $ 7,140,353 $ 1,775,086 $ 87,839,817 * LWC, BOH have year end at December 31, 2019. ^BOH amounts come from its component unit, Family Health Centers.

iv. OPEB Liabilities, OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources At June 30, 2020, Metro Government reported a net OPEB liability of $295,693,343 ($198,294,538 hazardous and $97,398,805 nonhazardous) for its proportionate share of the CERS net OPEB liability.

The net OPEB liability is calculated by KRS. The total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2019, using actuarial assumptions applied to all periods included in the measurement. No updated procedures were used to determine the total OPEB liability.

94 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued Metro Government's proportion of the net OPEB liability was based on its contributions relative to the contributions of all participants. Metro Government's proportionate share reported on June 30, 2020 is 5.79% for nonhazardous employees and 26.80% for hazardous employees. There are no expected changes in the proportion for the current year. Metro Government's proportionate share reported on June 30, 2019 was 5.82% for nonhazardouse employees and 27.72% for hazardous employees. For the year ended June 30, 2020, Metro Government recognized OPEB expense of $40,570,728 ($29,984,113 hazardous and $11,586,615 nonhazardous).

The deferred outflows and deferred inflows of resources related to OPEB for fiscal year 2020 for Metro Government are shown below:

Deferred Outflows of Deferred Inflows Resources of Resources Difference between expected and actual liability experience $ - $ 66,276,726 Difference between projected and actual investment experience - 15,726,670 Change in proportion and the difference between employer contribution and proportionate share of contributions 626,957 6,586,349 Change in assumptions 88,744,938 568,172 $ 89,371,895 $ 89,157,917 Contributions subsequent to the measurement date 23,610,524 - Total OPEB related resources $ 112,982,419 $ 89,157,917

The amount $23,610,524 reported as deferred outflows of resources related to OPEB resulting from Metro Government's contributions subsequent to the measurement date will be recognized as a reduction to the net OPEB liability in the year ending June 30, 2021. The other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Year ended June 30 2021 $ 10,109,755 2022 (436,823) 2023 (5,110,306) 2024 (2,008,157) 2025 (1,977,500) Thereafter (362,991) $ 213,978

v. Actuarial Assumptions Used to Determine the Total OPEB Liability and the Net OPEB Liability The total OPEB liability, the net OPEB liability, and the sensitivity information were based on an actuarial valuation date as of June 30, 2018. The total OPEB liability was rolled-forward from the valuation date to KRS's fiscal year ending June 30, 2019, using the following actuarial assumptions applied in all periods included in the measurement:

Inflation 2.30% Payroll growth rate 2.0% for CERS nonhazardous and hazardous Salary increase 3.30% to 10.30, varies by service for CERS nonhazardous and 3.55% to 19.05%, varies by service for CERS hazardous Investment rate of return 6.25% Healthcare trend rates (pre - 65) Initial trend starting at 7.00% at January 1, 2020 and gradually decreasing to an ultimate trend rate of 4.05% over a period of 12 years Healthcare trend rates (post - 65) Initial trend starting at 5.00% at January 1, 2020 and gradually decreasing to an ultimate trend rate of 4.05% over a period of 10 years

95 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued The mortality table used for active members is RP-2000 Combined Mortality Table projected with Scale BB to 2013 (multiplied by 50% for males and 30% for females). For healthy retired members and beneficiaries, the mortality table used is the RP-2000 Combined Mortality Table projected with Scale BB to 2013 (set back one year for females). For disabled members, the RP-2000 Combined Disabled Mortality Table projected with Scale BB to 2013 (set back four years for males) is used for the period after disability retirement. There is some margin in the current mortality tables for possible future improvement in mortality rates and that margin will be reviewed again when the next experience investigation is conducted.

vi. Actuarial Assumptions Used to Determine the Actuarially Determined Contribution The following were the actuarial methods and assumptions used to determine the actuarial contributions:

Valuation date June 30, 2017 Experience study July 1, 2008 - June 30, 2013 Actuarial cost method Entry age normal Amortization method Level percentage of payroll Remaining amortization period 26 years, closed Payroll Growth Rate 2.0% Asset valuation method 20% of the difference between the market value of assets and the expected actuarial value of assets recognized Inflation 2.30% Salary increase 4.00%, average Investment rate of return 6.25% Healthcare trend rates (pre - 65) Initial trend starting at 7.25% and gradually decreasing to an ultimate trend rate of 4.05% over a period of 13years Healthcare trend rates (post - 65) Initial trend starting at 5.10% and gradually decreasing to an ultimate rate of 4.05% over a period of 11 years

The mortality table used for this determination is the same as expressed above in 16(A)v.

The long term expected return on OPEB plan assets is reviewed as part of the regular experience studies prepared every five years for KRS. As a result of the experience study for the five-year period, ended June 30, 2018, the actuaries made significant changes to the actuarial assumptions used in the annual valuation. For example, one ofthe more significant changes was to the mortality assumption rate, which presume improvement in life expectancy. During the 2018 state legislative session, the legislature passed HB 185, which updatd the benefit provisions for active members who die in the line of duty. Benefits paid to the spouse of deceased members or benefits paid to surviving dependent children if the member did not have a surviving spouse have increased. Several factors are considered in the evaluation of the long-term rate of return assumption, including long-term historical data, estimates inherent in current market data, and a long-term normal distribution analysis, in which, best-estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed by the investment consultant for each major asset class. These ranges were 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 then adding expected inflation.

The capital market assumptions developed by the investment consultant are intended for use for over a 10-year horizon and may not be useful in setting the long-term rate of return for funding OPEB plans that cover a longer time frame. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years.

96 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized below:

Long-term Expected Real Asset class Target allocation Actual allocation Rate of Return U.S. Equity 18.75% 19.02% 4.30% International Equity 18.75 20.53 4.80 Private Equity 10.00 10.43 6.65 Specialty Credit 15.00 15.22 2.60 Fixed Income 13.50 15.50 1.35 Cash 1.00 4.38 0.20 Real Estate 5.00 3.62 4.85 Absolute Return 3.00 2.75 2.97 Real Return 15.00 8.55 4.10 Total 100.00% 100.00%

vii. Discount Rate The projection of cash flows used to determine the discount rate of 5.68% for CERS nonhazardous and 5.69% for CERS hazardous assumed that local employers would contribute to the actuarially determined contribution rate of projected compensation over the remaining 25 years (closed) amortization period of the unfunded actuarial accrued liability. The discount rate determination used an expected rate of return of 6.25% and a municipal bond rate of 3.13%, as reported in Fidelity Index's "20-year Municipal GO AA Index" as of June 30, 2019.

However, the cost associated with the implicit employer subsidy was not included in the calculation of the actuarially determined contributions, and any cost associated with the implicit subsidy will not be paid out of the trust. Therefore, the municipal bond rate was applied to future expected benefit payments associated with the implicit subsidy. The target asset allocation and best estimates of long-term expected real rate of return for each major class are summarized in the KRS fiscal year 2019 CAFR.

viii. Changes Since Measurement Date There were no changes between the measurement date of the collective net OPEB liability and the employer's reporting date.

ix. Sensitivity of Metro Government's Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate The following presents Metro Government's proportionate share of the net OPEB liability calculated using a discount rate of 5.68% for nonhazardous and 5.69% for hazardous. The graphic below also shows what the net OPEB liability for nonhazardous and hazardous would be if they were calculated using discount rates 1% lower or 1% higher:

Metro Government's Proportionate Discount Rate 1% Current Discount Discount Rate 1% Share of the Net OPEB Liability lower (4.68%) Rate (5.68%) higher (6.68%) Nonhazardous $ 130,474,330 $ 97,398,805 $ 70,146,771

Metro Government's Proportionate Discount Rate 1% Current Discount Discount Rate 1% Share of the Net OPEB Liability lower (4.69%) Rate (5.69%) higher (6.69%) Hazardous 276,660,829 198,294,538 134,683,858 Total Net OPEB Liability $ 407,135,159 $ 295,693,343 $ 204,830,629

97 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

16. Post-Employment Health Care Benefits, continued x. Sensitivity of Metro Government's Proportionate Share of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates The following presents Metro Government's proportionate share of the net OPEB liability calculated using the healthcare cost trend rate, as well as what its proportionate share would be if the applicable healthcare cost trend rate were decreased or increased by 1%.

1% Decrease in 1% Increase in Metro Government's Proportionate Healthcare Cost Current Healthcare Healthcare Cost Share of the Net OPEB Liability Trend Rate Cost Trend Rate Trend Rate Nonhazardous $ 72,435,988 $ 97,398,805 $ 127,669,179 Hazardous 137,976,328 198,294,538 271,879,456 Total Net OPEB Liability $ 210,412,316 $ 295,693,343 $ 399,548,635

xi. OPEB Plan Fiduciary Net Position Detailed information about the OPEB plan's fiduciary net position is available in the separately issued KRS financial report.

B. Continued Health Insurance for Retired Police and Firefighters As outlined in their respective union contracts covered under their respective pension trust funds, retired police and firefighters may purchase health care and life insurance through Metro Government or through a separately purchased plan. These retirees pay the full cost of the plans and are eligible to receive reimbursement from Metro Government up to the maximum of Metro Government’s contribution to the cost of single coverage health insurance premiums offered for its employees, but no less than the rate in effect as of January 2012. The annual reimbursements required for health insurance premiums for retired policemen and firefighters participating in the Metro Government retirement plans that were closed in 1986 and 1989 (see Note 17(B)), respectively, are outlined in the table below. These other post-employment benefit commitments are funded on a pay-as-you-go funding approach. Management has determined that an actuarial analysis to determine the annual required contribution is not necessary because these annual payments are immaterial to the financial position and results of operations for Metro Government as a whole. Further, since these funds are closed and the number of retirees and beneficiaries decreases each year, the annual reimbursement amounts also decline. The table below shows the amount of reimbursement for health care benefits paid by Metro Government to these plans over the past three years:

Policeman’s Firefighters’ Year End Retirement Fund Pension Fund Total 06/30/18 $ 388,854 $ 503,936 $ 892,790 06/30/19 392,757 511,174 903,931 06/30/20 385,205 508,671 893,876

98 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans Metro Government’s aggregate information for fiscal year ending June 30, 2020 on pension reporting is as follows:

CERS Firefighters’ Policeman’s Cost-Sharing Pension Fund Retirement Fund Total Net Pension Liability $ 1,147,770,056 $ 6,057,096 $ 4,341,204 $ 1,158,168,356 Deferred Inflows of Resources 31,776,841 1,035,714 25,496 32,838,051 Deferred Outflows of Resources 231,427,016 - 993,742 232,420,758 Pension Expense / (Income) 220,357,694 1,072,676 591,719 222,022,089

A. County Employees’ Retirement System i. Plan Description Metro Government, LWC, TARC, MSD, Riverport, Revenue Commission, PARC, KW, and WDC contribute to CERS. LWC, TARC, MSD, and Riverport have separate accounts with CERS. Revenue Commission, PARC, KW, and WDC participate as a part of Metro Government’s CERS Plan. Revenue Commission is a blended component unit. PARC, KW, and WDC are business-type activities operating as proprietary funds. They are not direct participants in CERS, but are allocated their fair share of Metro Government net pension liabilities, related deferrals and pension expense based on their percentage of employer contributions relative to Metro Government as a whole.

KRS issues a publicly available financial report that includes financial statements and required supplementary information for CERS. The report may be obtained by writing to Kentucky Retirement System, Perimeter Park West, 1260 Louisville Road, Frankfort, KY 40601 or it may be found at the KRS website at www.kyret.ky.gov.

Information on the Firefighters’ Pension Fund and the Policeman’s Retirement Fund can be found in section B of this note.

ii. Benefits Provided The plan provides for retirement, disability, and death benefits to plan members. Retirement benefits may be extended to beneficiaries of plan members under certain circumstances. Kentucky Revised Statute Section 61.645 establishes the benefit terms and can be amended only by the Kentucky General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 65 with four years of service credit or after 27 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available at age 55 and vested or 25 years of service credit. Members vest with five years of service credit. Service related disability benefits are provided after five years of service.

Prior to July 1, 2001, cost-of-living adjustments (“COLA”) were provided annually equal to the percentage increase in the annual average of the CPI for all urban consumers for the most recent calendar year, not to exceed 5% in any plan year. Effective July 1, 2009, and on July 1 or each year thereafter, the COLA is limited to 1.5% provided the recipient has been receiving a benefit for at least 12 months prior to the effective date of the COLA. If the recipient has been receiving a benefit for less than 12 months prior to the effective date of the COLA, the increase shall be reduced on a pro rata basis for each month the recipient has not been receiving benefits in the 12 months preceding the effective date of the COLA. The Kentucky General Assembly reserves the right to suspend or reduce cost-of-living adjustments if, in its judgment, the welfare of the Commonwealth so demands.

99 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued iii. Funding Policy Plan members are required to contribute 5% for participants in the Non-Hazardous Duty Plan and 8% for participants in the Hazardous Duty Plan of creditable compensation if hired before September 1, 2008. Plan members who began participating, on or after, September 1, 2008, are required to contribute 6% for participants in the Non-Hazardous Duty Plan and 9% for participants in the Hazardous Duty Plan of creditable compensation. Employers are required to contribute at an actuarially determined rate. The contribution requirements of employers and plan members are established and may be amended by the CERS Board of Trustees. Metro Government was required to contribute at an actuarially determined rate determined by Statute. Per Kentucky Revised Statute Section 78.545(33) normal contribution and past service contribution rates shall be determined by the KRS Board on the basis of an annual valuation last preceding July 1 of a new biennium. The KRS Board may amend contribution rates as of the first day of July of the second year of a biennium, if it is determined on the basis of a subsequent actuarial valuation that amended contribution rates are necessary to satisfy requirements determined in accordance with actuarial bases adopted by the KRS Board. Metro Government has met its funding requirement for the fiscal year ended June 30, 2020. The rate for the fiscal year ended June 30, 2020 is 24.06% for nonhazardous employees and 39.58% under the hazardous employee, which includes pension and OPEB.

Metro Government’s contribution (which includes Revenue Commission) to the CERS for the fiscal year ending June 30, 2020 is outlined in the table below.

Total Hazardous Nonhazardous Fiscal Year Ended Contributions Contribution Rate Contribution Rate 06/30/20 $ 73,673,448 30.06% 19.30% 06/30/19 65,781,683 24.86 16.22

Contributions of Metro Government’s component units to CERS met the funding requirements for the fiscal year ending June 30, 2020 as follows:

Total Net Pension Component Units Contributions Liability LWC* $ 5,651,953 $ 88,788,390 TARC# 6,192,956 92,870,861 PARC 341,428 4,983,824 Riverport 27,880 390,334 MSD 9,132,559 126,866,000 WDC 191,392 2,793,758 KW 257,592 3,760,060 BOH*^ 3,019,909 46,888,956 Total $ 24,815,669 $ 367,342,183

*LWC, BOH have year end at December 31, 2019. #TARC also has a single employer pension plan. TARC's contriubtions and net pension liabiltity to this plan were $461,850 and $1,200,456 at year end December 31, 2020. See 17.B.i.a. for more information. ^BOH amounts come from its component unit, Family Health Centers.

iv. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions At June 30, 2020, Metro Government reported a net pension liability of $1,147,770,056 ($407,315,889 nonhazardous and $740,454,167 hazardous) for its proportionate share of the CERS net pension liability. This is an increase of $122,761,846 or 11.98% from what was reported in fiscal year 2019. The net pension liability is calculated by KRS. The total pension liability, net pension liability, and sensitivity information as of June 30, 2019 were based on an actuarial valuation date of June 30, 2018. The total pension liability was rolled-forward from the valuation date to the plan's fiscal year ending June 30, 2019, using generally accepted actuarial principles.

100 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Metro Government’s proportion of the net pension liability was based on Metro Government’s contributions to the pension plan relative to the contributions of all participants. At June 30, 2020, Metro Government’s proportion share of CERS was 5.79% for nonhazardous employees and 26.81% for hazardous employees. There are no expected changes in proportion for the current year. The proportionate share from the June 30, 2019 CERS valuation was 5.82% and 27.73% for nonhazardous and hazardous employees, respectively. For the year ended June 30, 2020, Metro Government recognized pension expense of $220,357,694 ($76,020,176 for nonhazardous employees and $144,337,518 for hazardous employees).

The deferred outflows of resources and deferred inflows of resources related to pensions from the following sources are reflected below:

Deferred Deferred Outflows Inflows of Resources of Resources Difference between expected and actual investment earnings on plan investments $ - $ 17,045,456 Change in proportion and difference between employer contribution and proportional share 2,793,137 13,010,371 Difference between projected and actual experience 41,860,162 1,721,014 Change in assumptions 113,100,269 - 157,753,568 31,776,841 Contributions subsequent to the measurement date 73,673,448 - Total $ 231,427,016 $ 31,776,841

The net pension liability reported by Metro Government in fiscal year 2020 comes from the KRS proportionate share report dated June 30, 2019. The amount of $73,673,448 reported as deferred outflows of resources related to pensions resulting from Metro Government’s contributions subsequent to the measurement date will be recognized as a reduction to the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year end June 30: 2021 $ 87,780,062 2022 27,451,327 2023 9,612,106 2024 1,133,232 $ 125,976,727

101 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued v. Actuarial Assumptions for determining the Total Pension Liability and Net Pension Liability The total pension liability, net pension liability, and sensitivity information were based on an actuarial valuation date as of June 30, 2018. The total pension liability was rolled-forward from the valuation date to KRS's fiscal year ending June 30, 2019, using the following actuarial assumptions applied to all prior periods included in the measurement:

Valuation Date June 30, 2018 Experience Study July 1, 2008 – June 30, 2013 Actuarial Cost Method Entry Age Normal Amortization Method Level percentage of pay Remaining Amortization Period 26 years, closed Asset Valuation Method 20% of the difference between the market value of assets and the expected actuarial value of assets is recognized Inflation 2.30% Payroll Growth Rate 2.00% Salary Increase 3.30% to 10.30%, varies by service, for Nonhazardous; 3.55% to 19.05%, varies by service, for Hazardous Investment Rate of Return 6.25%

The mortality table used for active members was a Pub-2010 General Mortality table for Nonhazardous and the Pub-2010 Public Safety Mortality table for Hazardous; projected with the ultimate rates from the MP-2014 mortality improvement scale using a base year of 2010. The mortality table used for healthy retired members was a system-specific mortality table based on mortality experience from 2013-2018, projected with the ultimate rates from MP-2014 mortality improvement scale using a base year of 2019. The mortality table used for the disabled members was Pub-2010 Disabled Mortality table, with a four-year set-forward for both male and female rates, projected with the ultimate rates from MP-20147 mortality improvement scale using a base year of 2010.

The long-term expected return on plan assets is reviewed as part of the regular experience studies prepared every five years for KRS. The most recent analysis, performed for the period covering fiscal years 2008 through 2014, is outlined in the KRS report dated April 30, 2014.

Several factors are considered in evaluating the long-term rate of return assumption including long term historical data, estimates inherent in current market data, and a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected return, net of investment expense, and inflation) were developed by the investment consultant for each major asset class.

These ranges were 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 then adding expected inflation.

The capital market assumptions developed by the investment consultant are intended for use over a 10-year horizon and may not be useful in setting the long-term rate of return for funding pension plans that covers a longer time frame. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years.

102 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued The table below shows the aggregate actual and target allocations and the long-term expected real rate of return as reported by KRS:

Long-term Expected Target Actual Real Rate Asset Class Allocation Allocation of Return U.S. Equity 18.75% 18.90% 4.30% International Equity 18.75 20.80 4.80 Specialty Credit 15.00 16.20 1.35 Core Fixed Income 13.50 16.90 2.60 Real Return 15.00 8.90 4.10 Private Equity 10.00 9.30 6.65 Real Estate 5.00 3.70 4.85 Absolute return 3.00 2.60 2.97 Cash 1.00 2.70 2.00

Total 100.00% 100.00%

The long-term expected rate of return on pension plan investments was established by the KRS Board of Trustees as 6.25% based on a blending of the factors described above.

vi. Discount Rate The discount rate used to measure the total pension liability was 6.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at statutory contribution rates.

vii. Changes Since Measurement Date There were no changes between the measurement date of the collective net pension liability and the employer’s reporting date.

viii. Sensitivity of Metro Government’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents Metro Government’s proportionate share of the net pension liability calculated using the discount rate of 6.25%, as well as what its proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:

Current Metro Government’s Proportionate 1% Decrease Discount Rate 1% Increase Share of the Net Pension Liability 5.25% 6.25% 7.25% Nonhazardous $ 509,436,647 $ 407,315,889 $ 322,199,226 Hazardous 925,773,856 740,454,167 588,551,535 Total $ 1,435,210,503 $ 1,147,770,056 $ 910,750,761

ix. Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued KRS financial report.

103 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued B. Single Employer Plans i. Transit Authority of River City a. Plan Descriptions and Benefits General Information: TARC administers the Plan - a single employer defined benefit plan that provides pensions for specific employees of TARC. The Plan was closed to new entrants as of September 1, 1991. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). TARC has established a Pension Board, which consists of six members that include both management and union representatives. At December 31, 2019 and 2018, Plan membership consisted of:

December 31 December 31 Membership type 2019 2018 Retirees and beneficiaries currently receiving benefits 49 57 Vested active plan participants - -

As of September 1, 1991, the current members of the Plan had the option of transferring their assets to CERS toward the purchase of past service or remain in the Plan. Employees who became eligible for pension coverage after August 31, 1991, became members of CERS, a cost-sharing multiple-employer public employees' retirement system. The amount eligible to be transferred out of the Plan was determined by TARC.

Pension Benefits: All full-time employees, who were employed by TARC prior to September 1, 1991, were eligible to participate in the Plan beginning with the first full month of service. Benefits vested after five years of service and they are based on a monthly rate per year of service with monthly maximum benefits. The Plan also provides death and disability benefits. Effective September 1, 2010, the Plan elected an annual 2% increase in monthly benefit payments beginning March 1 for Plan years 2011-2016, a 0% increase in monthly benefit payments for Plan year 2017, and an annual 2% increase in monthly benefit payments beginning March 1 for Plan years 2018 and 2019. Starting in Plan year 2020, no cost of living adjustment is expected for the next six Plan years.

Effective for employees retiring after September 1, 1988, retirees' monthly benefits per year of service and maximum monthly benefit are as follows:

Maximum Benefit Monthly Amount Benefit Persons Retiring between: 9/1/1988 and 5/31/1989 $ 23,667 $ 710 6/1/1989 and 2/28/1990 24,667 740 3/1/1990 and 2/28/1991 25,667 770 3/1/1991 and 8/31/1992 26,667 800 9/1/1992 and 12/31/1993 27,667 830 1/1/1994 and 12/31/1994 28,667 860 1/1/1995 and later 29,667 890

The benefit amount is multiplied by the number of years (limited to 30 years) of credited service to determine the monthly retirement benefit.

If an employee dies before or after retirement date, their beneficiary shall be entitled to receive a sum equal to the accumulated employee contributions as of date of death. A married employee who elects the survivor option shall receive a monthly retirement benefit equal to 90% of their benefit as provided above, payable for the retired employee's lifetime, with one-half of such amount continuing monthly to the retired employee's spouse for the spouse's lifetime.

104 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued The monthly disability retirement benefit for an employee who retires shall be an amount computed as stated above, based on his/her credited service up to the date his/her disability commenced.

Funding Policy: TARC shall contribute to the Plan an amount needed to maintain the Plan in a sound condition as determined periodically based on an actuarial valuation. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the pension benefit obligation.

The actuarially determined contribution amount is based upon the sum of gross normal cost plus funding of past service costs over 10 years, less anticipated employee contributions. TARC contributed $595,256 and $461,850 to the Plan during 2019 and 2018, respectively. The actuarially determined contribution for Plan years 2019 and 2018 was $423,330 and $437,941, respectively.

During their employment with TARC, eligible employees were required to contribute an amount per hour that was agreed to in the bargaining agreement. Employee contributions were determined using the following amounts per hour:

March 1990 to August 1991 $ 0.375 September 1991 to December 2004 0.425

The final employee eligible to contribute into this Plan retired in 2004; therefore, there were no employee contributions to the Plan after that time.

b. Summary of Significant Accounting Policies and Plan Asset Matters Basis of Accounting: The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with GAAP. Under the accrual basis of accounting, contributions are recognized in the period in which the employee services are performed. Benefits are recognized when due and payable in accordance with terms of the Plan.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that certain reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investment Valuation and Income Recognition: The Plan's investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the exdividend date. Net appreciation (depreciation) in fair value of investments includes the Plan's gains and losses on investments bought and sold as well as held during the Plan year.

Administrative Expenses: Administrative expenses of the Plan are paid by the Plan as defined in the Plan Agreement.

Payment of Benefits: Benefit payments are recorded when paid.

Subsequent Events: Plan management has evaluated subsequent events for recognition and disclosure through May 18, 2020, which is the date the financial statements were available to be issued.

105 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Investment Policy: The Plan’s policy concerning the allocation of invested assets is established and may be amended by the Pension Board. The Pension Board’s policy is to pursue an investment strategy that reduces risk through the prudent diversification of the portfolio across collective trust funds and money market funds. The Plan is in compliance with this policy, which states that equity type investments are permitted but are not to exceed 75% of the total base cost of assets. The policy prohibits the Plan from holding unsecured investments in any public company exceeding 5% of the total market value of the Plan’s investments. The policy also prohibits the Plan from holding investments in any one specific industry exceeding 15% of the total market value of the Plan’s investments. The Plan’s target asset mix is currently 60% equity and 40% fixed income.

The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $115,333 in 2019 and depreciated in value by $9,453 in 2018.

Net Pension Liability: TARC’s net pension liability was measured as of January 1, 2019 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

The components of the net pension liability of TARC at December 31, 2019 and 2018 were as follows:

2019 2018 Total Pension Liability $ 2,304,533 $ 2,974,848 Plan Fiduciary Net Position (1,104,077) (871,648) Net Pension Liability $ 1,200,456 $ 2,103,200 Plan fiduciary net position as a percentage of the total pension liability 47.91% 29.30%

The total pension liability for 2019 was determined by an actuarial valuation as of January 1, 2020, using the following actuarial assumptions, applied to all periods included in the measurement:

 2% adjustment for cost of living in 2019.

 No cost of living adjustment for the next six years starting in 2020.

 Investment rate of return of 7% per annum.

 No projected salary increase, as there are no remaining active members in the Plan.

 Service cost is zero for all years since there are no active plan members accruing benefits.

 Mortality rates were based on RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected improvements after year 2006 under Projection Scale MP-2019 (male and female scales).

 Actuarial valuation method was based on the Entry Age Normal Cost Method, with the unfunded actuarial liability amortized over 10 years and any future liability changes amortized over average expected future lifetime.

 Asset valuation method based on the market value adjusted for accruals.

 Provision for expenses based on the replacement of prior year’s expenses paid from the trust.

106 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Changes in Assumptions: For the actuarial valuation as of January 1, 2020, the demographic and economic assumptions that affect the measurement of the total pension liability were updated as described in the summary of actuarial assumptions. For the January 1, 2020 actuarial valuation, the following changes in actuarial assumptions were incorporated:

 The mortality table changed from the RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected mortality improvements after year 2006 under Projection Scale MP-2018 (male and female scales) to the RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected mortality improvements after year 2006 under Projection Scale MP-2019 (male and female scales).

The total pension liability for 2018 was determined by an actuarial valuation as of January 1, 2019, using the following actuarial assumptions, applied to all periods included in the measurement:

 2% adjustment for cost of living in 2018 starting in March 2018.

 Investment rate of return of 7% per annum.

 No projected salary increase, as there are no remaining active members in the Plan.

 Service cost is zero for all years since there are no active plan members accruing benefits.

 Mortality rates were based on RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected improvements after year 2006 under Projection Scale MP-2018 (male and female scales).

 Actuarial valuation method was based on the Entry Age Normal Cost Method, with the unfunded actuarial liability amortized over 10 years and any future liability changes amortized over average expected future lifetime.

 Asset valuation method based on the market value adjusted for accruals.

 Provision for expenses based on the replacement of prior year’s expenses paid from the trust.

Changes in Assumptions: For the actuarial valuation as of January 1, 2019, the demographic and economic assumptions that affect the measurement of the total pension liability were updated as described in the summary of actuarial assumptions. For the January 1, 2019 actuarial valuation, the following changes in actuarial assumptions were incorporated:

 The mortality table changed from the RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected mortality improvements after year 2006 under Projection Scale MP-2017 (male and female scales) to the RP-2014 Generational Mortality Tables (Blue Collar) adjusted to 2006 with projected mortality improvements after year 2006 under Projection Scale MP-2018 (male and female scales).

107 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Long-term Expected Rate of Return: Return on Plan investments was determined 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 the Plan assets. Best estimates of the real rates of return for the Plan’s investments was 7.00% for both 2019 and 2018. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Target Long-Term Expected Asset Class Allocation Real Rate of Return Equity portfolio 60.00% 4.20% Fixed income portfolio 40.00 2.80 100.00%

Discount Rate: The discount rate used to measure the total pension liability was 7.0%. Based on projected future contributions, benefit payments and investment returns, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The projection of cash flows used to determine the discount rate assumed that TARC would contribute the actuarially determined contribution rate of projected compensation over the remaining 10-year amortization period of the unfunded actuarial accrued liability.

TRANSIT AUTHORITY OF RIVER CITY CHANGES IN TOTAL PENSION LIABILITY, PLAN FIDUCIARY NET POSITION & NET PENSION LIABILITY SINGLE EMPLOYER PENSION PLAN For the Year Ended December 31, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) – (b)

Balances - Beginning of year $ 2,974,848 $ 871,648 $ 2,103,200 Changes for the year: Interest 193,057 - 193,057 Differences between expected and actual experience (189,015) - (189,015) Contributions—employer - 595,256 (595,256) Net investment income - 125,663 (125,663) Benefit payments (473,229) (473,229) - Assumption changes (201,128) - (201,128) Administrative expenses - (15,261) 15,261 Net changes (670,315) 232,429 (902,744) Balances - End of year $ 2,304,533 $ 1,104,077 $ 1,200,456

108 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Sensitivity of the Net Pension Liability to Changes in the Discount Rate: The following presents the net pension liability of TARC, calculated using the discount rate of 7.00%, as well as what TARC’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 Rate 1% Increase Net Pension Liability 6.00% 7.00% 8.00% TARC's net pension liability $ 1,303,461 $ 1,200,456 $ 1,106,242

c. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, TARC recognized a pension benefit of $219,463 related to the Plan.

At June 30, 2020, TARC reported deferred outflows of resources and deferred inflows of resources related to the Plan from the following sources:

Deferred Deferred Outflows Inflows of Resources of Resources Contributions subsequent to measurement date $ 446,442 $ - Net difference between projected and actual earnings on investments - 60,485 Total $ 446,442 $ 60,485

Deferred outflows of resources resulting from employer contributions subsequent to the measurement date of $446,442 will be recognized as a reduction of net pension liability in the year ending June 30, 2021. The deferred outflows of resources resulting from the differences between projected and actual investment earnings on Plan investments are amortized over a four-year period with remaining amortization as follows:

Year ended June 30: 2021 $ (18,325) 2022 (19,414) 2023 (6,448) 2024 (16,298) $ (60,485)

Pension Plan Fiduciary Net Position: Detailed information about the pension plans' fiduciary net position is available in the separately issued audited pension plan financial reports. A copy of the separately issued audit report may be requested from the Chief Financial Officer, 1000 W. Broadway, Louisville, KY 40203.

ii. Fire and Police Pension Trust Funds a. Plan Descriptions and Benefits Most of the former City of Louisville’s firefighters and police officers transferred to CERS in 1989 and 1986, respectively. For those who did not transfer, Metro Government contributes to the Firefighters’ Pension Fund and the Policeman’s Retirement Fund (collectively, the “Funds”). Both Funds are single-employer defined benefit pension plans. The plans report on a calendar-year basis. These plans do not issue reports on a stand-alone basis.

109 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Membership of each plan consisted of the following at January 1, 2019:

Firefighters’ Policeman’s Pension Retirement Membership type Fund Fund Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits 132 99 Vested active plan participants - -

Benefits - A member may retire under the provisions of the:

 Firefighters’ Pension Fund: After reaching the age of 62 or having completed 20 years of service (25 years if hired after July 1, 1984), employee accounts vest after 10 years of service. Employees who retire with 20 years of service are eligible to receive 50% of their three-year average salary (25 years of service are eligible to receive 56% of their three-year average salary, if hired after July 1, 1984). The three-year average salary is the sum of the three highest fiscal years of annual base salary plus overtime and supplemental pay. The fund provides up to a maximum of 75% of the three-year average salary as the length of service increases. Upon termination, employees having completed 10 years of service but not considered eligible for normal retirement, shall receive a refund of contributions without interest under the Firefighters’ Pension Fund.

 Policeman’s Retirement Fund: After reaching age 62 or having completed 20 years of service (25 years of service if hired on or after April 1, 1985), employee accounts vest after five years of service. Under the Policeman’s Retirement Fund, employees who retire at or after age 62 with five or more years of service are entitled to receive payments for the remainder of their lives equal to 2% of their three-year average base salary times the number of years of service. The fund provides up to a maximum of 75% of the three-year average base salary as the length of service increases. Under the Policeman’s Retirement Fund, an employee who completes five years of service but is not yet eligible for normal retirement shall receive 75% of his or her contributions to the fund without interest, upon termination.

Both Funds include death and disability benefits whereby the surviving spouse or disabled employee is entitled to receive certain benefits. The Firefighters' Pension Fund includes death benefits that may reach 75% of base pay (at time of death) plus overtime and supplemental pay for firefighters. Disability payments may reach 75% of base pay (at time of disability) plus overtime and supplemental pay for firefighters. A disabled employee is entitled to receive disability payments for life, while the surviving spouse may receive death benefits for life or as long as the spouse does not remarry. The Policeman's Retirement Fund includes death benefits that may reach 75% of base pay (at time of death) for police officers. Disability payments may reach 75% of base pay (at time of disability). A disabled employee is entitled to receive disability payments for life, while the surviving spouse may receive death benefits for life or as long as the spouse does not remarry.

Contributions - The contribution requirements and benefit provisions for the Funds are established by state statute and Metro Government ordinance. The employees contribution rate for Firefighters’ Pension Fund was 7.0% of gross earnings to the fund, while employees contribution rate for the Policeman’s Retirement Fund was 6.5%. Metro Government contributed the required amount to the Firefighters’ Pension Fund and the Policeman’s Retirement Fund for each of the past three fiscal years.

Based on the actuarial valuations performed by consulting actuaries as of January 1, 2018, Metro Government was required to make annual contributions for fiscal year ended June 30, 2019 of $993,742 to the Policeman’s Retirement Fund and $1,377,882 to the Firefighters’ Pension Fund. Metro Government made excess of these requirements, paying $1,012,886 and $1,377,900 to the Policeman’s Retirement Fund and the Firefighters’ Pension Fund, respectively, in fiscal year 2019. For fiscal year 2018, Metro Government was required to make annual contributions of $1,161,525 to the Policeman’s Retirement Fund and $1,833,812 to the Firefighters’ Pension Fund. Metro Government exceeded these required payments, paying $1,976,200 and $2,682,989 to the Policeman's Retirement Fund and the Firefighters' Pension Fund, respectively, in fiscal year 2018.

110 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued

b. Summary of Significant Accounting Policies and Plan Asset Matters Basis of Accounting - The preparation of the financial statements of the Funds generally conform to the provisions of the GASB on financial reporting for pension plans. The Funds' financial statements are prepared on the accrual basis.

Plan member contributions are recognized in the period in which the contributions are due. Metro Government’s contributions are recognized when due and a formal commitment to provide the contributions has been made.

Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Administration costs for the plans are financed by Metro Government and are based on budgets submitted annually by administrators.

Investments - Investments are stated at fair value. Securities traded on a national exchange are valued at the last reported sales price. Gains or losses on the sale of fixed income securities are recognized using the completed transaction method.

There are no significant investments (other than U.S. Government and U.S. Government Agencies) in any one organization that represents 5% or more of net position available for benefits.

There are no investments or other assets legally reserved for purposes other than the payment of member benefits for either Fund. The historical asset allocation is similar to the target allocation of investments. The annual money-weighted rate of return is shown in the Required Supplementary Information.

Total Pension Liability and Net Pension Liability - The net pension liability of the Funds was measured as of December 31, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

Firefighters’ Policeman’s Pension Fund Retirement Fund Total Pension Liability $ 18,067,304 $ 11,958,299 Plan Fiduciary Net Position (12,010,208) (7,617,095) Net Pension Liability $ 6,057,096 $ 4,341,204 Plan fiduciary net position as a percentage of the total pension liability 66.47% 63.70%

111 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued The changes in the total pension liability, plan fiduciary net position, and net pension liability follow for each fund:

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CHANGES IN TOTAL PENSION LIABILITY, PLAN FIDUCIARY NET POSITION & NET PENSION LIABILITY FIREFIGHTERS’ PENSION FUND For the Year Ended December 31, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) – (b)

Balances - Beginning of year $ 18,732,961 $ 10,483,497 $ 8,249,464 Changes for the year: Interest 1,218,316 - 1,218,316 Differences between expected and actual experience 533,097 - 533,097 Contributions—employer - 1,377,900 (1,377,900) Net investment income - 2,490,641 (2,490,641) Benefit payments (2,406,549) (2,406,549) - Administrative expense - (303,181) 303,181 Assumption changes (10,521) - (10,521) Other changes - 367,900 (367,900) Net changes (665,657) 1,526,711 (2,192,368) Balances - End of year $ 18,067,304 $ 12,010,208 $ 6,057,096

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CHANGES IN TOTAL PENSION LIABILITY, PLAN FIDUCIARY NET POSITION & NET PENSION LIABILITY POLICEMAN’S RETIREMENT FUND For the Year Ended December 31, 2019

Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) – (b)

Balances - Beginning of year $ 12,813,266 $ 7,049,625 $ 5,763,641 Changes for the year: Interest 828,949 - 828,949 Differences between expected and actual experience 46,312 - 46,312 Contributions—employer - 1,012,886 (1,012,886) Contributions—employee - - - Net investment income - 1,224,116 (1,224,116) Benefit payments (1,730,228) (1,730,228) - Administrative expense - - - Assumption changes - (316,764) 316,764 Other changes - 377,460 (377,460) Net changes (854,967) 567,470 (1,422,437) Balances - End of year $ 11,958,299 $ 7,617,095 $ 4,341,204

112 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Actuarial assumptions and other information used to determine the annual required contributions are presented in the following table:

Firefighters’ Policeman’s Assumption Pension Fund Retirement Fund Valuation Date December 31, 2018 December 31, 2018 Actuarial Cost Method Entry Age Normal Entry Age Normal Amortization Method Level Percent, Closed Level Percent, Closed Remaining Amortization Period 15 years 15 years Asset Valuation Method Market Value, adjusted Market Value, adjusted for any accruals and for any accruals and receivables/payables receivables/payables Cost of Living Adjustment 2% per annum 2% per annum Salary Increase No Longer Applicable No Longer Applicable Discount Rate 7% for 38 years, 7% for 35 years, 3.26% thereafter 3.26% thereafter

Mortality rates for the Firefighters’ Pension Fund were based on the RP-2000 Mortality Table for Healthy Annuitants for males or females, as appropriate. For the Policeman’s Retirement Fund, mortality rates were Pre-retirement Mortality – RP-2000 Mortality Table for Healthy Annuitants (static table), Pre-retirement Mortality Type – 25% in line of duty and 75% not in line of duty, and Post-retirement Mortality Table for Healthy Annuitants (static table) for males or females, as appropriate.

The underlying method for selecting the long-term expected rate of return is based on the asset allocation of the Plans which target an 80% equity and 20% fixed income portfolio. The long-term expected rate of return for each fund is 7.00% established by Metro Government based on a blending of the factors described above.

The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Target Long-Term Expected Asset Class Allocation Real Rate of Return Equity portfolio 80.00% 8.00% Fixed income portfolio 20.00 3.00 100.00%

Discount Rate – Information about the discount rate follows:

Firefighters' Pension Fund: The discount rate used to measure the total pension liability was 7.00% for 39 years and 3.64% thereafter. The resulting uniform discount rate is 6.99% for the plans after considering the projected solvency.

Policeman's Retirement Fund: The discount rate used to measure the total pension liability was 7.00% for 35 years and 3.64% thereafter. The resulting uniform discount rate is 6.98% for the plans after considering the projected solvency.

The projection of cash flows used to determine the discount rate assumed that the employer contributions will be made on the basis of the current funding policy. Based on those assumptions, the Funds’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members through December 31, 2057 for the Firefighters’ Pension Fund and through December 31, 2053 for the Policeman’s Retirement Fund.

113 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued

The long-term expected rate of return on pension plan investments was applied to the periods of projected benefit payments through this date, and a 20-year municipal bond rate was used for the period thereafter to determine the total pension liability. The source of the municipal bond rate at the valuation date was from: https://us.spindices/com/indices/fixed-income/sp-municipal-bond-20-year-high-grade-rate-index/ .

Sensitivity of the Net Pension Liability - The following represents the net pension liability calculated using the stated discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:

1% Decrease Current Rate 1% Increase Net Pension Liability 6.00% 7.00% 8.00% Firefighters’ Pension Fund $ 7,171,343 $ 6,057,096 $ 5,062,052

1% Decrease Current Rate 1% Increase Net Pension Liability 5.98% 6.98% 7.98% Policeman’s Retirement Fund $ 5,051,908 $ 4,341,204 $ 3,705,510

c. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the recognized pension expense was $1,072,676 for the Firefighters’ Pension Fund, while the Policeman’s Retirement Fund recognized pension expense of $591,719.

At June 30, 2020, the Funds reported deferred outflows of resources and deferred inflows of resources in relation to pensions from the following sources:

Deferred Deferred Outflows Inflows of Resources of Resources Firefighters’ Pension Fund Contributions subsequent to measurement date $ - $ - Net difference between projected and actual earnings on investments - 1,035,714 Total $ - $ 1,035,714

Policeman’s Retirement Fund Contributions subsequent to measurement date $ 993,742 $ - Net difference between projected and actual earnings on investments - 25,496 Total $ 993,742 $ 25,496

Actual investment earnings above (or below) projected earnings are amortized over five years. Changes due to assumptions and experience losses/(gains) are amortized over the average remaining service period of active and inactive (no future service is assumed for inactive for this calculation).

The amount of $993,742 for the Policeman’s Retirement Fund reported as deferred outflows of resources are related to pensions resulting from Metro Government contributions subsequent to the measurement date will be recognized as a reduction of net pension liability in the year ended June 30, 2021.

114 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Firefighters’ Policeman’s Pension Retirement Year ended June 30: Fund Fund 2021 $ (260,140) $ (40,636) 2022 (317,121) 45,195 2023 (98,944) 121,680 2024 (359,509) (151,735) $ (1,035,714) $ (25,496)

Pension & Benefit Trust Funds activity is as follows:

COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION & BENEFIT TRUST FUNDS December 31, 2019

Firefighters’ Policeman’s Total Pension & Pension Fund Retirement Fund Benefit Trust ASSETS Cash and cash equivalents $ 284,753 $ 611,255 $ 896,008 Equity mutual funds 9,523,840 6,494,022 16,017,862 Bond mutual funds 2,207,242 - 2,207,242 Accounts receivable and accrued interest 124,524 611,508 736,032 Due from Metro Government 540,862 318,989 859,851 Total assets 12,681,221 8,035,774 20,716,995

DEFERRED OUTFLOWS OF RESOURCES OPEB related deferred outflows 46,337 26,563 72,900 Pension related deferred outflows 95,498 54,270 149,768 Total deferred outflows of resources 141,835 80,833 222,668 Total assets and deferred outflows of resources 12,823,056 8,116,607 20,939,663

LIABILITIES Accounts payable and accrued liabilities 5,629 99,690 105,319 Health insurance reimbursement 124,522 - 124,522 Net OPEB liability, CERS 119,133 69,767 188,900 Net pension liability, CERS 498,291 291,801 790,092 Total liabilities 747,575 461,258 1,208,833

DEFERRED INFLOWS OF RESOURCES OPEB related deferred inflows 43,816 25,667 69,483 Pension related deferred inflows 21,457 12,587 34,044 Total deferred inflows of resources 65,273 38,254 103,527

NET POSITION Restricted for pension benefits 12,010,208 7,617,095 19,627,303 Total liabilities, deferred inflows of resources, and net position $ 12,823,056 $ 8,116,607 $ 20,939,663

115 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

17. Defined Benefit Pension Plans, continued

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION & BENEFIT TRUST FUNDS For the Year Ended December 31, 2019

Firefighters’ Policeman’s Total Pension & Pension Fund Retirement Fund Benefit Trust ADDITIONS Contributions: Employer $ 1,377,900 $ 1,012,886 $ 2,390,786 Total contributions 1,377,900 1,012,886 2,390,786 Investment earnings: Increase in fair value of investments 772,309 1,061,360 1,833,669 Realized gains and losses 1,749,824 92,653 1,842,477 Interest and dividends 3,390 137,028 140,418 Total investment earnings 2,525,523 1,291,041 3,816,564 Investment expense (34,882) (66,925) (101,807) Net investment earnings 2,490,641 1,224,116 3,714,757 Other income 876,571 762,665 1,639,236 Total additions 4,745,112 2,999,667 7,744,779 DEDUCTIONS Benefit payments 2,406,549 1,730,228 4,136,777 Administration expense 303,182 316,764 619,946 Health insurance reimbursement 508,671 385,205 893,876 Total deductions 3,218,402 2,432,197 5,650,599

Net decrease in net position 1,526,710 567,470 2,094,180 Net position--beginning of the year 10,483,498 7,049,625 17,533,123 Net position--end of the year $ 12,010,208 $ 7,617,095 $ 19,627,303

116 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

18. Implementation of GASB Pronouncements A. Accounting Pronouncements Adopted during the Fiscal Year ended June 30, 2020 The financial statements of Metro Government are prepared in conformity with GAAP as applied to government units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. During the current year, Metro Government adopted the following GASB pronouncements:

 GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance: Provides temporary relief to governments and other stakeholders in light of the COVID-19 pandemic by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018. The requirements of this Statement are effective immediately. Metro Government adopted this standard for fiscal year ended June 30, 2020. The adoption of the standard has no impact on Metro Government's financial statements.

 GASB Statement No. 92, Omnibus 2020: Establishes accounting and financial reporting requirements for specific issues related to leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing and insurance related activities of public entity risk pools, fair value measurements, and derivative instruments. The initial requirements of Statement No. 92 are effective as follows: (a) The requirements in paragraphs 4, 5, 11, and 13 are effective upon issuance. (b) The requirements in paragraphs 6 and 7 are effective for fiscal years beginning after June 15, 2020. (c) The requirements in paragraphs 8, 9, and 12 are effective for reporting periods beginning after June 15, 2020. (d) The requirements in paragraph 10 are effective for government acquisitions occurring in reporting periods beginning after June 15, 2020. Statement No. 95 postpones the effective dates of this statement by one year. Metro Government adopted Statement No. 95, which postponed the implementation of this statement by one year. Management is currently evaluating the effect of this statement on Metro Government's financial statements.

B. Future Implementation of GASB Pronouncements In addition to the pronouncements discussed above, the GASB has issued additional guidance for state and local governments that is not yet effective. Metro Government is currently reviewing the provisions of the following pronouncements to determine the impact of implementation in future periods.  Implementation Guide No. 2019-1: Implementation Guidance Update - 2019: The objective of this implementation guide is to provide guidance that clarifies, explains, or elaborates on GASB statements. (FY 2021)

 Statement No. 84, Fiduciary Activities: Establishes criteria for identifying fiduciary activities of all state and local governments. (FY 2021)

 Implementation Guide No. 2019-2, Fiduciary Activities: The objective of this implentation guide is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 84, Fiduciary Activities. (FY 2021)

 Statement No. 87, Leases: To meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. It 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. (FY 2023)

 Implementation Guide No. 2019-3, Leases: The objective of this implentation guide is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 87, Leases. (FY 2023)

117 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

18. Implementation of GASB Pronouncements, continued  Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period: Establishes accounting requirements for interest cost incurred before the end of a construction period. This statement enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period. (FY 2022)

 Statement No. 90, Majority Equity Interests - an amendment of GASB Statements No. 14 and No. 61: Provides guidance on how to improve reporting of Majority Equity Interests. This statement improves the consistency and comparability of reporting a government's majority equity interest in legally separate organizations and to improve the relevance of financial statement information for certain component units. (FY 2021)

 Statement No. 91, Conduit Debt Obligations: Provides single method of reporting conduit debt obligations. This statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note. (FY 2023)

 Statement No. 93, Replacement of Interbank Offered Rates: Establishes accounting and financial reporting requirements related to the replacement of IBORs in hedging derivative instruments and leases. It also identifies appropriate benchmark interest rates for hedging derivative instruments. The requirements of this Statement, except for paragraphs 11b, are effective for reporting periods beginning after June 15, 2020. The requirement in paragraph 11b is effective for reporting periods ending after December 31, 2021. (FY 2021 and FY 2022)

 Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements: Establishes standards of accounting and financial reporting for PPPs and APAs for governments. (FY 2023)

 GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs): Establishes standards of accounting and financial reporting for SBITAs by a government end user (a government). (FY 2023)

 GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans: The statement (a) clarifies how the absence of a governing board should be considered in determining whether a primary government is financially accountable for purposes of evaluating potential component units and (b) modifies the applicability of certain component unit criteria as they relate to defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans (for example, certain Section 457 plans). The requirements of this statement are effective as follow: (a) The requirement in (1) paragraph 4 of this Statement as it applies to defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans and (2) paragraph 5 of this Statement are effective immediately. (b) The requirements in paragraphs 6–9 of this Statement are effective for fiscal years beginning after June 15, 2021. (c) All other requirements of this Statement are effective for reporting periods beginning after June 15, 2021. The adoption of paragraphs 4 and 5 does not have any material impact on Metro Government's financial statements. Management is evaluating the effect of the remaining paragraphs of this statement on Metro Government's financial statements. (FY 2022)

118 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT NOTES TO THE FINANCIAL STATEMENTS June 30, 2020

19. Subsequent Events A. Metro Government Metro Government made two draws on its Revolving Credit Agreement with U.S. Bank National Association between the time of the end of the fiscal period (June 30, 2020) and the date of publication. The first was a $12,000,000 draw on July 30, 2020 and the second was a $13,000,000 draw received on November 6, 2020. As of December 31, 2020, Metro Government has an outstanding balance of $45,000,000 on its line of credit with U.S. Bank National Association.

On November 4, 2020, Metro Government issued $40,385,000 of General Obligation Bonds, Series 2020A (tax-exempt) to finance various new money projects as described in the Metro Government 2020-2021 Capital Project Budget. The Series 2020A, issued at a premium, are payable in semi-annual principal installments, ranging from $800,000 to $4,210,000, beginning October 1, 2021, at coupon interest rates ranging from 1.625% to 5.000%, over 20 years, and an All-In True Interest Cost rate of 1.547438%.

The schedules in Note 7 do not reflect the impact of the issue above.

B. Component Units i. Metropolitan Sewer District On July 30, 2020, MSD issued $225,000,000 of revenue bonds, Series 2020A. The proceeds of the Series 2020A bonds will be used to pay, at maturity, redeem, and refund program notes issued and outstanding as senior subordinate debt under the resolution and MSD’s program note resolution, the proceeds of which were used for the purpose of financing the cost of capital improvements and additions to MSD’s sewer and drainage stem and refinancing other program notes previously used under the program note resolution and to pay the costs of issuance of the Series 2020A bonds.

On August 1, 2020, MSD's rate for wastewater and stormwater service charges increased by 5.0%.

On September 11, 2020, MSD submitted an application for a SRF loan from the KIA in an amount not to exceed $8,270,000 to finance the Rosa Terrace, Sanders, Wathen, and Sonne Pump Station project. MSD anticipates it will execute an assistance agreement for this project with the KIA in fiscal year 2021. Interest will be payable semiannually at a fixed rate of 2.5% per year commencing after funds are first drawn on the loan. The loan will be repaid over a period not to exceed 20 years from the date placed in operation.

On September 22, 2020 MSD sold $112,065,000 of its taxable sewer and drainage system revenue refunding bonds Series 2020C. The proceeds of the Series 2020C bonds will be used: together with other available funds of the District, to advance refund and redeem on May 15, 2023, MSD’s sewer and drainage system revenue refunding bonds, Series 2013C maturing on and after May 15, 2024 and to pay the costs of issuance of the Series 2020C bonds. The proceeds of the prior bonds were used to pay the costs of capital improvements and additions to MSD’s sewer and drainage system. The sale of the Series 2020C bonds closed on October 15, 2020. The refunding reduces debt service payments over the next twenty four years by $26,590,053 which is a net present value savings of $18,675,198.

On September 22, 2020, MSD sold $226,340,000 of sewer and drainage system subordinated BAN, Series 2020 with a coupon rate of 5.00% and an effective interest rate of 0.228%. The proceeds of the notes were used to refund the 2019 notes at maturity on October 23, 2020 and to pay the costs of issuance of the Series 2020 notes. The 2020 notes closed on October 14, 2020 and mature on October 20, 2021.

Commercial paper notes of $85,000,000 are outstanding as of October 30, 2020 in accordance with the respective Revolving Credit Agreements. Interest rates on the notes outstanding range from 0.18% to 0.25% and maturities range from 5 to 97 days. MSD intends to reissue maturing commercial paper in accordance with the refinancing terms of the Revolving Credit Agreements and periodically refund such maturities with proceeds from the issuance of long-term revenue bonds.

119 Required Supplementary Information Required Supplementary Information

Required Supplementary Information, while not a part of the basic financial statements, is information required by GASB to be presented alongside the basic financial statements. GASB has determined that the information is essential for stakeholders and other readers. The Required Supplementary Information contains the following:

• Budget and Actual on Basis of Budgeting - General Fund • CERS Other Postemployment Benefits (OPEB) • Schedule of Proportionate Share of the Net OPEB Liability • Schedule of Contributions • CERS Pension • Schedule of Proportionate Share of the Net Pension Liability • Schedule of Contributions • Single Employer Pensions • Schedule of Changes in the Net Pension Liability • Schedule of Contributions • Schedule of Investment Returns

120 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BASIS OF BUDGETING - GENERAL FUND For the Year Ended June 30, 2020 Variance with Final Budget and Actual Reconciliation Amounts Actual Amounts of Basis Actual Amounts Budgetary Basis Original Budget Final Budget GAAP Basis Difference Budgetary Basis Over / (Under) REVENUES Property taxes $ 175,160,000 $ 175,160,000 $ 174,531,481 $ (15,572) $ 174,515,909 $ (644,091) Occupational taxes 433,212,521 433,212,521 422,401,863 2,494,208 424,896,071 (8,316,450) Licenses and permits 17,132,200 17,132,200 17,324,319 (230,377) 17,093,942 (38,258) Intergovernmental 28,797,200 44,797,200 32,161,785 (233,401) 31,928,384 (12,868,816) Charges for services 53,955,300 53,896,439 42,606,097 2,497,579 45,103,676 (8,792,763) Fees and fines 5,350,000 5,350,000 4,983,164 205,915 5,189,079 (160,921) Investment income 820,000 820,000 4,419,838 7 4,419,845 3,599,845 Dividends 19,100,000 19,100,000 18,709,913 - 18,709,913 (390,087) Donations 2,879,900 7,002,800 6,426,764 (122,677) 6,304,087 (698,713) Miscellaneous 1,228,900 1,228,900 1,496,197 (229,569) 1,266,628 37,728 Total revenues 737,636,021 757,700,060 725,061,421 4,366,113 729,427,534 (28,272,526) EXPENDITURES Current operating: General Government: Metro Council 7,830,900 6,311,710 6,131,129 12,508 6,143,637 (168,073) Mayor's Office 2,253,500 2,253,500 2,111,149 (258) 2,110,891 (142,609) Jefferson County Attorney 9,541,200 9,541,200 9,067,472 - 9,067,472 (473,728) Other Elected Officials 12,935,900 13,435,900 13,243,309 (6,379) 13,236,930 (198,970) Louisville Fire 59,743,800 59,622,550 55,683,112 (79,204) 55,603,908 (4,018,642) Emergency Medical Services 25,346,300 27,860,860 22,166,477 28,778 22,195,255 (5,665,605) Emergency Management/MetroSafe 16,953,000 19,453,000 15,500,590 306,328 15,806,918 (3,646,082) Metro Corrections 55,606,500 55,606,500 50,259,142 323,963 50,583,105 (5,023,395) Youth Transportation Services 8,450,600 8,450,600 5,498,973 53,338 5,552,311 (2,898,289) Metro Animal Services 4,596,500 4,529,033 4,450,345 - 4,450,345 (78,688) Criminal Justice Commission 390,000 409,665 374,068 - 374,068 (35,597) Firefighters' Pension Fund 3,996,900 3,996,900 2,264,249 - 2,264,249 (1,732,651) Policeman's Retirement Fund 3,996,900 3,996,900 1,736,245 - 1,736,245 (2,260,655) Louisville Metro Police Department 186,728,500 187,155,202 169,265,457 33,574 169,299,031 (17,856,171) Economic Development 13,819,800 14,857,489 8,885,405 29,041 8,914,446 (5,943,043) Develop Louisville 8,308,500 10,876,715 8,312,468 (749,117) 7,563,351 (3,313,364) Air Pollution Control District 3,104,100 3,395,787 3,519,004 (993) 3,518,011 122,224 Codes and Regulations 11,473,600 11,473,600 11,245,069 - 11,245,069 (228,531) Parks & Recreation 27,010,700 27,161,453 27,327,907 6,353 27,334,260 172,807 Office of Resilience and Community Services 10,057,100 20,884,929 11,096,967 (147,278) 10,949,689 (9,935,240) Office of Safe and Healthy Neighborhoods 1,166,500 1,166,500 1,047,429 (164,326) 883,103 (283,397) Public Health & Wellness 19,845,500 25,000,362 17,628,728 (19,961) 17,608,767 (7,391,595) Public Works & Assets 39,772,000 39,834,592 31,499,253 (336,754) 31,162,499 (8,672,093) Office of Civic Innovation and Technology 18,045,300 19,045,300 15,974,114 (19,665) 15,954,449 (3,090,851) Facilities and Fleet Management 42,700,500 42,701,337 39,528,710 80,511 39,609,221 (3,092,116) Office of Management & Budget 42,333,600 40,529,220 33,612,932 391,128 34,004,060 (6,525,160) Office of Performance & Improvement 393,700 468,447 443,704 - 443,704 (24,743) Human Resources 5,216,400 5,216,400 4,748,346 (20,650) 4,727,696 (488,704) Human Relations Commission 838,600 838,300 910,898 - 910,898 72,598 Louisville Free Public Library 22,350,000 22,004,457 19,095,278 (9,743) 19,085,535 (2,918,922) Louisville Zoo 16,227,000 16,142,238 14,771,117 (102,804) 14,668,313 (1,473,925) Internal Audit 714,900 714,900 663,092 - 663,092 (51,808) Debt service interest and other charges 86,500 486,500 405,592 - 405,592 (80,908) Total expenditures 681,834,800 705,422,046 608,467,730 (391,610) 608,076,120 (97,345,926) Excess (deficiency) of revenues over expenditures 55,801,221 52,278,014 116,593,691 4,757,723 121,351,414 69,073,400 OTHER FINANCING SOURCES/(USES) Transfers in 847,854 847,854 Transfers out (72,697,802) (72,697,802) Total other financing sources/(uses) (71,849,948) (71,849,948) Net change in fund balances 44,743,743 49,501,466 Fund balances--beginning 110,019,670 99,308,982 Fund balances--ending $ 154,763,413 $ 148,810,448

Note: In the Metro Government Annual Budget the following agencies are presented differently: Emergency Medical Services and Emergency Management/MetroSafe are presented as one agency; budgets for Suburban Fire, Firefighter's Pension Fund and Policeman's Retirement Fund are included in Criminal Justice Commission's budget; the budget for Air Pollution Control District is included in Economic Development's budget, which also includes an appropriation for KentuckianaWorks. Parks and Recreation includes appropriations for Waterfront Development and the Kentucky Science Center. Develop Louisville includes an appropriation for Brightside. The Occupational taxes amounts for Original and Final budgets have been modified to include the amount of Occupational tax revenue received from Revenue Commission for debt service payments.

121 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - CERS OPEB SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY JUNE 30

2020 2019 2018 Metro Government’s proportionate share of the net OPEB liability $ 295,693,343 $ 300,991,501 $ 344,999,842

Metro Government’s proportion of the net OPEB liability Nonhazardous 5.79% 5.82% 5.75% Hazardous 26.80% 27.72% 27.76%

Covered payroll 306,414,664 305,079,688 297,128,562

Metro Government’s share of the net OPEB liability as a percentage of its covered payroll 96.50% 98.66% 116.11%

Total Plan fiduciary net position as a percentage of the total OPEB liability 61.75% 59.76% 54.52%

Note 1: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

Note 2: The amounts presented for each fiscal year were determined as of the year end that occurred one year prior.

Changes in Assumptions and Benefit Terms from 2019 to 2020: Since the prior measurement date, annual salary increases were updated based on the 2018 Experience Study; annual rates of retirement, disability, withdrawal, and mortality were updated based on the 2018 Experience Study; the percent of disabilities assumed to occur in the line of duty was updated from 0% to 2% for non-hazardous members and 50% for hazardous members; the assumed increase in future health care costs, or trend assumption, is reviewed on an annual basis and was updated (i.e. increased) to better reflect more current expectations relating to anticipated future increases in the medical costs for post-age 65 retirees; and the assumed impact of the Cadillac Tax was changed from a 3.6% to a 0.9% load on employer paid premiums for Non-Medicare retirees who became participants prior to July 1, 2003.

Changes in Assumptions and Benefit Terms from 2018 to 2019: Since the prior measurement date, there have been no changes in actuarial assumptions. However, during the 2018 legislative session, House Bill 185 was enacted, which updated the benefit provisions for active members who die in the line of duty. Benefits paid to the spouses of deceased members have been increased from 25% of the member's final rate of pay to 75% of the member's average pay. If the member does not have a surviving spouse, benefits paid to surviving dependent children have been increased from 10% of the member's final pay rate to 50% of average pay for one child, 65% of average pay for two children, or 75% of average pay for three children. The TPL as of June 30, 2018 was determined using these updated benefit provisions.

122 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - CERS OPEB SCHEDULE OF CONTRIBUTIONS JUNE 30

2020 2019 2018

Statutorily required contribution $ 21,377,198 $ 26,112,621 $ 23,098,272

Contributions in relation to the contractually required contribution (21,377,198) (26,112,621) (23,098,272)

Contribution deficiency / (excess) $ - $ - $ -

Covered payroll $ 297,281,314 $ 306,414,664 $ 305,079,688

Contributions as a percentage of covered payroll 7.18% 8.52% 7.57%

Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

123 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - CERS PENSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY JUNE 30

2020 2019 2018 2017 2016 2015 Metro Government’s proportionate share of the net $ pension liability $ 1,147,770,056 1,025,008,210 $ 957,399,902 $ 756,258,403 $ 669,512,880 $ 523,687,000

Metro Government’s proportion of the net pension liability Nonhazardous 5.79% 5.82% 5.75% 5.78% 5.83% 5.89% Hazardous 26.81% 27.73% 27.76% 27.72% 27.56% 27.67%

Covered payroll $ 306,414,664 $ 305,079,688 $ 297,128,562 $ 286,403,760 $ 279,213,055 $ 277,606,379

Metro Government’s share of the net pension liability as a percentage of its covered payroll 374.58% 335.98% 322.22% 264.05% 239.79% 188.64%

Total Plan fiduciary net position as a percentage of the total pension liability 49.43% 52.40% 52.40% 55.11% 58.49% 51.61%

Note 1: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

Note 2: The amounts presented for each fiscal year were determined as of the year end that occurred one year prior.

Changes in Assumptions and Benefit Terms from 2019 to 2020: Since the prior measurement date, annual salary increases were updated based on the 2018 Experience Study; annual rates of retirement, disability, withdrawal, and mortality were updated based on the 2018 Experience Study; the percent of disabilities assumed to occur in the line of duty was updated from 0% to 2% for non-hazardous members and 50% for hazardous members; the assumed increase in future health care costs, or trend assumption, is reviewed on an annual basis and was updated (i.e. increased) to better reflect more current expectations relating to anticipated future increases in the medical costs for post-age 65 retirees; and the assumed impact of the Cadillac Tax was changed from a 3.6% to a 0.9% load on employer paid premiums for Non-Medicare retirees who became participants prior to July 1, 2003.

Changes in Assumptions and Benefit Terms from 2018 to 2019: Since the prior measurement date, there have been no changes in actuarial assumptions. However, during the 2018 legislative session, House Bill 185 was enacted, which updated the benefit provisions for active members who die in the line of duty. Benefits paid to the spouses of deceased members have been increased from 25% of the member’s final rate of pay to 75% of the member’s average pay. If the member does not have a surviving spouse, benefits paid to surviving dependent children have been increased from 10% of the member’s final pay rate to 50% of average pay for one child, 65% of average pay for two children, or 75% of average pay for three children. The TPL as of June 30, 2018 was determined using these updated benefit provisions.

124 Changes in Assumptions and Benefit Terms from 2017 to 2018: Since the prior measurement date, the demographic and economic assumptions that affect the measurement of the total pension liability have been updated as described: (i) the assumed investment rate of return was decreased from 7.50% to 6.25%, (ii) the assumed rate of inflation was reduced from 3.25% to 2.30%, and (iii) payroll growth assumption was reduced from 4.00% to 2.00%.

Note: There were no changes from 2016 to 2017.

Changes in Assumptions and Benefit Terms from 2015 to 2016: Since the prior measurement date, the demographic and economic assumptions that affect the measurement of the total pension liability have been updated as described: (i) the assumed investment rate of return was decreased from 7.75% to7.50%, (ii) the assumed rate of inflation was reduced from 3.50% to 3.25%, (iii) the assumed rate of wage inflation was reduced from 1.00% to 0.75%, (iv) payroll growth assumption was reduced from 4.50% to 4.00%, (v) the mortality table used for active members is RP-2000 Combined Mortality Table projected with Scale BB to 2013 (multiplied by 50% for males and 30% for females). For healthy retired members and beneficiaries, the mortality table used is the RP-2000 Combined Mortality Table projected with Scale BB to 2013 (set back 1 year for females). For disabled members, the RP-2000 Combined Disabled Mortality Table projected with Scale BB to 2013 (set back 4 years for males) is used for the period after disability retirement. There is some margin in the current mortality tables for possible future improvement in mortality rates and that margin will be reviewed again when the next experience investigation is conducted, and (vi) the assumed rates of retirement, withdrawal and disability were updated to more accurately reflect experience.

125 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - CERS PENSION SCHEDULE OF CONTRIBUTIONS JUNE 30

2020 2019 2018 2017 2016 2015

Statutorily required contribution $ 73,673,448 $ 65,781,683 $ 58,565,556 $ 53,533,956 $ 48,017,806 $ 48,095,460

Contributions in relation to the contractually required contribution (73,673,448) (65,781,683) (58,565,556) (53,533,956) (48,017,806) (48,095,460)

Contribution deficiency / (excess) $ - $ - $ - $ - $ - $ -

Covered payroll $ 297,281,314 $ 306,414,664 $ 305,079,688 $ 297,128,562 $ 286,403,760 $ 279,213,055

Contributions as a percentage of covered payroll 24.78% 21.47% 19.20% 18.02% 16.77% 17.23%

Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

126 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - SINGLE EMPLOYER PENSIONS SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY DECEMBER 31 Firefighters' Pension Fund

2019 2018 2017 2016 2015 2014 Total Pension Liability Total Pension Liability - January 1 $ 18,732,961 $ 19,806,514 $ 21,435,460 $ 22,852,523 $ 24,135,093 $ 24,630,219 Changes for the year: Interest cost 1,218,316 1,292,928 1,387,106 1,495,092 1,585,619 1,731,650 Differences between expected and actual experience 533,097 51,416 (404,214) (318,488) (129,606) (166,665) Changes of assumptions (10,521) - (98,163) 108,210 - 785,839 Benefit payments (2,406,549) (2,417,897) (2,513,675) (2,701,877) (2,738,583) (2,845,950) Total Pension Liability - December 31 18,067,304 18,732,961 19,806,514 21,435,460 22,852,523 24,135,093

Plan Fiduciary Net Position Plan Fiduciary Net Position - January 1 10,483,497 11,047,061 9,094,886 8,430,697 9,505,109 8,688,396 Changes for the year: Contributions - employer 1,377,900 2,332,970 2,682,989 2,945,318 2,906,318 3,143,954 Net investment income 2,490,641 (537,497) 1,728,023 359,570 (1,242,147) 518,709 Benefit payments/refunds (2,406,549) (2,417,897) (2,513,675) (2,701,877) (2,738,583) (2,845,950) Administrative expenses and reimbursements (303,182) (287,990) (278,412) (270,872) - - Other charges 367,900 346,850 333,250 332,050 - - Plan Fiduciary Net Position - December 31 12,010,207 10,483,497 11,047,061 9,094,886 8,430,697 9,505,109 Net Pension Liability - December 31 $ 6,057,097 $ 8,249,464 $ 8,759,453 $ 12,340,574 $ 14,421,826 $ 14,629,984 Plan fiduciary net position as a percentage of the total pension liability 66.47% 55.96% 55.77% 42.43% 36.89% 39.38%

Covered payroll, as of December 31 N/A N/A N/A N/A N/A N/A

Net pension liability as a percentage of covered payroll N/A N/A N/A N/A N/A N/A

Note 1: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

No changes were made to the actuarial assumptions and methods from the last measurement date.

127 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - SINGLE EMPLOYER PENSIONS SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY DECEMBER 31 Policeman's Retirement Fund

2019 2018 2017 2016 2015 2014 Total Pension Liability Total Pension Liability - January 1 $ 12,813,266 $ 14,379,013 $ 15,030,360 $ 17,100,800 $ 18,299,029 $ 18,472,218 Changes for the year: Interest cost 828,949 896,180 943,032 1,051,544 1,155,210 1,293,881 Differences between expected and actual experience 46,312 (429,711) 281,893 (874,978) (369,491) (43,156) Changes of assumptions - (217,073) 41,496 (134,755) 156,520 829,265 Benefit payments (1,730,228) (1,815,143) (1,917,768) (2,112,251) (2,140,468) (2,253,179) Total Pension Liability - December 31 11,958,299 12,813,266 14,379,013 15,030,360 17,100,800 18,299,029

Plan Fiduciary Net Position Plan Fiduciary Net Position - January 1 7,049,625 8,495,978 7,392,856 6,509,629 7,661,800 7,457,171 Changes for the year: Contributions - employer 1,012,886 1,104,150 1,976,200 2,041,183 1,976,165 1,896,693 Contributions - employee - 2,588 4,575 4,347 - - Net investment income 1,224,116 (800,255) 901,387 878,789 (987,623) 561,918 Benefit payments/refunds (1,730,228) (1,815,143) (1,917,768) (2,112,251) (2,140,468) (2,253,179) Administrative expenses and reimbursements (316,764) (301,437) (283,287) (267,562) (1,328) (1,145) Other charges 377,460 363,744 422,015 338,721 1,083 342 Plan Fiduciary Net Position - December 31 7,617,095 7,049,625 8,495,978 7,392,856 6,509,629 7,661,800 Net Pension Liability - December 31 $ 4,341,204 $ 5,763,641 $ 5,883,035 $ 7,637,504 $ 10,591,171 $ 10,637,229 Plan fiduciary net position as a percentage of the total pension liability 63.70% 55.02% 59.09% 49.19% 38.07% 41.87%

Covered payroll, as of December 31 $ - $ - $ 61,963 $ 62,290 $ 61,877 $ 60,590

Net pension liability as a percentage of covered payroll N/A N/A 9494.43% 12261.20% 17116.49% 17556.08%

Note 1: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available. No changes were made to the actuarial assumptions and methods from the last measurement date.

128 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - SINGLE EMPLOYER PENSIONS SCHEDULE OF CONTRIBUTIONS DECEMBER 31 Firefighters' Pension Fund

2019 2018 2017 2016 2015 2014 Actuarially determined contribution $ 1,377,882 $ 1,245,440 $ 1,883,812 $ 2,673,328 $ 2,906,318 $ 3,143,954 Contribution in relation to the actuarially determined contributions (1,377,900) (2,332,970) (2,682,989) (2,945,318) (2,906,318) (3,143,954) Contribution in excess covered payroll $ (18) $ (1,087,530) $ (799,177) $ (271,990) $ - $ - Covered payroll, as of December 31 N/A N/A N/A N/A N/A N/A Contributions as a percentage of covered payroll N/A N/A N/A N/A N/A N/A

Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - SINGLE EMPLOYER PENSIONS SCHEDULE OF CONTRIBUTIONS DECEMBER 31 Policeman's Retirement Fund

2019 2018 2017 2016 2015 2014 Actuarially determined contribution $ 993,742 $ 1,032,065 $ 1,161,525 $ 1,663,300 $ 1,976,165 $ 1,821,693 Contribution in relation to the actuarially determined contributions (1,012,886) (1,104,150) (1,976,200) (2,041,183) (1,976,165) (1,821,693) Contribution in excess covered payroll $ (19,144) $ (72,085) $ (814,675) $ (377,883) $ - $ - Covered payroll, as of December 31 $ - $ - $ 61,963 $ 62,290 $ 61,877 $ 60,590 Contributions as a percentage of covered payroll N/A N/A 3189.32% 3276.90% 3193.70% 3006.59%

Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, Metro Government is presenting information for those years for which information is available.

129 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT REQUIRED SUPPLEMENTARY INFORMATION - SINGLE EMPLOYER PENSIONS SCHEDULE OF INVESTMENT RETURNS DECEMBER 31 Annual money-weighted rate of return, net of investment expense

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Firefighters’ Pension Fund 26.35% (4.60)% 20.19% 5.09% 1.52% 7.82% 21.62% 11.44% 4.13% 5.50% 21.78% Policeman’s Retirement Fund 20.02% (9.22)% 15.00% 15.73% (3.62)% 9.30% 23.20% 11.56% 0.01% 8.87% 21.11%

130 Other Supplementary Information Other Supplementary Information - Combining Financial Statements

Other Supplementary Information - Combining Financial Statements is information presented outside the basic financial statements that is not considered necessary for the financial statements to be fairly presented in accordance with the applicable financial reporting framework required by GASB. It should be derived from, and directly related to, the underlying records used to prepare the financial statements. The Other Supplementary Information - Combining Financial Statements contain the following:

• Nonmajor Governmental Funds • Combining Balance Sheet • Combining Statement of Revenues, Expenditures, and Changes in Fund Balances • Internal Service Funds • Combining Statement of Fund Net Position • Combining Statement of Fund Revenues, Expenses, and Changes in Net Position • Combining Statement of Cash Flows • Agency Funds • Combining Statement of Fiduciary Net Position • Combining Statement of Changes in Assets and Liabilities

131 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2020

Debt Service Capital Projects Total Capital Capital Nonmajor General Projects Special Projects Governmental Obligation Corporation Purpose Fund Corporation Funds ASSETS Cash and cash equivalents $ - $ - $ 5,750,278 $ 1,627,812 $ 7,378,090 Investments - - 1,505,474 455,879 1,961,353 Restricted assets: Cash and cash equivalents 3,815,921 2,737 - - 3,818,658 Total assets 3,815,921 2,737 7,255,752 2,083,691 13,158,101 LIABILITIES Accounts payable - - 112,441 - 112,441 Total liabilities - - 112,441 - 112,441 FUND BALANCES Restricted for: Debt service reserve 3,815,921 2,737 - - 3,818,658 Assigned to: Capital projects - - 7,143,311 2,083,691 9,227,002 Total fund balances 3,815,921 2,737 7,143,311 2,083,691 13,045,660 Total liabilities and fund balances $ 3,815,921 $ 2,737 $ 7,255,752 $ 2,083,691 $ 13,158,101

132 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2020

Debt Service Capital Projects Total Capital Public Capital Nonmajor General Projects Special Properties Projects Governmental Obligation Corporation Purpose Fund Corporation Corporation Funds REVENUES Intergovernmental $ 3,193,709 $ 4,241,712 $ 1,638,691 $ - $ - $ 9,074,112 Charges for services - - 15,345 - - 15,345 Fees and fines - - 6,209 - - 6,209 Investment income 54,975 - 46,815 - - 101,790 Total revenues 3,248,684 4,241,712 1,707,060 - - 9,197,456 EXPENDITURES Current: Office of Management & Budget - 2,500 - - - 2,500 Debt service: Principal 45,545,000 2,965,000 - - - 48,510,000 Interest and other charges 18,192,771 1,359,979 - - - 19,552,750 Capital outlay - - 2,575,346 - - 2,575,346 Total expenditures 63,737,771 4,327,479 2,575,346 - - 70,640,596 Deficiency of revenues under expenditures (60,489,087) (85,767) (868,286) - - (61,443,140) OTHER FINANCING SOURCES Transfers in 60,958,782 82,939 - - 2,083,691 63,125,412 Transfers out - - - (2,083,691) - (2,083,691) Total other financing sources 60,958,782 82,939 - (2,083,691) 2,083,691 61,041,721 Net change in fund balances 469,695 (2,828) (868,286) (2,083,691) 2,083,691 (401,419) Fund balances--beginning 3,346,226 5,565 8,011,597 2,083,691 - 13,447,079 Fund balances--ending $ 3,815,921 $ 2,737 $ 7,143,311 $ - $ 2,083,691 $ 13,045,660

133 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF FUND NET POSITION INTERNAL SERVICE FUNDS June 30, 2020

Louisville Insurance and Jefferson Co. Risk Metro Management Revenue Fund Commission Total ASSETS Current assets: Cash and cash equivalents $ 60,415,117 $ 55,354,985 $ 115,770,102 Cash and cash equivalents, restricted - 14,015,260 14,015,260 Investments 15,817,215 - 15,817,215 Accounts receivable 666,027 - 666,027 Deposits with paying agents 75,000 - 75,000 Total current assets 76,973,359 69,370,245 146,343,604 Capital assets: Furniture and equipment, net - 5,110,556 5,110,556 Total capital assets - 5,110,556 5,110,556 Total assets 76,973,359 74,480,801 151,454,160

LIABILITIES Current liabilities: Accounts payable 5,580,360 2,704,633 8,284,993 Refunds payable - 162,009 162,009 Claims and judgments, current 19,883,810 - 19,883,810 Accounts payable to related parties, Louisville Metro Government - 2,355 2,355 Due to other funds - 60,997,564 60,997,564 Total current liabilities 25,464,170 63,866,561 89,330,731 Noncurrent liabilities: Claims and judgments 33,478,091 - 33,478,091 Total noncurrent liabilities 33,478,091 - 33,478,091 Total liabilities 58,942,261 63,866,561 122,808,822

DEFERRED INFLOWS OF RESOURCES Deferred tax credit receipts - 5,693,190 5,693,190 Toal deferred inflows of resources - 5,693,190 5,693,190

NET POSITION Net investment in capital assets - 5,110,556 5,110,556 Restricted for: Insurance reserves 2,513,481 - 2,513,481 Total restricted 2,513,481 - 2,513,481 Unrestricted 15,517,617 (189,506) 15,328,111 Total net position 18,031,098 4,921,050 22,952,148 Total liabilities, deferred inflows of resources and net position $ 76,973,359 $ 74,480,801 $ 151,454,160

134 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF FUND REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended June 30, 2020

Louisville Insurance and Jefferson Co. Risk Metro Management Revenue Fund Commission Total

OPERATING REVENUES: Premiums, collections, and other fees $ 58,842,439 $ 5,095,169 $ 63,937,608 Insurance income 13,957,840 - 13,957,840 Total operating revenues 72,800,279 5,095,169 77,895,448

OPERATING EXPENSES: Professional services 3,991,604 4,098,017 8,089,621 Contractual services - 641,193 641,193 Other supplies and expenses 6,500 330,241 336,741 Insurance claims, settlements and losses 66,617,209 - 66,617,209 Insurance premiums 3,106,371 - 3,106,371 Depreciation - 1,756,913 1,756,913 Total operating expenses 73,721,684 6,826,364 80,548,048 Operating (loss) (921,405) (1,731,195) (2,652,600)

NONOPERATING REVENUES: Investment income 8 - 8 Total nonoperating revenues 8 - 8 Net (loss) before transfers (921,397) (1,731,195) (2,652,592) Transfers in 10,671,972 - 10,671,972 Change in net position 9,750,575 (1,731,195) 8,019,380 Total net position--beginning 8,280,523 6,652,245 14,932,768 Total net position--ending $ 18,031,098 $ 4,921,050 $ 22,952,148

135 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended June 30, 2020

Louisville Insurance and Jefferson Co. Risk Management Metro Revenue Fund Commission Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from premiums, collection, and other fees $ 58,959,585 $ 5,095,169 $ 64,054,754 Insurance income 13,955,845 - 13,955,845 Payments to employees (257,016) (3,838,069) (4,095,085) Payments to suppliers (3,734,588) (1,231,378) (4,965,966) Contractual services 4,953,015 - 4,953,015 Claims and judgments paid (64,244,661) - (64,244,661) Insurance premiums paid (3,106,371) - (3,106,371) Decrease in cash collected for others - (23,543,951) (23,543,951) Other payments (6,500) - (6,500) Net cash provided/(used) by operating activities 6,519,309 (23,518,229) (16,998,920)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 10,671,972 - 10,671,972 Net cash provided by noncapital financing activities 10,671,972 - 10,671,972

CASH FLOWS FROM INVESTING ACTIVITIES Change in investment pool participation 11,717,439 - 11,717,439 Investment income 8 - 8 Net cash provided by investing activities 11,717,447 - 11,717,447 Net increase/(decrease) in cash and cash equivalents 28,908,728 (23,518,229) 5,390,499 Cash and cash equivalents-beginning 31,506,389 92,888,474 124,394,863 Cash and cash equivalents-ending $ 60,415,117 $ 69,370,245 $ 129,785,362

Reconciliation of Operating Loss to Net Cash Provided/(Used) By Operating Activities Operating loss $ (921,405) $ (1,731,195) $ (2,652,600) Adjustments to reconcile operating loss to net cash provided/(used) by operating activities: Depreciation expense - 1,756,913 1,756,913 Increase/(decrease) in cash due to changes in assets and liabilities: Accounts receivable 115,151 - 115,151 Accounts and other payables 4,909,082 442,369 5,351,451 Liability for incurred claims and judgments 2,416,481 - 2,416,481 Due to other funds and governmental agencies - (17,781,167) (17,781,167) Deferred inflows of resources - (6,205,149) (6,205,149) Net cash provided/(used) by operating activities $ 6,519,309 $ (23,518,229) $ (16,998,920)

136 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS June 30, 2020

Escrow and Revenue Mass Transit Deposit Commission Total ASSETS Cash and cash equivalents $ 3,207,693 $ 10,539,810 $ - $ 13,747,503 Certificates of deposit 100,000 - - 100,000 Contributions receivable and other 26 36,232 - 36,258 Interfund receivables 4,780,669 - 14,015,260 18,795,929 Due from other governmental agencies 6,116,446 - - 6,116,446

Total assets 14,204,834 10,576,042 14,015,260 38,796,136 LIABILITIES Accounts payable and accrued liabilities 166,365 910,213 - 1,076,578 Due to other governmental agencies 14,038,469 - 14,015,260 28,053,729 Refundable deposits - 9,665,829 - 9,665,829

Total liabilities $ 14,204,834 $ 10,576,042 $ 14,015,260 $ 38,796,136

137

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended June 30, 2020

Mass Transit Balance Balance July 1, June 30, 2019 Additions Deductions 2020 ASSETS Cash and cash equivalents $ 2,132,236 $ 63,712,099 $ 62,636,642 $ 3,207,693 Certificates of deposit 100,000 - - 100,000 Contribution receivable and other 128 47 149 26 Interfund receivables 6,000,627 4,780,669 6,000,627 4,780,669 Due from other governmental agencies 6,051,496 6,116,446 6,051,496 6,116,446

Total assets 14,284,487 74,609,261 74,688,914 14,204,834

LIABILITIES Accounts payable 79,033 166,365 79,033 166,365 Due to other governmental agencies 14,205,454 56,373,292 56,540,277 14,038,469

Total liabilities $ 14,284,487 $ 56,539,657 $ 56,619,310 $ 14,204,834

Escrow and Deposit Balance Balance July 1, June 30, 2019 Additions Deductions 2020 ASSETS Cash and cash equivalents $ 11,218,718 $ 13,005,827 $ 13,684,735 $ 10,539,810 Contribution receivable and other - 60,108 23,876 36,232

Total assets 11,218,718 13,065,935 13,708,611 10,576,042

LIABILITIES Accounts payable - 910,213 - 910,213 Due to other governmental agencies 37,890 - 37,890 - Refundable deposits 11,180,828 6,524,324 8,039,323 9,665,829

Total liabilities $ 11,218,718 $ 7,434,537 $ 8,077,213 $ 10,576,042

Revenue Commission Balance Balance July 1, June 30, 2019 Additions Deductions 2020 ASSETS Interfund receivables $ 23,064,750 $ 185,861,691 $ 194,911,181 $ 14,015,260

Total assets 23,064,750 185,861,691 194,911,181 14,015,260

LIABILITIES Due to other governmental agencies 23,064,750 185,861,691 194,911,181 14,015,260

Total liabilities $ 23,064,750 $ 185,861,691 $ 194,911,181 $ 14,015,260

138 139 Statistical Section Statistical Section

The objectives of the Statistical Section are to provide financial statement users with additional historical perspective, context, and detail to assist in using the information in the financial statements, notes to the financial statements, and the required supplementary information to understand and assess a government's economic condition.

Information is presented in five catagories: financial trends, revenue capacity, debt capacity, demographic and economic, and operating.

140 Statistical Section

This part of Metro Government’s CAFR presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about Metro Government’s overall financial health.

Contents Page Financial Trends Summary of Net Position and Changes in Net Position 142 Fund Balance, Governmental Funds 143 Changes in Fund Balance, Governmental Funds 144 Revenue Capacity General Governmental Revenues by Source 145 General Fund Tax Revenues by Source 146 Employment, Income and Occupational Tax Revenues 147 Principal Withholding Taxpayers 148 Assessed and Estimated Actual Value of Taxable Property (Metro and USD) 149-150 Direct and Overlapping Governments Tax Rates 151 Principal Property Taxpayers 152 Property Tax Levies and Collections 153 Debt Capacity Legal Debt Margin 154 Direct and Overlapping Governmental Activities Debt 155 Ratios of Outstanding Debt by Type 156 Ratios of General Bonded Debt Outstanding 157 Pledged Revenue Coverage 158 Demographic and Economic Indicators Population Growth 159 Principal Employers 160 Number of Government Employees by Function/Program 161 Operating Information Miscellaneous Operating Indicators and Capital Asset Information 162-164

These schedules contain service and infrastructure data to help the reader understand how the information in Metro Government’s financial report relates to the services Metro Government provides and the activities it performs.

141 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT SUMMARY OF NET POSITION AND CHANGES IN NET POSITION Last Ten Fiscal Years 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Primary Government/Governmental Activities: Net investment in capital assets $ 564,365,332 $ 561,495,114 $ 605,614,641 $ 592,136,882 $ 613,703,722 $ 519,383,561 $ 588,414,685 $ 671,451,385 $ 765,166,483 $ 773,411,553 Restricted 117,847,207 105,432,176 114,534,971 102,447,018 108,156,832 129,776,847 157,392,453 136,967,955 16,938,766 69,973,117 Unrestricted (68,207,245) (73,702,597) 612,809,973 673,254,749 154,810,977 153,453,858 89,303,396 (188,893,927) (353,357,902) (393,605,954) Total Primary Government/Governmental Activities Net Position $ 614,005,294 $ 593,224,693 $ 1,332,959,585 $ 1,367,838,649 $ 876,671,531 $ 802,614,266 $ 835,110,534 $ 619,525,413 $ 428,747,347 $ 449,778,716 Primary Government/Governmental Activities: Expenses General Government $ 24,642,512 $ 24,356,217 $ 25,551,288 $ 24,959,340 $ 27,667,424 $ 28,949,797 $ 30,722,827 $ 36,684,456 $ 36,913,694 $ 38,533,436 Public Protection 165,249,244 180,560,832 173,165,530 178,457,835 185,695,917 196,518,124 201,144,972 215,342,571 226,944,845 230,863,339 Louisville Metro Police Department 146,109,848 149,203,869 154,390,579 166,543,751 174,573,333 179,485,583 194,540,340 221,936,793 229,350,879 232,629,244 Develop Louisville - - - - 17,355,055 17,257,539 29,017,733 29,398,351 35,196,156 24,263,315 Economic Development/APCD 46,807,358 40,714,536 39,022,221 36,586,292 21,210,884 133,189,464 24,647,114 28,312,383 33,886,123 27,773,090 Codes & Regulations 10,260,304 10,162,793 13,203,773 12,689,355 6,755,777 8,212,418 7,920,502 13,639,980 13,741,909 14,091,300 Parks & Recreation 27,335,066 34,427,841 32,020,006 35,381,854 36,768,286 40,756,427 41,767,653 48,100,818 46,568,670 40,814,508 Office of Resilience and Community Services 48,008,957 37,987,193 38,238,990 33,276,562 33,455,039 32,796,195 26,877,813 27,740,851 30,144,214 35,278,222 Office of Safe & Healthy Neighborhoods ------3,604,176 2,941,631 Public Health & Wellness 26,097,549 37,286,740 30,902,897 29,051,919 25,589,495 20,040,431 23,668,554 36,302,299 36,995,617 37,312,266 Public Works & Assets 115,037,984 121,557,241 107,057,482 97,489,191 71,092,808 88,810,401 86,447,125 108,118,845 92,511,927 87,416,104 Office of Civic Innovation and Technology 10,284,427 11,410,236 12,111,989 12,049,036 12,671,624 14,342,681 15,735,589 18,342,518 21,804,205 21,956,701 Facilities and Fleet Management ------35,392,743 57,559,440 55,329,733 Office of Management & Budget 30,926,357 25,968,370 28,750,138 28,003,568 66,090,396 63,140,900 64,071,597 42,100,463 47,707,352 46,281,101 Office of Performance Improvement - - - 786,196 1,086,780 1,324,155 1,425,126 1,843,267 1,743,455 499,050 Human Resources 3,643,413 3,683,658 4,029,030 3,838,145 3,826,529 3,984,022 4,505,951 5,688,195 5,987,068 6,052,037 Related Agencies 38,706,100 35,595,222 34,884,831 35,710,144 36,812,637 44,657,311 45,154,523 49,915,801 60,740,699 50,802,153 Interest expense 19,397,158 17,886,190 16,133,319 14,433,550 12,577,236 15,068,075 15,392,915 16,151,274 16,689,800 15,692,590 Total Expenses 712,506,277 730,800,938 709,462,073 709,256,738 733,229,220 888,533,523 813,040,334 935,011,608 998,090,229 968,529,820 Program Revenues: Charges for Services: Emergency Medical Services 14,857,817 15,827,599 14,875,428 15,016,285 17,397,699 17,034,887 17,553,430 13,125,893 13,910,144 11,734,046 Codes & Regulation 11,476,715 12,240,045 13,714,006 15,050,262 19,817,678 19,793,127 19,507,931 17,551,006 19,984,546 20,248,575 Louisville Zoo 9,337,769 14,347,717 9,674,461 10,055,819 10,048,797 10,502,885 11,052,877 9,898,443 9,878,624 4,996,735 Economic Development 12,377,407 11,837,685 5,766,022 4,965,184 2,425,472 4,190,442 7,227,315 3,699,403 3,054,924 2,308,348 Other 65,108,525 34,959,342 39,137,833 39,752,384 44,472,266 46,753,814 51,809,023 49,242,675 52,465,986 31,242,737 Total Charges for Services 113,158,233 89,212,388 83,167,750 84,839,934 94,161,912 98,275,155 107,150,576 93,517,420 99,294,224 70,530,441 Operating Grants and Contributions 92,108,638 99,653,680 94,956,266 89,354,359 65,469,606 77,916,538 83,473,746 83,998,087 95,615,719 135,523,018 Capital Grants and Contributions 47,352,771 30,007,843 30,619,786 18,032,812 40,427,419 31,589,116 26,426,240 31,980,392 37,165,266 16,039,050 Total Primary Government Program Revenues 252,619,642 218,873,911 208,743,802 192,227,105 200,058,937 207,780,809 217,050,562 209,495,899 232,075,209 222,092,509 Net (Expense) Revenue (459,886,635) (511,927,027) (500,718,271) (517,029,633) (533,170,283) (680,752,714) (595,989,772) (725,515,709) (766,015,020) (746,437,311) General Revenues: Taxes Property taxes, levied for general purposes 135,553,293 134,925,775 146,224,312 140,252,274 145,215,158 151,684,603 157,387,932 166,033,793 171,508,087 176,363,041 Occupational taxes 304,470,948 311,921,717 332,642,106 342,160,707 363,247,789 383,942,352 398,376,170 414,803,705 432,693,080 422,401,863 Investment income 1,185,714 803,261 317,716 866,649 446,799 806,261 1,011,619 190,034 7,025,452 5,961,467 Gain on equity interest in LWC - - 27,767,655 27,368,502 30,927,799 31,462,285 31,691,517 30,288,816 32,856,489 31,708,413 Dividends 18,232,699 18,873,435 18,937,347 20,055,060 20,768,549 20,558,305 19,832,441 19,338,075 19,047,575 18,709,913 Other intergovernmental revenue 13,499,503 14,409,201 13,466,456 13,961,702 13,694,877 14,448,839 14,345,375 15,155,765 15,643,486 109,532,772 Amortization of intra-entity transfer - - - 532,020 532,019 532,019 532,019 532,019 532,019 532,019 Gain on sale of assets 323,156 34,705 4,861,434 3,994,793 11,001 1,261,750 1,074,035 111,168 283,106 50,001 Other taxes 3,480,660 984,143 309,135 299,836 355,117 441,673 439,826 457,327 108,422 32,217 Rental receipts (1) ------Miscellaneous 4,635,565 9,194,189 1,960,028 2,417,254 1,398,184 1,557,362 3,795,106 1,332,394 2,909,435 2,176,974 Total General Revenues 481,381,538 491,146,426 546,486,189 551,908,797 576,597,292 606,695,449 628,486,040 648,243,096 682,607,151 767,468,680 Change in Net Position 21,494,903 (20,780,601) 45,761,918 34,879,064 43,427,009 (74,057,265) 32,496,268 (77,272,613) (83,407,869) 21,031,369 Net Position - beginning 595,810,958 614,005,294 593,224,693 1,436,405,968 1,367,838,649 876,671,531 802,614,266 835,110,534 619,525,413 428,747,347 Prior period adjustment (3,300,567) - 797,419,357 (103,446,383) (534,594,127) - - (138,312,508) (107,370,197) - Net Position - beginning, restated 592,510,391 614,005,294 1,390,644,050 1,332,959,585 833,244,522 876,671,531 802,614,266 696,798,026 512,155,216 428,747,347 Net Position - ending $ 614,005,294 $ 593,224,693 $ 1,436,405,968 $ 1,367,838,649 $ 876,671,531 $ 802,614,266 $ 835,110,534 $ 619,525,413 $ 428,747,347 $ 449,778,716

(1) Rental receipts were reclassified into program income.

142 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT FUND BALANCE, GOVERNMENTAL FUNDS Last Ten Fiscal Years

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

General Fund Nonspendable $ 2,152,746 $ 2,201,362 $ 2,234,245 $ 1,827,935 $ 1,383,067 $ 1,543,084 $ 1,286,598 $ 1,422,089 $ 4,695,901 $ 4,851,873 Committed 8,398,077 5,516,769 12,145,968 9,121,441 7,208,401 18,122,565 12,725,508 13,923,790 14,437,188 57,398,546 Assigned 3,237,648 4,782,910 - 5,075,503 17,324,373 13,097,525 14,123,050 18,467,229 20,014,395 21,399,779 Unassigned 61,481,800 62,427,431 60,993,761 62,487,554 66,081,010 67,909,239 68,910,080 69,410,079 70,872,186 71,113,215

Total General Fund $ 75,270,271 $ 74,928,472 $ 75,373,974 $ 78,512,433 $ 91,996,851 $ 100,672,413 $ 97,045,236 $ 103,223,187 $ 110,019,670 $ 154,763,413

All Other Governmental Funds Nonspendable $ 30,601,612 $ 31,876,842 $ 42,194,182 $ 36,686,860 $ 35,403,863 $ 33,314,580 $ - $ - $ 192,029 $ 58,789,105 Restricted Debt service reserve 702,588 1,188,444 1,549,007 1,874,159 2,264,092 5,083,285 7,351,292 4,457,492 3,351,791 3,818,658 Grant programs - - - - - (152,166) - - - - Other capital projects 33,149,813 22,193,090 16,471,248 22,212,134 29,694,105 59,886,439 67,914,277 79,957,379 32,405,484 18,135,435 Committed 13,420,935 14,477,155 18,712,355 16,462,358 13,686,363 18,338,639 12,489,255 12,956,114 10,661,863 111,347,026 Assigned Capital projects 56,415,646 43,955,089 49,828,695 30,660,936 29,690,390 34,519,116 32,544,212 24,730,232 10,095,288 9,227,002 Other purposes 1,695,405 1,317,853 - - - 1,352,393 47,518,366 47,518,366 75,231,066 - Unassigned ------(710,696) (88,320,342)

Total All Other Governmental Funds $ 135,985,999 $ 115,008,473 $ 128,755,487 $ 107,896,447 $ 110,738,813 $ 152,342,286 $ 167,817,402 $ 169,619,583 $ 131,226,825 $ 112,996,884

(1) Metro Government elected to implement GASB Statement No. 54, Fund Balance Reporting and the Governmental Fund Type Definitions, in fiscal year 2009. This statement allows the entity to apply prospectively in the statistical section. Therefore, Metro Government has not reclassified prior information.

143 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS Last Ten Fiscal Years

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 REVENUES Property taxes $ 138,778,419 $ 135,292,983 $ 146,395,352 $ 140,114,870 $ 145,930,479 $ 151,559,429 $ 156,760,361 $ 166,297,600 $ 170,602,995 $ 174,531,481 Occupational taxes 304,470,948 311,921,717 332,642,106 342,160,707 363,247,789 383,942,352 398,376,170 414,803,705 432,693,080 422,401,863 Licenses and permits 11,368,388 11,605,120 11,310,699 12,751,256 17,501,754 17,676,637 15,038,237 14,839,749 16,269,560 17,413,037 Intergovernmental 155,184,610 143,345,773 135,815,730 121,489,356 116,222,595 113,562,520 115,723,006 123,389,677 126,706,777 155,714,526 Charges for services 87,881,294 75,011,225 68,797,114 62,197,666 70,985,287 74,926,747 72,879,653 73,227,940 76,817,742 45,566,176 Fees and fines 3,198,045 3,343,794 4,109,364 4,594,366 4,933,455 5,218,961 5,128,452 5,449,730 6,206,922 7,551,228 Investment income 1,185,714 803,261 317,716 866,649 446,799 806,261 1,011,619 190,034 7,025,452 5,961,467 Dividends 18,232,699 18,873,435 18,931,347 20,055,060 20,768,549 20,558,305 19,832,441 19,338,075 19,047,575 18,709,913 Donations 10,092,130 5,149,786 6,420,941 5,455,900 4,465,835 11,242,858 8,799,235 7,056,722 15,313,630 10,166,994 Miscellaneous 4,398,396 9,232,820 1,964,512 2,267,202 828,470 1,268,027 3,795,105 1,332,394 2,909,435 2,176,974 Total revenues 734,790,643 714,579,914 726,704,881 711,953,032 745,331,012 780,762,097 797,344,279 825,925,626 873,593,168 860,193,659 EXPENDITURES General Government 24,666,853 24,090,917 24,326,121 24,505,744 26,623,663 27,723,782 28,639,671 30,682,310 30,108,941 30,988,716 Public Protection 161,712,743 164,487,923 167,301,188 169,421,490 169,852,405 173,264,229 180,141,581 173,107,168 179,691,453 179,338,987 Louisville Metro Police Department 145,142,734 146,384,294 145,861,874 162,414,323 166,916,128 170,358,402 180,388,165 186,134,784 187,694,632 188,490,959 Develop Louisville - - - - 16,704,960 16,498,130 26,992,432 24,834,486 28,860,278 19,676,644 Economic Development/APCD 45,274,868 38,142,444 35,307,818 32,577,093 18,388,191 128,022,137 18,389,461 23,136,924 25,151,452 20,724,030 Codes & Regulations 10,260,927 10,055,407 12,573,693 12,462,632 6,502,716 7,033,831 7,351,368 11,334,093 11,257,001 11,404,193 Parks & Recreation 24,637,647 28,386,403 25,287,010 28,320,015 29,790,919 33,714,669 3,343,477 34,896,686 33,542,767 30,393,771 Office of Resilience and Community Services 46,153,340 37,568,161 36,398,441 32,666,551 32,190,468 27,157,179 25,007,245 23,319,100 24,726,347 28,613,754 Office of Safe and Healthy Neighborhoods ------2,917,899 2,405,154 Public Health & Wellness 25,963,966 36,693,912 29,261,333 28,364,636 24,469,644 18,698,575 21,844,178 30,268,547 30,152,159 30,028,869 Public Works & Assets 87,164,736 87,164,736 80,831,004 80,908,231 53,611,347 71,186,668 65,387,822 75,542,623 60,441,715 54,420,984 Office of Information Technology 9,337,569 10,309,590 10,682,818 10,990,985 11,601,162 13,545,096 14,044,734 14,615,461 17,046,345 16,860,419 Facilities and Fleet Management ------25,830,301 43,436,785 40,365,337 Office of Management & Budget 30,855,010 25,583,709 27,289,853 30,737,314 63,455,842 59,521,844 57,682,537 32,300,862 35,205,784 33,715,243 Office of Performance Improvement - - - 772,149 1,046,071 1,276,651 1,316,751 1,539,280 1,430,203 443,704 Human Resources 3,647,513 3,643,159 3,836,766 3,769,569 3,683,193 3,813,502 4,133,448 4,769,409 4,899,198 4,885,444 Related Agencies 34,632,946 31,446,405 31,629,495 32,275,766 32,840,695 35,912,329 38,910,753 38,749,407 46,511,362 37,911,321 Debt service principal 36,100,000 38,306,051 40,419,497 39,884,168 44,196,641 48,498,814 131,636,243 47,124,662 68,347,966 48,510,000 Debt service interest and other payments 16,426,350 15,014,147 14,293,180 13,018,262 12,844,244 18,323,504 19,385,694 20,756,271 20,989,059 20,024,462 Line of Credit principal ------45,000,000 Capital outlay 39,852,354 36,228,306 32,379,439 33,758,724 37,478,308 62,232,996 80,689,813 97,657,727 99,489,715 74,096,384 Total expenditures 741,829,556 733,505,564 717,679,530 736,847,652 752,196,597 916,782,338 905,285,373 896,600,101 951,901,061 918,298,375 Other Financing Sources (Uses) Proceeds from sale of capital assets 323,156 34,705 15,985,084 3,994,793 11,001 1,261,750 1,074,035 111,168 283,106 50,001 Issuance of bonds, par 9,385,000 - 10,100,000 6,961,900 - - 147,485,000 25,070,000 30,405,000 40,845,000 Issuance of bonds, premium 58,702 - - - - - 13,481,408 75,959,756 (93,993) 4,395,489 Issuance of refunding bonds, par 41,300,000 - 16,835,000 9,380,000 52,218,362 179,918,360 - - - - Issuance of refunding bonds, premium/(discount) 1,341,521 - 2,804,708 693,069 2,085,609 - - - - - Issuance of debt, capital lease - 3,500,000 ------Issuance of Line of Credit ------15,000,000 50,000,000 Bond issuance costs paid - - - (9,880,000) ------Refunded bond principal, interest, and premium - - - (109,673) ------Proceeds from long term note 10,000,000 ------Payment to bond refunding escrow agent (42,030,940) - (19,223,684) - (21,517,816) - - - - - Note Revenue - - - - 149,940 149,940 149,940 149,940 - - Transfers in 61,262,097 62,640,229 69,340,694 48,756,830 60,989,622 78,562,253 163,293,047 63,644,657 85,729,370 65,401,285 Transfers out (75,545,398) (68,568,949) (90,674,937) (52,622,580) (70,144,604) (80,778,823) (175,694,397) (79,516,894) (91,375,885) (76,073,257) Total other financing sources (uses) 6,094,138 (2,394,015) 5,166,865 7,174,339 23,792,114 179,113,480 149,789,033 85,418,627 39,947,598 84,618,518 Net change in fund balance $ (944,775) $ (21,319,665) $ 14,192,216 $ (17,720,281) $ 16,926,529 $ 43,093,239 $ 41,847,939 $ 14,744,152 $ (38,360,295) $ 26,513,802

Ratio of total debt service expenditures 7.48% 7.65% 7.98% 7.52% 7.98% 7.82% 18.31% 8.50% 10.48% 8.12% to noncapital expenditures

(1) During fiscal year 2010, Neighborhoods was disbanded and its divisions were moved to Parks & Recreation.

144 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT GENERAL GOVERNMENTAL REVENUES BY SOURCE (1) Last Ten Fiscal Years

Donations and Fiscal Licenses and Inter- Charges for Fines and Investment Miscellaneous Year Taxes Permits governmental Services Forfeitures Income Revenue Total Revenues 2011 443,249,367 11,168,192 153,497,428 85,845,830 3,198,045 567,731 7,058,190 704,584,783 2012 447,214,700 11,605,120 141,088,592 73,142,640 3,311,544 519,963 12,113,961 688,996,520 2013 479,037,458 11,310,699 134,470,127 66,212,186 4,109,364 62,864 3,971,153 699,173,851 2014 482,275,577 12,751,256 118,913,528 58,513,390 4,594,366 611,253 4,010,244 681,669,614 2015 509,178,268 17,501,754 113,582,408 70,948,853 4,933,455 226,126 3,475,096 719,845,960 2016 535,501,781 17,451,637 111,325,834 73,392,941 5,204,720 537,537 6,195,129 749,609,579 2017 555,136,531 15,038,237 114,550,259 71,961,013 5,117,887 265,938 11,226,488 773,296,353 2018 581,101,305 14,839,749 120,996,488 72,069,823 5,403,260 (482,570) 7,366,372 801,294,427 2019 603,296,075 16,269,560 120,767,674 75,616,703 5,449,902 4,000,416 8,808,440 834,208,770 2020 596,933,344 17,413,037 153,521,641 87,413,353 4,983,941 4,717,557 9,823,902 874,806,775

(1) Includes General, Special Revenue, and Debt Service Funds.

145 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT GENERAL FUND TAX REVENUES BY SOURCE Last Ten Fiscal Years

Bank and Public Interest, Fiscal General Life Insurance Service Occupational Penalties and Year Total Taxes Property Taxes Shares Corporations Taxes Other (1) Other Fees 2011 443,249,367 117,583,514 4,790,507 6,595,542 304,470,948 8,389,009 1,419,847 2012 447,214,700 117,758,838 4,769,261 6,156,154 311,921,717 5,894,287 714,443 2013 479,037,458 119,461,158 4,976,240 12,049,982 332,642,106 9,184,756 723,216 2014 482,275,592 120,956,463 5,028,818 7,765,117 342,160,722 5,666,983 697,489 2015 509,178,269 123,213,176 4,983,804 10,299,465 363,247,789 6,794,760 639,275 2016 535,501,781 128,546,766 5,410,201 10,466,682 383,942,352 6,448,576 687,204 2017 555,136,531 133,688,304 5,773,210 9,342,513 398,376,170 7,226,682 729,652 2018 581,101,305 139,126,003 6,035,438 14,325,469 414,803,705 6,141,038 669,652 2019 603,296,075 142,030,741 6,743,075 13,206,566 432,693,080 7,923,337 699,276 2020 596,933,344 148,488,382 7,320,520 11,255,362 422,401,863 6,953,178 514,039

(1) Tax revenues designated as Other include deed taxes, delinquent taxes, and other miscellaneous property taxes.

146 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT EMPLOYMENT, INCOME, AND OCCUPATIONAL TAX REVENUES Last Ten Fiscal Years

Fiscal Unemployment Per Capita Income Percent Income Occupational Percent Revenue Year Employment (2) Rate (2) (1) (2) (3) Growth Tax Revenue Growth 2011 326,802 10.6% 39,407 (4.69)% 304,470,948 4.13% 2012 327,926 10.0% 41,828 6.14% 311,921,717 2.45% 2013 334,034 8.6% 43,408 3.78% 332,642,106 6.64% 2014 339,429 8.1% 44,482 2.47% 342,160,722 2.86% 2015 355,616 6.1% 44,499 0.04% 363,247,789 6.16% 2016 352,193 4.9% 45,421 2.07% 383,942,352 5.70% 2017 363,746 4.4% 46,372 2.09% 398,376,170 3.76% 2018 376,784 4.4% 47,096 1.56% 414,803,705 4.12% 2019 384,318 4.1% 47,698 1.28% 432,693,080 4.31% 2020 386,373 4.0% 47,779 1.43% 422,401,863 (2.38)%

Source: Bureau of Economic Analysis website: www.bea.gov Workforce Kentucky website: www.workforcekentucky.ky.gov

(1) Per capita income for 2019 is an estimate based on the average annual percentage increase over the last 10 years. Per capita income for 2018, which had been an estimate, has been changed to reflect published figures as of March 2019.

(2) Employment, unemployment, and per capita figures represent the annual average for the full calendar year previous to fiscal year end. The sources referenced above have continually updated these figures subsequent to the publishing of prior years reports. For consistency, Metro Government has elected to not revise prior year information and is presenting our previously published data.

(3) Total personal income is shown as part of the Schedule for Ratios of Outstanding Debt by Type on page 156.

147 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PRINCIPAL WITHHOLDING TAXPAYERS Fiscal Year Ended June 30, 2020

Rank Employer 1 Norton Healthcare, Inc. 2 Jefferson County Board of Education 3 Ford Motor Company 4 Humana Insurance Co. 5 University of Louisville 6 United Parcel Service, Inc. (Ohio) 7 Humana, Inc. 8 Haier US Appliance Solutions, Inc. 9 Louisville/Jefferson County Metro Government 10 Baptist Healthcare System 11 United Parcel Service, Co. 12 University Medical Center Inc. 13 Brown Forman Corporation 14 U. S. Department of Defense 15 University of Louisville Physicians Inc. 16 Kroger Limited Partnership 17 Kentucky State Treasurer 18 Baptist Medical Associates, Inc. 19 Jewish Hospital & St. Mary's Healthcare, Inc. 20 UPS Worldwide Forwarding, Inc. 21 L G & E and KU Services Company 22 Charter Communications Holding Co. 23 United States Postal Service 24 UPS Supply Chain Solutions, Inc. 25 Wal-Mart Associates, Inc. 26 Tricon Restaurants Services Group Inc. 27 The Wellpoint Companies, Inc. 28 United States Department of Agriculture 29 Equain LLC 30 Papa Johns USA, Inc.

Information obtained from the Louisville/Jefferson County Revenue Commission.

148 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY (1) METRO GOVERNMENT Last Ten Fiscal Years

Ratio of Total Real Property Personal Property Total Assessed Value to Direct Rates Fiscal Estimated Estimated Estimated Total Estimated Homestead Year Assessed Value (2) Actual Value Assessed Value Actual Value Assessed Value Actual Value Actual Value Real Personal Exemption (3) 2011 51,996,671,540 54,559,993,610 7,039,488,986 7,039,488,986 59,036,160,526 61,599,482,596 95.84% 0.126 0.166 33,700 2012 51,480,204,902 54,041,866,872 8,018,563,988 8,018,563,988 59,498,768,890 62,060,430,860 95.87% 0.126 0.166 34,000 2013 52,680,900,802 55,287,731,992 9,641,449,953 9,641,449,953 62,322,350,755 64,929,181,945 95.99% 0.126 0.166 34,000 2014 52,784,193,990 55,550,817,680 8,554,120,377 8,554,120,377 61,338,314,367 64,104,938,057 95.68% 0.126 0.166 36,000 2015 53,719,598,239 56,472,371,339 9,202,006,137 9,202,006,137 62,921,604,376 65,674,377,476 95.81% 0.126 0.166 36,000 2016 56,429,647,046 59,228,065,186 9,528,743,615 9,528,743,615 65,958,390,661 68,756,808,801 95.93% 0.125 0.166 36,900 2017 59,292,080,982 62,122,455,652 9,223,533,524 9,223,533,524 68,515,614,506 71,345,989,176 96.03% 0.125 0.166 36,900 2018 62,578,466,025 65,309,823,375 10,901,629,316 10,901,629,316 73,480,095,341 76,211,452,691 96.42% 0.124 0.166 37,600 2019 64,242,471,596 66,990,206,936 10,568,979,074 10,568,979,074 74,811,450,670 77,559,186,010 96.46% 0.124 0.166 37,600 2020 66,646,814,652 69,394,549,992 10,283,892,544 10,283,892,544 76,930,707,196 79,678,442,536 96.55% 0.126 0.166 39,300

(1) Pursuant to the Constitution of Kentucky and applicable statutes, real property is to be revalued annually at 100% of its fair cash value.

(2) Metro Government tax is levied on properties within the entire Metropolitan area. Urban Services District ("USD") tax is an additional tax levied on properties with the USD. All properties within the Metropolitan area are taxed at the Metro Government general rate. Only those properties within the USD are taxed at the additional USD tax rates.

(3) Under the provisions of the Homestead Amendment to the Kentucky Constitution, persons 65 years or older are granted exemptions of these amounts on the assessed value of their bona fide residence.

149 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY (1) URBAN SERVICES DISTRICT Last Ten Fiscal Years

Real Property Personal Property Total Assessed Value to Direct Rates Fiscal Estimated Estimated Estimated Total Estimated Homestead Year Assessed Value (2) Actual Value Assessed Value Actual Value Assessed Value Actual Value Actual Value Real Personal Exemption (3) 2011 13,221,353,224 13,819,232,754 1,392,226,642 1,392,226,642 14,613,579,866 15,211,459,396 96.07% 0.367 0.566 33,700 2012 13,105,246,418 13,688,841,348 1,687,391,277 1,687,391,277 14,792,637,695 15,376,232,625 96.20% 0.367 0.566 34,000 2013 13,540,026,278 14,127,735,908 2,434,463,209 2,434,463,209 15,974,489,487 16,562,199,117 96.45% 0.367 0.566 34,000 2014 13,499,447,592 14,116,984,162 1,700,346,488 1,700,346,488 15,199,794,080 15,817,330,650 96.10% 0.367 0.566 36,000 2015 13,549,601,362 14,164,569,942 2,037,843,994 2,037,843,994 15,587,445,356 16,202,413,936 96.20% 0.354 0.566 36,000 2016 14,782,238,903 15,404,694,453 2,164,868,863 2,164,868,863 16,947,107,766 17,569,563,316 96.46% 0.354 0.566 36,900 2017 15,340,003,731 15,962,459,281 1,972,411,695 1,972,411,695 17,312,415,426 17,934,870,976 96.53% 0.354 0.566 36,900 2018 15,984,043,741 17,305,626,611 2,391,755,492 2,391,755,492 18,375,799,233 19,697,382,103 93.29% 0.354 0.566 37,600 2019 16,502,942,231 17,643,518,961 2,358,110,021 2,358,110,021 18,861,052,252 20,001,628,982 94.30% 0.354 0.566 37,600 2020 16,884,350,036 18,024,926,766 1,957,428,103 1,957,428,103 18,841,778,139 19,982,354,869 94.29% 0.358 0.566 39,300

(1) Pursuant to the Constitution of Kentucky and applicable statutes, real property is to be revalued annually at 100% of its fair cash value.

(2) The Urban Services District ("USD") lies within the Metropolitan boundaries. The above schedule represents the assessed value of the properties within the USD. Metro Government tax is levied on properties within the entire Metropolitan area. USD tax is an additional tax levied on properties within the USD. All properties within the Metropolitan area are taxed at the Metro Government general rate. Only those properties within the USD are taxed at the additional USD tax rates.

(3) Under the provisions of the Homestead Amendment to the Kentucky Constitution, persons 65 years or older are granted exemption of these amounts on the assessed value of their bona fide residence.

150 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS TAX RATES (PER $100 OF ASSESSED VALUATION) Last Ten Fiscal Years

Metro Governemnt Direct Rates (1) Overlapping Rates Urban Services Consolidated Metro Government District School District Total Direct & Overlapping Fiscal Year Real Personal Real Personal Total Direct Real Inventory Personal Real Inventory Personal Total 2011 0.126 0.166 0.367 0.566 1.225 0.676 0.676 0.676 1.169 0.676 1.408 3.253 2012 0.126 0.166 0.367 0.566 1.225 0.677 0.677 0.677 1.170 0.677 1.409 3.256 2013 0.126 0.166 0.367 0.566 1.225 0.700 0.700 0.700 1.193 0.700 1.432 3.325 2014 0.126 0.166 0.367 0.566 1.225 0.710 0.710 0.710 1.203 0.710 1.442 3.355 2015 0.126 0.166 0.367 0.566 1.225 0.710 0.710 0.710 1.189 0.710 1.442 3.341 2016 0.125 0.166 0.354 0.566 1.211 0.710 0.710 0.710 1.189 0.710 1.442 3.341 2017 0.125 0.166 0.354 0.566 1.211 0.710 0.710 0.710 1.189 0.710 1.442 3.341 2018 0.124 0.166 0.354 0.566 1.210 0.700 0.700 0.700 1.178 0.700 1.432 3.310 2019 0.124 0.166 0.354 0.566 1.210 0.725 0.725 0.725 1.203 0.725 1.457 3.385 2020 0.126 0.166 0.358 0.566 1.216 0.736 0.736 0.736 1.220 0.736 1.468 3.424

Tax rates obtained from the Jefferson County Clerk's Office.

(1) All taxpayers within Jefferson County are subject to the Metro Government rates. The Total Direct Rate applies to taxpayers residing within the Urban Services District.

151 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PRINCIPAL PROPERTY TAXPAYERS (1) Current Year and Nine Years Ago

June 30, 2020 June 30, 2011 Percent of Percent of Total Assessed Total Assessed Assessed Valuation of Assessed Valuation of Rank Rank Taxpayer Type of Business Valuation 95,772,485,336 Valuation 73,649,740,393 Louisville Gas & Electric Co. Energy Utility $ 2,889,516,261 1 3.0% $ 1,379,184,269 1 1.9% Humana Inc. Healthcare 516,969,904 2 0.5% 302,438,545 3 0.4% Galt House Inc. Hotel Services 431,406,111 3 0.5% WMB 2, LLC Real Estate 322,426,300 4 0.3% Diversified Distribution/Logistics United Parcel Service, Inc. Services 294,799,542 5 0.3% 187,819,726 5 0.3% AT&T Telecommunications 276,175,105 6 0.3% 390,587,458 2 0.5% Omni Hotel Services 235,665,202 7 0.2% Insight Midwest LP Cable Media 233,991,720 8 0.2% BT Property Property Management 223,091,660 9 0.2% 172,654,793 6 0.2% Brown Forman Corp Distillery 181,988,836 10 0.2% Louisville Trophy LLC Miscellaneous Services 188,690,628 4 0.3% MRI NCT LLC Real Estate 159,000,398 7 0.2% Thomas W. Bullitt Retail 156,935,269 8 0.2% Information Systems Corporation Information Services 111,511,075 9 0.2% Level 3 Commun. LLC Communications Services 91,102,265 10 0.1% Total $ 5,606,030,641 5.9% $ 3,139,924,426 4.3%

(1) Source: Jefferson County Sheriff's Office

152 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years

Amount Percentage Collections in Total Tax Total Outstanding Fiscal Collected in Year Collected in Subsequent Collections to Percentage of Delinquent Taxes Year Amount of Levy of Levy Year of Levy Years Date Levy Collected Receivable at June 30 2011 133,193,647 131,954,594 99.1% 892,513 132,847,107 99.7% 6,614,735 2012 132,050,675 131,350,289 99.5% 466,596 131,816,885 99.8% 6,344,686 2013 142,495,713 141,489,737 99.3% 695,487 142,185,224 99.8% 6,110,372 2014 136,518,821 135,353,735 99.1% 818,554 136,172,289 99.7% 5,205,643 2015 141,445,826 138,541,249 97.9% 2,226,747 140,767,996 99.5% 4,794,405 2016 147,637,046 145,744,061 98.7% 1,604,034 147,348,095 99.8% 5,727,128 2017 151,379,452 149,806,990 99.0% 1,199,960 151,006,950 99.8% 6,817,070 2018 162,307,947 160,139,717 98.7% 1,778,032 161,917,749 99.8% 7,947,362 2019 165,572,291 163,615,352 98.8% 1,335,741 164,951,093 99.6% 9,104,210 2020 163,474,298 161,079,082 98.5% 1,016,820 162,095,902 99.2% 10,431,455

Levies do not include autos. These are levied and collected by the Jefferson County Clerk's Office as required by Kentucky Revised Statutes Chapter 134 and City of Louisville Ordinance #185, Series 1984.

153 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT LEGAL DEBT MARGIN Last Ten Fiscal Years

2011 2012 2013 2014 2015 2016 2017 2018 2019

Debt Limit - 10% of assessed valuation $ 7,364,974,039 $ 7,429,140,658 $ 7,829,684,024 $ 7,653,810,845 $ 7,867,553,277 $ 8,290,549,843 $ 8,582,802,993 $ 9,185,589,457 $ 9,367,250,292 Total bonded debt applicable to limit 424,406,850 389,674,245 361,564,765 331,386,311 318,927,099 451,582,752 465,593,799 514,500,483 477,669,210

Legal debt margin $ 6,940,567,189 $ 7,039,466,413 $ 7,468,119,259 $ 7,322,424,534 $ 7,548,626,178 $ 7,838,967,091 $ 8,117,209,194 $ 8,671,088,974 $ 8,889,581,082

Total net debt applicable to the limit as a percentage of debt limit 5.76% 5.25% 4.62% 4.33% 4.05% 5.45% 5.42% 5.60% 5.10%

Legal Debt Margin Calculation for Fiscal Year 2020 Assessed Valuation - January 1, 2020 $ 95,772,485,336 Debt Limit (10% of assessed value) 9,577,248,534 Debt applicable to limit: Bonded debt outstanding 473,350,000 Less: Amount set aside for repayment of bonded debt (38,184,649) Total debt margin applicable to limit 435,165,351 Legal debt margin $ 9,142,083,183

Metro Government is authorized by Section 158 of the Kentucky Constitution to incur indebtedness to a maximum of ten percent of the value of the taxable property located within the boundaries of Jefferson County. Value of taxable property is to be estimated by the assessment next before the assessment previous to incurring of additional indebtedness.

154 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT June 30, 2020

Percentage Debt Outstanding, net Applicable to Louisville Metro of bond premiums and Louisville Metro Taxpayers Share of Governmental Unit discounts Taxpayers Debt

Direct debt: Line of Credit $ 20,000,000 100.00% $ 20,000,000 Capital Lease 20,312,989 100.00% 20,312,989 Revenue bonds 28,715,428 100.00% 28,715,428 General obligation debt 465,581,869 100.00% 465,581,869 Total direct debt 534,610,286 534,610,286

Overlapping debt: Jefferson County Public Schools 395,485,290 100.00% 395,485,290 Total direct and overlapping debt $ 930,095,576 $ 930,095,576

Note: Both Metro Government and the Jefferson County Public Schools taxing district occupy the entire geographical boundaries of Jefferson County. Therefore, the outstanding debt of both overlapping governments is borne by all residents within Jefferson County.

155 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years (amounts in thousands except per capita)

Governmental Activities General Percentage of Total Fiscal Obligation Lease Revenue Notes Capital Total Primary Total Personal Personal Per Year Bonds Bonds (2) Payable Leases Line of Credit Government Income Income (1) Capita 29,247,199 2011 331,603 93,507 12,000 116 - 437,226 1.49% 590 31,241,331 2012 302,438 84,247 11,737 3,186 - 401,608 1.29% 538 32,228,455 2013 285,189 78,054 11,282 2,478 - 377,003 1.17% 502 32,297,938 2014 262,781 70,479 8,618 1,783 - 343,661 1.06% 454 33,262,475 2015 258,786 62,407 7,705 22,532 - 351,430 1.06% 462 35,633,856 2016 402,504 53,702 - 21,117 - 477,323 1.34% 625 36,768,485 2017 428,500 44,445 - 20,666 - 493,611 1.34% 645 37,792,223 2018 484,458 34,545 - 20,614 - 539,617 1.43% 700 38,729,763 2019 449,365 31,650 - 20,499 15,000 501,514 1.29% 670 38,785,069 2020 444,665 28,685 - 20,313 20,000 513,663 1.32% 670

(1) Personal Income for 2019 is an estimate based on the average annual percentage increase over the last ten years. Source: Bureau of Economic Analysis website: www.bea.gov

(2) The amount of Lease Revenue Bonds, up to 2017, includes principal and accreted interest. The bonds that included accreted interest concluded in 2017.

156 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT RATIOS OF BONDED DEBT OUTSTANDING Last Ten Fiscal Years

Net Bonded Debt Outstanding

Deferred Less: amounts Ratio of Net Net Bonded Fiscal Bond Debt premiums and available in bond Net Bonded Bonded Debt to Debt Per Year Population (1) Assessed Value Outstanding discounts debt service Debt Assessed Value Capita 2011 741,096 73,649,740,393 425,109,437 8,325,753 700,074 432,735,116 0.59% 584 2012 746,906 74,291,406,584 390,862,688 6,798,508 1,185,936 396,475,260 0.53% 531 2013 750,828 78,296,840,242 363,242,582 7,637,792 1,675,310 369,205,064 0.47% 492 2014 756,832 76,538,108,447 333,260,464 6,560,985 1,871,652 337,949,797 0.44% 447 2015 760,026 78,675,532,773 321,193,688 9,643,406 2,264,083 328,573,011 0.42% 432 2016 763,623 82,905,498,427 456,206,037 12,824,983 4,620,653 464,410,367 0.56% 608 2017 765,352 85,828,029,932 472,945,083 21,264,667 7,348,225 486,861,525 0.57% 636 2018 771,158 91,855,894,574 518,957,966 25,188,129 4,453,203 539,692,892 0.59% 700 2019 770,517 93,672,502,921 481,015,000 20,583,253 3,340,225 498,258,028 0.53% 647 2020 766,757 95,772,485,336 473,350,000 20,947,296 3,815,912 490,481,384 0.51% 640

(1) Source: US Census Bureau website: www.census.gov

157 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PLEDGED REVENUE COVERAGE Last Ten Fiscal Years

Lease Revenue Bonds

Fiscal Gross Debt Service Year Revenue (1) Principal Interest Coverage 2011 9,103,779 6,820,000 2,283,779 100% 2012 9,845,779 7,650,000 2,195,779 100% 2013 14,559,379 12,455,000 2,104,379 100% 2014 11,304,379 9,295,000 2,009,379 100% 2015 11,340,579 9,430,000 1,910,579 100% 2016 11,472,779 9,665,000 1,807,779 100% 2017 11,485,779 9,785,000 1,700,779 100% 2018 11,594,579 10,005,000 1,589,579 100% 2019 4,323,979 2,850,000 1,473,979 100% 2020 4,324,979 2,965,000 1,359,979 100%

Note: Metro Government makes annual lease payments in amounts sufficient to pay the required principal and interest payments on the Lease Revenue Bonds.

(1) Gross revenues include lease income and nonoperating interest income in debt service and debt service reserve funds.

158 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT DEMOGRAPHIC & ECONOMIC INDICATORS POPULATION GROWTH June 30, 2020

% Change % Change Area 2000 2010 2000-2010 2016 2017 2018 2019 2000-2019

Louisville/Jefferson County 693,604 741,096 6.8% 765,352 771,158 770,517 766,757 10.5%

Kentucky 4,041,769 4,339,367 7.4% 4,436,974 4,454,189 4,468,402 4,467,673 10.5%

United States 281,421,906 308,745,538 9.7% 323,127,513 325,719,178 327,167,434 327,239,523 16.6%

Source: US Census Bureau website: www.census.gov

(1) Estimated population amounts for 2020 were not available from the Census Bureau.

159 LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT PRINCIPAL EMPLOYERS Current Year and Nine Years Ago

June 30, 2020 June 30, 2011 Percentage Percentage of Total of Total Employer Industry/Product Employees Rank Employment Employees Rank Employment United Parcel Service, Inc. Diversified Distribution/Logistics Services 25,090 1 3.86% 20,125 1 3.52% Jefferson County Public Schools K-12 Public Education 14,484 2 2.23% 13,964 2 2.44% Norton Healthcare, Inc. Healthcare 13,828 3 2.13% 8,698 4 1.52% Ford Motor Company Automotive Manufacturer 13,020 4 2.00% 5,397 9 0.94% Humana Inc. Healthcare 12,360 5 1.90% 9,400 3 1.64% UofL Health Inc. Healthcare 12,000 6 1.85% The Kroger Company Retail Grocer 9,300 7 1.43% 5,692 8 1.00% Baptist Healthcare System Inc. Healthcare 7,346 8 1.13% Walmart Inc. Retailer 6,650 9 1.02% University of Louisville Higher Education 6,620 10 1.02% 6,352 5 1.11% Jewish Hospital & St. Mary's Healthcare, Inc. Healthcare 5,782 6 1.01% Louisville Metro Government Government Services 5,765 7 1.01% Kentucky State Government Government Services 4,361 10 0.76%

Total 120,698 18.57% 85,536 14.95%

Source: Business First of Louisville Workforce Kentucky website: www.workforcekentucky.ky.gov

Note: Employee counts and employment figures are based on the eight county Louisville Metropolitan Statistical Area.

160 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT NUMBER OF GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM June 30

Full-Time Equivalent Employees as of June 30, (1) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Metro Council 77 78 77 77 75 78 74 71 75 69 Mayor's Office 27 21 21 19 19 20 18 18 17 16 Jefferson County Attorney 91 88 91 93 95 98 101 100 94 97 Other Elected Officials 39 38 37 38 41 43 38 39 41 38 Office of Performance Improvement - - - 9 10 14 16 15 14 1 Louisville Fire 466 473 457 486 506 477 497 467 482 443 Emergency Medical Services 246 239 248 244 255 246 228 251 223 217 Emergency Management/MetroSafe 192 197 182 192 190 190 182 182 182 176 Metro Corrections 547 561 568 554 542 546 547 535 513 496 Youth Transportation Services 128 128 129 122 119 113 114 114 103 21 Metro Animal Services 48 48 49 55 58 56 60 59 57 53 Criminal Justice Commission 4 2 4 4 4 4 4 4 3 5 Louisville Metro Police Department 1,476 1,492 1,479 1,504 1,529 1,521 1,592 1,579 1,542 1,479 Economic Development 66 70 50 32 32 27 27 24 22 21 Air Pollution Control District 67 66 66 53 55 51 53 49 53 50 Develop Louisville (5) - - - - 146 154 165 114 106 104 Codes & Regulations 168 166 187 192 96 96 103 153 147 151 Parks & Recreation 508 587 489 551 508 473 493 505 344 277 Office of Resilience and Community Services (5) 226 197 192 158 120 111 120 122 116 116 Office of Safe and Healthy Neighborhoods (7) ------17 11 Public Health & Wellness 285 259 251 228 203 204 222 225 212 207 Public Works & Assets 684 631 608 622 633 642 648 450 430 430 Office of Civic Innovation and Technology 65 63 67 62 67 74 65 66 64 68 Facilities and Fleet Management (6) ------190 179 173 Office of Management & Budget 110 166 173 177 181 190 192 188 175 157 Human Resources 38 35 37 39 39 38 45 45 43 44 Human Relations Commission 14 15 11 16 16 15 14 14 15 14 Kentuckiana Works (2) - - - 17 15 23 25 23 23 20 Louisville Free Public Library 238 231 233 228 239 241 241 248 237 259 Louisville Zoo 254 248 260 255 261 261 248 266 204 190 Internal Audit 7 6 7 6 6 8 7 8 6 6 Waterfront Development Corporation (4) 79 - - - 80 82 80 81 80 56 Total 6,150 6,105 5,973 6,033 6,140 6,096 6,219 6,205 5,819 5,465

(1) Numbers represent actual employees for the last pay period of each fiscal year, with full-time employees counted at 100% and part-time and seasonal employees counted at 50%. (2) In 2009, Kentuckiana Works was brought under Economic Growth & Innovation. (3) In 2010, Neighborhoods was dissolved and its employees were transferred to Parks & Recreation. (4) In 2012, Waterfront Development Corporation became a component unit of the primary government. (5) In 2015, the division of Housing, Community Action Partnership, and Planning and Design Services were merged under the new department Develop Louisville. (6) In 2018, Facilities and Fleet Management was formed out of Public Works & Assets. (7) In 2019, the Office of Safe and Healthy Neighborhoods was formed.

161 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT MISCELLANEOUS OPERATING INDICATORS AND CAPITAL ASSET INFORMATION June 30, 2020

Date Founded (City of Louisville) 1778 Date of Incorporation (City of Louisville) 1828 Date of City/County Merger 2003 Form of Government Mayor/Council Area in Square miles 386

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public Works & Assets Road Operations and Maintenance Miles of streets maintained 2,900 2,578 2,412 2,596 2,598 2,583 2,578 2,565 2,577 2,582 Miles of streets paved 35 44 19 50 35 135 91 86 85 87 Number of potholes filled 34,909 26,827 28,953 46,893 177,141 68,089 43,739 68,759 64,820 41,384 Overlay and pavement repairs (sq ft) 225,062 174,191 154,923 154,618 95,262 130,048 88,806 94,112 36,852 61,233 Crack Seals (linear ft) (3) - 190,073 114,630 31,674 18,675 28,901 270,574 117,669 20,300 17,394

Solid Waste Management Tons recycled 11,613 12,742 15,160 17,952 16,810 18,373 18,968 16,896 24,933 18,912 Tons composted 27,148 11,639 10,240 11,307 7,063 13,165 11,232 9,574 14,362 12,789 Tons landfilled 124,506 152,979 120,570 108,403 119,952 122,305 123,780 112,230 103,708 93,802

Fleet & Facilites Services Fleet Services Number of vehicles maintained 2,515 2,450 2,415 2,387 2,382 2,370 2,363 2,375 2,595 2,588 Number of buildings maintained 75 68 89 89 89 89 89 91 90 90

Codes & Regulation Inspections, Permits and Licenses Number of inspections performed 173,751 153,104 144,071 114,662 119,231 92,805 149,698 154,330 157,957 125,234 Number of permits issued 41,458 30,446 41,649 37,234 33,570 4,144 37,939 37,752 37,291 34,176

Planning and Design Services (1) Number of zoning adjustments 94 56 137 56 58 72 75 92 86 55 Number of plans submitted 1,464 1,091 1,705 1,934 1,702 1,836 2,071 2,183 3,384 3,204

Parks & Recreation Community centers 12 12 12 12 12 17 17 17 16 16 Number of parks 122 120 120 120 120 132 132 120 119 119 Park acreage 12,447 12,447 12,447 12,447 12,447 12,593 12,593 12,593 13,126 13,172 Golf courses 9 9 11 12 12 12 12 12 12 12 Swimming pools 5 5 4 4 4 5 5 5 5 5 Tennis courts 178 178 160 160 160 160 160 160 178 169 Number of walking trails/bike paths 52 54 54 54 54 87 87 87 87 87

Louisville Zoological Gardens Total acreage 151 151 151 151 151 151 151 133 151 151 Area developed in acres 90 90 90 90 90 90 90 90 90 90 Number of animals 1,757 1,496 1,515 1,410 1,409 1,393 1,147 1,026 1,058 1,186 Number of visitors 867,417 945,184 843,404 881,776 821,518 862,138 863,164 765,588 759,381 493,638

(continued)

162 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT MISCELLANEOUS OPERATING INDICATORS AND CAPITAL ASSET INFORMATION June 30, 2020

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Louisville Free Public Library Number of branches 17 18 18 18 18 18 18 18 16 17 Number of library card holders 339,093 335,669 355,902 367,964 368,600 362,948 371,003 401,981 431,850 460,884 Number of public computers 567 589 608 618 642 727 801 776 765 781 Number of items in circulation 1,309,345 1,257,787 1,222,480 1,349,880 1,435,632 1,495,558 1,448,386 1,487,707 1,597,628 1,485,071 Number of items borrowed 3,878,587 3,755,067 3,724,722 3,868,717 4,142,285 4,156,961 3,764,922 3,745,655 3,741,625 3,481,079

Fire Protection (Urban Service District) Number of stations 22 22 21 21 21 21 21 21 21 21 Number of incidents (calls answered) 10,097 12,469 12,446 12,813 12,847 13,500 15,198 42,838 41,665 41,426 Number of medical runs 16,452 20,456 20,197 19,978 21,062 22,755 22,617 22,829 21,210 21,304 Number of fires extinguished 1,093 1,364 1,412 1,452 1,514 1,333 1,523 1,649 1,400 1,831 Number of home inspections conducted 958 943 780 7,808 8,628 8,101 10,519 4,427 7,976 13,281 Number of building inspections conducted 5,725 6,912 6,884 7,032 9,122 9,664 8,356 7,307 7,198 6,864

Police Protection Number of active patrol units 1,232 1,233 1,227 1,242 1,243 1,239 1,263 1,266 1,254 1,194 Number of incidents (calls answered) 510,259 548,568 548,409 566,388 546,331 415,904 399,500 551,526 823,785 600,899 Number of arrests 57,831 53,254 53,793 42,499 48,079 45,180 49,365 45,506 42,128 30,831 Number of citations (2) 37,058 38,861 68,111 54,089 59,729 48,944 63,051 46,469 43,556 27,566

Corrections Number of prisoners 45,339 42,172 40,739 38,852 33,187 34,820 33,881 32,554 30,492 23,331 Number of beds 1,793 1,793 1,793 1,793 1,793 1,793 1,793 1,793 1,793 1,793 Average daily population 1,992 2,005 1,991 1,851 1,794 1,991 2,246 2,148 1,908 1,679

Youth Transportation Services Number of youth monitored 918 1,155 986 879 989 982 922 890 663 129 Number of youth housed 2,001 1,717 1,547 1,120 1,295 568 1097 855 615 454

Public Health & Wellness Number of clinics 12 12 12 12 8 8 3 3 3 3 Number of services provided 351,789 369,100 541,893 266,490 326,792 254,924 88,914 95,281 96,734 454

Emergency Medical Services Number of dispatches 115,618 115,892 111,243 116,637 137,599 136,550 140,481 140,835 93,434 79,249 Number of transports 69,716 69,228 76,214 83,182 89,991 86,112 84,512 89,214 67,583 56,901

Metro Animal Services Licensed pets 53,508 54,612 51,654 56,239 70,125 68,500 65,327 56,053 57,204 37,445 Number of animals spayed/neutered 3,135 2,462 3,159 3,091 4,187 5,232 6,497 7,161 3,603 2,765 Number of pets adopted 2,173 2,293 1,933 1,943 1,910 2,266 2,730 3,027 2,952 2,765 Live animal release rate (3) 51.4% 63.2% 69.3% 75.6% 79.2% 89.3% 90.1% 93.1% 95.4% 94.6%

Economic Growth & Innovation Number of downtown market rate housing units 2,316 2,349 2,406 2,406 2,580 2,622 2,676 2,762 3,246 3,475

Office of Resilience and Community Services Number of families assisted 22,569 20,037 17,738 17,731 17,068 16,365 16,420 16,625 17,883 18,712 Number of individuals assisted 51,059 45,303 40,236 40,527 38,327 35,875 36,343 37,109 40,371 41,433

(continued)

163 LOUISVILLE/ JEFFERSON COUNTY METRO GOVERNMENT MISCELLANEOUS OPERATING INDICATORS AND CAPITAL ASSET INFORMATION June 30, 2020

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Louisville Water Company Number of residential customers 248,451 240,715 242,007 243,187 244,138 245,294 247,629 248,565 250,056 252,133 Annual residential consumption (1,000 Gallons) 16,067,929 14,037,669 14,067,469 13,227,765 13,253,377 13,152,138 12,582,347 12,638,288 12,563,081 12,392,387 Number of commercial and industrial customers 24,711 22,770 22,769 22,844 22,617 23,195 23,403 23,447 23,512 23,618 Annual comm. and ind. consumption (1,000 Gallons) 15,084,249 1,649,740 16,373,833 15,880,532 16,000,379 16,049,936 15,810,426 15,607,870 15,889,234 15,444,381 Number of fire hydrants 21,480 23,734 23,792 23,841 23,936 24,042 24,130 24,332 24,448 24,603

Parking Authority of River City, Inc. Number of PARC garages 16 15 15 14 14 14 14 15 15 15 Number of PARC surface lots 2 3 3 6 6 5 4 4 4 2 Number of parkers 9,429 9,008 8,990 9,922 10,225 10,455 10,771 10,748 10,798 10,354

Transit Authority of River City Total ridership 14,056,838 15,192,500 14,966,139 14,965,789 14,620,979 14,033,890 13,019,892 12,403,099 11,356,778 8,721,608 Revenue miles driven 11,200,334 11,708,182 11,541,025 11,636,956 12,062,268 11,970,727 12,082,981 12,246,106 12,455,730 12,420,719 Revenue hours driven 806,803 842,707 861,242 859,135 900,654 890,563 914,033 922,269 924,021 912,335 Buses in service 315 314 314 297 300 325 325 322 226 229 Number of hybrid buses 21 21 32 32 32 32 32 33 33 33 Number of electric buses 15 15 15 15 15 Number of routes 46 43 40 41 41 44 43 44 46 26

Metropolitan Sewer District Miles of sewers 3,200 3,332 3,240 3,263 3,240 3,293 3,322 3,463 3,348 3,488 Number of treatment plants 20 20 19 19 16 5 5 5 5 5 Number of service connections 230,240 235,136 239,334 240,174 253,462 280,063 280,489 283,936 285,156 280,309 Daily average treatment (mgd) 142 145 131 141 143 139 112 150 173 164 Daily treatment capacity (mgd) 173 173 177 177 177 170 170 200 200 200 (mgd - millions of gallons per day)

Facilities and services not included in the reporting entity: Jefferson County Public Schools Total enrollment 99,095 100,420 100,975 100,996 100,854 100,319 100,533 99,244 98,506 97,856 Number of elementary schools 9 89 89 89 90 90 91 91 91 90 Number of middle schools 23 23 23 23 23 23 23 22 22 22 Number of high schools 18 18 18 18 18 18 18 18 18 18 Number of instructors 5,372 6,287 6,474 6,630 6,653 6,721 6,835 6,867 6,896 6,896

(1) Fiscal year 2008 was the first year information related to Planning and Design Services has been included with Metro Government's financial reports. Due to system limitations, information for fiscal years 2004-2007 was not available and therefore has not been included. (2) Fiscal year 2010 was the first year that the number of paper citations was not available and therefore has not been included. (3) This information was not archived prior to fiscal year 2011 and therefore is not reported.

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