3 2015 POPULAR ANNUAL FINANCIAL REPORT in This Report

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3 2015 POPULAR ANNUAL FINANCIAL REPORT In This Report

2 A Message from the City Controller CITIZENS OF THE CITY OF PITTSBURGH 3 About Pittsburgh 4 Pittsburgh Education, Culture and Business CITY CITY 5 Pittsburgh Happenings CONTROLLER MAYOR COUNCIL 6 Pittsburgh Government 7,8 Pittsburgh’s City Controller • Management & Budget City Clerk 9 General Fund Revenues • Citiparks 10 General Fund Expenditures • Public Works 11 Pittsburgh’s Capital Spending • City Planning 12 Pittsburgh’s Net Position • Public Safety 13 Debt and Liabilities • Personnel & Civil Service Commission 14 2015 Financial Highlights • Citizens Police Review Board • Innovation & Performance ELECTED OFFICIALS • Finance • Human Relations MAYOR: WILLIAM PEDUTO Commission • Law TERM: 4 YEARS • Office of Municipal RESPONSIBILITY: CHIEF EXECUTIVE Investigations • Equal Opportunity CONTACT INFO: 414 GRANT STREET Review Commission ROOM 512 • Equipment Leasing PITTSBURGH, PA 15219 Authority (412) 255-2626 • Permits, Licenses ti a on

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“It is important to demonstrate what makes Pittsburgh a great place to live, study and work.” Michael E. Lamb

I am pleased to present to you the City of Pittsburgh’s (the “City’s”) Popular Annual Financial Report for the year ended December 31, 2015. This report is intended to increase awareness throughout the community of the financial operations of the City. As such, this report is written in a user-friendly manner that will summarize and communicate the City’s financial condition. I am pleased that, for the sixth consecutive year, the City’s Controller’s Office has received the Award for Outstanding Achievement in Popular Annual Financial Reporting from the Government Finance Officers Association (“the GFOA”) for the Popular Annual Financial Report.

In addition to providing financial information, it is important to demonstrate what makes Pittsburgh a great place to live, study and work. Pittsburgh’s economy is supported by a vast network of for-profit and not-for-profit businesses. It is important for us to demonstrate the role City government is playing in supporting these activities.

Financial information within this report is derived in large part from the City’s 2015 independently audited set of financial statements that are prepared in accordance with generally accepted accounting principles. These audited statements are part of the City’s 2015 Comprehensive Annual Financial Report (“CAFR”). We are proud to say that the City’s Controller’s Office CAFR has been awarded a Certificate of Achievement for Excellence in Financial Reporting by the GFOA for each of the past 23 years.

I welcome any feedback, comments, or concerns regarding the information included in this report.

Sincerely,

Michael E. Lamb City Controller

2015 POPULAR ANNUAL FINANCIAL REPORT 2 About Pittsburgh

Pittsburgh’s 2015 Demographic and Economic Statistics Popular Statistics: Recognitions Population (2010 Census) 305,704 % Male 48.5% % Female 51.5% • #1 Food City of 2015 (Zagat) Median Age 33.3 years • Northeast’s Best Place to Live in 2015 Educational Attainment: (Money Magazine) High school graduate or higher 91.0% • • PNC Park, Best Ballpark in America (Ballpark Digest) • Bachelor’s degree or higher 37.2% Pittsburgh Public Schools: • Best Downtown in the U.S. (Livability) • Enrollment K-12 24,103 • #3 Best Foodie City (Livability) • Early Childhood 1,401 Total Enrollment 25,504 • #6 Best College City & Town in America for 2015 • 2015 Graduates 1,336 (WalletHub) • Number of Teachers 1,975 Pittsburgh Public Safety: • #8 “Destination on the Rise” (TripAdvisor) • Number of Police Officers 852 • Top 10 Most Charitable City (Charity Navigator) • Number of Fire Fighters 642 • Number of Emergency • One of Top 12 Places to Invest Medical Services Personnel 152 (U.S. Department of Commerce) Percentage of population that speaks a language other than English at home 10.0% • Top 10 Best City for Staycations (WalletHub) Median Value of owner-occupied housing unit • Top 10 Most Creative City (Movoto Real Estate) (2010-2014) $91,500 Per Capita Income (2010-2014) $27,435 • Top 10 Friendliest Cities in America Occupations: (Travel + Leisure) • Management, Business, Science & Arts 44.7% • Top 15 Best City to Live In (WalletHub) • Service 21.1% • Sales and Office 22.3% • Top 15 Quirkiest City in America (Travel + Leisure) • Natural Resources, Construction & Maintenance 4.7% • Production, Transportation & Material Moving 7.2% • Top 20 Most Cultured City (Travel + Leisure) Source: 2014 American Community Survey • #21 Best City for Millenials (Forbes) Unemployment Rate • #22 ‘Most Ready for the Future’ City Nation: 4.7% (April 2016) in America (Dell) Pennsylvania: 5.3% (April 2016) Pittsburgh: 5.4%* (April 2016) Source: U.S. Bureau of Labor Statistics * Rate is not seasonally adjusted

In cooperation with the Pittsburgh Public School District, the City of Pittsburgh is involved with The Pittsburgh Promise program. This program provides scholarships of up to $7,500 per year to qualified students for any post-secondary education within Pennsylvania. As of the end of 2015, more than 6,400 graduates of the Pittsburgh Public Schools have taken advantage of The Pittsburgh Promise scholarship. For more information on The Pittsburgh Promise, please visit Photo: Josh Franzos pittsburghpromise.org

3 2015 POPULAR ANNUAL FINANCIAL REPORT Pittsburgh Education, Culture and Business

Colleges and Universities in the City The view of Pittsburgh from The Art Institute of Pittsburgh “Grandview Avenue on Carlow University Mt. Washington made the Carnegie Mellon University list of America’s most Stunning Chatham University Views and ranks as one of the Community College of Allegheny County best skylines in the world. Duquesne University USA Today Travel ” Point Park University University of Pittsburgh Source: 2016 Pittsburgh Business Times Book of Lists Museums in the City 2015 Fortune 500 Companies The Andy Warhol Museum Headquartered in Pittsburgh Largest Arts and Humanities August Wilson Center for African United States Steel Corporation Nonprofits American Culture The PNC Financial Services Group, Inc. Carnegie Museums of Pittsburgh Carnegie Museums of Pittsburgh PPG Industries, Inc. The Pittsburgh Cultural Trust Carnegie Science Center Kraft Heinz Pittsburgh Symphony Orchestra Children’s Museum of Pittsburgh WESCO International, Inc. Carnegie Library of Pittsburgh Fort Pitt Museum Source: 2015 Fortune Magazine, Fortune 500 Western Pennsylvania Conservancy Frick Art and Historical Center Pittsburgh Zoo & PPG Aquarium Mattress Factory Art Museum Largest Health and Social Pittsburgh CLO Pittsburgh Center for the Arts/ Service Nonprofits Phipps Conservatory and Botanical Pittsburgh Filmmakers Brother’s Brother Foundation Gardens Inc. Senator John Heinz History Center Pittsburgh Mercy Health System Pittsburgh Ballet Theatre Society for Contemporary Craft YWCA of Greater Pittsburgh Senator John Heinz History Center Soldiers and Sailors National Pressley Ridge Source: 2016 Pittsburgh Business Times Book of Lists Military Museum & Memorial Goodwill of Southwestern Pennsylvania University of Pittsburgh’s Vincentian Collaborative System Nationality Rooms Achieva Source: 2016 Pittsburgh Business Times Book of Lists The Children’s Institute of Pittsburgh Baptist Homes Society

Photos: Top left to right: Carnegie Museum of Natural History, photo by Joshua Franzos; Pittsburgh Source: 2016 Pittsburgh Business Times Book of Lists Ballet, photo by Rich Sofranko; Frick Art and Historical Center, photo credit VisitPittsburgh; The Children’s Institute of Pittsburgh, photo by Joshua Franzos; Pittsburgh Center for the Arts.

Photos: Bottom left to right: A commemorative plaque for the location of Fort Pitt, near the Fort Pitt Museum; United States Steel Corporation located on Grant Street; Carlow University; National Aviary Exhibit, photo by the National Aviary.

2015 POPULAR ANNUAL FINANCIAL REPORT 4 Pittsburgh Happenings

Pittsburgh as a Pittsburgh “Gets Healthy” Pittsburgh Residential Film-making Town in Recreation Make-over For many years Pittsburgh has been Healthy Ride is the latest mode of transit For many years Pittsburgh has been the setting for many popular movies in Pittsburgh. With 50 stations and 500 converting and demolishing buildings and television shows. bikes located throughout the City, Healthy to provide for new residential space for Ride provides affordable active transpor- all sizes of budgets. Films and TV Shows Made in tation options for all. Healthy Ride takes Pittsburgh in 2015: advantage of the latest advances in Skyline Terrace is just one development on approximately 50 acres, located in • Concussion technology and policy in order to create a system that is convenient, affordable Pittsburgh’s Hill District and replaces • American Pastoral and fun. public housing dating back to the 1940s with a 400-unit townhome, • Love the Coopers While enjoying a ”healthy ride”, have some mixed-income development. • Banshee (TV) fun peddling over to Bicycle Heaven and Bike Shop, located one block from Three Other residential developments that • Downward Dog (TV) Rivers Heritage Trail on the North Side of opened in 2015 include Larimer Pointe • The Outsiders (TV) Pittsburgh. The Museum and Bike Shop (40 units, cost of $13.4 million), Brass have the largest collection of bikes and Building Lofts (14 units, $2.5 M), Uptown parts in the United States. They feature Lofts on Fifth (47 units, $12M), Hot Metal vintage bikes along with new bikes. Flats (173 units, $30M), and 3030 South Water Street Apartments (264 units, $61M).

Photos: Top left to right: Filming the movie “Concussion”, starring Will Smith, photo copyright © Pittsburgh Post-Gazette, 2016, all rights reserved, printed with permission; Enjoying an afternoon ride on, “Healthy Ride” bike rentals; Burgatory Bar on Pittsburgh’s North Shore. Bottom left to right: Filming the movie, “The Last Witch Hunter”, photo by James A. Mahathey; Bicycle Heaven Museum and Bike Shop, located on the Three Rivers Heritage Trail, photo by Adam Isovitsch; Urban Redevelopment Authority, Skyline Terrace Housing. 5 2015 POPULAR ANNUAL FINANCIAL REPORT Pittsburgh Government

Permits, Licenses and Inspections Permits, Licenses and Inspections is responsible for the administration and enforcement of the Pittsburgh What Your Government Does building code and zoning code and also enforces the The City provides a full range of services, including police, City’s various business and trade licenses. fire and emergency medical services, construction and Bureau of Emergency Medical Services maintenance of City property and infrastructure, sani- The Bureau of Emergency Medical Services is dedicated tation services, and recreation and cultural activities. to the health and safety of residents and visitors The Water and Sewer Authority, Urban Redevelopment through the provision of advanced life support, Authority, Housing Authority, Stadium Authority, and pre-hospital care, medically directed technical Parking Authority are component units of the City and rescue and transportation of the ill and injured. are shown as such in the financial statements and the footnotes to the CAFR. Bureau of Fire The Bureau of Fire develops, implements and adminis- ters public safety programs in areas of fire suppression, Department of Public Works first responder emergency medical care, fire prevention, The Department of Public Works maintains the City’s infrastructure hazardous materials code enforcement, fire and arson by resurfacing streets, preserving park facilities, and rehabilitating investigation, and public education. public structures. The Department also meets the environmental Bureau of Police needs of Pittsburgh residents by collecting residential refuse and The Bureau of Police is responsible for the protection of recyclables. It also ensures public safety by responding to weather- life and property, the enforcement of criminal and traffic related emergencies such as flooding, land subsidence, snow and law violations, and the prevention of crime. ice storms, and other disasters. Citiparks Citiparks, Pittsburgh’s Department of Parks and Recreation, is responsible for promoting and operating many of the City’s recreational, educational and cultural programs. Citiparks operates all of the City’s swimming pools, spray parks, community and senior recreation centers, the Schenley Oval Sports Complex, Schenley Park Ice Rink and the Mellon Park Indoor Tennis Center. City Planning City Planning is responsible for ensuring that development projects are in compliance with the City’s neighborhood plans and applicable zoning regulations. Planning also makes sure that development projects are ADA (Americans with Disabilities Act) compliant, and conducts reviews of a project’s impact on traffic, storm water management, and the environment. City Controller See pages 7 and 8 for responsibilities and duties of the City Controller. Department of Finance/City Treasurer The Department of Finance/City Treasurer is responsible for the collection and investment of operating cash of the City. Finance audits City revenues and bills and collects tax revenue, fees and charges. The Finance Department is also responsible for the investigation and auditing of revenue accounts. Personnel & Civil Service Commission The Department of Personnel and Civil Service Commission (DPCSC) is responsible for overseeing employment and staffing of the City of Pittsburgh government. DPCSC also manages education and training, and benefits and worker’s compensation for City employees. Photos: Second Row left: West End Pittsburgh Police Station Wall Mural, photo by John Altdorfer; Photo Third Row left: Creek Camp Young Naturalists summer 2014, Pittsburgh Parks Conservancy.

2015 POPULAR ANNUAL FINANCIAL REPORT 6 Pittsburgh’s City Controller

About Pittsburgh’s City Controller The City controller is one of two independently elected, citywide offices in the City of Pittsburgh, the other being the mayor. It is the job of the controller to protect City tax dollars from waste, fraud and abuse. The controller audits all City government-related expenditures (the City also has a Finance Department and Treasurer who are responsible for collecting and auditing all City revenues), and conducts audits of all City departments and authorities. To learn more about Pittsburgh’s controller, please visit pittsburghpa.gov/controller-office/.

Over the past few years the Controller has introduced several user-friendly tools to allow for transparency, to access financial information and to report waste, fraud and abuse.

FI $ CAL FOCUS PITTSBURGH Fiscal Focus Pittsburgh OpenBook Pittsburgh Fiscal Focus Pittsburgh is a financial data platform that OpenBook Pittsburgh is a searchable website of provides the public with access to the City’s budget. Through City of Pittsburgh contracts, elected official campaign Fiscal Focus Pittsburgh, users can create, analyze, and down- contributions & expenditures, and a list of lobbyists who load customized reports based on data from the overall City are registered with the City. budget and actual amounts. To learn more about OpenBook Pittsburgh, For more information on Fiscal Focus Pittsburgh, please visit openbookpittsburgh.com. please visit pittsburghpa.gov/controller/fiscal-focus-pgh. @OpenBookPGH @FiscalFocusPGH

The following screen shots are examples of information you have access to on the website.

7 2015 POPULAR ANNUAL FINANCIAL REPORT Pittsburgh’s City Controller

Unclaimed Property PGH Watchdog In 2015, the City controller’s office launched an PGH Watchdog is a mobile app that enables any person to unclaimed properties website which allows the public report to the City controller’s office any waste, fraud and to search the City’s database of unclaimed funds. abuse of City tax dollars they may see. In addition to its These unclaimed funds belong to people and businesses fraud and waste reporting capabilities, the app also allows that have failed to get money owed to them, through citizens to access Open Book Pittsburgh, Fiscal Focus such means as earned income and real estate tax Pittsburgh, audits and reports completed by the controller’s refunds, or City vendor payments. office and the City’s unclaimed property website.

For more information, and to search the City of PGH Watchdog is available for free on the Apple App store Pittsburgh’s unclaimed funds database, please visit and Google Play. pittsburghpa.gov/controller-office/unclaimed- property2/index.html. @PghWatchdog

@UnclaimedPGH

2015 POPULAR ANNUAL FINANCIAL REPORT 8 General Fund Revenues

When assessing the financial results of the City, it is important that we focus on the City’s General Fund. It is used to account for all regular day-to-day operations, revenues and expenditures of Where Our Money Comes From the City, except those required to be accounted for in another Like all governments, the City must raise funds to fund. In this section, we will discuss General Fund revenues, the pay for the services that it provides to its citizens largest of which are taxes. and businesses. These sources of funds, referred The City collects taxes from different entities for a variety of to as revenue, are raised through grants, charges reasons. The major categories of tax collections of the City are and taxes. shown below.

Revenue by Type (in thousands) The revenues of the General Fund come from a variety 2015 2014 2013 of sources. Revenues received in 2015 are as follows: Real Estate Taxes $137,316 $127,354 $127,606 Earned Income Taxes 88,853 86,860 84,103 Payroll Preparation Taxes 66,130 55,972 54,151 Real Estate 26% Parking Taxes 55,001 53,233 51,977 Other Taxes 82,110 75,962 73,391 Total Taxes $429,410 $399,381 $391,228 Earned Income % Charges 45,786 35,228 33,836 17 Grants 35,604 40,960 45,320 Other Revenue 12, 8 1 6 9,910 12,328 Total $523,616 $485,479 $482,712 Payroll Preparation 13% Revenue Fluctuations Total General Fund revenues increased approximately $38 million or by 8%, from 2014 to 2015. The net increase Parking 10% of $30 million in tax revenue was mostly due to increases of $10 million in real estate taxes, $8 million in payroll preparation taxes, $2 million in earned income taxes, and $6 million in other taxes. Other Taxes 16% Total General Fund revenues increased approximately $2.8 million or by 0.6%, from 2013 to 2014. The net increase of $8 million in tax revenue was mostly due to increases of Charges % $3 million in earned income tax, and $5 million in other taxes. 9 All other taxes were relatively stable. During 2012, there was a court-ordered re-assessment in Allegheny County which prompted the City to enact an anti-windfall millage reduction, and increase Other Revenue 9% the Homestead exemption causing a decrease in Real Estate tax collections for the year 2013.

Major Taxes Assessed by the City Payroll Preparation Taxes The following are the descriptions of the major types of taxes This tax is imposed on all for-profit employers at a rate the City levies: of 0.55% of the total wages of all employees who work in the City. Real Estate Taxes Parking Taxes Real estate taxes are imposed on most property in the City A tax equal to 37.5% of the consideration paid for each as assessed by the Allegheny County Board of Property parking transaction is levied on the patrons of non-resi- Assessment, Appeals and Review. The rate was 7.56 mills dential parking places in the City. on buildings and land. Other Earned Income Taxes Other taxes assessed by the City include the Amusement This tax is levied at a rate of 1% on the wages or net profits Tax, the Deed Transfer Tax, the Institution Service earned by City residents. The City also receives a portion of Privilege Tax, the Local Services Tax and the Facility the Earned Income Tax assessed by the Pittsburgh Public Usage Fee. Schools equal to 0.25%.

9 2015 POPULAR ANNUAL FINANCIAL REPORT General Fund Expenditures

During the years ended December 31, 2015, 2014 and 2013, the City expended its funds as shown below. The per capita amounts represent the amount that the City expended on each type of Where Your Money Goes service per resident, while the aggregate represents the total Once the City collects taxes and other revenues, amount spent. the funds must be spent efficiently to provide General Fund expenditures increased by 1% from 2014 to 2015. services to the citizens and businesses of the City. Elements of this increase include a 2.5% increase in General As this section will further detail, the City provides Government and a decrease of 1.5% in both the URA Subsidy and a variety of services to its residents and businesses. Community, Recreation and Culture. General Fund expenditures increased by 5% from 2013 to 2014. 2015 expenditures and transfers of the General Fund are This increase was mainly due to a more conservative estimate of classified by the type of service provided. Below is a potential legal claims and judgments, and the usual increase in summary of the function and the types of departments City employee health and benefit costs. within that function reported below.

General Fund Expenditures and Transfers Expenditures Aggregate (in thousands) Per Capita* Public Safety 53% 2015 2014 2013 2015 2014 2013 Government $ 73,400 $ 63,343 $ 60,001 $ 240 $ 208 $ 197 General Public Safety 268,282 263,073 256,660 878 861 840 Government 15% Public Works 37,498 33,028 32,443 123 108 106 Environmental Services 17,145 16,192 16,014 56 53 52 Public Works % Community, Recreational 7,035 12,338 7,440 23 40 24 7 and Cultural Urban Redevelopment 7,034 14,257 13,507 23 47 44 Environmental Authority Subsidy Services 3% Other Expenditures 1,648 4,914 2,714 5 16 9

Total Expenditures $412,042 $407,145 $388,779 $1,348 $1,333 $1,272 Transfers URA Subsidy 1% _ Transfers to Capital 10,500 25,500 34 83 _ Projects Community Transfers to Debt 88,986 87,001 86,867 291 285 284 % Service Recreation & Cultural 1

Other Transfers (2,088) (1,597) 3,479 (7) (5) 11 Other Expenditures Total $509,440 $518,049 $479,125 $1,666 $1,696 $1,567 & Transfers 20% * Expenditures and transfers are those respective amounts divided by the 2010 population.

General Government expenditures are related to the adminis- Community, Recreational and Cultural expenditures tration of the City’s affairs. These expenses include the costs of are the costs of the Department of Parks and Recreation. all elected officials as well as City Information Systems, Finance The URA Subsidy is the City’s subsidy to the Urban Department and Law Department, among many others. Redevelopment Authority. Public Safety expenditures represent the Emergency Medical Other Expenditures include all amounts that are not Services, Bureau of Police, Bureau of Fire, Building Inspection and included in the categories above. Animal Control. Transfers are funds provided by the General Fund to Public Works expenditures include administration, transportation support other funds of the City. and engineering and street and parks maintenance. Environmental Services expenditures include garbage collection and recycling services within the public works department.

2015 POPULAR ANNUAL FINANCIAL REPORT 10 Pittsburgh’s Capital Spending

The City maintains a separate Capital Projects Fund to account for the financial transactions and resources used by the City for the acquisition or construction of major capital assets. During 2015 the City spent $45.9 million on Capital Projects. The 2015 capital spending is detailed below by both function and area spent.

Function (Millions) Engineering & Construction Improvements to walls, steps, fences, roads, sidewalks and bridges $23.6

Vehicles & Equipment Purchase of vehicles and heavy equipment for public safety and service-delivery $13.4

Pittsburgh Areas Major repairs of City assets, such as Facility Improvements $4.9 parks, playgrounds, pools, ballfields Central and fire stations Business District $9 million Costs associated with administration Administration & SubAwards $1.9 of the City’s capital assets and Capital 20% Improvement Plan Citywide $25.4 million Neighborhoods Repair and replace important infrastructure $11.5 million 55% Public Safety $1.8 for the health and well-being of City residents 25%

Investment in the City’s neighborhood Neighborhood Development $0.3 business districts and residential communities

Citywide: Neighborhood Specific: Central Business District: $25.4 million $11.5 million $9 million Citywide spending encompasses any To determine the location of capital The Golden Triangle remains the epicenter materials, equipment, vehicles, and spending by neighborhood, the Office for development and capital projects in software that is intended to benefit of the Controller reviewed over 2,400 the City. the City, such as EMS radios and invoices submitted to be paid from Largest Capital Spending in Central Police equipment. It also includes Capital funds in the City’s accounting Business District includes (in millions): any voucher with multiple locations software. LED Crosswalk & Traffic Signals: $3.2 in different neighborhoods, such as Largest Capital Spending by Forbes Avenue Reconstruction: $2.0 street resurfacing. Neighborhood includes: City-County Building Improvements: $0.4 Largest Citywide Capital Spending Greenfield Bridge: $1,022,528 (Compared to $1.3 in 2014) includes (in millions): Riverview Park: $615,920 Vehicles: $10.1 Burgwin Spray Park Paving: $4.1 (Hazelwood): $387,818 Urban Redevelopment Authority: $1.5 Beechview Senior Center: $268,181 Bike Share Program: $1.4 South Side Market House: $147,604 Sidewalk Ramps in Shadyside: $134,172

11 2015 POPULAR ANNUAL FINANCIAL REPORT Pittsburgh’s Net Position

In essence, a negative net position balance, or a deficit, means that the City’s liabilities exceed its assets and deferred outflows of resources. While this demonstrates that there is an imbalance between the assets, deferred outflow of resources and liabilities of the City, it should be noted that the City has made a significant effort in improving its financial situation.

(Millions) During 2015, the City implemented GASB Statement No. 68 “Accounting and Financial Reporting for Pensions” resulting in an increase in its negative net position at January 1, 2015 by approximately $902 million. In 2015 the City’s deficit decreased from approximately $(1.32) billion to $(1.29) billion.

Municipalities Financial Recovery Act In November 2003, the City sought municipal self-help as a “financially distressed” municipality under the Municipalities Financial Recovery Act (Act 47). The Pennsylvania Department of Community and Economic Development (DCED), after review of the City’s application and advice of its legal and financial experts, agreed. The Act 47 coordinators issued their Recovery Plan on June 11, 2004, which was adopted by Pittsburgh City Council on June 29, 2004. Subsequent to the City’s designation as financially distressed under Act 47, the State legislature under Act 11 established an Intergovermental Cooperation Authority (ICA) to provide fiscal oversight for the City for an initial period of seven years. Act 11 stipulated that the ICA is to operate concurrently and equally with the Act 47 coordinators.

In accordance with specific requirements under Act 11 and with the support and approval of both the Act 47 coordinators and ICA oversight committee, the City submitted on November 5, 2004 its 2005 Operating and Capital Budgets and Five-Year Financial Forecast and Performance Plan. The Plan called for both expenditure cut backs and proposed a new tax levy structure.

Expenditure reductions and controls included: salary freezes City-wide for at least two years, public safety cost reduction achieved primarily through the renegotiation of the firefighter contract, reductions to all elected officials’ budgets and regular reporting requirements verifying adherence to the Plan’s budget.

In November 2012, the Act 47 Coordinator for the City recommended that the Secretary of DCED rescind the City’s status as a financially distressed municipality. On March 13, 2014 the governor denied the request for the removal of Act 47 and stated that Pittsburgh had not made enough progress. The Act 47 coordinators drafted a third, five-year recovery plan, which will budget spending for years 2014-2019. The plan will limit how the City will spend its money including negotiations with unions. On December 31, 2015, the 2016 Operating and Capital Budgets and Five-Year Financial Forecast and Performance Plan was submitted to and subsequently approved by the Act 47 coordinators and ICA oversight committee. There were no significant changes from the initial five-year plan.

Photos from top left: Heinz Lofts, photo by John Altdorfer; Water sports near PNC Park; Hill District neighborhood at the intersection of Crawford Street and Centre Avenue, photo by John Altdorfer; Henry Clay Frick historical marker on Grant Street; UPMC currently is ranked No. 13 in the nation on the U.S. News & World Report Honor Roll of America’s Best Hospitals. 2015 POPULAR ANNUAL FINANCIAL REPORT 12 Debt and Liabilities

The City’s Outstanding Bonds A major liability of the City is the amount of bonds outstanding. The City’s total bond issuances outstanding as of December 31, 2015 equal approximately $493 million. Over the past five years, the City has paid off approximately $399 million of outstanding debt, including refundings.

(in millions) 2011 2012 2013 2014 2015 Bonded Debt per Capita General Obligation Bonds: Beginning Balance $ 633 $ 594 $ 622 $ 565 $ 558 Debt issued during the year — 126 — 120 — Principal repaid and/or (52) (98) (57) (127) (65) refunded during the year and other Ending Balance $ 581 $ 622 $ 565 $ 558 $ 493 Outstanding Bonds per Capita $1,901 $2,034 $1,849 $1,825 $1,613

The City’s Bond Debt ratings are Moody’s A1, Fitch A and Standard & Poor’s A+ as of December 31, 2015. Bonded debt per capita represents outstanding bonds divided by 2010 population. The City’s Debt Service Fund The City maintains a separate fund to account for the cash reserves and principal and interest payments of the City’s bonded debt. The activity that occurred throughout the year is presented below:

Beginning Fund Balance in the Debt Service Fund $1,145,076

Debt Service Revenues 170,478 Principal Payments (61,135,000) Interest Payments (27,889,016) Transfer from General Fund 88,985,978

Ending Fund Balance in the Debt Service Fund $1,277,516 Home of the Pittsburgh Pirates, PNC Park.

Historic Polish Army Landmark on Pittsburgh’s South Side. Enjoying the river in front of Heinz Field. 13 2015 POPULAR ANNUAL FINANCIAL REPORT Debt and Liabilities 2015 Financial Highlights

population. Within the past several years, A Year of Mixed Results that population loss has slowed, but unfortu- nately, the City continues to lose population The previous sections of this document while the Pittsburgh Public Schools continue provided information on what we see to see declines in enrollment. It is increasingly everyday in the City. The remainder of this important for government officials to make document will provide readers with the Pittsburgh an attractive place where people City’s financial information for the year want to live and do business. ended 2015. While the City has overcome large challenges in the past year, there is Pension Funding still much work to be done. The most immediate challenge faced by the City is securing funding for the City’s Compre- hensive Municipal Pension fund. In 2011, the The City’s Cash Position City began dedicating a portion of the City’s The City ended 2015 with a total fund balance of parking tax revenue to the pension fund. $170.3 million, a decrease of $12.5 million from 2014. The City will contribute $13.4 million in $69.1 million of the $170.3 million is the “unassigned parking tax revenue every year through 2017 fund balance” which is available for the City to spend. and $26.8 million per year from 2018 through The $12.5 million decrease from 2014 is largely due to 2041. Despite having the parking tax as a spending on capital projects. Despite the decreases source of revenue, the fund remains signifi- in the overall total fund balance, the “unassigned cantly underfunded and will require additional fund balance” increased by $16 million as a result of increased revenue. 4 funding commitments and cost reductions moving forward. Long-Term Debt In 2015, the City reduced its debt by $65.2 million to Aging Infrastructure $493 million. Even with this reduction, long-term The City’s aging infrastructure is also a concern debt continues to be a problem in moving Pittsburgh and must be addressed by City officials. According toward sustained financial stability. to the Department of Public Works, in 2015 the City paved approximately 47.25 miles of roads Challenges Ahead at a cost of $10.4 million. In addition to the miles Pittsburgh’s Population of roads, the City maintains bridges, stairways, Over the past few decades, the City has experienced storm sewers and other systems and facilities great population loss, losing about half of its popula- that continue to age. Securing funding to upgrade tion during a 30-year time period. Not surprisingly, and improve these assets will be critical in the the City’s tax base has decreased along with its years to come.

Photos: Bottom left to right: Liberty Tunnels; Nied’s Hotel in Lawrenceville; the Modern Cafe on the North Side, photos by John Altdorfer. Photos: Right top to bottom: The Carnegie Science Center; Ace Hotel in East Liberty, photo by Rob Larson; Gateway Center Transit Station in downtown Pittsburgh.

2015 POPULAR ANNUAL FINANCIAL REPORT 14 PRESORTED STANDARD US POSTAGE PAID PITTSBURGH PA PERMIT NO 5450

C ity of Pittsburgh, PA 414 Grant Street Pittsburgh, PA 15219

pittsburghpa.gov

About this Report

Although this report is largely based on the City’s 2015 Comprehensive Annual Financial Report, this report is not prepared in accordance with generally accepted accounting principles (“GAAP”). Only the financial data for the general government is included in this report and, therefore, all of the City’s discretely presented component units are excluded. Addition- ally, information is presented in a summarized manner and certain financial statements and note disclosures required by GAAP are omitted. A copy of this PAFR as well as the City’s audited 2015 CAFR, which is prepared in accordance with GAAP, is located at pittsburghpa.gov/controller.

PAFR Consultants: The Binkley Kanavy Group, LLC, Pittsburgh, PA

/PittsburghController