This Preliminary Official Statement and the information contained herein is subject to completion and amendment. These securities may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. As of its date, this Preliminary Official Statement has been “deemed final” by the Drainage District for purposes of SEC Rule 15c2-12(b)(1) except for the information permitted to be omitted by SEC Rule 15c2-12(b)(1). § * † The dateofthisOfficial Statement is:August__,2020. Purchase Price: Dated/Delivery: of Payment payment. interest each for principal andinteresttoBeneficialOwnersshallbemadeasdescribedin“THEBONDS-Book-EntryOnlySystem”herein. date payment the preceding month the of day fifteenth the of as books registration the by shown as owner registered the to mailed check by due Bank, GrandRapids,Michigan(the“PayingAgent”)orsuchotherPayingAgentastheCountymayhereafterdesignatebynoticemailedtoregisteredowner.Interestshall bepaidwhen of thedenomination$5,000ormultiplesthereofnotexceedingforeachmaturityprincipalamountsuchmaturity.TheandinterestshallbepaidbyHuntington National PAYMENT OF BONDS: InterestontheBondswillbepayablesemiannuallyAugust1andFebruaryofeachyearcommencing1,2021.Theregisteredbonds, Owners oftheBonds.“THEBONDS-Book-Entry-OnlySystem”herein. long as Cede & Co. is the Bondholder, as nominee of DTC, references herein to the Bondholders or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial So purchased. Bonds the in interest beneficial their representing certificates receive not will Purchasers thereof. multiple integral any or $5,000 of denominations the in form, entry-only of The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book- BOOK-ENTRY-ONLY: is subjecttoconstitutionalandstatutorylimitationsonthetaxingpowerofCounty. aforementioned special assessments, the County is obligated to advance from its general fund moneys sufficient to pay such principal and interest. The County’s ability to raise such funds security forthepaymentofprincipalandinterestonBonds.Ineventtoextentthatmoneysrequiredpaysucharenotcollectedfrom FULL FAITHANDCREDIT:PursuanttoaresolutionadoptedbyitsBoardofCommissioners,theCountyIngham(the“County”)haspledgedfullfaithandcreditasadditional pledged forthepromptpaymentofBondsandinterestthereonassamebecomedue.. been have District Drainage the of credit and faith full The Bonds. the of payment the to pledged not are Bonds the of proceeds the with financed not Project the of aspects supplemental of and interest on the Bonds when due. Certain other supplemental special assessments which have been or may be levied against the City of Lansing or the State of Michigan for certain principal the pay to sufficient be will thereon interest the and Assessments Special the of installments the and Assessments Special the of amount the exceed not will Bonds Additional the (the “Special Assessments”). The Bonds and the Additional Bonds shall be of equal standing and priority with respect to the Special Assessments. Theprincipal amount ofthe Bonds and the County of Ingham and the State of Michigan and a supplemental special assessment for the City’s legal and financial costs in connection with the Bonds levied against the City of Lansing principal andinterestthereonareprimarilypayablefrom,collectionsofspecialassessmentsassessedagainsttheCityLansing,EastCharterTownship part ofthecostconstructingMontgomeryDrainMaintenanceandImprovementProject(the“Project”).TheBondsAdditionalaretobeissuedinanticipationof, the Drainage District (the “Resolution”), and an Order of the Ingham County Drain Commissioner to defray, together with one or more additional series of bonds (the “Additional Bonds”), PURPOSE ANDSECURITY:TheBonds,aretobeissuedpursuanttheprovisionsofAct40,PublicActsMichigan,1956,asamended,aresolutionadoptedbyDrainageBoardfor New Issue This cover page contains information for a quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the to making ofaninformedinvestmentdecision. essential information obtain to Statement Official entire the read must Investors issue. this of summary a not is It only. reference quick a for information contains page cover This Bond Counsel. BOND COUNSEL:TheBondswillbeofferedwhen,asandifissuedbytheDrainageDistrictsubjectto approvinglegalopinionofDickinsonWrightPLLC,GrandRapids,Michigan, redemption priortomaturity,attheoptionofDrainageDistrictasdescribedherein. PRIOR REDEMPTION:BondsmaturingonorpriortoAugust1,2027,arenotsubjectredemption to maturity.BondsmaturingonandafterAugust1,2028,aresubject hours ofthesale. TERM BOND OPTION:Biddersshallhavetheoptionofdesignatingbondsasserialortermbonds, bothasdescribedherein.Anysuchdesignationmustbemadewithin24 maintain ascomparableanunderwriterspreadpossibletothewinningbid.See“ADJUSTMENT INPRINCIPALAMOUNT”hereinandinAppendixL,DraftNoticeofSale. ADJUSTMENT TOPURCHASEPRICE:ThepurchasepriceoftheBondswillbeadjustedproportionatelytoadjustmentin principal amountoftheBondsandinsuchmannerasto Appendix L,DraftNoticeofSale. the Bonds.Suchadjustment,ifnecessary,willbemadeinincrementsof$5,000,andmay bemadeinoneormorematurities.See“ADJUSTMENTINPRINCIPALAMOUNT”hereinand of amount principal the decrease or increase to right the reserves District Drainage the award, final to prior and bids of receipt Following ADJUSTMENT INPRINCIPALAMOUNT: INTEREST RATERESTRICTION:Bondsmaturinginanyoneyearshallnotbearaninterestratelowerthanthepreceding year. estate taxesandongainsrealizedfromthesale,paymentorotherdispositionthereof. the federalalternativeminimumtaxand(2)BondsinterestthereonareexemptfromalltaxationbyStateofMichiganorapoliticalsubdivisionthereof,except gross incomeforfederaltaxpurposesexceptasdescribedunder“TAXMATTERS”herein,andinterestontheBondsisnotanitemofpreference Book-Entry-Only Multiples: The BondswillmatureonAugust1intheyearsandamountsasfollows:
Drainage District shallnotberesponsible fortheselectionof CUSIPnumbers,norany representationmadeas totheircorrectnesson theBondsorasindicated above. Copyright 2020,American BankersAssociation.CUSIPdatahereinisprovided byCUSIPGlobalServices,managedonbehalf oftheAmericanBankersAssociationbyS&P GlobalMarketingIntelligence.The Preliminary, subjecttochange. For anexplanationofratings, see“RATING”herein. Numbers CUSIP§ In theopinionofDickinsonWrightPLLC,BondCounsel,subjecttocompliancewithcertaincovenants,underexistinglaw,(1)interestonBondsisexcludedfrom
Not lessthan99%ormore102%ofparvalue To BeDetermined(EstimatedtobeSeptember8,2020) 1/8th or1/100thof1%both The Bondsareissuableonlyasfullyregisteredbondswithoutcouponsand,whenissued,willbeinthenameofCede&Co.,Bondholderandnominee Year 2035 2034 2033 2032 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 Amount* $645,000 915,000 890,000 865,000 835,000 810,000 785,000 755,000 735,000 715,000 690,000 660,000 645,000 625,000 605,000 PRELIMINARY OFFICIAL STATEMENT DATED: AUGUST 14, 2020
MONTGOMERY DRAIN DRAINAGE DISTRICT Additional information relativetothisBondissuemay beobtained from: Interest Rate County ofIngham,StateMichigan (General ObligationLimitedTax)
Date ofSale:Tuesday,August25,2020 PFM FinancialAdvisors LLC Drain Bonds,Series2020A
555 Briarwood Circle, Suite333 Yield Ann Arbor, MI48108 Time: 1:30PM,ET $29,395,000* 734-994-9700
Numbers CUSIP§ Year 2036 2050 2049 2048 2047 2046 2045 2044 2043 2042 2041 2040 2039 2038 2037 Amount* 1,525,000 1,475,000 1,425,000 1,380,000 1,335,000 1,285,000 1,245,000 1,200,000 1,160,000 1,115,000 1,085,000 1,050,000 1,010,000 $950,000 980,000 Maximum InterestSpread: Maximum InterestRate: Rating: S&PGlobalRatings: Interest Rate Principal Due:
Yield
August 1 5.00% 3.00% † AA COUNTY OF INGHAM Ingham County Courthouse 341 South Jefferson Street Mason, Michigan 48854
Phone: (517) 676-7220 Fax: (517) 676-7242
COUNTY BOARD OF COMMISSIONERS
VICE VICE CHAIRPERSON CHAIRPERSON CHAIRPERSON PRO-TEM Bryan Crenshaw Carol Koenig Robin Naeyaert
MEMBERS Victor Celentino Randy Maiville Thomas Morgan Ryan Sebolt Chris Trubac Emily Stivers Derrell Slaughter Mark Grebner Mark Polsdofer Todd Tennis Randy Schafer
TREASURER Eric A. Schertzing CLERK REGISTER OF DEEDS Barb Byrum Derrick Quinney
DRAIN COMMISSIONER SHERIFF PROSECUTING ATTORNEY Patrick E. Lindemann Scott Wriggelsworth Carol A. Siemon
CONTROLLER/ADMINSTRATOR* Gregg Todd
DIRECTOR OF FINANCIAL SERVICES Tori Meyer
*As of August 17, 2020.
PROFESSIONAL SERVICES
Bond Counsel ...... Dickinson Wright, PLLC Grand Rapids, Michigan
Financial Advisor ...... PFM Financial Advisors LLC Ann Arbor, Michigan
Paying Agent ...... The Huntington National Bank Grand Rapids, Michigan
ii No dealer, broker, salesperson or other person has been authorized by Drainage District or the County to give any information or to make any representations, other than those contained in the Official Statement. This Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the Drainage District or the County since the date hereof. This Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
This Official Statement and any addenda thereto were prepared relying on information of the Drainage District and the County and other sources and are believed to be reliable.
In making an investment decision, investors must rely on their own examination of the Drainage District and the County and the terms of the offering, including the merits and risks involved.
iii TABLE OF CONTENTS
INTRODUCTION ...... 1 INFORMATION FOR BIDDERS ...... 1 INTEREST ...... 1 ADJUSTMENT IN PRINCIPAL AMOUNT ...... 1 ADJUSTMENT TO PURCHASE PRICE ...... 1 GOOD FAITH DEPOSIT ...... 2 TERM BOND OPTION ...... 2 PRIOR REDEMPTION ...... 2 Mandatory Redemption ...... 2 Optional Redemption ...... 2 PURPOSE AND SECURITY ...... 2 OFFICIAL NOTICE OF SALE ...... 3 BIDCOMP/PARITY BIDDING ...... 3 ESTIMATED SOURCES AND USES OF FUNDS ...... 3 APPORTIONMENT OF COSTS ...... 4 POTENTIAL IMPACT OF THE COVID – 19 PANDEMIC ...... 4 THE BONDS ...... 5 Description and Form of the Bonds ...... 5 Book-Entry-Only System ...... 5 Paying Agent and Bond Registration ...... 7 Transfer Outside Book-Entry-Only System ...... 7 BOND INSURANCE AT PURCHASER’S OPTION ...... 7 LITIGATION ...... 8 TAX MATTERS ...... 8 General...... 8 Tax Treatment of Accruals on Original Issue Discount Bonds ...... 9 Amortizable Bond Premium ...... 9 Future Developments ...... 9 MUNICIPAL FINANCE QUALIFYING STATEMENT...... 9 BOND COUNSEL’S RESPONSIBILITY ...... 10 MUNICIPAL ADVISOR...... 10 CONTINUING DISCLOSURE ...... 10 RATING ...... 12 CERTIFICATION ...... 12
APPENDIX A: COUNTY OF INGHAM GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION APPENDIX B: COUNTY OF INGHAM GENERAL FUND BUDGET SUMMARY & COMPARATIVE FINANCIAL STATEMENTS APPENDIX C: COUNTY OF INGHAM AUDITED FINANCIAL STATEMENTS APPENDIX D: CITY OF LANSING GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION APPENDIX E: CITY OF LANSING GENERAL FUND BUDGET SUMMARY & COMPARATIVE FINANCIAL STATEMENTS APPENDIX F: CITY OF LANSING AUDITED FINANCIAL STATEMENTS APPENDIX G: CHARTER TOWNSHIP OF LANSING GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION APPENDIX H: CHARTER TOWNSHIP OF LANSING GENERAL FUND BUDGET SUMMARY & COMPARATIVE FINANCIAL STATEMENTS APPENDIX I: CHARTER TOWNSHIP OF LANSING AUDITED FINANCIAL STATEMENTS APPENDIX J: FORM OF LEGAL OPINION APPENDIX K: FORMS OF CONTINUING DISCLOSURE CERTIFICATES APPENDIX L: DRAFT NOTICE OF SALE
iv $29,395,000* MONTGOMERY DRAIN DRAINAGE DISTRICT County of Ingham, State of Michigan Drain Bonds, Series 2020A (General Obligation Limited Tax)
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and the Appendices, is to furnish information in connection with the issuance and sale by the Montgomery Drain Drainage District, County of Ingham, State of Michigan (the “Drainage District”) of its Drain Bonds, Series 2020A (the “Bonds”).
INFORMATION FOR BIDDERS
Date of Sale: Tuesday, August 25, 2020 Time of Sale: 1:30 PM, ET Time of Award: Same day
Bids may be emailed to [email protected] or submitted electronically via PARITY. Bidder shall bear all risk of electronic transmission failure.
DATED: Date of Delivery MAXIMUM INTEREST RATE: 5.0%
FIRST INTEREST: February 1, 2021 MAXIMUM INTEREST SPREAD: 3.0%
DENOMINATIONS: $5,000 or any integral multiple MULTIPLES: 1/8 or 1/100 of 1% or both thereof not exceeding for each maturity the principal amount of such maturity. REGISTRATION: Principal and Interest
PURCHASE PRICE: Not less than 99% nor more than 102% of par value
PAYING AGENT: The Huntington National Bank, Grand Rapids, Michigan
GOOD FAITH DEPOSIT: A 1% Good Faith Deposit will be required. For further information regarding this issue, see “DRAFT OFFICIAL NOTICE OF SALE” attached hereto as Appendix L.
RESTRICTION: THE INTEREST RATE BORNE BY BONDS MATURING IN ANY YEAR SHALL NOT BE LESS THAN THE INTEREST RATE BORNE BY BONDS MATURING IN THE PRECEDING YEAR.
PRINCIPAL DUE: August 1, annually as shown the front cover. INTEREST Interest on the Bonds will be payable on February 1, 2021 and semiannually on the 1st day of each August and February thereafter. Interest will be computed on the basis of a 360-day year of twelve 30-day months.
ADJUSTMENT IN PRINCIPAL AMOUNT
The County reserves the right to increase or decrease the principal amount of the Bonds after receipt of the bids and prior to final award. Such adjustment, if necessary, will be made in increments of $5,000 and may be made in any maturity. See “DRAFT NOTICE OF SALE” attached hereto as Appendix L.
ADJUSTMENT TO PURCHASE PRICE
The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. See “DRAFT NOTICE OF SALE” attached hereto as Appendix L.
*Preliminary, subject to change.
1 GOOD FAITH DEPOSIT A good faith deposit in the form of a certified or cashier’s check drawn upon an incorporated bank or trust company, or wire transfer, in the amount of one percent (1%) of the final aggregate principal amount of the Bonds payable of the Treasurer of the County of Ingham will be required of the successful bidder. The successful bidder is required to submit its good faith deposit to the Treasurer of the County of Ingham as instructed by the Drainage District or its Registered Municipal Advisor referred to below not later than Noon, Eastern Daylight Time, on the next business day following the sale. The good faith deposit will be applied to the purchase price of the Bonds and payment of the balance of the purchase price shall be made at closing. In the event the purchaser fails to honor its accepted bid, the good faith deposit will be retained by the Drainage District. TERM BOND OPTION Bidders shall have the option of designating bonds as serial bonds or term bonds, or both. The bid must designate whether each of the principal amounts for the years 2021 through final maturity represents a serial maturity or a mandatory redemption requirement for a term bond maturity. There may be more than one term bond designated. In any event, the principal amount scheduled for the years 2021 through final maturity shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination of both. Any such designation must be made within 24 hours of the sale. PRIOR REDEMPTION Mandatory Redemption Bonds designated as term bonds shall be subject to mandatory redemption at par and accrued interest on the dates and in the amounts corresponding to the annual principal maturities hereinbefore set forth. The bonds or portions of bonds to be redeemed shall be selected by lot.
If the term bonds option is selected, then the principal amount of the term bonds of a maturity to be redeemed on the dates set forth above shall be reduced by the principal amount of the term bonds of the same maturity which have been previously redeemed or called for redemption (other than as a result of a mandatory redemption) or purchased or acquired by the Drainage District and delivered to the Paying Agent. The Drainage District may satisfy mandatory redemption requirements by the purchase and surrender of term bonds in lieu of the calling of such term bonds for redemption.
The Drainage District may purchase the term bonds in the open market at a price not greater than that payable on the next redemption date from any available funds in order to satisfy part or all of the next succeeding scheduled mandatory redemption. All such purchases must be made not less than 45 days prior to the interest payment date on which the term bonds are subject to scheduled mandatory redemption. Optional Redemption Bonds maturing on or prior to August 1, 2027, are not subject to redemption prior to maturity. Bonds maturing on and after August 1, 2028, are subject to redemption prior to maturity, at the option of the Drainage District, in such order as determined by the Drainage District, in whole or in part, on any date, on and after August 1, 2027, in integral multiples of $5,000 and by lot within a maturity, at the par value of the bond or portion of the bond called to be redeemed, plus accrued interest to the redemption date, but without premium.
Not less than thirty days' notice of redemption shall be given by first class mail to the registered owner at the registered address. Failure to receive notice of redemption shall not affect the validity of the proceedings for redemption. Bonds or portions of bonds called for redemption shall not bear interest after the redemption date; provided, funds are on hand with the bond registrar and paying agent to redeem the bonds called for redemption. PURPOSE AND SECURITY The Bonds, are to be issued pursuant to the provisions of Act 40, Public Acts of Michigan, 1956, as amended, a resolution adopted by the Drainage Board for the Drainage District (the “Resolution”), and an Order of the Ingham County Drain Commissioner to defray, together with one or more additional series of bonds (the “Additional Bonds”), part of the cost of constructing the Montgomery Drain Maintenance and Improvement Project (the “Project”). The Bonds and Additional Bonds are to be issued in anticipation of, and the principal and interest thereon are primarily payable from, collections of special assessments assessed against the City of Lansing, the City of East Lansing, the Charter Township of Lansing, the County of Ingham and the State of Michigan and a supplemental special assessment for the City’s legal and financial costs in connection with the Bonds levied against the City of Lansing (the “Special
2 Assessments”). The Bonds and the Additional Bonds shall be of equal standing and priority with respect to the Special Assessments. The principal amount of the Bonds and the Additional Bonds will not exceed the amount of the Special Assessments and the installments of the Special Assessments and the interest thereon will be sufficient to pay the principal of and interest on the Bonds when due. Certain other supplemental special assessments which have been or may be levied against the City of Lansing or the State of Michigan for certain supplemental aspects of the Project not financed with the proceeds of the Bonds are not pledged to the payment of the Bonds. The full faith and credit of the Drainage District have been pledged for the prompt payment of the Bonds and the interest thereon as the same become due. .
Pursuant to a resolution adopted by the Ingham County Board of Commissioners, the County of Ingham, Michigan (the “County”) has pledged its full faith and credit as additional security for the payment of the principal of and interest on the Bonds. In the event and to the extent that moneys required to pay such principal and interest are not collected from the aforementioned Special Assessments, the County is obligated to advance moneys from its general funds sufficient to pay such principal and interest. The County's ability to raise such moneys is subject to constitutional and statutory limitations on the taxing power of the County.
The rights and remedies of the registered owners of the Bonds for enforcement of the payment of the principal of or interest on the Bonds may be affected by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable and their enforcement also may be subject to the exercise of judicial discretion in appropriate cases. OFFICIAL NOTICE OF SALE See APPENDIX L - “DRAFT NOTICE OF SALE”. BIDCOMP/PARITY BIDDING Notice is hereby given that electronic proposals will be received via BIDCOMP/PARITY, in the manner described below, until 1:30 p.m., Eastern Time, on Tuesday, August 25, 2020.
Bids may be submitted electronically via BIDCOMP/PARITY pursuant to the Notice of Sale, but no bid will be received after the time for receiving bids specified above and bidder shall bear all risk of electronic transmission failure. To the extent any instructions or directions set forth in BIDCOMP/PARITY conflict with the Official Notice of Sale for the Bond, the terms of the Official Notice of Sale for the Bonds shall control. For further information about BIDCOMP/PARITY, potential bidders may contact the Municipal Advisor at (734) 994-9700 or BIDCOMP/PARITY at (212) 849-5021. ESTIMATED SOURCES AND USES OF FUNDS Sources of Funds: Par Amount Premium (Discount) TOTAL SOURCES
Uses of Funds: Construction Fund Deposit Principal and Interest Fund (including capitalized interest) Underwriter's Discount Cost of Issuance TOTAL USES
3 APPORTIONMENT OF COSTS The cost of the Drain has been apportioned among the various municipalities as follows:
Public Corporation Assessment Prepays Share of Bonds Percent City of Lansing $19,736,852.55 $0.00 $19,736,852.55 67.14% City of East Lansing 2,226,365.70 0.00 2,226,365.70 7.57 Charter Township of Lansing 4,414,001.72 0.00 4,414,001.72 15.02 Ingham County 1,402,091.57 0.00 1,402,091.57 4.77 MDOT 3,035,887.76 (1,718,703.32) 1,317,184.44 4.48 City of Lansing - Supplemental 300,746.89 0.00 300,746.89 1.02 $31,115,946.19 ($1,718,703.32) $29,397,242.87 100.00% POTENTIAL IMPACT OF THE COVID – 19 PANDEMIC
The World Health Organization declared a pandemic following the outbreak of COVID-19, a respiratory disease caused by a new strain of the coronavirus. On March 10, 2020, Michigan Governor Gretchen Whitmer declared a state of emergency across the State, directing State agencies to use all resources necessary to prepare for and respond to the outbreak. On March 13, 2020, President Trump declared a national emergency to unlock federal funds to help states and local governments fight the pandemic. The current spread of COVID-19, and actions taken by the federal and state and local governments in response thereto, are altering the behavior of businesses and people in a manner that may have a long term negative effect on economic activity, and therefore could adversely affect the future financial condition of the County, directly or indirectly. State of Emergency- Legislative Authority and Executive Orders In response to the effect of COVID-19 in Michigan, the Governor has exercised broad authority under the Emergency Powers of the Governor Act, Act 302, Public Acts of Michigan, 1945, as amended (“Act 302”) and the Emergency Management Act, Act 390, Public Acts of Michigan, 1976, as amended (“Act 390”). Beginning on March 10, 2010, the Governor has issued a series of Executive Orders declaring a state of emergency and a state of disaster in the State in response to COVID-19, indicating that the state of emergency and state of disaster will terminate on the earlier of a specified date or when emergency and disaster conditions no longer exist.† Act 390 requires approval of the legislature to extend an executive order issued pursuant to that statute to continue beyond 28 days. Act 302 is silent on legislative approval. On April 7, 2020, the Michigan Legislature approved the Governor’s extension of the state of emergency and state of disaster through April 30, 2020. On April 30, the Legislature did not extend the state of emergency and state of disaster under Act 390. On May 5, 2020, the Legislature filed suit against the Governor challenging the validity and constitutionality of her executive orders related to COVID-19. On May 21, 2020, the Michigan Court of Claims ruled that the Governor’s April 30th state of emergency declaration was a valid exercise of authority under Act 302, but that her state of emergency and state of disaster declaration was not a valid exercise of authority under Act 390. Both of those rulings have been appealed. A number of other lawsuits have also been filed challenging the scope of the Governor’s authority to exercise emergency powers, some of which have been dismissed, while others remain pending. On June 18, 2020, the Governor issued Executive Order 2020-127, terminating the state of emergency and state of disaster declared in prior executive orders and declaring a new state of emergency under Act 302 and a new state of emergency and state of disaster under Act 390. Executive Order 2020-127 expired on July 16, 2020. On July 14, 2020, the Governor issued Executive Order 2020-151, declaring a state of emergency under the Powers of the Governor Act of 1945. Subject to the ongoing litigation, and the possibility that current rulings may be overturned or otherwise altered on appeal, and to the extent the governor may declare a state of disaster under the Emergency Management Act of 1976. Executive Order 2020-151 expires on August 11, 2020 at 11:59 pm. Executive Order 2020-127 is rescinded. On August 7, 2020, the Governor issued Executive Order 2020-165 extending the state of emergency and state of disaster through September 4, 2020. Stay-Home Practices and Restricted Activity- Executive Orders Beginning on March 23, 2020, the Governor has issued a series of Executive Orders directing all Michigan
† All COVID-19-related Executive Orders and Executive Directives issued by the Governor, as well as other releases and information regarding COVID-19 in the State, can be accessed at www.michigan.gov/coronavirus.
4 businesses and operations to temporarily suspend in-person operations that are not necessary to sustain or protect life and further directed individuals to stay in their homes unless they are part of the critical infrastructure workforce. The current order, Executive Order 2020-110, issued on June 1, 2020, extends certain prior restrictions but lifts a significant number of prior restrictions, including allowing retail operations to resume on June 4, 2020, and restaurants and bars statewide to reopen fully on June 8, 2020, with capacity limitations. Executive Order 2020-115, issued on June 5, 2020, lifts additional restrictions. Impact on the County and the Bonds The County has pledged its full faith and credit for the payment of principal of and interest on the Bonds, including collections of ad valorem taxes levied on all taxable property in the County, subject to applicable constitutional and statutory tax rate limitations. The County does not currently anticipate that the 2020 levy of property taxes will be materially affected; however the County cannot predict the effect the spread of COVID-19 will have on collection of those taxes or on future property tax levies and collections.
The State’s finances have also been adversely affected by the continued spread of COVID-19, with the State’s May Consensus Revenue Estimating Conference projecting an overall 12% revenue decrease in the General Fund and School Aid Fund from the prior year. Constitutional revenue sharing projections for the State’s 2020 fiscal year were reduced approximately 6.1% from January estimates, while projections for the State’s 2021 fiscal year were reduced approximately 12.1%. While these reductions will affect payments to many local units of government, they will not affect payments to the County, which receives statutory revenue sharing payments only. Statutory revenue sharing has not been affected because it is set by legislative appropriation; however the amount and timing of statutory revenue sharing payments to local units of government, including the County, may still be altered by the Legislature and/or Governor. The County cannot currently predict the ultimate effect the spread of COVID-19 will have on its future finances or operations. THE BONDS Description and Form of the Bonds The Bonds will be issued in book-entry-only form as one fully registered Bond per maturity, without coupons, in the aggregate principal amount for each maturity set forth on the cover page hereof and may be purchased in denominations of $5,000 or any integral multiple thereof. The Bonds will be dated as of and bear interest from the date of delivery. Interest on the Bonds shall be payable on February 1, 2021 and semiannually on each February 1 and August 1 thereafter to maturity. Interest on the Bonds shall be computed using a 360-day year with twelve 30-day months, and the Bonds will mature on the dates and in the principal amounts and will bear interest at the rates as set forth on the cover of this Official Statement.
The Huntington National Bank, Grand Rapids, Michigan, or its successor will serve as the Paying Agent (the “Paying Agent”) for the Bonds and also transfer agent if the Bonds cease to be held in book-entry-only form. For a description of payment of principal and interest, transfers and exchanges and notice of redemption on the Bonds, which are held in the book-entry-only system, see “Book-Entry-Only System” below. In the event the Bonds cease to be held in the book-entry-only system, then interest on the Bonds shall be payable when due by check or draft to the person or entity who or which is, as of the fifteenth (15th) day of the month preceding each interest payment date, the registered owner of record, at the owner’s registered address. See “Transfer Outside Book-Entry-Only System” below. Book-Entry-Only System The information in this section has been furnished by The Depository Trust Company, New York, New York (“DTC”). No representation is made by the Drainage District or the Paying Agent as to the completeness or accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. No attempt has been made by the Drainage District or the Paying Agent to determine whether DTC is or will be financially or otherwise capable of fulfilling its obligations. Neither the Drainage District nor the Paying Agent will have any responsibility or obligation to Direct Participants, Indirect Participants (both as defined below) or the persons for which they act as nominees with respect to the Bonds, or for any principal, premium, if any, or interest payment thereof.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity and will be deposited with DTC.
5 DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC's participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor's highest rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Drainage District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal interest and redemption amounts, if any, on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Drainage District
6 or Paying Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent, or Drainage District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal, interest and redemption amounts, if any, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) are the responsibility of the Drainage District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Drainage District or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered.
The Drainage District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository).
In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Drainage District believes to be reliable, but the Drainage District takes no responsibility for the accuracy thereof.
Paying Agent and Bond Registration
Principal and interest shall be payable and the Bonds shall be registered as described under the heading “Book-Entry-Only System” above until the book-entry-only system is discontinued. The Drainage District has appointed the Paying Agent shown on the cover. In the event the book-entry-only system is discontinued, the Paying Agent will also act as bond registrar and Transfer Agent.
Transfer Outside Book-Entry-Only System
In the event that the book-entry-only system is discontinued, the Paying Agent shall keep the registration books for the Bonds (the “Bond Register”) at its corporate trust office. Subject to the further conditions contained in the Resolution, the Bonds may be transferred or exchanged for one or more Bonds in different authorized denominations upon surrender thereof at the corporate trust office of the Paying Agent by the registered owners or their duly authorized attorneys; upon surrender of any Bonds to be transferred or exchanged, the Paying Agent shall record the transfer or exchange in the Bond Register and shall authenticate replacement bonds in authorized denominations; during the 15 days immediately preceding the date of mailing (the “Record Date”) of any notice of redemption or any time following the mailing of any notice of redemption, the Paying Agent shall not be required to effect or register an transfer or exchange of any Bond which has been selected for such redemption, except the Bonds properly surrendered for partial redemption may be exchanged for new Bonds in authorized denominations equal in the aggregate to the unredeemed portion; the Drainage District and Paying Agent shall be entitled to treat the registered owners of the Bonds, as their names appear in the Bond Register as of the appropriate dates, as the owners of such Bonds for all purposes under the Resolution . No transfer or exchange made other than as described above in the Resolution shall be valid or effective for any purposes under the Resolution . BOND INSURANCE AT PURCHASER’S OPTION If the Bonds qualify for the issuance of any policy of municipal bond insurance or commitment therefore at the option of the purchaser, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the Drainage District has requested and received a rating on the Bonds, from a rating agency, the Drainage District will pay the fee for the requested rating. Any other rating agency fees shall be the responsibility of the purchaser. FAILURE OF THE MUNICIPAL BOND INSURER TO ISSUE THE POLICY AFTER THE BONDS HAVE BEEN AWARDED TO THE PURCHASER SHALL NOT CONSTITUTE CAUSE FOR FAILURE OR REFUSAL BY THE PURCHASER TO ACCEPT DELIVERY OF THE BONDS FROM THE DRAINAGE DISTRICT.
7 LITIGATION The County, the City of Lansing, and the Charter Township of Lansing have not been served with any litigation, administrative action or proceeding, and to the knowledge of the appropriate officials of the County, the City and Township, no litigation or administrative action or proceeding has been threatened against it, seeking to restrain or enjoin the issuance and delivery of the Bonds, or questioning or contesting the validity of the Bonds or the proceedings or authorities under which they are authorized to be issued, sold, executed and delivered, or that would materially impact the County’s, the City of Lansing and the Charter Township of Lansing’s finances or the ability of either to meet the debt service obligations on the Bonds.
Notwithstanding the foregoing, in Montgomery Drain v CKJ Properties, LLC, Ingham County Circuit Court, Case No. 19-877-CZ (the “Litigation”), the Drainage District sued CKJ Properties, LLC (“CKJ”), requesting that the trial court order the removal of a building encroaching on the Drainage District’s drain easement where a portion of the project will be constructed and requesting damages related to obstructing the drain including attorney fees. CKJ has asserted counterclaims of adverse possession, violations of due process, equal protection and the Michigan Environmental Protection Act. The trial court, upholding the Drainage District’s easement denied the counterclaim for adverse possession and granted the Drainage District’s request that the building be removed from the easement and the building is currently undergoing demolition. The Drainage District has moved for dismissal of all the remaining counterclaims and Litigation counsel expects a ruling within the next few weeks. However, if successful, CKJ’s counterclaims could result in additional project costs for the Drainage District. While the outcome of the Litigation cannot be predicted with certainty, Litigation counsel to the Drainage District, believes that CKJ’s counterclaims lack merit.
TAX MATTERS General In the opinion of Dickinson Wright PLLC, Bond Counsel, based on its examination of the documents described in its opinion, under existing law as enacted and construed on the date of the initial delivery of the Bonds, the interest on the Bonds is excluded from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax. The opinion set forth above is subject to the condition that the Drainage District comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds. The Drainage District has covenanted to comply with all such requirements. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds and the interest thereon. In the opinion of Dickinson Wright PLLC, Bond Counsel, based on its examination of the documents described in its opinion, under existing law as enacted and construed on the date of the initial delivery of the Bonds, the Bonds and the interest thereon are exempt from all taxation by the State of Michigan or a political subdivision thereof, except estate taxes and taxes on gains realized from the sale, payment or other disposition thereof.
Prospective purchasers of the Bonds should be aware that (i) interest on the Bonds is included in the effectively connected earnings and profits of certain foreign corporations for purposes of calculating the branch profits tax imposed by Section 884 of the Code, (ii) interest on the Bonds may be subject to a tax on excess net passive income of certain S Corporations imposed by Section 1375 of the Code, (iii) interest on the Bonds is included in the calculation of modified adjusted gross income for purposes of determining taxability of social security or railroad retirement benefits, (iv) the receipt of interest on the Bonds by life insurance companies may affect the federal tax liability of such companies, (v) in the case of property and casualty insurance companies, the amount of certain loss deductions otherwise allowed is reduced by a specific percentage of, among other things, interest on the Bonds, (vi) registered owners acquiring the Bonds subsequent to initial issuance will generally be required to treat market discount recognized under Section 1276 of the Code as ordinary taxable income, (vii) the receipt or accrual of interest on the Bonds may cause disallowance of the earned income credit under Section 32 of the Code, (viii) interest on the Bonds is subject to backup withholding under Section 3406 of the Code in the case of registered owners that have not reported a taxpayer identification number and are not otherwise exempt from backup withholding, and (ix) registered owners of the Bonds may not deduct interest on indebtedness incurred or continued to purchase or carry the Bonds, and financial institutions may not deduct that portion of their interest expense allocated to interest on the Bonds.
8 Tax Treatment of Accruals on Original Issue Discount Bonds
For federal income tax purposes, the difference between the initial offering prices to the public (excluding bond houses and brokers) at which a substantial amount of the Bonds initially sold at a discount corresponding to the yields as shown on the cover page hereof (the “OID Bonds”) is sold and the amount payable at the stated redemption price at maturity thereof constitutes “original issue discount.” Such discount is treated as interest excluded from federal gross income to the extent properly allocable to each registered owner thereof. The original issue discount accrues over the term to maturity of each such OID Bond on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue) with straight line interpolations between compounding dates. The amount of original issue discount accruing during each period is added to the adjusted basis of such OID Bonds to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such OID Bonds.
The Code contains certain provisions relating to the accrual of original issue discount in the case of registered owners of the OID Bonds who purchase such bonds after the initial offering of a substantial amount thereof. Registered owners who do not purchase such OID Bonds in the initial offering at the initial offering and purchase prices should consult their own tax advisors with respect to the tax consequences of ownership of such OID Bonds. Amortizable Bond Premium For federal income tax purposes, the difference between an original registered owner’s cost basis of the Bonds initially sold at a premium corresponding to the yields as shown on the cover page hereof (the “Original Premium Bonds”) and the amounts payable on the Original Premium Bonds other than stated interest constitutes an amortizable bond premium. The same applies with respect to any Bond, if a registered owner’s cost basis exceeds the amounts payable thereon other than stated interest (collectively with the Original Premium Bonds held by the original registered owners, “Premium Bonds”). Such amortizable bond premium is not deductible from gross income, but is taken into account by certain corporations in determining adjusted current earnings for the purpose of computing the alternative minimum tax, which may also affect liability for the branch profits tax imposed by Section 884 of the Code. The amount of amortizable bond premium allocable to each taxable year is generally determined on the basis of the registered owner’s yield to maturity determined by using the registered owner’s basis (for purposes of determining loss on sale or exchange) of such Premium Bonds and compounding at the close of each six-month accrual period. The amount of amortizable bond premium allocable to each taxable year is deducted from the registered owner’s adjusted basis of such Premium Bonds to determine taxable gain upon disposition (including sale, redemption or payment at maturity) of such Premium Bonds. Future Developments NO ASSURANCE CAN BE GIVEN THAT ANY FUTURE LEGISLATION OR CLARIFICATIONS OR AMENDMENTS TO THE CODE, IF ENACTED INTO LAW, WILL NOT CONTAIN PROPOSALS THAT COULD CAUSE THE INTEREST ON THE BONDS TO BE SUBJECT DIRECTLY OR INDIRECTLY TO FEDERAL OR STATE OF MICHIGAN INCOME TAXATION, ADVERSELY AFFECT THE MARKET PRICE OR MARKETABILITY OF THE BONDS, OR OTHERWISE PREVENT THE REGISTERED OWNERS FROM REALIZING THE FULL CURRENT BENEFIT OF THE STATUS OF THE INTEREST THEREON. FURTHER, NO ASSURANCE CAN BE GIVEN THAT ANY SUCH FUTURE LEGISLATION, OR ANY ACTIONS OF THE INTERNAL REVENUE SERVICE, INCLUDING, BUT NOT LIMITED TO, SELECTION OF THE BONDS FOR AUDIT EXAMINATION, OR THE AUDIT PROCESS OR RESULT OF ANY EXAMINATION OF THE BONDS OR OTHER BONDS THAT PRESENT SIMILAR TAX ISSUES, WILL NOT ADVERSELY AFFECT THE MARKET PRICE OF THE BONDS.
INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE BONDS AND THE TAX CONSEQUENCES OF THE ORIGINAL ISSUE DISCOUNT OR PREMIUM THEREON, IF ANY. MUNICIPAL FINANCE QUALIFYING STATEMENT The Michigan Department of Treasury has determined that the Drainage District and the County are in material compliance with the criteria identified in the Revised Municipal Finance Act, Act 34 of the Public Acts of Michigan, 2001, as amended, for a municipality to be granted qualified status. The Drainage District and the County may therefore proceed to issue the Bonds without further approval from the Department of Treasury of the State of Michigan.
9 BOND COUNSEL’S RESPONSIBILITY The fees of Bond Counsel for services rendered in connection with its approving opinion are expected to be paid from Bond proceeds. Except to the extent necessary to issue its approving opinion as to the validity of the Bonds and tax matters relating to the Bonds and the interest thereon, and except as stated below, Bond Counsel has not been retained to examine or review, and has not examined or reviewed any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly will not express any opinion with respect to the accuracy or completeness of any such financial documents, statements or materials.
Bond Counsel has reviewed the statements in this Official Statement under the headings “PRIOR REDEMPTION,” “PURPOSE AND SECURITY,” “THE BONDS - Transfer Outside Book-Entry-Only System,” “TAX MATTERS,” “APPROVAL BY THE MICHIGAN DEPARTMENT OF TREASURY,” “BOND COUNSEL’S RESPONSIBILITY,” “CONTINUING DISCLOSURE” (first two paragraphs only). Bond Counsel has not been retained to review and has not reviewed any other portions of the Official Statement for accuracy or completeness, and has not made inquiry of any official or employee of the Issuer or any other person and has made no independent verification of such other portions hereof, and further has not expressed and will not express an opinion or belief as to any such other portions hereof. MUNICIPAL ADVISOR PFM Financial Advisors LLC, of Ann Arbor, Michigan (the “Municipal Advisor”), has been retained by the Drainage District and the County to provide certain financial advisory services. The Municipal Advisor assisted in the preparation of the Official Statement and in other matters relating to the planning, structuring and issuance of the Bonds. In preparing portions of the Official Statement, the Municipal Advisor has relied upon governmental officials and other sources which have access to relevant data, to provide accurate information for the Official Statement and the Municipal Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. To the best of the Municipal Advisor’s knowledge and belief, the information contained in the Official Statement which it assisted in preparing, while it may be summarized, is complete and accurate. However, the Municipal Advisor has not and will not independently verify the completeness and accuracy of the information contained in the Official Statement.
The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds. PFM Financial Advisors LLC is registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board as a municipal advisor.
Further information concerning the Bonds may be secured from PFM Financial Advisors LLC, 555 Briarwood Circle, Suite 333, Ann Arbor, Michigan 48108, (734) 994-9700, Financial Advisor to the Drainage District and the County. CONTINUING DISCLOSURE In connection with the issuance of the Bonds, each of the County, the Charter Township of Lansing (the “Township”) and the City of Lansing (the “City”) has covenanted and will covenant for the benefit of the Bondholders and the Beneficial Owners (as hereinafter defined) pursuant to resolutions and adopted by the respective governing bodies of each of the County, the Township and the City and a Continuing Disclosure Certificate of each to be delivered on the date of issuance of the Bonds to the purchaser thereof (the “Disclosure Certificate”), to provide or cause to be provided: (i) each year, certain financial information and operating data relating to the County, the Township and the City, respectively, for the preceding fiscal year (the “Annual Report”) in the case of the County and the Township by not later than the date seven (7) months after the first day of the Fiscal Year of the County and the Township respectively, commencing with the Annual Report for the fiscal year ending December 31, 2020 and in the case of the City by not later than the last day of the sixth (6th) month following the end of the fiscal year of the City, commencing with the fiscal year ended June 30, 2020; provided, however, that if audited financial statements are not available by such date, unaudited financial statements in a format similar to the audited financial statements then most recently prepared for the County, the Township and the City will be included in the Annual Report and audited financial statements will be provided when available; and (ii) timely notices of the occurrence of certain enumerated events. Currently, the fiscal year of the County and the Township commences on January 1 and the fiscal year of the City begins on July 1. “Beneficial Owner” means any person which has or shares the power, directly or indirectly, to
10 make investment decisions concerning ownership of any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries).
Each Annual Report will be filed with the Municipal Securities Rulemaking Board (“MSRB”) electronically through MSRB’s Electronic Municipal Market Access system (“EMMA”). If the County, the Township, the City or MDOT is unable to provide the MSRB its Annual Report by the date required, the County, the Township, the City or MDOT, as applicable, shall send, in a timely manner, to the MSRB through EMMA, a notice of the failure to file the Annual Report by such date. The notices of material events will be filed by the County, the Township and the City with the MSRB through EMMA. These covenants have been made by the County, the Township and the City, respectively, in order to assist the purchaser of the Bonds and registered brokers, dealers and municipal securities dealers in complying with the requirements of subsection of (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Rule”). The information to be contained in the Annual Report, the enumerated events, the occurrence of which will require a notice, and the other terms of the Disclosure Certificate are set forth in Appendix K, “FORMS OF CONTINUING DISCLOSURE CERTIFICATE”.
A failure by the County, the Township or the City to comply with its Disclosure Certificate must be reported by the County, the Township or the City, as applicable, in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such failure may adversely affect the transferability and liquidity of the Bonds and their market price.
A failure by the County, the Township or the City to comply with its Undertaking will not constitute an event of default under the Resolution and holders of the Bonds or Beneficial Owners are limited to the remedies described in the Undertaking.
The County timely filed its Annual Reports for the fiscal years ended December 31, 2015 through 2017. The County also timely filed updated financial and operating data for the fiscal years 2015 through 2019, as required by its outstanding continuing disclosure undertakings. However, the County filed a timely notice of failure to file its 2018 Annual Report and then filed the Report on August 20, 2019. The 2019 Annual Report was filed on June 29, 2020 which was timely for most of the disclosure undertakings; however, the filing was one-day late for a few disclosure undertakings that have a 180-day filing requirement. A notice of failure to file was filed timely on June 26, 2020 in anticipation that the 2019 Annual Report would be filed late for at least some of the disclosure undertakings. The County omitted a section on percentage change in population in its filings for fiscal years ended 2013-2015 and did not provide the required Captured TIF Revenue information in its filing for its fiscal year ended 2013 for the 2007 Brownfield Authority Bonds. This information was posted on July 7, 2016. The County also omitted the section on percentage change in population on its filing for its fiscal year ended 2016 and posted this information on April 3, 2018. In addition, the County filed late material event notices of rating changes affecting its underlying rating and ratings of certain bond insurers. The County has filed material event notices reflecting these rating changes.
Except as hereafter provided, the Township has not failed to comply in the past five years, in any material respect, with any previous undertakings pursuant to the Rule. Annual Reports for fiscal years ended December 31, 2015 and 2016 were timely filed however the reports were not linked on EMMA to bonds issued by the Groesbeck Park Drain Drainage District for which the Township is an obligated person pursuant to the Rule. Notice of failure to file has since been posted on EMMA along with the Annual Reports. The Annual Reports for the fiscal year ended December 31, 2019 were filed one day late. Further the final 2019 audit is not yet available. A failure to file the 2019 audit was posted on EMMA along with a draft audit and the final audit will be filed as soon as it is available.
Except as described in this section, the City has not failed to comply in the last five years with the requirements, as described in section (b)(5) of the Rule, of any undertaking made by the City.
On January 20, 2016, the City made a late filing with the MSRB through EMMA of the City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015 (the "2015 CAFR") for CUSIPs relating to the City's General Obligation Limited Tax Refunding Bonds, Series 2015 (the "2015 City Bonds"). The 2015 CAFR had been timely filed on December 23, 2015 for all of the City's other outstanding issues but had not been linked to the 2015 City Bonds. Separately, the Official Statement dated December 17, 2015 for the 2015 City Bonds contained the required annual disclosure of operating data for the 2015 City Bonds, except one table titled "Water Consumption by User Classification" was not included and was filed on December 27, 2016 within the operating data for 2016.
11 On September 19, 2018, the City filed a late material event notice of a change to the underlying rating on the City of Lansing and County of Ingham Joint Building Authority's 2005 Building Authority Refunding Bonds (Limited Tax General Obligation) (the "2005 JBA Bonds") which had occurred on December 15, 2015. The City did not file a material event notice of the withdrawal of ratings on a bond insurer that insured the 2005 JBA Bonds, which occurred on December 1, 2017. The 2005 JBA Bonds are no longer outstanding.
On July 21, 2020, the City filed with the MSRB through EMMA its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017 (the "2017 CAFR") and its fiscal year 2017 operating data for certain CUSIPs assigned in 2017 to the unrefunded portions of the LBA's 2009 Building Authority Refunding Bonds (Limited Tax General Obligation) (Federally Taxable) (the "2009 LBA Bonds"). The 2017 CAFR and operating data had been timely filed on December 27, 2017 for all of the City's, TIFA's and LBA's outstanding issues, including the 2009 LBA Bonds under CUSIPs assigned when issued, but the City had not linked the 2017 filings to new CUSIPs assigned in 2017 to the unrefunded portions of the 2009 LBA Bonds.
The City also did not link the 2017 filings to new CUSIPs assigned in 2017 to the unrefunded portions of the TIFA's 2009 Refunding Bonds; however, no corrective filing has been made because the affected portions of the TIFA's 2009 Refunding Bonds were called for early redemption on May 14, 2019 and redeemed in full on June 13, 2019. The City is in the process of developing a continuing disclosure policy and procedure that will encompass annual disclosure filings and material event filings, and that will enable the City to identify and file material event notices in a timely manner in the future.
RATING S&P Global Ratings, a division of S&P Global, Inc. (“S&P”) is expected to assign, as of the date of delivery of the Bonds, its municipal bond rating of “AA” to the Bonds.
No application has been made to any other ratings service for a rating on the Bonds. The Drainage District furnished to S&P certain materials and information in addition to that provided herein. Generally, rating agencies base their ratings on such information and materials, and on investigations, studies and assumptions. There is no assurance that such ratings will prevail for any given period of time or that they will not be revised downward or withdrawn entirely by S&P if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse affect on the market price of the Bonds. Any ratings assigned represent only the views of S&P. Further information is available upon request from S&P Global Ratings, 55 Water Street, New York, NY 10014, telephone: (212) 438-1000.
CERTIFICATION
The Drainage District and the County have authorized the distribution of this Official Statement for use in connection with the initial sale of the Bonds. The Drainage District and the County have each reviewed the information contained within the Official Statement prepared on behalf of the Drainage District by PFM Financial Advisors LLC, and insofar as it pertains to each of them respectively said Official Statement does not contain any material misstatement of fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
All information contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original sources thereof. In particular, no opinion or representation is rendered as to whether any projection will approximate actual results, and all opinions, estimates and assumptions, whether or not expressly identified as such, should not be considered statements of fact.
12 This Official Statement has been duly approved, executed and delivered by the Drainage District and the County on the date as set forth on the front cover of this Official Statement.
Montgomery Drain Drainage District County of Ingham County of Ingham State of Michigan State of Michigan
By: Patrick E. Lindemann By: Gregg Todd Its: Drain Commissioner Its: County Administrator/Controller
The City certifies that to its best knowledge and belief, said Official Statement does not contain any material misstatement of fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
City of Lansing State of Michigan
By: Cheryl Fox Its: Interim Treasurer
The Township certifies that to its best knowledge and belief, said Official Statement does not contain any material misstatement of fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
Charter Township of Lansing State of Michigan
By: Leo C. Rodgers Its: Treasurer
13 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A¹ COUNTY OF INGHAM GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION LOCATION AND DESCRIPTION Ingham County occupies an area of 576 square miles in the south central portion of Michigan’s lower peninsula. Lansing, the State Capitol, represents thirty percent of Ingham County’s property valuation and is the largest retail center in the area. Several large industrial firms are located within the County, with manufacturing, government and education representing the major employment source. Agriculture is important to the County, including dairy, livestock and crop farming. Michigan State University, in the City of East Lansing, is the State’s second largest university. POPULATION The U.S. Census Bureau reported historical and 2018 estimated populations for the County are as follows:
County of Ingham 2018 U.S. Census Estimate 292,735 2010 U.S. Census 280,895 2000 U.S. Census 279,320 1990 U.S. Census 281,912
FORM OF GOVERNMENT Ingham County is governed by a fourteen member Board of Commissioners (the "Board"). Each Commissioner is elected on a partisan basis for terms of two years from single-member districts that are approximately equal in population. The Board annually elects from its ranks a Chairperson, Chairperson Pro-Tem and Vice Chairperson by majority vote. The administration of the County, other than as delegated to elected officials is guided by the County Controller who is appointed by a two-thirds vote of the Board of Commissioners and serves at its pleasure. Primary functions of the Board include determination of type and level of County services, adoption of the County Budget, equalization of County property values, legislative oversight of County services and the appointment of various boards, commissions and County Officials. PROPERTY VALUATIONS Article IX, Section 3, of the Michigan Constitution provides that the proportion of true cash value at which property shall be assessed shall not exceed 50% of true cash value. The Michigan Legislature by statute has provided that property shall be assessed at 50% of its true cash value, except as described below. The Michigan Legislature or the electorate may at some future time reduce the percentage below 50% of true cash value.
On March 15, 1994, the electors of the State approved an amendment to the Michigan Constitution permitting the Legislature to authorize ad valorem taxes on a non-uniform basis. The legislation implementing this constitutional amendment added a new measure of property value known as “Taxable Value.” Since 1995, taxable property has had two valuations—state equalized valuation (“SEV”) and Taxable Value. Property taxes are levied on Taxable Value. Generally, the Taxable Value of property is the lesser of: (a) the property’s Taxable Value in the immediately preceding year minus any losses, multiplied by the lesser of 1.05 or the inflation rate, plus all additions, or (b) the property’s current SEV. Under certain circumstances, therefore, the Taxable Value of property may be different from the same property’s SEV.
When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing law is 50% of the current true cash value. The Taxable Value of new construction is equal to current SEV. The Taxable Value and SEV of existing property are also adjusted annually for additions and losses.
Responsibility for assessing taxable property rests with the local assessing officer of each township and city. Any property owner may appeal the assessment to the local assessor, to the local board of review and ultimately to the Michigan Tax Tribunal.
In addition to limiting the annual increase in Taxable Value, the Michigan Constitution mandates a system of equalization of assessments. Although the assessor for each local unit of government within a county is responsible
¹Unless otherwise noted, the information in Appendix A was provided by the County. A-1 for actually assessing at 50% of true cash value, adjusted for Taxable Value purposes, the final SEV and Taxable Value are arrived at through several steps. Assessments are established initially by the municipal assessor.
Municipal assessments are then equalized to the 50% levels as determined by the County Department of Equalization. Thereafter, the State equalizes the various counties in relation to each other. SEV is important, aside from its use in determining Taxable Value for the purpose of levying ad valorem property taxes, because of its role in the spreading of taxes between overlapping jurisdictions, the distribution of various State aid programs, State revenue sharing and in the calculation of debt limits.
Property that is exempt from property taxes (e.g., churches, government property, public schools) is not included in the SEV or Taxable Value data in this Appendix A. Property granted tax abatements under Act 198, Public Acts of Michigan, 1974, as amended, is recorded on a separate tax roll while subject to tax abatement. The valuation of tax abated property is based upon SEV but is not included in either the SEV or Taxable Value data in this Appendix A except as noted. HISTORY OF VALUATIONS A history of the property valuations in the County is shown below:
Property Levy/ Total State Value as Valuation Taxable Percent Equalized Percent of 12/31 Year Value Change Value Change 2019 2020 $8,447,048,113 3.99% $10,274,051,222 6.88% 2018 2019 8,122,887,376 3.73 9,612,432,229 6.45 2017 2018 7,830,424,660 3.29 9,029,578,058 3.17 2016 2017 7,580,908,085 2.63 8,752,507,785 4.84 2015 2016 7,386,544,658 ---- 8,348,398,957 ----
History of Valuations
$12,000 $10,000 $8,000 $6,000
Millions $4,000 $2,000 $0 2016 2017 2018 2019 2020
Taxable Value State Equalized Value
A summary of the 2020 valuation subject to taxation is as follows:
2020 Taxable Value $8,447,048,113 Plus: 2020 Equivalent IFT Taxable Value1 41,095,707 Total 2020 Equivalent Taxable Value $8,488,143,820
1See “INDUSTRIAL FACILITY TAX ABATEMENTS” herein. Source: Ingham County Equalization Department
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Valuation Composition
A breakdown of the County’s 2020 Taxable Value by class, use and municipality is as follows:
2020 Percent By Class: Taxable Value of Total Taxable Value by Use Real Property $7,777,964,407 92.08% 7.92% 2.36% Personal Property 669,083,706 7.92 0.02% 24.23% TOTAL $8,447,048,113 100.00% By Use: Agricultural $199,412,634 2.36% Commercial 2,046,717,102 24.23 2.28% 63.19% Industrial 192,409,233 2.28 Residential 5,337,772,497 63.19 Agricultural Commercial Industrial Developmental 1,652,941 0.02 Residential Developmental Personal Personal 669,083,706 7.92 TOTAL $8,447,048,113 100.00%
Source: Ingham County Equalization Department
By Municipality: Townships Alaiedon Township $226,842,808 2.69% Aurelius Township 159,156,138 1.88 Bunker Hill Township 86,764,351 1.03 Delhi Township 823,028,856 9.74 Ingham Township 83,690,746 0.99 Lansing Charter Township 322,893,722 3.82 Leroy Township 133,607,241 1.58 Leslie Township 101,216,121 1.20 Locke Township 81,852,537 0.97 Meridian Charter Township 1,872,353,236 22.17 Onondaga Township 91,038,488 1.08 Stockbridge Township 254,022,374 3.01 Vevay Township 141,168,167 1.67 Wheatfield Township 81,197,236 0.96 White Oak Township 77,380,945 0.92 Williamstown Township 265,300,549 3.14 Cities East Lansing 1,026,538,701 12.15 Lansing 2,216,978,934 26.25 Leslie 37,909,432 0.45 Mason 241,731,070 2.86 Williamston 122,366,461 1.45 TOTAL $8,447,038,113 100.00%
Source: Ingham County Equalization Department
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INDUSTRIAL FACILITY TAX ABATEMENTS Under the provisions of Act 198 of the Public Acts of Michigan, 1974, as amended (“Act 198”), plant rehabilitation districts and/or industrial development districts may be established. Businesses in these districts are offered certain property tax incentives to encourage restoration or replacement of obsolete facilities and to attract new facilities in the area. The industrial facilities tax (“IFT”) is paid, at a lesser effective rate and in lieu of ad valorem property taxes, on such facilities for a period of up to 12 years. Qualifying facilities are issued abatement certificates for this period.
After expiration of the abatement certificate, the then-current SEV of the facility is returned to the ad valorem tax roll. The owner of such facility may obtain a new certificate, provided it has complied with the provisions of Act 198.
The County has several IFT abatements outstanding with a total 2020 Taxable Value of $82,191,413, all of which is taxed at half rate. For purposes of computing “Equivalent” Taxable Value, it has been shown in the “History of Valuations” table above as 50% of the Taxable Value.
Source: Ingham County Equalization Department PROPERTY TAX REFORM
The voters of the State approved enactment of Michigan Public Acts 153 and 154 of 2013 and Acts 80 and 86 through 93 of 2014 by referendum on August 5, 2014 (collectively, the “PPT Reform Acts”), which significantly reformed Personal Property tax in Michigan.
Under the PPT Reform Acts, owners of industrial and commercial Personal Property with a total true cash value of $80,000 or less may file an affidavit claiming a Personal Property tax exemption. To be eligible for the exemption, all of the commercial or industrial Personal Property within a city or township that is owned by, leased to, or controlled by the claimant has to have an accumulated true cash value of $80,000 or less. Beginning in calendar year 2016, owners of certain manufacturing Personal Property that was either purchased after December 31, 2012, or that is at least 10 years old may claim an exemption from Personal Property tax. By 2022, all eligible manufacturing Personal Property will be at least 10 years old or purchased after December 31, 2012, so that it could be exempted from Personal Property tax.
To replace personal property tax revenues lost by local governments, including cities, the PPT Reform Acts divided the existing state use tax into two components, a “state share tax” and a “local community stabilization share tax,” and established the Local Community Stabilization Authority (the “LCSA”) to administer distribution of the local community stabilization share. The Michigan Department of Treasury collects the local community stabilization share tax on behalf of the LCSA. The local community stabilization share tax revenues are not subject to the annual appropriations process and are provided to the LCSA for distribution pursuant to a statutory formula. The statutory formula is anticipated to provide 100% reimbursement to local governments for losses due to the new personal property tax exemptions.
The ultimate nature, extent and impact of other tax and revenue measures, which are from time to time considered, cannot currently be predicted. No assurance can be given that any future legislation or administrative action, if enacted or implemented, will not adversely affect the market price or marketability of the Bonds, or otherwise prevent Bondholders from realizing the full current benefit of an investment therein. Purchasers of the Bonds should be alert to the potential effect of such measures upon the Bonds, the security therefor, and the operations of the County.
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MAJOR TAXPAYERS The ten largest taxpayers in Ingham County and their 2020 Taxable Value and Industrial Facilities Tax Valuations are as follows:
Taxable "Equivalent" Total Taxpayer Product/Service Value IFT Value1 Valuation Enbridge Energy LP Utility $156,214,700 $0 $156,214,700 Consumers Energy Company Utility 151,882,262 0 151,882,262 Dart Container of Michigan LLC Plastics Foam Products 21,119,849 19,828,981 40,948,830 Jackson National Life Insurance 35,862,626 0 35,862,626 Enbridge Pipelines (Toledo) Inc. Pipeline 31,828,100 0 31,828,100 Retail Properties of America, Inc. Real Estate 29,793,427 0 29,793,427 General Motors Company Automotive 23,332,027 4,438,959 27,770,986 HB BM East Lansing LLC Property Management 25,398,684 0 25,398,684 Lansing Properties I LLC Apartments (SkyVue) 24,590,660 0 24,590,660 Meridian Mall, Ltd. Partnership Shopping Mall 22,538,609 0 22,538,609 TOTALS $522,560,944 $24,267,940 $546,828,884 Total 2020 Taxable Value $8,447,048,113 $8,488,143,820 Top 10 Taxpayers as a % of 2020 Total Taxable Value 6.19% 6.44%
1Represents 50% of the actual Taxable Value. Source: Ingham County Equalization Department
CONSTITUTIONAL ROLLBACK AND ASSESSMENT CAPS
Article IX, Section 31 of the Michigan Constitution requires that if the total value of existing taxable property in a local taxing unit, exclusive of new construction and improvements, increases faster than the U.S. Consumer Price Index from one year to the next, the maximum authorized tax rate for that local taxing unit must be reduced through a Millage Reduction Fraction unless reversed by a vote of the electorate of the local taxing unit. TAX RATE LIMITATIONS
Article IX, Section 6, Michigan Constitution of 1963 provides, in part:
“Except as otherwise provided in this Constitution, the total amount of general ad valorem taxes imposed upon real and tangible property personal property for all purposes in any one year shall not exceed 15 mills on each dollar of the assessed valuation of property as finally equalized.”
Section 6 further provides that by a majority vote of qualified electors of the County, the 15 mill limitation may be increased to a total of not to exceed 18 mills, and the millage of the local units involved shall then permanently be fixed within that greater millage limitation.
Act 62, Public Acts of Michigan, 1933, as amended, defines local units as counties, townships, villages, cities, school districts, community college districts, intermediate school districts, and all other division, districts, and organizations of government that are or may be established with the power to levy taxes, except villages and cities for which there are provisions in their charters or general law fixing maximum limits on the power to levy taxes against property.
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The County’s current millage rates are as follows:
2019 Millage Maximum Allowable 2019 Millage 2019 Tax Expiration Purpose Authorized Millage after Rollback Levied Rate Margin Date of Levy Operating 6.7670 6.7670 6.7670 0.0000 N/A County Transportation 0.6000 0.6000 0.6000 0.0000 2020 911 (Emergency Police) 0.8500 0.8500 0.8500 0.0000 2019 Juvenile Justice 0.6000 0.6000 0.6000 0.0000 2021 Potter Park Zoo 0.4100 0.4100 0.4100 0.0000 2020 Farmland Preservation 0.1400 0.1400 0.1400 0.0000 2027 Indigent Veterans Relief Fund 0.0330 0.0330 0.0330 0.0000 N/A Animal Control 0.2400 0.2400 0.2400 0.0000 2021 Parks and Trails 0.5000 0.5000 0.5000 0.0000 2019 Health Services 0.5200 0.5200 0.3500 0.1700 2019 Jail/Justice 0.8500 0.8500 0.8500 0.0000 2037 In addition, Article IX, Section 6, permits the levy of millage in excess of the above for:
1. All debt service on tax supported notes issued prior to December 23, 1978 or tax supported issues which have been approved by the voters for which the County has pledged its full faith and credit.
2. Operating purposes for a specified period of time provided that such increased millage approved by a majority of the qualified electors of the local unit. TAX RATES – (PER $1,000 OF VALUATION)
The following table shows the total County tax rates for the past five years.
Taxing Jurisdiction 2019 2018 2017 2016 2015 County of Ingham Operating 6.7670 6.7670 6.3512 6.4206 6.3500 Airport Authority 0.6990 0.6990 0.6990 0.7079 0.7500 County Transportation* 0.6000 0.6000 0.6000 0.6000 0.6000 911 (Emergency Police) 0.8500 0.8500 0.8500 0.8431 0.8431 Juvenile Justice 0.6000 0.6000 0.6000 0.6000 0.6000 Potter Park Zoo 0.4100 0.4100 0.4100 0.4100 0.4100 Farmland Preservation 0.1400 0.1400 0.1400 0.1400 0.1400 Indigent Veterans Relief Fund 0.0330 0.0330 0.0330 0.0330 0.0330 Animal Control 0.2400 0.2400 0.2400 0.2400 0.0000 Parks and Trails 0.5000 0.5000 0.5000 0.5000 0.5000 Health Services 0.3500 0.3500 0.3500 0.3500 0.3500 Jail/Justice 0.8500 0.8500 0.0000 0.0000 0.0000 County Total 12.0390 12.0390 10.7732 10.8446 10.5761
Other Tax Rates State Education Tax 6.0000 6.0000 6.0000 6.0000 6.0000 Capital Library 1.5600 1.5600 1.5600 1.5600 1.5600 Ingham County ISD 5.9987 5.9987 5.9881 5.9881 5.9881 Lansing Community College 3.8072 3.8072 3.8072 3.8072 3.8072
*Includes 0.48 for special transportation and 0.12 for public transportation. Source: Ingham County Equalization Department
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TAX LEVIES AND COLLECTIONS
The County’s fiscal year begins January 1 and ends December 31. Its property taxes are due July 1 and December 1 of each fiscal year and are payable without penalty until the following February 14. All real property taxes remaining unpaid on March 1st of the year following the levy are turned over to the County Treasurer for collection. Ingham County annually pays from its Tax Revolving Fund delinquent taxes on real property to all taxing units in the County, including the County’s, shortly after the date delinquent taxes are returned to the County Treasurer for collection.
A history of tax levies and collections for the County is as follows:
Levy Total Collections to Collections Plus Funding to Year Tax Levy March 1, Following Year June 30, Following Year 2019 $51,100,000 $49,590,296 97.05% $51,054,752 99.91% 2018 49,425,000 47,965,000 97.05 49,425,000 100.00 2017 45,605,000 43,224,521 94.78 43,224,521 94.78 2016 44,035,000 42,622,437 96.79 43,974,450 99.86 2015 43,123,598 41,514,694 96.27 43,123,598 100.00
Source: Ingham County
REVENUES FROM THE STATE OF MICHIGAN
The County receives revenue sharing payments from the State of Michigan under the State Revenue Sharing Act of 1971, as amended (the “Revenue Sharing Act”). Under the Revenue Sharing Act the County receives its pro rata share of State revenue sharing distributions on a per capita basis. The County’s receipts could vary depending on the population of the County compared to the population of the State as a whole. The County’s revenue sharing distribution is subject to annual legislative appropriation and may be reduced or delayed by Executive Order during any State fiscal year in which the Governor, with the approval of the State Legislature’s appropriation committees, determines that actual revenues will be less than the revenue estimates on which appropriations were based.
The State’s ability to make revenue sharing payments to the County in the amounts and at the times specified in the Revenue Sharing Act is subject to the State’s overall financial condition and its ability to finance any temporary cash flow deficiencies. Act 357, Public Acts of Michigan, 2004 (“Act 357”) amended the General Property Tax Act to temporarily eliminate statutory revenue sharing payments to counties by creating a reserve fund, against which counties could draw in lieu of annual revenue sharing payments, paid for by the permanent advancement of the counties’ property tax levy from December to July each year, beginning in 2005. Under Act 357, a county would resume receiving state revenue sharing payments in the first year in which the county’s property tax revenue reserve was less than the amount the county would have otherwise received in state revenue sharing payments. The County resumed receiving State revenue sharing payments during its fiscal year ending September 30, 2013.
Under the fiscal year 2020 budget, signed into law on September 29, 2019, a portion of county revenue sharing payment distributions are made pursuant to the Revenue Sharing Act and a portion are distributed through an incentive- based program called the county incentive program ("CIP"). For fiscal year 2020, the county revenue sharing program has an appropriation of $226.5 million, an increase over the fiscal year 2019 amount of $220.4 million, with $183.2 million being distributed pursuant to the Revenue Sharing Act, $43.3 million being distributed through the CIP. The CIP provides eligible counties distributions for complying with “best practices” to increase transparency. The department of treasury shall distribute revenue sharing funds to counties so that each eligible county receives a payment equal to 104.5619% of the amount determined pursuant to the Revenue Sharing Act, less the amount such county is eligible to receive under the CIP. However, each eligible county that is determined to have a retirement pension benefit system in underfunded status under section 5 of Act 202, Public Acts of Michigan, 2017, must allocate the 2020 incremental increase to its unfunded pension liability. Eligible counties are those that would be eligible to resume receiving state revenue sharing payments under Act 357.
Under the fiscal year 2020 CIP, an eligible county can receive CIP payments if it meets requirements for accountability and transparency, including making a citizen's guide to its finances, a performance dashboard, a debt service report and a two-year budget projection available for public viewing. Any portion of the CIP that the County would be eligible to receive would be subject to certain benchmarks that the County would need to meet, and there can be no assurance of what amount, if any, the County would receive under CIP. The County anticipates meeting the requirements to receive fiscal year 2020 CIP payments.
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Purchasers of the Bonds should be alert to further modifications to revenue sharing payments to Michigan local governmental units, to the potential consequent impact upon the County's general fund condition, and to the potential impact upon the market price or marketability of the Bonds resulting from changes in revenues received by the County from the State.
The following table sets the amounts of annual revenue sharing payments from the State for the County’s fiscal years ended December 31, 2015 through December 31, 2019 and the estimated revenue sharing payments for the County’s fiscal year ending December 31, 2020.
County of Ingham Revenue Fiscal Year Ended Sharing December 31st Payments1 2020 $6,366,473 2 2019 6,238,691 2018 6,219,288 2017 6,166,616 2016 6,106,607 2015 6,078,069
1Amounts do not include state gas and weight tax distributions. 2Estimated. Source: Department of Treasury via website at www.michigan.gov/treasury and Ingham County
PENSION FUND
Municipal Employees’ Retirement System of Michigan (MERS)
The County participates in the Municipal Employees Retirement System of Michigan (MERS), an agent multiple- employer plan administered by the Retirement Board of MERS. Act No. 427 of the Public Acts of 1984, as amended, establishes and amends the benefit provisions of the participants in MERS.
The Municipal Employees Retirement System of Michigan issues a publicly available financial report that includes financial statements and required supplemental information of this defined benefit plan. This report can be obtained at www.mersofmichigan.com or in writing to MERS at 1134 Municipal Way, Lansing, Michigan 48917.
Based on the most recent actuarial valuation of the plan as of December 31, 2018, Plan membership consisted of the following:
Inactive plan members or beneficiaries currently receiving benefits 1,409 Inactive plan members entitled to by not yet receiving benefits 291 Active Plan Members 1,226 2,926 Schedule of Employer Contributions
Contributions as a Year Statutorily Contributions in Relation Contribution Percentage of Ended Required to the Statutorily Excess Covered Covered Payroll December 31, Contribution Required Contribution (Deficiency) Payroll Contributed
2019 $15,530,069 $15,530,069 $0 $69,595,869 22.31%
2018 13,749,694 13,749,694 0 69,595,869 19.76
2017 12,696,005 12,696,005 0 70,321,127 18.05
2016 12,981,273 12,981,273 0 73,389,017 17.69
2015 11,299,006 11,299,006 0 76,503,544 14.77
For additional information, please see Required Supplemental Information in the County’s Comprehensive Annual Financial Statements in Appendix C herein.
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Schedule of Changes in the Net Pension Liability and Related Ratios – MERS Pension Plan
Fiscal year ended December 31, 2019 2018 2017 2016 2015 Total Pension Liability Service Cost $7,353,561 $7,601,938 $7,964,327 $8,437,242 $8,340,133 Interest 35,901,843 34,952,140 34,121,845 32,007,463 31,321,551 Changes in Benefit Terms 5,140 -- -- (3,914) -- Differences between Expected & Actual Experience (479,516) (2,362,648) (6,140,673) 3,308,318 -- Changes in Assumptions ------20,196,487 -- Benefit Payments (Including Refunds) (28,815,140) (27,572,697) (25,553,732) (24,211,818) (23,168,183) Net Change in Total Pension Liability $13,965,888 $12,618,733 $10,391,767 $39,733,778 $16,493,501 Total Pension Liability – Beg of Year 459,503,818 446,885,085 436,493,318 396,759,540 380,266,039 Total Pension Liability – End of Year $473,469,706 $459,503,818 $446,885,085 $436,493,318 $396,759,540
Plan Fiduciary Net Position Contributions – Employer $13,749,694 $12,696,005 $13,882,450 $13,630,987 $10,576,306 Contributions – Member 3,418,416 3,660,381 4,094,076 4,524,180 5,094,128 Net Investment (Loss) Income (11,690,639) 36,725,788 29,316,820 (4,018,135) 16,511,548 Administrative Expenses (586,552) (582,172) (579,114) (589,041) (606,136) Benefit Payments (Including Refunds) (28,815,140) (27,572,697) (25,553,732) (24,211,818) (23,168,183) Other ------16,415 -- Net Change in Plan Fiduciary Net Position ($23,924,221) $24,927,305 $21,160,500 ($10,647,412) $8,407,663 Plan Fiduciary Net Position – Beg of Year $306,873,483 $281,946,178 $260,785,678 $271,433,090 $263,025,427 Plan Fiduciary Net Position – End of Year $282,949,262 $306,873,483 $281,946,178 $260,785,678 $271,433,090
County's Net Pension Liability ‐ Ending $190,520,444 $152,630,335 $164,938,907 $175,707,640 $125,326,450 Plan Fiduciary Net Position as a % of Total Pension Liability/Asset 59.76% 66.78% 63.09% 59.75% 68.41% Covered Employee Payroll $69,595,869 $70,321,127 $73,389,107 $76,503,544 $71,575,329 Net Pension Liability (Asset) as a % of Covered Employee Payroll 273.75% 217.05% 224.75% 229.67% 175.10%
For additional information, please see Note 12 – Pension Plans in the Notes to the Financial Statements of the County’s Comprehensive Annual Financial Statements in Appendix C herein.
Defined Contribution Plan
In the labor agreements ratified since 2013, it was agreed that al new hires would be eligible for a hybrid defined benefit contribution plan administered by the Municipal Employees’ Retirement System. The start date of the plan varies by bargaining unit.
The employer and employees contribution rates range for 1.0 to 2.5 percent of salaries for the defined contribution portion of the plan, as defined by the County’s labor agreements. The vesting period for the defined contribution plan is five years.
The defined benefit portion ranges from a multiplier of 10. To 1.5 percent. The cost of the defined benefit plan is paid exclusively by the County. The employees can elect to contribute an additional amount to the defined contribution plan on an after-tax basis. The vesting period for the defined benefit portion is six years.
Once established, only the contribution rate for the defined contribution portion can be changed, and this can only occur through revisions to the labor agreements.
The County’s contribution to the defined contribution plan during 2019 totaled $416,904. The contributions to the defined benefit portion of the plan are included in Note 12.
Source: County of Ingham Audited Financial Statements
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OTHER POST-EMPLOYMENT BENEFITS Postemployment Benefits Other than Pensions - GASB #45
Primary Government
The Ingham County Retiree Health Care Plan (the Plan) is a single-employer defined benefit healthcare plan administered by the Retiree Health Care Board (the Board). The Plan was adopted and established by the Ingham County Board of Commissioners. The Plan provides postemployment healthcare and life insurance benefits to eligible retirees of the primary government in accordance with the various labor contracts and personnel policies. At December 31, 2017, 729 retired employees were eligible to participate, of which 515 participated. The assets of the Plan are reported as another employee benefits trust fund in the accompanying financial statements; a separate, stand-alone report is not issued.
Schedule of Employer Contributions
Contributions as a Year Statutorily Contributions in Relation Contribution Percentage of Ended Required to the Statutorily Excess Covered Covered Payroll December 31, Contribution Required Contribution (Deficiency) Payroll Contributed
2019 $7,789,816 $6,863,719 ($926,097) $68,002,582 10.09%
2018 7,949,795 7,218,187 (731,608) 64,221,689 11.24
2017 7,644,034 5,999,151 (1,644,883) 63,666,708 9.42
2016 8,152,054 6,135,244 (2,016,810) 61,335,303 10.00
2015 7,838,514 5,459,560 (2,378,954) 61,335,303 8.90
Schedule of Funding Progress
Actuarial Actuarial Actuarial Accrued Unfunded Funded UAAL as a
Valuation Value of Liability AAL Ratio Covered % of Covered Date Assets (AAL) (UAAL) Total Payroll Payroll
12/31/2016 $13,659,381 $91,294,403 $77,635,022 15.0% $59,413,038 130.7%
12/31/2014 7,729,468 91,119,729 83,390,261 8.5 57,516,000 145.0
12/31/2012 3,913,176 86,934,173 83,020,997 4.5 55,517,218 149.5
12/31/2010 2,480,058 84,813,721 82,333,663 2.9 52,756,718 156.1
12/31/2008 -- 79,274,189 79,274,189 -- 51,746,029 153.2
Medical Care Facility
Facility employees participate in a single employer defined benefit healthcare plan. The Plan provides postemployment healthcare and life insurance benefits to eligible retirees in accordance with labor contracts and personnel policies. The plan is closed to new participants with hire dates subsequent to January 1, 2013.
Schedule of Employer Contributions
Contributions as a Year Statutorily Contributions in Relation Contribution Percentage of Ended Required to the Statutorily Excess Covered Covered Payroll December 31, Contribution Required Contribution (Deficiency) Payroll Contributed
2019 $151,373 $389,803 $238,430 $14,842,271 2.63%
2018 137,451 137,451 0 15,485,447 0.89
2017 145,672 500,000 354,328 14,253,950 3.51
2016 784,204 5,242,214 4,458,010 10,299,132 50.90
2015 801,299 225,441 (575,858) 10,299,132 2.19
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Schedule of Funding Progress
Actuarial Actuarial Actuarial Accrued Unfunded Funded UAAL as a
Valuation Value of Liability AAL Ratio Covered % of Covered Date Assets (AAL) (UAAL) Total Payroll Payroll
12/31/2016 $5,017,993 $5,429,101 $411,108 92.4% $14,253,950 2.9%
12/31/2014 -- 7,778,271 7,778,271 -- 10,299,132 75.5
12/31/2012 -- 6,261,514 6,261,514 -- 9,942,346 63.0
12/31/2010 -- 5,655,037 5,655,037 -- 9,517,974 59.4
12/31/2008 -- 4,290,944 4,290,944 -- 8,953,011 47.9
Road Department
The Road Department provides certain retiree health care benefits and life insurance benefits to all applicable employees, in accordance with union agreements and/or personnel policies. In 2008, the Road Department offered the retirees a choice between two plans. One plan was a PPO and the other plan was a HMO, both are health programs that pay for claims (less deductible and co-pay) in accordance with the group from which the employee retired. The Road Department pays for 100% of the health portion of the insurance while the retiree pays for the prescription portion of the premium. At December 31, 2017, 68 retirees meet plan eligibility requirements and 58 were participating.
In June 2012, the County merged with the Ingham County Road Commission. The Road Commission was dissolved and the Department of Transportation and Road was established. The actuary valuations as of December 31, 2012 and 2014 were performed under the same assumptions as the County's plan. These assumptions may differ from the past actuarial reports performed for the prior Road Commission.
Schedule of Employer Contributions
Year Annual Ended Required Percentage December 31, Contribution Contributed 2017 $824,804 66.31% 2016 916,215 60.64 2015 880,976 53.92 2014 823,238 44.20 2013 791,575 69.03
Schedule of Funding Progress
Actuarial Actuarial Actuarial Accrued Unfunded Funded UAAL as a
Valuation Value of Liability AAL Ratio Covered % of Covered Date Assets (AAL) (UAAL) Total Payroll Payroll
12/31/2016 $378,941 $12,068,044 $11,689,103 3.1% $4,253,670 274.8%
12/31/2014 -- 13,583,867 13,583,867 -- 3,819,303 355.7
12/31/2012 -- 12,924,820 12,924,820 -- 3,539,959 365.1
12/31/2010 -- 13,679,694 13,679,694 -- 3,658,008 374.0
12/31/2008 -- 13,377,603 13,377,603 -- 4,038,205 331.3
For additional information, please see Required Supplemental Information in the County’s Comprehensive Annual Financial Statements in Appendix C herein.
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Other Postemployment Benefits - County Plan - Including all Funds and Component Units with the Exception of the Medical Care Facility - GASB #74
The County administers the Ingham County OPEB Trust. It is a single employer defined benefit trust which is used to provide postemployment benefits other than pensions (OPEB) for eligible retirees of the County.
Management of the Plan is vested with the Ingham County Retiree Health Insurance Trust Board (Board), which consists of 3 members who have been appointed by the County Board of Commissioners. These include the Controller, Director of Financial Services and County Treasurer.
Based on the most recent actuarial valuation of the plan as of December 31, 2018, Plan membership consisted of the following:
Retirees and beneficiaries currently receiving benefits 798 Active Plan members 1,094 1,892
Schedule of Changes in the Net OPEB Liability and Related Ratios – County – GASB 74
Fiscal year ended December 31, 2019 2018 2017 Total OPEB Liability Service Cost $2,197,658 $4,092,294 $4,061,106 Interest 6,081,669 5,363,271 5,316,191 Change in Assumptions -- (35,788,982) 6,908,358 Difference Between Expected and Actual Experience (1,030,999) (8,293,286) (758,443) Benefit Payments (3,816,635) (4,273,811) (3,398,946) Miscellaneous (73,741) -- -- Net Change in Total OPEB Liability 3,357,952 (38,900,514) 12,128,266 Total OPEB Liability – Beginning of Year 102,244,384 141,144,898 129,016,632 Total OPEB Liability – End of Year $105,602,336 $102,244,384 $141,144,898
Plan Fiduciary Net Position Contributions – Employer $6,833,853 $7,218,187 $6,260,400 Net Investment Income 3,933,669 (1,146,974) 2,025,042 Administrative Expenses -- (116,182) -- Benefit Payments (Including Refunds) (3,816,635) (4,273,811) (3,398,946) Net Change in Plan Fiduciary Net Position 6,950,887 1,681,220 4,886,496 Plan Fiduciary Net Position – Beginning of Year 20,606,038 18,924,818 14,038,322 Plan Fiduciary Net Position – End of Year $27,556,925 $20,606,038 $18,924,818
Net OPEB Liability ‐ End of Year $78,045,411 $81,638,346 $122,220,080 Plan Fiduciary Net Position as a % of Total OPEB Liability 26.09% 20.15% 13.41% Covered Employee Payroll $68,002,582 $64,221,689 $63,631,808 Net OPEB Liability as a % of Covered Employee Payroll 114.77% 127.12% 192.07%
For additional information, please see Note 15 – Other Postemployment Benefit Plan in the Notes to the Financial Statements of the County’s Comprehensive Annual Financial Statements in Appendix C herein.
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Other Postemployment Benefits - Medical Care Facility Plan - GASB 74
The Facility administers the Ingham County Medical Care Facility Health Care Plan (Plan). It is a single employer defined benefit trust which is used to provide postemployment healthcare and life insurance benefits in accordance with labor contracts and personnel policies to eligible retirees hired prior to January 1, 2013. Substantially all employees will become eligible for the benefits if they reach normal retirement age while working at the Facility. The plan is closed to new participants with hire dates subsequent to January 1, 2013.
Management of the Plan is vested with the Trustees, which consists of 3 members who have been appointed by the Board of Commissioners. These include the Administrator and Controller of the Ingham County Medical Care Facility and the Ingham County Treasurer.
Based on the most recent actuarial valuation of the plan as of December 31, 2018, Plan membership consisted of the following:
Retirees and beneficiaries currently receiving benefits 73 Active Plan members 256 329
Schedule of Changes in the Net OPEB Liability and Related Ratios – Medical Care Facility – GASB 74
Fiscal year ended December 31, 2019 2018 2017 Total OPEB Liability Service Cost $85,381 $101,528 $109,749 Interest 383,151 384,715 373,574 Change in Benefit Terms 1,260,150 (133,779) -- Difference Between Expected and Actual Experience (1,168,538) (16,124) (17,153) Changes in Assumptions (102,478) -- -- Benefit Payments (389,803) (311,411) (294,406) Net Change in Total OPEB Liability 67,863 24,929 171,764 Total OPEB Liability – Beginning of Year 5,625,794 5,600,865 5,429,101 Total OPEB Liability – End of Year $5,693,657 $5,625,794 $5,600,865
Plan Fiduciary Net Position Contributions – Employer $389,803 $137,451 $500,000 Net Investment (Loss) Income 902,996 (279,044) 201,872 Administrative Benefits -- (5,238) -- Benefit Payments (Including Refunds) (389,803) (311,411) (294,406) Net Change in Plan Fiduciary Net Position 902,996 (458,242) 407,466 Plan Fiduciary Net Position – Beginning of Year 4,967,216 5,425,458 5,017,992 Plan Fiduciary Net Position – End of Year $5,870,212 $4,967,216 $5,425,458
Net OPEB Liability ‐ End of Year ($176,555) $658,578 $175,407 Plan Fiduciary Net Position as a % of Total OPEB Liability 103.10% 88.29% 96.87% Covered Employee Payroll $14,842,271 $8,310,046 $8,310,046 Net OPEB Liability as a % of Covered Employee Payroll -1.19% 7.93% 2.11%
For additional information, please see Note 15 – Other Postemployment Benefit Plan in the Notes to the Financial Statements of the County’s Comprehensive Annual Financial Statements in Appendix C herein.
Source: County of Ingham Audited Financial Statements
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LABOR FORCE A breakdown of the number of employees of the County and their affiliation with organized groups follows:
No. of Bargaining Exp. Date Employee Group Employees Unit of Contract Local 1499 of the American Federation of State, County, and Municipal Employees AFL-CIO, Council 25 (AFSCME) Ingham County Road Department - Road Workers 49 AFSCME 12/31/2020 Command Officers Association of Michigan (COAM) Ingham County 911 Supervisory Division 6 8011 12/31/2020 Capitol City Labor Program, Inc. (CCLP) Animal Control Officers, Veterinarian Technicians and Animal Care Specialists 12 405 12/31/2020 Corrections Units 62 404 12/31/2020 Law Enforcement Unit 51 412 12/31/2020 Supervisory Officers 25 412 12/31/2020 911 Non-Supervisory 46 411 12/31/2020 Ingham County Employees' Association (ICEA) Assistant Prosecuting Attorney's Division 31 216 12/31/2020 County Professionals 116 202 12/31/2020 County Professionals/Jail Nurses 3 222 12/31/2020 Court Professionals 37 207 12/31/2020 Park Rangers 4 292 12/31/2020 Public Health Nurses Unit 15 260 12/31/2020 Ingham County and Thirtieth Judicial Circuit Court and 55th District Court, and Ingham County Probate Court Managerial & Confidential Employee Personnel Manual 12/31/2020 Confidentials 30 2323 Managers 93 303 Professionals 18 2424 Michigan Nurses Association (MNA) Nurse Practitioners/Clinic Nurses Unit 42 206 12/31/2020 Office and Professional Employees International Union (OPEIU) Local 459, AFL-CIO for the Circuit Court/Family Division Professional Employees 32 1414 12/31/2020 Local 512 of the Office and Professional Employees, International Union (OPEIU) Supervisory Unit - Ingham County Road Department 6 OPEIU/SUPS 12/31/2020 Technical/Clerical Unit - Ingham County Road Department 14 OPEIU 12/31/2020 International Brotherhood of Teamsters, Chauffeurs and Warehousemen, Local 243 (Teamsters Zoo) Potter Park Zoo Supervisory Unit 4 8000 12/31/2020 United Automobile Aerospace and Agricultural Implement Workers of American (UAW) Ingham County Unit Local 2256 Technical, Office, Para-professional and Service Employee 370 101 12/31/2020 Zoo Unit (UAW Zoo) 19 292 12/31/2020 Non Union - Other Judges 11 1313 State Compensation Elected Officials 6 1515 Board of Commissioners 14 BOC Assistant Public Defenders Teamsters Local 214 Assistant Public Defender 18 214 12/31/2020 Sr. Assistant Public Defender 6 214 12/31/2020 TOTAL EMPLOYED 1,140
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DEBT STATEMENT* - (As of 08/13/20 – including the Bonds described herein.)
Self-Supporting or Portion Paid Directly by Benefited DIRECT DEBT GROSS Municipalities NET General Obligation Bonds $97,621,337* $73,935,459.01 $23,685,877.99 General Obligation Long Term Notes 1,779,002 1,567,506 211,496 Building Authority Bonds 14,115,000 0 14,115,000 Brownfield Authority Bonds 2,945,000 0 2,945,000 TOTAL $116,460,339* $75,502,965.24 $40,957,373.76
OVERLAPPING DEBT Cities $126,608,011 Townships 77,031,845 Villages 2,466,845 School Districts 447,663,957 Intermediate School Districts 918,026 Community Colleges 66,052,950 TOTAL OVERLAPPING DEBT $720,741,634 NET DIRECT AND OVERLAPPING DEBT $761,699,008
*Preliminary, subject to change. Source: Municipal Advisory Council of Michigan DEBT RATIOS*
Estimated County Population 292,735 2020Taxable Value $8,447,048,113 2020 State Equalized Value (SEV) $10,274,051,222 2020 True Cash Value (TCV) $20,548,102,444
Per Capita 2020 Taxable Value $28,855.61 Per Capita 2020 State Equalized Value $35,096.76 Per Capita 2020 True Cash Value $70,193.53
Per Capita Net Direct Debt $139.91 Per Capita Net Direct and Overlapping Debt $2,602.01
Percent of Net Direct Debt of 2020 Taxable Value 0.48% Percent of Net Direct and Overlapping Debt of 2020 Taxable Value 9.02%
Percent of Net Direct Debt of 2020 SEV 0.40% Percent of Net Direct and Overlapping Debt of 2020 SEV 7.41%
Percent of Net Direct Debt of 2020 TCV 0.20% Percent of Net Direct and Overlapping Debt of 2020 TCV 3.71%
*Preliminary, subject to change.
LEGAL DEBT MARGIN* - (As 08/13/20 – including the Bonds described herein.) 2020 State Equalized Value (SEV) $10,274,051,222 Legal Debt Limit - 10% of SEV $1,027,405,122
Total Bonded Debt Outstanding $116,460,339
LEGAL DEBT MARGIN AVAILABLE $910,944,783
*Preliminary, subject to change.
A-15
OTHER DEBT The County has the following other debt obligation outstanding:
Dated Date Description Maturity Date Balance 12/31/18 Equipment Lease Agreement 01/01/29 $21,977,793
DEBT HISTORY The County has no record of default on its obligations. FUTURE FINANCING The County is considering as many as eight drain construction projects that may be financed by the issuance of bonds over the next 12 months with estimates up to $39 million. The County also expects to issue bonds to finance a new Justice Center facility which will consolidate the Sheriff’s office, county jail and district court operations. County voters have authorized a property tax millage to fund the roughly $70 million Justice Center project.
SCHEDULE OF LONG-TERM BOND MATURITIES* – (As of 08/13 /20 – including the Bonds described herein.)
Fiscal General GO Building Brownfield Year End Obligation Long Term Authority Authority Percent 31-Dec Bonds Notes Bonds Bonds TOTAL Repaid 2020 $1,345,000 $300,000 $680,000 $360,000 $2,685,000 2021 6,103,955 999,633 1,875,000 380,000 9,358,588 2022 5,263,955 99,633 1,925,000 400,000 7,688,588 2023 5,080,955 99,633 570,000 405,000 6,155,588 2024 4,852,775 99,638 590,000 410,000 5,952,413 27% 2025 4,743,025 54,500 615,000 415,000 5,827,525 2026 4,794,025 17,995 640,000 420,000 5,872,020 2027 4,323,025 17,995 665,000 155,000 5,161,020 2028 4,353,686 17,995 685,000 0 5,056,681 2029 4,396,936 17,995 715,000 0 5,129,931 51% 2030 4,433,000 17,995 740,000 0 5,190,995 2031 4,193,000 17,995 560,000 0 4,770,995 2032 4,124,000 17,995 580,000 0 4,721,995 2033 3,298,000 0 605,000 0 3,903,000 2034 3,183,000 0 630,000 0 3,813,000 70% 2035 2,849,000 0 655,000 0 3,504,000 2036 2,743,000 0 680,000 0 3,423,000 2037 2,448,000 0 705,000 0 3,153,000 2038 2,434,000 0 0 0 2,434,000 2039 2,408,000 0 0 0 2,408,000 83% 2040 2,238,000 0 0 0 2,238,000 2041 1,874,000 0 0 0 1,874,000 2042 1,918,000 0 0 0 1,918,000 2043 1,953,000 0 0 0 1,953,000 2044 1,999,000 0 0 0 1,999,000 91% 2045 2,038,000 0 0 0 2,038,000 2046 1,673,000 0 0 0 1,673,000 2047 1,719,000 0 0 0 1,719,000 2048 1,563,000 0 0 0 1,563,000 2049 1,613,000 0 0 0 1,613,000 2050 1,663,000 0 0 0 1,663,000 100% Total $97,621,337 $1,779,002 $14,115,000 $2,945,000 $116,460,339
*Preliminary, subject to change.
A-16
MAJOR EMPLOYERS
Listed below are the largest employers that are located within the County of Ingham:
Approx. No. Employer Product or Service of Employees Within Ingham County (700 + employees) State of Michigan (Eaton & Ingham Co.) Government 14,390 Michigan State University Education 10,253 Sparrow Hospital System Health Care 7,600 General Motors Corporation Automotive 4,549 Lansing Community College Education 3,144 Ingham Regional Medical Center/McLaren Health Care 3,000 Auto-Owners Insurance Insurance 2,578 Peckham Industries Textiles & Auto Parts 2,510 Jackson National Life Insurance Insurance 2,500 Meijer, Inc. Retail 2,000 Dart Container Manufacturing 2,000 Lansing School District Education 1,307 Leona Group LLC Consulting services 1,200 U.S. Post Office Postal service 1,200 Wal-Mart Retailer 1,185 County of Ingham Government 1,140 Lansing Board of Water & Light Utility 712
Source: 2019 Michigan Manufacturers Directory, Lansing Chamber website; www.gm.com, Economic Development Council (“MEDC”), Manta via www.manta.com, and individual employers.
As a result of the restrictions put in place by the Order, some entities listed above may be currently closed. See "POTENTIAL IMPACT OF COVID-19 PANDEMIC” in this Official Statement. EMPLOYMENT BREAKDOWN
The U.S. Census Bureau, 2014-2018 American Community Survey reports the occupational breakdown of persons 16 years and over for the County of Ingham is as follows:
County of Ingham Number Percent PERSONS BY OCCUPATION 140,932 100.00% Management, Business, Science & Arts 57,135 40.54 Service 27,330 19.39 Sales & Office 30,791 21.85 Natural Resources, Construction & Maintenance 7,710 5.47 Production, Transportation & Material Moving 17,966 12.75
A-17
The U.S. Census Bureau, 2014-2018 American Community Survey reports the breakdown by industry for persons 16 years and over in the County of Ingham is as follows:
County of Ingham Number Percent PERSONS BY INDUSTRY 140,932 100.00% Agriculture, Forestry, Fishing, Hunting & Mining 812 0.58 Construction 4,981 3.53 Manufacturing 14,038 9.96 Wholesale Trade 2,563 1.82 Retail Trade 14,282 10.13 Transportation 5,256 3.73 Information 2,170 1.54 Finance, Insurance & Real Estate 9,636 6.84 Professional & Management Services 14,059 9.98 Educational, Health & Social Services 40,720 28.90 Arts, Entertainment, Recreation & Food Services 16,265 11.54 Other Professional & Related Services 6,546 4.64 Public Administration 9,604 6.81
UNEMPLOYMENT RATES
The U.S. Department of Labor, Bureau of Labor Statistics, reports unemployment averages for the County of Ingham as compared to the State of Michigan are as follows:
Annual County of State of Average Ingham Michigan June, 2020* 11.2% 14.9% 2019 3.5 4.1 2018 3.6 4.1 2017 4.2 4.6 2016 4.3 5.0
*The above unemployment figures reflect job losses arising from the recent COVID-19 pandemic.
POPULATION BY AGE
The 2010 U.S. Census estimate of population by age for the County of Ingham is as follows:
County of Ingham Number Percent Total Population 280,895 100.00% 0 through 19 years 75,256 26.79 20 through 64 years 176,226 62.74 65 years and over 29,413 10.47
Median Age 31.4 years
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INCOME
The U.S. Census Bureau 2014-2018 American Community Survey estimate of household income for the County of Ingham is as follows:
County of Ingham Number Percent HOUSEHOLDS BY INCOME 112,200 100.00% Less than $ 10,000 9,814 8.75 $ 10,000 to $ 14,999 5,496 4.90 $ 15,000 to $ 24,999 12,467 11.11 $ 25,000 to $ 34,999 11,543 10.29 $ 35,000 to $ 49,999 15,847 14.12 $ 50,000 to $ 74,999 20,491 18.26 $ 75,000 to $ 99,999 12,376 11.03 $100,000 to $149,999 14,271 12.72 $150,000 to $199,999 5,252 4.68 $200,000 or MORE 4,643 4.14
Median Income $50,940
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APPENDIX B COUNTY OF INGHAM GENERAL FUND BUDGET SUMMARY AND COMPARATIVE FINANCIAL STATEMENTS
County of Ingham General Fund Budget Summary
As Adopted 2020 Revenue Taxes $55,402,626 Intergovernmental Transfers 9,282,761 Department Generated Revenue 21,117,545 Total Revenue $85,802,932
Expenditures County Services $12,446,648 Human Services 20,203,876 Law and Courts 53,391,868 Other 1,866,618 Total Expenditures $87,909,010
Excess of Expenditures (over) under Revenues ($2,106,078)
Fund Balance - January 1 $32,828,364
Projected Fund Balance - December 31 $30,722,286
Source: Ingham County
B-1
County of Ingham General Fund
Comparative Balance Sheet
For Fiscal Years Ended December 31 2017 2018 2019 Assets Pooled Cash and Investments $29,847,650 $29,243,843 $24,426,796 Property Taxes Receivable 762,483 920,587 1,004,973 Accounts Receivables 191,264 170,074 180,803 Accrued Interest Receivable 96,977 153,250 164,206 Due From Other Funds 2,209,012 2,573,006 6,250,080 Due From Component Unit -- 226,229 -- Due From Other Governmental Units 1,433,350 5,696,491 7,155,752 Prepaid Items 150,557 25,810 5,062 Advances to Other Funds 111,661 94,824 61,463 Advances to Component Unit 1,000,000 1,000,000 1,000,000 Total Assets $35,802,954 $40,104,114 $40,249,135
Liabilities Accounts Payable and Accrued Liabilities $944,057 $878,458 $1,633,092 Salaries and Related Withholdings 774,522 888,410 1,093,224 Property Tax Payable 320,000 314,363 350,000 Deposits Payable 800 -- 119,200 Unearned Revenue 360,733 431,305 201,792 Unavailable Revenue - Other 330,415 3,931,687 4,023,463 Total Liabilities $2,730,527 $6,444,223 $7,420,771
Fund Balance Nonspendable $1,262,218 $1,120,634 $1,066,525 Committed 12,367,364 12,367,364 12,367,365 Assigned 3,708,431 3,012,189 4,716,847 Unassigned 15,734,414 17,159,704 14,677,627 Total Fund Balance $33,072,427 $33,659,891 $32,828,364
Total Liabilities and Fund Balance $35,802,954 $40,104,114 $40,249,135
Source: Audited Financial Statements
B-2
County of Ingham General Fund
Comparative Statement of Revenues, Expenditures and Changes in Fund Balance
For Fiscal Years Ended December 31 2017 2018 2019 Revenue Taxes $48,002,272 $51,314,600 $53,525,119 Licenses and Permits 428,950 345,802 385,395 Intergovernmental 14,444,503 15,423,225 15,876,596 Charges for Services 10,044,650 9,446,728 9,311,110 Fines and Forfeits 369,033 355,190 375,424 Investment Earnings 493,746 589,817 664,703 Other 1,632,884 1,535,568 1,780,201 Total Revenue $75,416,038 $79,010,930 $81,918,548
Expenditures Current General Government $16,256,614 $15,834,139 $16,870,421 Public Safety 21,881,612 22,359,631 23,549,943 Judicial 16,246,242 16,417,262 16,466,767 Public works 491,134 483,539 498,649 Health 5,280,366 6,908,284 7,444,339 Welfare 537,894 -- -- Economic Development 124,374 1,064,200 949,877 Culture and Recreation 2,788,888 2,617,417 2,739,244 Capital Outlay 934,920 298,987 1,583,960 Debt Service Principal Retirement 15,665 -- 4,561 Interest and Fiscal Charges 963 -- 117 Total Expenditures $64,558,672 $65,983,459 $70,107,878
Excess of Revenue Over (Under) Expenditures $10,857,366 $13,027,471 $11,810,670
Other Financing Sources (Uses) Transfers In $3,399,718 $3,629,360 $3,495,933 Transfers Out (15,155,881) (16,075,861) (16,138,825) Proceeds From Sales of Capital Assets 1,546 6,494 695 Total Other Financing Sources (Uses) ($11,754,617) ($12,440,007) ($12,642,197)
Excess of Revenue & Other Sources Over (Under) Expenditures & Other Uses ($897,251) $587,464 ($831,527)
Fund Balance - Beginning $33,969,678 $33,072,427 $33,659,891
Fund Balance - Ending $33,072,427 $33,659,891 $32,828,364
Source: Audited Financial Statements
B-3
[THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C COUNTY OF INGHAM AUDITED FINANCIAL STATEMENTS
The auditor was not requested to examine or review and therefore has not examined or reviewed any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly has not conducted any post-audit review procedures and will not express any opinion with respect to the accuracy or completeness of such financial documents, statements or materials.
[THIS PAGE INTENTIONALLY LEFT BLANK] To the Board of Directors Ingham County, Michigan
Other Matters
Independent Auditor's Report Required Supplemental Information Accounting principles generally accepted in the United States of America require that the management's To the Board of Directors discussion and analysis and other required supplemental information, as identified in the table of contents, be Ingham County, Michigan presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, Report on the Financial Statements economic, or historical context. We have applied certain limited procedures to the required supplemental We have audited the accompanying financial statements of the governmental activities, business-type activities, information in accordance with auditing standards generally accepted in the United States of America, which aggregate discretely presented component units, each major fund, and the aggregate remaining fund information consisted of inquiries of management about the methods of preparing the information and comparing the of Ingham County, Michigan (the "County") as of and for the year ended December 31, 2019 and the related notes information for consistency with management's responses to our inquiries, the basic financial statements, and to the financial statements, which collectively comprise Ingham County, Michigan's basic financial statements, as other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or listed in the table of contents. 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. Management’s Responsibility for the Financial Statements Other Information 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, Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial Ingham County, Michigan's basic financial statements. The other supplemental information, as identified in the statements that are free from material misstatement, whether due to fraud or error. table of contents, and introductory section and statistical section, as identified in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Auditor’s Responsibility The other supplemental information, as identified in the table of contents, is the responsibility of management and Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit was derived from and relates directly to the underlying accounting and other records used to prepare the basic in accordance with auditing standards generally accepted in the United States of America and the standards financial statements. Such information has been subjected to the auditing procedures applied in the audit of the C-1 applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of basic financial statements and certain additional procedures, including comparing and reconciling such information the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance directly to the underlying accounting and other records used to prepare the basic financial statements or to the about whether the financial statements are free from material misstatement. basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplemental information, as An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the identified in the table of contents, is fairly stated in all material respects in relation to the basic financial statements financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the as a whole. 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 The introductory section and statistical section, as identified in the table of contents, have not been subjected to financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we do not express purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no an opinion or provide any assurance on them. 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 Other Reporting Required by Government Auditing Standards presentation of the financial statements. In accordance with Government Auditing Standards, we will also issue a report on our consideration of Ingham We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit County, Michigan's internal control over financial reporting and on our tests of its compliance with certain opinions. provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that Opinions testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Ingham In our opinion, the financial statements referred to above present fairly, in all material respects, the respective County, Michigan's internal control over financial reporting and compliance. financial position of the governmental activities, business-type activities, aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Ingham County, Michigan as of December 31, 2019 and the respective changes in its financial position and, where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
June 23, 2020
1 2 As management of Ingham County, we offer readers of Ingham County’s financial statements this narrative overview and Both of the government-wide financial statements (Statement of Net Position and Statement of Activities) distinguish analysis of the financial activities of Ingham County for the fiscal year ended December 31, 2019. We encourage readers various Ingham County functions into one of two groups. The first, called Governmental Activities, and the other as to consider the information presented here in conjunction with additional information that we have furnished in our letter Business Type Activities. Governmental activities are those that are principally supported by taxes and of transmittal. intergovernmental revenues (cost allocations for internal service operations.) Business type activities are those that intend to recover all or a significant portion of their costs through user fees and charges. Financial Highlights Governmental activities of Ingham County fall into one of nine categories. These include The assets of Ingham County exceeded its liabilities by the amount of $62,041,551 at the close of 2019. Governmental activities reported net position of $14 million and business type activities of $48 million. 1. General Government, 2. Public Safety, County governmental activities net position increased by $10.7 million, resulting in an End of Year balance of 3. Judicial, $14,034,685. 4. Public Works, 5. Health and Welfare, County business-type activities net position decreased by $2.2 million, resulting in an End of Year balance of 6. Economic Development, $48,006,866. 7. Culture and Recreation.
Total net position of Ingham County increased by $8.5 million. Business-type activities performed by Ingham County include: 1. Medical care facility (long-term skilled nursing care), At the close of 2019, Ingham County’s governmental funds (this includes the general fund, special revenue, debt 2. Delinquent tax collections and property foreclosures, service and capital projects funds) reported a combined ending fund balance of $75 million. Of this total amount, 3. Clinical fee-based health service to Medicaid eligible individuals, approximately $19.4 million is available for spending at the County’s discretion (unassigned and assigned fund 4. Operations of the county fair, balance combined). In addition, $12.37 million is committed for the following: 5. Inmate concession. o Budget Stabilization $10.56 million The government-wide financial statements include not only Ingham County itself, but also legally separate entities for which the County is financially accountable. These include: o Jail Medical $.95 million 1. Housing Commission, o Public Health Service $.86 million 2. Drain Commission, 3. Brownfield Redevelopment Authority, C-2 At the end of the fiscal year, unassigned fund balance for the general fund was $14.7 million. The total fund 4. Land Bank. balance for the general fund was $32.8 million as of December 31, 2019. The financial information for these entities are included in the component unit portion of this report.
Overview of the Financial Statements Other component units (legally separate entities) of Ingham County include:
This discussion and analysis intends to serve as an introduction to the Ingham County basic financial statements. The 1. Building Authority, Ingham County basic financial statements contain three components: 2. Medical Care Facility 3. Ingham County Fair Board. 1. Government-wide financial statements, 2. Fund financial statement, These component units function for all practical purposes as departments of Ingham County, and therefore have been 3. Notes to the financial statements. included as integral part under the primary government grouping.
This report also contains other supplementary information in addition to the basic financial statements themselves. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Like other state and local governments, Ingham County uses fund Government-Wide Financial Statements: The government-wide financial statements provide readers with a broad accounting to ensure and demonstrate compliance with finance-related legal requirements. Funds are divided into one of overview of Ingham County’s finances, in a manner somewhat similar to a private-sector business. three categories in order to comply with GAAP finance reporting requirements that affect how their activities will be accounted for: The Statement of Net Position presents information on all of Ingham County’s assets and liabilities. The difference between assets and liabilities is “Net Position”. Over time, increases or decreases in net position can serve as a useful 1. Governmental indicator of whether the financial position of Ingham County is improving or deteriorating. To understand the reason(s) for 2. Proprietary a change in net position, the reader must also review the notes and supplementary information associated with these 3. Fiduciary financial statements in order reach an informed conclusion as to the overall health of the County. Governmental Funds. Governmental funds account for essentially the same functions reported as Governmental The Statement of Activities presents information showing how the County’s net position changed during the most recent Activities in the government-wide financial statements. However, unlike Government-Wide financial statements, fiscal year. In other words, it provides additional information as to the causes of the change in net position as reported by governmental fund financial statements focus on near-term inflows and outflows of spendable resources and balances of the Statement of Net Position. Any changes in net position is reported as soon as the underlying event giving rise to the spendable resources available at the end of the fiscal year. change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses reported in this statement for some items may only result in a cash flow in future fiscal period. Examples of such accounts would be uncollected tax Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful revenues (revenues recognized but cash not yet received) and earned but unused vacation leave expenditures for county to compare the information presented for governmental funds with similar information presented for governmental employees. activities in the governmental-wide financial statements. By doing so, the reader may better understand the long-term impact of the government’s near-term financing decisions. Included as part of this section are reconciliations between fund reports and government-wide statements to help the reader to understand the differences between the two reports. 3 4 Net Position Excluding the drain funds and their related debt funds, Ingham County has 96 funds that require management during the year. Of these, 72 are funds types that require a regular commitment of oversight and maintenance. Of these, 50 are active funds that require a high level of commitment by accounting staff and financial clerks for the accounting of daily Governmental Activities Business-type Activities Total activity. 2019 2018 2019 2018 2019 2018 Based on generally accepted accounting principles and GASB pronouncements, governmental funds are either a major or a non-major fund. Major funds are funds whose revenues, expenditures, assets, or liabilities (excluding extraordinary items) that amount to at least 10 percent of corresponding totals for all governmental or enterprise funds and at least 5 Current and other assets $159,386,019 $146,523,557 $36,660,061 $58,733,195 $196,046,080 $205,256,752 percent of the aggregate amount for all governmental and enterprise funds. Capital assets, net 216,690,917 187,897,224 33,169,355 20,737,707 249,860,272 208,634,931 Ingham County’s major funds for 2019 include the general, road, health, trails and parks millage, emergency telephone, Total assets 376,076,936 334,420,781 69,829,416 79,470,902 445,906,352 413,891,683 and Community Mental Health debt service funds
Data from the other 30 governmental funds (non-major funds) are combined into a single, aggregated presentation. Deferred Outflows of 34,400,832 20,844,177 2,609,534 1,105,929 37,010,366 21,950,106 Individual fund data for each of these non-major governmental funds is provided in the form of a combining statement resources elsewhere in this report.
Proprietary Funds. The County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Ingham County Long-term liabilities 310,637,940 259,828,349 19,334,128 22,224,164 329,972,068 282,052,513 uses seven enterprise funds to account for its business-type activities. These include the Medical Care Facility, Delinquent Tax Revolving Fund, and the Community Health Network. Other liabilities 20,292,746 14,741,611 3,411,205 6,726,315 23,703,951 21,467,926 Total liabilities 330,930,686 274,569,960 22,745,333 28,950,479 353,676,019 303,520,439 Internal Service Funds. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Ingham County’s various functions. Ingham County uses internal service funds to account for its equipment, employee fringe benefits, liability and workers’ compensation insurances, print shop, courier operations and its Deferred inflows of 65,512,397 77,332,725 1,686,751 1,441,966 67,199,148 78,774,691 management information systems. Because these services predominantly benefit governmental rather than business- resources type functions, we have included them within governmental activities in the government-wide financial statements.
All internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Net position: ` C-3 Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Net investment in capital Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. assets 184,631,942 177,394,755 23,580,098 19,378,632 208,212,040 196,773,387 Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are Restricted 37,035,811 31,077,507 542,150 541,887 37,577,961 31,619,394 not available to support Ingham County’s own programs. The accounting used for fiduciary funds is much like that used Unrestricted -207,633,068 -205,109,989 23,884,618 30,263,867 -183,748,450 -174,846,122 for proprietary funds. The County role in fiduciary funds is to ensure that the assets reported in these funds are used for their intended purposes. Total net position $14,034,685 $3,362,273 $48,006,866 $50,184,386 $62,041,551 $53,546,659
Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of The schedule shows the County’s assets exceeded liabilities by $62 million at the close of the year. the data provided in the government-wide and fund financial statements. The County has $208.2 million in net investment in capital assets. Investments shown are at net value. Net value County-Wide Financial Analysis. As noted earlier, net position may serve when viewed over time as a useful indicator represents the cost of each asset minus accumulated depreciation and any remaining related debt used to purchase the of a government’s financial condition. The following schedule is a summary presentation of Ingham County’s asset. Ingham County uses these capital assets to provide services to citizens in the performance of their many activities. assets, liabilities, and net position at December 31, 2019. Unlike most other assets reported by the county, these assets are not available for future spending (as they represent an estimate of their unused value at that time).
Although the County’s investment in its capital assets is net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The net investment in capital assets increased by $11.4 million.
An additional portion of Ingham County’s net position represents $37.6 million of resources that are subject to external restrictions on how they may be used. Ingham County’s unrestricted net position is a deficit amounting to $183.7 million as of December 31, 2019.
The County’s total net position increased by $8.5 million when compared to December 31, 2018.
5 6 Change in Net Position Governmental Activities. An analysis of the governmental activity revenues and expenses shows that revenue increased by $9.7 million from the prior year, so that even though expenses increased by $13 million from the prior year, for a net decrease in change in position of $3.2 million. Governmental Activities Business-type Activities Total Taxable value of county assessed property increased by $292,462,716 from the prior year, a 3.73% increase. This 2019 2018 2019 2018 2019 2018 continues an accelerating increase in year-by-year improvement of taxable value assessments since 2012 when taxable value experienced a net 1.25% decrease.
Program revenues: Increases in expenses compared to the prior year are noted in Culture and Recreation (increase of $4.8 million from the Charges for services $23,499,947 $20,945,677 $51,939,929 $51,115,337 $75,439,876 $72,061,014 prior year), Public Safety (increase of $4.1 million from the prior year), and Health & Welfare (increase of $3 million from the prior year). Operating grants and Business-type Activities. Business-type activities decreased Ingham County’s net position by $2.2 million. The majority contributions 55,912,791 51,777,982 5,043,067 4,456,185 60,955,858 56,234,167 of the change is due to an increase in expenses of $3.7 million at the Medical Care Facility compared to the prior year.
Capital grants and Financial Analysis of the Government’s Funds contributions 3,036,787 6,361,043 2,243 - 3,039,030 6,361,043 As noted earlier, Ingham County uses fund accounting to ensure and demonstrate compliance with finance-related legal General revenues: requirements. Property taxes 91,257,545 81,911,179 - - 91,257,545 81,911,179 Other 9,168,443 12,196,496 497,519 450,615 9,665,962 12,647,111 Governmental Funds. The focus of Ingham County’s governmental funds is to provide information on near-term inflows and balances of spendable resources. Such information is useful in assessing Ingham County’s financing requirements. Total revenues 182,875,513 173,192,377 57,482,758 56,022,137 240,358,271 229,214,514 In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the fiscal year, Ingham County’s governmental funds reported combined ending fund balances of $75 Expenses: million. Of this total amount, $19.4 million constitutes assigned and unassigned fund balance, which is available for General government 2 , , 20,334,813 - - 20,908,593 20,334,813 spending at the government’s discretion. The remainder of fund balance is not available and is non-spendable, committed or restricted. Commitments include $10.56 in budget stabilization, .86 million in public health services, .95 million in jail Public safety 37,634,319 33,537,885 - - 37,634,319 33,537,885 medical and .018 million in debt service. C-4 Judicial 17,440,453 17,052,145 - - 17,440,453 17,052,145 Public works 24,872,419 25,283,034 - - 24,872,419 25,283,034 The general fund is the chief operating fund of Ingham County. At the end of the fiscal year, the unassigned fund balance of the general fund was $14.7 million. The unassigned fund balance as of December 31, 2018 totaled $17.2 million. The Health & Welfare 54, , 51,549,134 - - 54,559,409 51,549,134 decrease in fund balance from 2018 is largely due to increased liabilities as assets increased just slightly. Economic development 1,482,002 1,871,626 - - 1,482,002 1,871,626 Culture and recreation 14,709,358 9,867,925 - - 14,709,358 9,867,925 Interest on long-term debt 1,575,715 728,451 - - 1,575,715 728,451 The road fund increased its fund balance by $1.1 million, the Health Fund increased its fund balance by $1.2 million, the Trails and Parks Millage Fund decreased its fund balance by $1.2 million and Emergency Telephone (911 Central Medical care facility - - 32,065,826 28,390,511 32,065,826 28,390,511 Dispatch) increased its fund balance by $1.9 million. Delinquent tax collection - - 2,539,399 2,402,519 2,539,399 2,402,519 Community health center General fund revenue increased from 2018 by $2.8 million, most of the increase in tax revenue. General fund expenditures (including transfers out) increased by $4.2 million largely due to capital outlay spending. network - - 22,330,941 19,998,488 22,330,941 19,998,488 Inmate stores - - 501,014 644,098 501,014 644,098 Proprietary Funds. Ingham County’s proprietary funds provide the same type of information found in the government- Restricted Tax Sales 247 509,875 247 509,875 wide financial statements, but in more detail.
Fair Board - - 982,348 980,929 982,348 980,929 The Medical Care Facility is the largest proprietary fund at Ingham County and accounts for 64% of the total Enterprise Total expenses 173, , 160,225,013 58,419,775 52,926,420 231,602,043 213,151,433 Funds. Operating expenses were $32 million while operating revenue was $29.4 million resulting in a negative change to net position of $2.3 million. Net position at end of year was $30.7 million.
Change in net position, before transfers 9, , 12,967,364 -937,017 3,095,717 8,756,228 16,063,081 General Fund Budgetary Highlights. Transfers , 1,947,665 -1,240,503 -1,943,915 -261,336 3,750 Revenues exceeded budget by $790,193 while expenditures were $3,094,136 less than budget. Other Financing Uses Change in net position 10,672,412 14,915,029 -2,177,520 1,151,802 8,494,892 16,066,831 were less than budget by $708,502. Overall, the General Fund had budgeted to spend down the fund balance reserve Net position: by $5,424,358 yet actual spending of the reserves was only $831,527 so the General Fund did better than budget by $4.6 Beginning of year 3,362,273 -11,552,756 50,184,386 49,032,584 53,546,659 37,479,828 million. End of year $14,034,685 $3,362,273 $48,006,866 $50,184,386 $62,041,551 $53,546,659 Capital Asset and Debt Administration.
Capital Assets. Ingham County’s investment in capital assets for its governmental and business-type activities as of December 31, 2019 amounts to $249.9 million (net of accumulated depreciation). This is a $32 million increase from 2018. 7 8 This investment in capital assets includes land, land improvements, construction in progress, intangible assets, buildings, capital expenditures. In 2020 as in 2019, management is looking to budget for the use of fund balance in order to keep machinery, equipment and infrastructure. Business-type capital accounted for $3.2 million of the overall increase. fund balance at a level in line with Board expectations.
Additional information on Ingham County’s capital assets can be found in note 4 of the notes to the financial statements. Taxable values for 2019 increased 3.73% over the prior year, continuing the trend in increased valuations since 2012.
Capital Assets (Net of Depreciation) The County has taken steps to address the unfunded liability for retiree health insurance costs since 2006. Since 2016, the County has increased the contribution rate to 4.5% of payroll. This contribution rate is not expected to change in 2020.
Governmental Activities Business-type Activities Total Requests for Information
2019 2018 2019 2018 2019 2018 The financial report is designed to provide a general overview of Ingham County’s finances for all those with an interest. Questions concerning any information provided in this report or requests for additional financial information should be addressed to the Office Land $8,975,230 $8,973,190 $137,912 $137,912 $9,113,142 $9,111,102 of the Controller, Ingham County Courthouse, Mason, Michigan 48854. Land improvements $31,385,040 $30,805,267 $317,298 $354,469 $31,702,338 $31,159,736 Construction in progress $43,039,227 $18,715,154 $19,924,627 $16,213,884 $62,963,854 $34,929,038 Intangible assets $8,258,707 $7,589,888 - - $8,258,707 $7,589,888 Buildings $34,062,235 $27,780,484 $12,020,955 $12,377,538 $46,083,190 $40,158,022 Machinery and equipment $6,621,074 $6,616,663 $768,563 $872,946 $7,389,637 $7,489,609 Infrastructure $84,349,404 $87,416,578 - - $84,349,404 $87,416,578
Total capital assets, net $216,690,917 $187,897,224 $33,169,355 $29,956,749 $249,860,272 $217,853,973
Long-Term Debt. At the end of 2019, Ingham County had total general obligation debt of $32.3 million. The entire amount is backed by the full faith and credit of the County.
C-5 Outstanding General Obligation Debt Governmental Activities Business Type Obligations Total 2019 2018 2019 2018 2019 2018 General Obligation Bonds 16,880,000 19,430,000 8,535,000 9,075,000 25,415,000 28,505,000 Delinquent Tax Notes - - 6,900,000 9,150,000 6,900,000 9,150,000
Total 16,880,000 19,430,000 15,435,000 18,225,000 32,315,000 37,655,000
The County issued $12 million in delinquent tax notes in 2019 and that was the only debt issued other than the Drain Commission (see component unit).
Ingham County maintains a highly favorable prime -1 short term rating, the highest rating available for short them borrowing and has increased their longer term bond rating from Aa3 to Aa2, a high quality low risk investment grade rating issued by Moody’s. All rating agencies have provided very favorable ratings in a similar manner. S&P recently downgraded the County from AA+ to AA with the dire economic outlook related to COVID-19 as they are doing consistently with other local governmental entities.
Additional information on the County’s long-term debt can be found in note 7 of the notes to the financial statements and tables 8-11 in the statistical section of this report.
Economic Factors and Next Year’s Budget and Rates
In order to maintain financial stability over the long term, the budgeting practice at Ingham County is designed to manage its budget in a manner such that actual expenses/expenditures do not erode the accumulated fund balance. This policy, along with a fully funded budget stabilization reserve, has given Ingham County the resources necessary to address difficult economic times without resorting to a crisis-management approach. It has permitted the County Board to utilize its annual budget process as the primary vehicle to make decisions on the type and level of county services provided. When unexpected revenue losses or expenditure increases occur during the year, they are generally addressed through short-term expenditure reduction measures such as reductions in controllable expenses, hiring delays, or deferrals of 9 10 Ingham County, Michigan Ingham County, Michigan Statement of Net Position Statement of Net Position (Continued) December 31, 2019 December 31, 2019
Primary Government Primary Government Governmental Business-type Governmental Business-type Activities Activities Total Component Units Activities Activities Total Component Units Deferred Inflows of Resources Assets Property taxes levied for the following year $ 34,054,000 $ - $ 34,054,000 $ - Pooled cash and investments (Note 3) $ 80,616,111 $ 8,173,608 $ 88,789,719 $ 14,092,977 Deferred pension cost reductions (Note 12) 3,241,877 263,157 3,505,034 93,294 Receivables: Deferred OPEB cost reductions (Note 15) 28,216,520 1,423,594 29,640,114 581,673 Property taxes receivable 32,542,898 - 32,542,898 409,600 Special assessments receivable 411,930 - 411,930 54,157,329 Total deferred inflows of resources 65,512,397 1,686,751 67,199,148 674,967 Accounts receivable - Net 2,916,617 4,045,800 6,962,417 - Delinquent property taxes receivable - 12,586,078 12,586,078 - Net Position Accrued interest receivable 276,131 19,223 295,354 69,783 Net investment in capital assets 184,631,942 23,580,098 208,212,040 10,502,341 Lease receivable (Note 6) 9,665,000 - 9,665,000 - Restricted: Other receivables 2,104,686 12,985 2,117,671 221,017 General government 197,746 - 197,746 - Due from other governments 18,968,927 7,646,815 26,615,742 103,292 Public health services 4,479,101 - 4,479,101 - Land contracts receivable - - - 7,600 Public safety 6,562,741 - 6,562,741 - Due from component units (Note 5) 24,627 281,921 306,548 - Transportation 2,021,456 - 2,021,456 - Advances to component unit (Note 5) 1,000,000 - 1,000,000 - Culture and recreation 9,970,135 524,340 10,494,475 - Internal balances 2,920,897 (2,920,897) - - Welfare 2,430,900 - 2,430,900 - Inventory 1,712,013 - 1,712,013 1,464,124 Education 53,784 17,810 71,594 - Prepaids and other assets 2,583,908 309,470 2,893,378 13,047 Economic development 5,084,768 - 5,084,768 - Restricted cash 3,425,021 401,000 3,826,021 978,501 Debt service 1,626 - 1,626 - Investment and related loan receivable - 998,845 998,845 - Animal shelter 744,112 - 744,112 - Net OPEB asset (Note 15) - 176,555 176,555 - Capital projects 5,487,868 - 5,487,868 63,238,314 Capital assets: (Note 4) Indigent defense 1,574 - 1,574 - Assets not subject to depreciation 91,658,204 20,062,539 111,720,743 26,523,998 Unrestricted (207,633,068) 23,884,618 (183,748,450) (4,741,380) Assets subject to depreciation - Net 125,032,713 13,106,816 138,139,529 58,682,457 C-6 $ 14,034,685 $ 48,006,866 $ 62,041,551 $ 68,999,275 Other noncurrent assets 217,253 - 217,253 - Total net position Assets limited as to use (Note 1) - 4,928,658 4,928,658 - Land contracts receivable - Net of current portion - - - 392,001
Total assets 376,076,936 69,829,416 445,906,352 157,115,726
Deferred Outflows of Resources Deferred charges on bond refunding 57,916 - 57,916 - Deferred pension costs (Note 12) 34,342,916 2,609,534 36,952,450 416,721
Total deferred outflows of resources 34,400,832 2,609,534 37,010,366 416,721
Liabilities Accounts payable 12,474,104 2,437,535 14,911,639 2,306,120 Due to other governments 402,002 - 402,002 286,015 Advances from primary government (Note 5) - - - 1,000,000 Due to primary government (Note 5) - - - 306,548 Refundable deposits and bonds 603,847 23,054 626,901 75,110 Accrued liabilities and other 3,589,783 880,377 4,470,160 632,260 Provision for property tax refunds 596,750 - 596,750 - Unearned revenue 2,626,260 70,239 2,696,499 143,448 Noncurrent liabilities: Due within one year: Compensated absences (Note 7) 3,221,140 1,139,873 4,361,013 52,556 Provision for claims (Note 8) 1,285,000 35,000 1,320,000 - Current portion of long-term debt (Note 7) 4,765,667 538,864 5,304,531 26,441,814 Due in more than one year: Compensated absences - Net of current portion (Note 7) 1,734,460 223,125 1,957,585 31,583 Net pension liability (Note 12) 187,072,593 1,365,477 188,438,070 2,082,374 Net OPEB liability (Note 15) 75,836,364 646,513 76,482,877 1,562,534 Long-term debt - Net of current portion (Note 7) 36,722,716 15,385,276 52,107,992 52,937,843
Total liabilities 330,930,686 22,745,333 353,676,019 87,858,205
See notes to financial statements. 11 See notes to financial statements. 12 Ingham County, Michigan Statement of Activities Year Ended December 31, 2019
Net (Expense) Revenue and Changes in Net Position Program Revenue Primary Government Operating Capital Grants Charges for Grants and and Governmental Business-type Component Expenses Services Contributions Contributions Activities Activities Total Units
Functions/Programs Primary government: Governmental activities: General government $ 21,668,584 $ 1,829,244 $ 9,302,119 $ - $ (10,537,221) $ - $ (10,537,221) $ - District court 17,440,453 3,260,704 3,728,252 - (10,451,497) - (10,451,497) - Public safety 37,634,319 8,683,203 909,226 1,000 (28,040,890) - (28,040,890) - Public works 24,872,419 - 20,820,544 2,988,787 (1,063,088) - (1,063,088) - Health and welfare: 54,060,754 6,397,739 20,938,763 - (26,724,252) - (26,724,252) - Community and economic development 1,482,002 1,152,563 213,887 - (115,552) - (115,552) - Recreation and culture 14,709,358 2,176,494 - 47,000 (12,485,864) - (12,485,864) - Interest on long-term debt 1,575,715 - - - (1,575,715) - (1,575,715) -
Total governmental activities 173,443,604 23,499,947 55,912,791 3,036,787 (90,994,079) - (90,994,079) - Business-type activities: Medical Care Facility 32,065,826 29,441,557 - - - (2,624,269) (2,624,269) - Delinquent Tax Revolving 2,539,399 3,559,702 - - - 1,020,303 1,020,303 - Community Health Center Network 22,330,941 16,933,013 5,043,067 - - (354,861) (354,861) -
C-7 Inmate Stores 501,014 507,517 - 2,243 - 8,746 8,746 - Restricted Tax Sale Proceeds 247 699,524 - - - 699,277 699,277 - Fair Board 982,348 798,616 - - - (183,732) (183,732) -
Total business-type activities 58,419,775 51,939,929 5,043,067 2,243 - (1,434,536) (1,434,536) -
Total primary government $ 231,863,379 $ 75,439,876 $ 60,955,858 $ 3,039,030 (90,994,079) (1,434,536) (92,428,615) -
Component units: Housing Commission $ 1,175,390 $ 270,982 $ 688,581 $ - - - - (215,827) Land Bank 2,459,873 1,645,285 723,000 11,563 - - - (80,025) Drain Commission 11,201,767 324,389 - 10,380,176 - - - (497,202) Brownfield Redevelopment Authority 266,582 - - 340,000 - - - 73,418
Total component units $ 15,103,612 $ 2,240,656 $ 1,411,581 $ 10,731,739 - - - (719,636)
General revenue: Property taxes 91,257,545 - 91,257,545 574,949 State-shared revenue 7,129,204 - 7,129,204 - Unrestricted investment income 1,538,266 - 1,538,266 415,957 Gain on sale of capital assets 695 - 695 14,554 Other miscellaneous income 500,278 497,519 997,797 393,023
Total general revenue 100,425,988 497,519 100,923,507 1,398,483
Transfers 1,240,503 (1,240,503) - -
Change in Net Position 10,672,412 (2,177,520) 8,494,892 678,847 Net Position - Beginning of year 3,362,273 50,184,386 53,546,659 68,320,428
Net Position - End of year $ 14,034,685 $ 48,006,866 $ 62,041,551 $ 68,999,275
See notes to financial statements. 13 14 Ingham County, Michigan Governmental Funds Balance Sheet December 31, 2019 Community Mental Trails and Parks Emergency Health Debt Service Total Governmental General Fund Road Fund Health Fund Millage Fund Telephone Fund Fund Nonmajor Funds Funds
Assets Pooled cash and investments $ 24,426,796 $ 3,661,807 $ 2,589,493 $ 9,780,735 $ 5,413,336 $ - $ 23,143,686 $ 69,015,853 Receivables: Property taxes receivable 1,004,973 - - 3,488,519 5,909,965 - 22,139,441 32,542,898 Special assessments receivable ------411,930 411,930 Accounts receivable - Net 180,803 13,340 384,342 - 1,195,474 148,423 190,766 2,113,148 Accrued interest receivable 164,206 - - 35,341 19,673 - 48,503 267,723 Lease receivable (Note 6) ---- - 9,665,000 - 9,665,000 Other receivables ------2,104,686 2,104,686 Due from other governments 7,155,752 5,308,256 1,776,086 36,216 250,484 - 4,272,025 18,798,819 Advances to component unit (Note 5) 1,000,000 ------1,000,000 Due from other funds (Note 5) 6,250,080 ------6,250,080 Advances to other funds (Note 5) 61,463 ------61,463 Inventory - 1,284,838 359,595 - - - 57,580 1,702,013 Prepaids and other assets 5,062 23,631 83,085 1,817,641 7,375 - 95,787 2,032,581 Restricted cash ------37 37
$ 40,249,135 $ 10,291,872 $ 5,192,601 $ 15,158,452 $ 12,796,307 $ 9,813,423 $ 52,464,441 $ 145,966,231 Total assets
Liabilities Accounts payable $ 1,633,092 $ 896,314 $ 874,717 $ 2,867,747 $ 221,509 $ - $ 3,414,214 $ 9,907,593 Due to other governments - 387,702 14,300 - - - - 402,002 Due to other funds (Note 5) ---- - 496,797 2,832,386 3,329,183 Refundable deposits and bonds 119,200 484,647 - - - - - 603,847 Accrued liabilities and other 1,093,224 140,045 427,289 3,146 168,123 - 627,315 2,459,142 Provision for property tax refunds 350,000 - - 26,000 45,000 - 175,750 596,750 C-8 Unearned revenue 201,792 16,926 330,924 - - - 2,076,618 2,626,260
Total liabilities 3,397,308 1,925,634 1,647,230 2,896,893 434,632 496,797 9,126,283 19,924,777
Deferred Inflows of Resources Unavailable revenue 4,023,463 - 1,050,000 9,345 15,887 9,315,000 2,550,321 16,964,016 Property taxes levied for the following year - - - 3,750,000 6,377,000 - 23,927,000 34,054,000
Total deferred inflows of resources 4,023,463 - 1,050,000 3,759,345 6,392,887 9,315,000 26,477,321 51,018,016
Total liabilities and deferred inflows of resources 7,420,771 1,925,634 2,697,230 6,656,238 6,827,519 9,811,797 35,603,604 70,942,793
Fund Balances Nonspendable: Inventory - 1,284,838 359,595 - - - 57,580 1,702,013 Prepaids 5,062 23,631 83,085 1,817,641 7,375 - 95,787 2,032,581 Long-term receivable 1,061,463 ------1,061,463 Restricted: Transportation and roads - 7,057,769 - - - - 2,020,335 9,078,104 General administration ------197,746 197,746 Welfare ------2,419,624 2,419,624 Debt service ---- - 1,626 - 1,626 Economic development ------2,977,465 2,977,465 Public safety ---- 5,961,413 - 574,729 6,536,142 Animal shelter ------739,626 739,626 Education ------53,784 53,784 Recreation and culture - - - 6,684,573 - - 1,302,457 7,987,030 Public health services - - 2,052,691 - - - 927,188 2,979,879 Capital outlay ------5,487,868 5,487,868 Committed: Budget stabilization 10,562,365 ------10,562,365 Jail medical 945,000 ------945,000 Public health services 860,000 ------860,000 Debt service ------6,648 6,648 Assigned: Subsequent year's budget 2,106,078 ------2,106,078 Unexpended grants 17,391 ------17,391 Public improvement 2,116,257 ------2,116,257 Parks operation 477,121 ------477,121 Unassigned 14,677,627 ------14,677,627
Total fund balances 32,828,364 8,366,238 2,495,371 8,502,214 5,968,788 1,626 16,860,837 75,023,438
Total liabilities, deferred inflows of resources, $ 40,249,135 $ 10,291,872 $ 5,192,601 $ 15,158,452 $ 12,796,307 $ 9,813,423 $ 52,464,441 $ 145,966,231 and fund balances See notes to financial statements. 15 16 Ingham County, Michigan Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position December 31, 2019
Fund Balances Reported in Governmental Funds $ 75,023,438 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds 212,593,420 Receivables that are not collected soon after year end are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 16,964,016 Deferred outflows related to debt refunding activities are not reported in the funds 57,916 Bonds payable and capital lease obligations are not due and payable in the current period and are not reported in the funds (41,488,383) Accrued interest is not due and payable in the current period and is not reported in the funds (1,031,764) Some employee fringe benefits are payable over a long period of years and do not represent a claim on current financial resources; therefore, they are not reported as fund liabilities:
C-9 Employee compensated absences (4,773,500) Pension benefits (151,659,942) [THIS PAGE INTENTIONALLY LEFT BLANK] Retiree healthcare benefits (99,543,552) Internal service funds are included as part of governmental activities: Capital assets-related items 4,097,497 All other items 3,795,539 Net Position of Governmental Activities $ 14,034,685
See notes to financial statements. 17 Ingham County, Michigan Governmental Funds Statement of Revenue, Expenditures, and Changes in Fund Balances Year Ended December 31, 2019
Community Mental Health Total Trails and Parks Emergency Debt Service Governmental General Fund Road Fund Health Fund Millage Fund Telephone Fund Fund Nonmajor Funds Funds
Revenue Taxes $ 53,525,119 $ - $ - $ 3,714,443 $ 6,312,603 $ - $ 27,134,164 $ 90,686,329 Special assessments ------142,955 142,955 Intergovernmental 15,876,596 23,666,376 8,745,540 96,574 784,109 - 17,049,256 66,218,451 Charges for services 9,311,110 4,363 6,121,091 - 3,016,293 - 2,192,951 20,645,808 Fines and forfeitures 375,424 ------375,424 Licenses and permits 385,395 ------385,395 Interest and rentals 664,703 132,315 - 263,496 174,809 1,626 604,108 1,841,057 Other revenue 1,780,201 9,040 96,014 - 158,047 645,838 389,364 3,078,504
Total revenue 81,918,548 23,812,094 14,962,645 4,074,513 10,445,861 647,464 47,512,798 183,373,923 Expenditures Current services: General government 16,870,421 - - - - - 5,816,914 22,687,335 Judicial 16,466,767 ------16,466,767 Public safety 23,549,943 - - - 8,322,479 - 1,975,170 33,847,592
C-10 Public works 498,649 21,832,783 - - - - 4,334,992 26,666,424 Social services 7,444,339 - 20,480,991 - - - 23,472,919 51,398,249 Community and economic development 949,877 - - - - - 135,211 1,085,088 Recreation and culture 2,739,244 - - 4,767,152 - - 7,470,238 14,976,634 Capital outlay 1,583,960 874,698 - 466,612 23,993,460 - 3,964,930 30,883,660 Debt service: Principal 4,561 - - - - 350,000 2,320,000 2,674,561 Interest and fiscal charges 117 - - - - 295,838 415,551 711,506
Total expenditures 70,107,878 22,707,481 20,480,991 5,233,764 32,315,939 645,838 49,905,925 201,397,816 Excess of Revenue Over (Under) Expenditures 11,810,670 1,104,613 (5,518,346) (1,159,251) (21,870,078) 1,626 (2,393,127) (18,023,893) Other Financing Sources (Uses) Transfers in (Note 5) 3,495,933 - 6,698,549 - - - 15,838,445 26,032,927 Transfers out (Note 5) (16,138,825) - - (51,500) (217,880) - (9,451,460) (25,859,665) Issuance of debt (Note 6) ---- 23,993,460 - - 23,993,460 Sale of capital assets 695 ------695
Total other financing (uses) sources (12,642,197) - 6,698,549 (51,500) 23,775,580 - 6,386,985 24,167,417 Net Change in Fund Balances (831,527) 1,104,613 1,180,203 (1,210,751) 1,905,502 1,626 3,993,858 6,143,524 Fund Balances - Beginning of year 33,659,891 7,261,625 1,315,168 9,712,965 4,063,286 - 12,866,979 68,879,914
Fund Balances - End of year $ 32,828,364 $ 8,366,238 $ 2,495,371 $ 8,502,214 $ 5,968,788 $ 1,626 $ 16,860,837 $ 75,023,438
See notes to financial statements. 18 19 Ingham County, Michigan Ingham County, Michigan Governmental Funds Proprietary Funds Reconciliation of the Statement of Revenue, Expenditures, and Changes in Statement of Net Position Fund Balances to the Statement of Activities December 31, 2019 Year Ended December 31, 2019 Governmental Enterprise Funds Activities Net Change in Fund Balances Reported in Governmental Funds $ 6,143,524 Community Total Medical Care Delinquent Tax Health Center Nonmajor Enterprise Internal Amounts reported for governmental activities in the statement of activities are different Facility Revolving Network Funds Funds Service Funds because: Assets Current assets: Governmental funds report capital outlays as expenditures; however, in the statement of Pooled cash and investments $ 4,534,172 $ 529,934 $ 92,844 $ 3,016,658 $ 8,173,608 $ 11,600,258 activities, these costs are allocated over their estimated useful lives as depreciation: Receivables: Capital outlay 39,637,232 Accounts receivable - Net 2,814,603 - 1,231,197 - 4,045,800 803,469 Delinquent property taxes Depreciation expense (11,149,071) receivable - 12,586,078 - - 12,586,078 - Accrued interest receivable - 7,777 3,528 7,918 19,223 8,408 Revenue in the statement of activities that does not provide current financial resources is Other receivables - - - 12,985 12,985 - not reported as revenue in the funds until it is available (666,841) Due from other governments - 1,217,876 6,428,939 - 7,646,815 170,108 Due from component units (Note 5) - 281,921 - - 281,921 24,627 Acquisition of capital leases provides current financial resources to governmental funds Inventory -----10,000 but increases long-term liabilities in the statement of net position (23,993,460) Prepaids and other assets 258,610 - 50,860 - 309,470 551,327 Repayment of bond principal is an expenditure in the governmental funds but not in the Total current assets 7,607,385 14,623,586 7,807,368 3,037,561 33,075,900 13,168,197 statement of activities (where it reduces long-term debt) 2,674,561 Noncurrent assets: Restricted cash - - - 401,000 401,000 3,424,984 Interest expense, including the amortization of bond premiums and discounts, is Investment and related loan C-11 recognized in the government-wide statements as it accrues (864,209) receivable 998,845 - - - 998,845 - Net OPEB asset 176,555 - - - 176,555 - Some employee costs (pension, OPEB, and compensated absences) do not require the Capital assets: (Note 4) use of current financial resources and, therefore, are not reported as expenditures in Assets not subject to the governmental funds (3,049,571) depreciation 20,057,459 - - 5,080 20,062,539 1,351,752 Assets subject to depreciation - Internal service funds are included as part of governmental activities 1,940,247 Net 7,857,027 - 3,553,525 1,696,264 13,106,816 2,745,745 Other noncurrent assets -----217,253 Assets limited as to use (Note 1) 4,928,658 - - - 4,928,658 - Change in Net Position of Governmental Activities $ 10,672,412 Total noncurrent assets 34,018,544 - 3,553,525 2,102,344 39,674,413 7,739,734
Total assets 41,625,929 14,623,586 11,360,893 5,139,905 72,750,313 20,907,931
Deferred Outflows of Resources - Deferred pension costs (Note 12) 2,405,760 106,000 - 97,774 2,609,534 972,895
See notes to financial statements. 20 See notes to financial statements. 21 Ingham County, Michigan Ingham County, Michigan Proprietary Funds Proprietary Funds Statement of Net Position (Continued) Statement of Revenue, Expenses, and Changes in Net Position December 31, 2019 Year Ended December 31, 2019
Governmental Governmental Enterprise Funds Activities Enterprise Funds Activities Community Total Community Total Medical Care Delinquent Tax Health Center Nonmajor Enterprise Internal Medical Care Delinquent Tax Health Center Nonmajor Enterprise Internal Facility Revolving Network Funds Funds Service Funds Facility Revolving Network Funds Funds Service Funds
Liabilities Operating Revenue Current liabilities: Charges for services $ 29,416,526 $ - $ 16,928,998 $ 886,885 $ 47,232,409 $ - Accounts payable $ 1,484,602 $ 43,694 $ 649,274 $ 259,965 $ 2,437,535 $ 2,566,511 Other sales - - - 1,118,772 1,118,772 - Due to other funds (Note 5) - 2,500,000 420,897 - 2,920,897 - Interest and penalty charges - 2,023,324 - - 2,023,324 - Refundable deposits and bonds - - 9,573 13,481 23,054 - Collection fees - 1,536,378 - - 1,536,378 - Accrued liabilities and other 359,702 5,975 507,381 7,319 880,377 98,877 Other 23,446 - - - 23,446 937,383 Unearned revenue - - 70,239 - 70,239 - Charges for services - - - - - 46,290,467 Compensated absences (Note 7) 725,498 7,215 396,500 10,660 1,139,873 118,365 Provision for claims (Note 8) 35,000 - - - 35,000 1,285,000 Total operating revenue 29,439,972 3,559,702 16,928,998 2,005,657 51,934,329 47,227,850 Current portion of long-term debt (Note 7) 538,864 - - - 538,864 - Operating Expenses Cost of insurance claims and employee Total current liabilities 3,143,666 2,556,884 2,053,864 291,425 8,045,839 4,068,753 benefits expenses -----34,643,567 Administrative costs 31,113,929 2,338,345 22,064,230 367,564 55,884,068 4,862,675 Noncurrent liabilities: Operating expenses - - - 949,360 949,360 6,267,446 Advances from other funds -----61,463 Depreciation 951,897 - 266,711 166,685 1,385,293 751,865 Compensated absences - Net of current portion (Note 7) - 3,885 213,500 5,740 223,125 63,735 Total operating Net pension liability (Note 12) 277,869 565,757 - 521,851 1,365,477 5,192,669 expenses 32,065,826 2,338,345 22,330,941 1,483,609 58,218,721 46,525,553 C-12 Net OPEB liability (Note 15) - 246,243 - 400,270 646,513 3,285,656 Long-term debt - Net of current Operating (Loss) Income (2,625,854) 1,221,357 (5,401,943) 522,048 (6,284,392) 702,297 portion (Note 7) 8,485,276 6,900,000 - - 15,385,276 - Nonoperating (Expense) Revenue Total noncurrent Interest expense - (201,054) - - (201,054) - liabilities 8,763,145 7,715,885 213,500 927,861 17,620,391 8,603,523 Loss on sale of assets -----(9,351) Donations 1,585 - 4,015 - 5,600 - Total liabilities 11,906,811 10,272,769 2,267,364 1,219,286 25,666,230 12,672,276 Grants - - 5,043,067 - 5,043,067 - Investment income 316,773 130,464 8,045 42,237 497,519 180,060 Deferred Inflows of Resources Deferred pension cost Total nonoperating reductions (Note 12) 243,924 10,004 - 9,229 263,157 91,838 revenue (expense) 318,358 (70,590) 5,055,127 42,237 5,345,132 170,709 Deferred OPEB cost reductions (Note 15) 1,182,814 91,708 - 149,072 1,423,594 1,223,676 (Loss) Income - Before capital contributions (2,307,496) 1,150,767 (346,816) 564,285 (939,260) 873,006 Total deferred inflows of resources 1,426,738 101,712 - 158,301 1,686,751 1,315,514 Capital Contributions - Capital grants - - - 2,243 2,243 -
Net Position Transfers In (Note 5) - - 930,807 403,057 1,333,864 1,067,241 Net investment in capital assets 18,325,229 - 3,553,525 1,701,344 23,580,098 4,097,497 Restricted: Transfers Out (Note 5) - (2,500,000) - (74,367) (2,574,367) - Culture and recreation - - - 524,340 524,340 - Education - - - 17,810 17,810 - Change in Net Position (2,307,496) (1,349,233) 583,991 895,218 (2,177,520) 1,940,247 Unrestricted 12,372,911 4,355,105 5,540,004 1,616,598 23,884,618 3,795,539 Net Position - Beginning of year 33,005,636 5,704,338 8,509,538 2,964,874 50,184,386 5,952,789
$ 30,698,140 $ 4,355,105 $ 9,093,529 $ 3,860,092 $ 48,006,866 $ 7,893,036 $ 30,698,140 $ 4,355,105 $ 9,093,529 $ 3,860,092 $ 48,006,866 $ 7,893,036 Total net position Net Position - End of year
See notes to financial statements. 22 See notes to financial statements. 23 Ingham County, Michigan Ingham County, Michigan Proprietary Funds Proprietary Funds Statement of Cash Flows Statement of Cash Flows (Continued) Year Ended December 31, 2019 Year Ended December 31, 2019
Governmental Governmental Enterprise Funds Activities Enterprise Funds Activities Community Total Community Total Medical Care Delinquent Tax Health Center Nonmajor Enterprise Internal Medical Care Delinquent Tax Health Center Nonmajor Enterprise Internal Facility Revolving Network Funds Funds Service Funds Facility Revolving Network Funds Funds Service Funds
Cash Flows from Operating Activities Reconciliation of Operating (Loss) Receipts from customers $ 28,108,305 $ 2,531,202 $ 13,638,554 $ 2,000,982 $ 46,279,043 $ - Income to Net Cash from Operating (Payments) receipts from interfund Activities services and reimbursements (28,827,628) 325,075 420,897 (14,271) (28,095,927) 46,064,684 Operating (loss) income $ (2,625,854) $ 1,221,357 $ (5,401,943) $ 522,048 $ (6,284,392) $ 702,297 Payments to suppliers - (2,033,482) (9,558,137) (800,339) (12,391,958) (6,269,637) Adjustments to reconcile operating Payments to employees and fringes - (286,297) (12,509,721) (413,407) (13,209,425) (4,853,446) (loss) income to net cash from Claims paid -----(33,602,536) operating activities: Other receipts 23,446 - - - 23,446 913,903 Depreciation 951,897 - 266,711 166,685 1,385,293 751,865 Bad debt expense 86,355 - - - 86,355 - Net cash and cash equivalents Amortization of issuance premium 11,536 - - - 11,536 - (used in) provided by Provision for related loan receivable 600,000 - - - 600,000 - operating activities (695,877) 536,498 (8,008,407) 772,965 (7,394,821) 2,252,968 Changes in assets and liabilities: Receivables (1,394,576) (1,028,500) (3,291,468) (5,198) (5,719,742) (249,263) Cash Flows from Noncapital Financing Due to and from other funds - 325,075 420,897 (14,271) 731,701 - Activities Prepaid and other assets 229,178 - 32,034 235 261,447 162,447 Operating grants and subsidies - - 5,043,067 - 5,043,067 - Accounts payable (86,429) 39,938 (84,616) 150,516 19,409 (88,648) Transfers from other funds - - 3,501,221 403,057 3,904,278 1,067,241 Estimated claims liability -----979,273 Repayments on delinquent tax notes - (2,478,254) - - (2,478,254) - Net pension or OPEB liability or Transfers to other funds - - (2,570,414) (74,367) (2,644,781) - C-13 asset 3,023,873 92,403 - 77,255 3,193,531 800,846 Donations - - 4,015 - 4,015 - Deferrals related to pension or OPEB (1,088,259) (83,091) - (87,470) (1,258,820) (826,752) Net cash and cash equivalents Accrued and other liabilities (403,598) (30,684) 48,954 (36,835) (422,163) 20,903 (used in) provided by Refundable bonds and deposits - - 1,024 - 1,024 - noncapital financing activities - (2,478,254) 5,977,889 328,690 3,828,325 1,067,241 Total adjustments 1,929,977 (684,859) (2,606,464) 250,917 (1,110,429) 1,550,671 Cash Flows from Capital and Related Financing Activities Net cash and cash Receipt of capital grants - - - 2,243 2,243 - equivalents (used in) Purchase of capital assets (4,765,816) - - (292,478) (5,058,294) (1,066,750) provided by operating $ (695,877) $ 536,498 $ (8,008,407) $ 772,965 $ (7,394,821) $ 2,252,968 Principal and interest paid on capital activities debt (540,000) - - - (540,000) - Donations received 1,585 - - - 1,585 - Significant Noncash Transactions - Purchase of capital assets included in Net cash and cash equivalents accounts payable $ 565,117 $ - $ - $ - $ 565,117 $ - used in capital and related financing activities (5,304,231) - - (290,235) (5,594,466) (1,066,750)
Cash Flows Provided by Investing Activities - Interest received on investments 245,407 145,542 9,518 41,110 441,577 185,296
Net (Decrease) Increase in Cash and Cash Equivalents (5,754,701) (1,796,214) (2,021,000) 852,530 (8,719,385) 2,438,755
Cash and Cash Equivalents - Beginning of year 15,217,531 2,326,148 2,113,844 2,565,128 22,222,651 12,586,487
Cash and Cash Equivalents - End of year $ 9,462,830 $ 529,934 $ 92,844 $ 3,417,658 $ 13,503,266 $ 15,025,242
Classification of Cash and Cash Equivalents Cash and investments $ 4,534,172 $ 529,934 $ 92,844 $ 3,016,658 $ 8,173,608 $ 11,600,258 Restricted cash - - - 401,000 401,000 3,424,984 Assets limited as to use 4,928,658 - - - 4,928,658 -
$ 9,462,830 $ 529,934 $ 92,844 $ 3,417,658 $ 13,503,266 $ 15,025,242 Total cash and cash equivalents
See notes to financial statements. 24 See notes to financial statements. 25 Ingham County, Michigan Ingham County, Michigan Fiduciary Funds Fiduciary Funds Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position December 31, 2019 Year Ended December 31, 2019
Other Employee Other Employee Benefit Trust Benefit Trust Fund Agency Funds Fund
Assets Additions Pooled cash and investments $ - $ 1,681,012 Investment income: Investments: Interest and dividends $ 801,058 Domestic equities 11,993,624 - Net increase in fair value of investments 4,035,607 International equities 4,992,483 - Emerging markets equities 1,693,729 - Net investment income 4,836,665 Bond mutual funds and other fixed-income securities 14,568,327 - Contributions - Employer 7,253,522 Money market 335,733 - Total additions 12,090,187 Total assets 33,583,896 $ 1,681,012 Deductions - Benefit payments 4,236,304 $ 1,681,012 Liabilities - Accounts payable 156,759 Net Increase in Net Position Restricted for OPEB 7,853,883 Net Position Restricted for OPEB $ 33,427,137 Net Position Restricted for OPEB - Beginning of year 25,573,254
Net Position Restricted for OPEB - End of year $ 33,427,137 C-14
See notes to financial statements. 26 See notes to financial statements. 27 Ingham County, Michigan Component Units Statement of Net Position December 31, 2019
Brownfield Housing Drain Redevelopment Commission Land Bank Commission Authority Total
Assets Pooled cash and investments $ 252,303 $ 541,934 $ 13,262,331 $ 36,409 $ 14,092,977 Receivables: Property taxes receivable - - - 409,600 409,600 Special assessments receivable - - 54,157,329 - 54,157,329 Accrued interest receivable - - 69,231 552 69,783 Other receivables 18,037 194,644 8,336 - 221,017 Due from other governments - 99,967 3,325 - 103,292 Land contracts receivable - 7,600 - - 7,600 Inventory - 1,464,124 - - 1,464,124 Prepaids and other assets 332 12,715 - - 13,047 Restricted cash - - 978,501 - 978,501 Capital assets: (Note 4) Assets not subject to depreciation 327,078 1,000 26,195,920 - 26,523,998 Assets subject to depreciation - Net 658,887 586,108 57,437,462 - 58,682,457 Land contracts receivable - Net of current portion - 392,001 - - 392,001
Total assets 1,256,637 3,300,093 152,112,435 446,561 157,115,726
Deferred Outflows of Resources - Deferred C-15 pension costs (Note 12) 109,591 - 307,130 - 416,721 [THIS PAGE INTENTIONALLY LEFT BLANK] Liabilities Accounts payable 16,153 120,573 2,169,394 - 2,306,120 Due to other governments - 286,015 - - 286,015 Advances from primary government (Note 5) - - 1,000,000 - 1,000,000 Due to primary government (Note 5) - 306,548 - - 306,548 Refundable deposits and bonds 22,197 - 52,913 - 75,110 Accrued liabilities and other - 28,399 548,673 55,188 632,260 Unearned revenue 4,210 - 139,238 - 143,448 Noncurrent liabilities: Due within one year: Compensated absences 15,506 - 37,050 - 52,556 Current portion of long-term debt - - 26,081,814 360,000 26,441,814 Due in more than one year: Compensated absences - Net of current portion 11,633 - 19,950 - 31,583 Net pension liability (Note 12) 443,116 - 1,639,258 - 2,082,374 Net OPEB liability (Note 15) 370,047 - 1,192,487 - 1,562,534 Long-term debt - Net of current portion (Note 7) - 1,731,302 48,622,300 2,584,241 52,937,843
Total liabilities 882,862 2,472,837 81,503,077 2,999,429 87,858,205
Deferred Inflows of Resources Deferred pension cost reductions (Note 12) 64,305 - 28,989 - 93,294 Deferred OPEB cost reductions (Note 15) 137,556 - 444,117 - 581,673
Total deferred inflows of resources 201,861 - 473,106 - 674,967
Net Position Net investment in capital assets 985,965 587,108 8,929,268 - 10,502,341 Restricted - - 63,238,314 - 63,238,314 Unrestricted (704,460) 240,148 (1,724,200) (2,552,868) (4,741,380)
$ 281,505 $ 827,256 $ 70,443,382 $ (2,552,868) $ 68,999,275 Total net position
See notes to financial statements. 28 Ingham County, Michigan Component Units Statement of Activities Year Ended December 31, 2019
Program Revenue Net (Expense) Revenue and Changes in Net Position Operating Capital Grants Brownfield Charges for Grants and and Housing Drain Redevelopment Expenses Services Contributions Contributions Commission Land Bank Commission Authority Total
Functions/Programs Housing Commission $ 1,175,390 $ 270,982 $ 688,581 $ - $ (215,827) $ - $ - $ - $ (215,827) Land Bank 2,459,873 1,645,285 723,000 11,563 - (80,025) - - (80,025) Drain Commission 11,201,767 324,389 - 10,380,176 - - (497,202) - (497,202) Brownfield Redevelopment Authority 266,582 - - 340,000 - - - 73,418 73,418 Total component units $ 15,103,612 $ 2,240,656 $ 1,411,581 $ 10,731,739 (215,827) (80,025) (497,202) 73,418 (719,636)
General revenue: Taxes - - - 574,949 574,949 Unrestricted investment income 77 22,715 391,598 1,567 415,957 Gain on sale of capital assets - 14,554 - - 14,554 Other miscellaneous income 40,407 285,342 67,274 - 393,023
C-16 Total general revenue 40,484 322,611 458,872 576,516 1,398,483
Change in Net Position (175,343) 242,586 (38,330) 649,934 678,847 Net Position - Beginning of year 456,848 584,670 70,481,712 (3,202,802) 68,320,428 Net Position - End of year $ 281,505 $ 827,256 $ 70,443,382 $ (2,552,868) $ 68,999,275
See notes to financial statements. 29 30 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies Note 1 - Significant Accounting Policies (Continued) Reporting Entity Ingham County Drain Commission (the "Drain Commission") The accompanying financial statements present Ingham County, Michigan (the "County") and its All drainage districts established pursuant to the Michigan Drain Code of 1956 are separate legal entities component units, entities for which the County is considered to be financially accountable. Blended with the power to contract; to sue and be sued; and to hold, manage, and dispose of real and personal component units are, in substance, part of the County's operations, even though they are separate legal property. The statutory governing board of Chapter 20 drainage districts consists of the drain entities. Thus, blended component units are appropriately presented as funds of the County. Discretely commissioner, the chair of the county board of commissioners, and one other member of the county presented component units are reported in a separate column in the government-wide financial board of commissioners. The statutory governing board of Chapter 5 and 6 drainage districts consists of statements to emphasize that they are legally separate from the government. the Michigan director of agriculture and the drain commissioner of each county involved in the project. The Drain Commission has sole responsibility to administer Chapter 3 and 4 drainage districts. A drainage Blended Component Units board or drain commissioner, on behalf of the drainage district, may issue debt and levy special Ingham County Building Authority (the "Building Authority") assessments without the prior approval of the County. The full faith and credit of the County may be given for the debt of a drainage district. The nature and significance of the relationship between the primary The Building Authority is governed by a three-member board appointed by the Ingham County board of government and the Drain Commission is such that exclusion would cause the primary government's commissioners. Its sole function is to oversee the financing and construction, if any, of the County's public financial statements to be misleading or incomplete. The Drain Commission has a December 31 year end. buildings; therefore, it is reported as if it were part of the primary government. Separate financial statements for the Ingham County Drain Commission are not prepared but are included herein. Discretely Presented Component Units Ingham County Brownfield Redevelopment Authority (the "Authority") Ingham County Housing Commission (the "Housing Commission") The Authority, which was established pursuant to state statutes and has as its primary purpose The Housing Commission is governed by a five-member board appointed by the County for a five-year encourag ment of the redevelopment of underutilized and environmentally contaminated properties in
C-17 term. The Housing Commission administrates a subsidized housing complex located in Okemos, the geographic area and is governed by an 11-member board. The County appoints a voting majority of Michigan. In addition, it administers the Section 8 voucher system for Ingham County, Michigan residents. the Authority's board and is able to impose its will through the ability to approve or disprove the All revenue is provided by federal grants or the operations of the rental facility. No General Fund Authority's project plans. The Authority has a December 31 year end. Separate financial statements for the assistance is provided to the Housing Commission, but the subsidized housing complex is owned by the Authority are not prepared but are included herein. County. The administration of the Housing Commission is completely separate from the County. Joint Ventures The Housing Commission has a September 30 year end. Separate financial statements are available for the Ingham County Housing Commission at its offices located at 3882 Dobie Road, Okemos, MI 48864. In 1998, the County entered into an agreement with the City of Lansing, Michigan (the "City") to form the City of Lansing and Ingham County Joint Building Authority (JBA) for the purpose of constructing and Land Bank Fast Track Authority (the "Land Bank") managing a building in downtown Lansing that houses the courts, prosecuting attorney, and other related The Land Bank was established on November 1, 2005 and began operations subsequent to January 1, departments. The JBA is governed by a three-member board composed of one member each appointed 2006 pursuant to Public Act 258 and an intergovernmental agreement entered into between the Land by the City and County and one appointed jointly by the two units. Both the County and City contribute Bank and the County. The Land Bank is governed by a five-member board, of which the county treasurer cash or property to the JBA. Bonds were issued in 1999 by the JBA to provide the funding necessary to serves as the chairperson, and the other four members are appointed by the county board of construct the building. These bonds were paid off in 2019. Because the joint venture agreement does not commissioners for overlapping four-year terms. The County is financially accountable for the Land Bank provide an explicit contractual formula outlining the County’s claim to the JBA’s assets, it is deemed to be inasmuch as the County specifically issues debt for the exclusive benefit of the Land Bank's operations. a "joint venture with no equity interest," and, accordingly, no amounts are reported in the accompanying financial statements for an equity interest. Financial information for the JBA may be obtained by writing the The Land Bank has a December 31 year end. Separate financial statements for the Land Bank are Ingham County Financial Services Division, P.O. Box 319, Mason, MI 48854. available at the office of the Land Bank Fast Track Authority located at 3024 Turner Street, Lansing, MI 48906. Jointly Governed Organizations The County, in conjunction with other local governmental and corporate entities, is responsible for appointing the members of the boards of several other organizations. The County has no significant influence over the management of these organizations. Financial accountability is limited to the extent of any appropriated operating grant. Therefore, these organizations are not included in the County's financial report. Tri-County Community Mental Health Board The Tri-County Community Mental Health Board provides comprehensive mental health services to the residents of Ingham, Eaton, and Clinton counties. Operating revenue is derived from federal, state, and local governments, as well as from fees for services. The organization is governed by a 12-member board appointed by the boards of commissioners of the three counties it serves. Ingham County, Michigan's 2019 contribution to the Tri-County Community Mental Health Board was $2,061,941.
31 32 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies (Continued) Note 1 - Significant Accounting Policies (Continued) Tri-County Regional Planning Commission (the "Commission") Report Presentation The Tri-County Regional Planning Commission services Ingham, Eaton, and Clinton counties. The Governmental accounting principles require that financial reports include two different perspectives - the Commission's membership includes those counties; the City of Lansing, Michigan; the City of East government-wide perspective and the fund-based perspective. The government-wide financial statements Lansing, Michigan; Delta Township; Meridian Township; and the Michigan Department of Transportation. (i.e., the statement of net position and the statement of activities) report information on all of the Also included by right are the county road commissions and transit authorities, making a total of 19 voting nonfiduciary activities of the primary government and its component units, as applicable. The government- members. The Commission must adopt a proposed budget at its February meeting and submit the same wide financial statements are presented on the economic resources measurement focus and the full to the boards of commissioners of the three counties it serves and to the Lansing City Council with its accrual basis of accounting. Property taxes are recognized as revenue in the year for which they are request for allocation of funds. Each of these units contributes one-quarter of the total annual budget. levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed Ingham County, Michigan's 2019 contribution was $106,844. by the provider have been met. The statements also present a schedule reconciling these amounts to the modified accrual-based presentation found in the fund-based statements. Capital Region Airport Authority (the "Airport Authority") The statement of activities demonstrates the degree to which the direct expenses of a given function or The Capital Region Airport Authority operates the Capital Region International Airport and Mason Jewett segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a Field. The Airport Authority is administered by a five-member board. The majority of the board is specific function or segment. Program revenue includes: (1) charges to customers or applicants for appointed by the City of Lansing, Michigan. In addition to a tax levy of up to ¾ mills, the Airport Authority goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and receives operating funds from revenue produced by airport operations and from federal grants. The tax is contributions, including special assessments. Taxes, unrestricted intergovernmental receipts, and other collected by the County for the Airport Authority. The County provides no funding to the Airport Authority. items not properly included among program revenue are reported instead as general revenue. Additionally, the County does not hold title to any of the Airport Authority's assets, nor does it have any right to the Airport Authority's surplus. As a general rule, the effect of interfund activity has been removed from the government-wide financial statements. Exceptions to this general rule occur when there are charges between the County's enterprise C-18 Capital Area District Library functions and various other functions. Eliminations of these charges would distort the direct costs and In 1997, Ingham County, Michigan and the City of Lansing, Michigan established the Capital Area District program revenue reported for the various functions concerned. Library (CADL). Effective January 1, 1998, the CADL assumed operating responsibility for the 11 county Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, library branches and one library maintained by the Lansing School District. The CADL provides library even though the latter are excluded from the government-wide financial statements. Major individual services for most of Ingham County, Michigan. Excluded from the CADL's service areas are the City of governmental funds and major individual enterprise funds, if any, are reported as separate columns in the East Lansing, Michigan and other locations where the district libraries were already established. The fund financial statements. CADL is administered by a seven-member board. The City of Lansing, Michigan appoints two board members, and the County appoints the remaining five board members. Four of the seven board members Fund Accounting must be residents of the City of Lansing, Michigan or Lansing Township. Although the County appoints a voting majority of the CADL board, it does not have the authority to remove or censure any appointees. The County accounts for its various activities in several different funds in order to demonstrate Furthermore, other than the initial financial support agreed to by the County, the CADL does not provide a accountability for how it spends certain resources; separate funds allow the County to show the particular financial benefit or impose a financial burden on the County. Accordingly, management has concluded expenditures for which specific revenue is used. The various funds are aggregated into three broad fund that the County is not financially accountable for the CADL and determined that it is not a component unit types: of the County under guidelines established by Governmental Accounting Standards Board (GASB) Governmental Funds Statement No. 80. Governmental funds include all activities that provide general governmental services that are not Accounting and Reporting Principles business-type activities. Governmental funds can include the General Fund, special revenue funds, debt The County follows accounting principles generally accepted in the United States of America (GAAP) service funds, capital project funds, and permanent funds. The County reports the following funds as applicable to governmental units. Accounting and financial reporting pronouncements are promulgated by "major" governmental funds: the Governmental Accounting Standards Board. The following is a summary of the significant accounting The General Fund is the primary operating fund because it accounts for all financial resources used to policies used by the County. provide government services other than those specifically assigned to another fund. Funds with Other Fiscal Year Ends The Road special revenue fund accounts for the operations of the County's road department (formally The Housing Commission discretely presented component unit; the Community Health Network enterprise the Ingham County Road Commission.) Funding is provided by the State of Michigan and local fund; and Health, Family Court Child Care, Social Welfare, DHS Child Care, Community Development governmental units. Block Grant, Community Corrections, Friend of the Court, Indigent Defense, and Cooperative Reimbursement Prosecuting Attorney special revenue funds are reported on a September 30 fiscal year The Health special revenue fund accounts for the delivery of a vast array of health services to county end. residents. This fund is accounted for on a September 30 fiscal year end, which coincides with its primary funding source, and the primary sources of revenue are grants and user fees, along with General Fund appropriations.
33 34 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies (Continued) Note 1 - Significant Accounting Policies (Continued) The Emergency Telephone special revenue fund accounts for the operations of the emergency Interfund Activity telephone and dispatch system, and the primary source of revenue is property taxes and telephone During the course of operations, the County has activity between funds for various purposes. Any residual surcharges. balances outstanding at year end are reported as due from/to other funds and advances to/from other The Trails and Parks Millage special revenue fund accounts for a special millage for creating and funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in maintaining a county system of recreational trails and adjacent parks trail system. governmental activities (i.e., the governmental and internal service funds) are eliminated so that only the The Community Mental Health debt service fund accounts for the debt service and the lease payments net amount is included as internal balances in the governmental activities column. Similarly, balances for the bonds issued to increase the size of Tri-County Community Mental Health building. between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Additionally, the County reports the following nonmajor governmental fund types: Furthermore, certain activity occurs during the year involving transfers of resources between funds. In Special revenue funds are used to account for the proceeds of specific revenue sources that are fund financial statements, these amounts are reported at gross amounts as transfers in/out. While restricted or committed to expenditure for specified purposes. reported in fund financial statements, certain eliminations are made in the preparation of the government- wide financial statements. Transfers between the funds included in governmental activities are eliminated Capital projects funds are used to record bond proceeds or other revenue and to disburse invoices so that only the net amount is included as transfers in the governmental activities column. Similarly, specifically designated for capital-related items. The funds operate until the purpose for which they balances between the funds included in business-type activities are eliminated so that only the net amount were created is accomplished. is included as transfers in the business-type activities column. Debt service funds are used to account for and report financial resources that are restricted, Basis of Accounting committed, or assigned to expenditure for principal and interest on long-term debt. C-19 The governmental funds use the current financial resources measurement focus and the modified accrual Proprietary Funds basis of accounting. This basis of accounting is intended to better demonstrate accountability for how the County has spent its resources. Proprietary funds include enterprise funds (which provide goods or services to users in exchange for charges or fees) and internal service funds (which provide goods or services to other funds of the County). Expenditures are reported when the goods are received or the services are rendered. Capital outlays are The County reports the following funds as "major" enterprise funds: reported as expenditures (rather than as capital assets) because they reduce the ability to spend resources in the future; conversely, employee benefit costs that will be funded in the future (such as The Medical Care Facility enterprise fund accounts for the long-term care of elderly residents in a pension and retiree healthcare-related costs or sick and vacation pay) are not counted until they come due medical care unit owned and operated by the County. for payment. In addition, debt service expenditures, claims, and judgments are recorded only when payment is due. The Delinquent Tax Revolving enterprise fund accounts for the County's annual purchase of delinquent real property taxes from each of the local taxing units within the County and the ultimate collection from Proprietary funds and fiduciary funds, as applicable, use the economic resources measurement focus and the property owners of the delinquent taxes with penalty and interest. The fund also accounts for the the full accrual basis of accounting. Revenue is recorded when earned, and expenses are recorded when County's issuance of debt (to provide cash flow for the purchase of the taxes) and for the resulting debt a liability is incurred, regardless of the timing of related cash flows. service payments. Specific Balances and Transactions The Community Health Center Network enterprise fund accounts for the health department's clinical Cash and Investments fee-based programs, which ensure access to primary health care, prevention, and support services for Cash and cash equivalents include amounts in demand deposits and amounts in the county treasurer's vulnerable populations, including uninsured and Medicaid individuals. cash management pool. The cash pool has the general characteristics of demand deposits in that The County’s internal service funds account for operations that provide services (such as building deposits and withdrawals may be made at any time without prior notice or penalty. Each fund or opinion operations, data processing, employee benefits, and other services) to other departments or agencies of unit's portion of this pool is included in the pooled cash and investments caption in the accompanying the County, or to other governments, on a cost-reimbursement basis. financial statements. Investments are stated at fair value. Fiduciary Funds Inventories and Prepaid Items Fiduciary funds include amounts held in a fiduciary capacity for others. These amounts are not used to Inventories are valued at cost, on a first-in, first-out basis. The costs of governmental fund-type inventories operate the County’s programs. Activities that are reported as fiduciary include the following: are primarily recorded as expenditures when purchased rather than when consumed. Donated vaccine inventory in the Health special revenue fund is fully offset by unearned revenue. Certain payments to The agency funds account for assets held for other governments in an agency capacity, specifically for vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both library penal fines and payroll withholdings. government-wide and fund financial statements, when applicable. The other employee benefit trust fund accounts for the activities of the retiree healthcare plan. Payments made to vendors for services that will benefit future periods are recorded as prepaid items.
35 36 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies (Continued) Note 1 - Significant Accounting Policies (Continued) Assets Limited as to Use The County reports the following deferred outflows of resources and deferred inflows of resources: The restricted cash primarily includes cash and investments set aside by the Ingham County Department Outflows Inflows of Health and Human Services for future capital improvements, workers' compensation, and other postemployment benefits over which the board retains control and may, at its discretion, subsequently use Unavailable revenue (those not collected within the period of availability) - Reported only at the modified accrual level for other purposes. Deferred charge on bond refunding Capital Assets Deferred pension costs (or cost reductions) Capital assets, which include land, buildings, equipment, vehicles, and infrastructure assets (e.g., roads, bridges, drains, and similar items), are reported in the applicable governmental or business-type activities Deferred OPEB costs (or cost reductions) column in the government-wide financial statements. Capital assets are defined by the County as assets Property taxes levied for the following year with an initial individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated Net Position capital assets, donated works of art and similar items, and capital assets received in a service concession Net position of the County is classified in three components. Net investment in capital assets consists of arrangement are recorded at estimated acquisition value at the date of donation. capital assets net of accumulated depreciation and is reduced by the current balances of any outstanding Interest incurred during the construction of capital assets of business-type activities is included as part of borrowings used to finance the purchase or construction of those assets. The restricted component of net the capitalized value of the assets constructed. position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Unrestricted net position is the remaining net position that does not meet the definition of Capital assets are depreciated using the straight-line method over the following useful lives: invested in capital or restricted. C-20 Depreciable Life - Net Position Flow Assumption Years The County will sometimes fund outlays for a particular purpose from both restricted and unrestricted Buildings and improvements 30 resources. In order to calculate the amounts to report as restricted net position and unrestricted net Equipment 5-10 position in the government-wide and proprietary fund financial statements (as applicable), a flow Vehicles 3-5 assumption must be made about the order in which the resources are considered to be applied. It is the Infrastructure 8-50 County’s policy to consider restricted net position to have been depleted before unrestricted net position is For the road assets, capital assets are depreciated using the straight-line method (except for road applied. equipment, which is depreciated using the sum-of-the-years' digits method) over the useful lives Fund Balance Flow Assumptions presented above. The County will sometimes fund outlays for a particular purpose from both restricted and unrestricted Long-term Obligations resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the In the government-wide financial statements and the proprietary fund types in the fund financial amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental statements, long-term debt and other long-term obligations are reported as liabilities in the applicable fund financial statements, a flow assumption must be made about the order in which the resources are governmental activities, business-type activities, or proprietary fund-type statement of net position. Bond considered to be applied. It is the County’s policy to consider restricted fund balance to have been premiums and discounts are deferred and amortized over the life of the bonds using the effective interest depleted before using any of the components of unrestricted fund balance. Furthermore, when the method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance components of unrestricted fund balance can be used for the same purpose, committed fund balance is costs are expensed at the time they are incurred. In the fund financial statements, governmental fund depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. types recognize bond issuances and premiums as "other financing sources" and bond discounts as "other Fund Balance Policies financing uses." The General Fund and debt service funds are generally used to liquidate governmental long-term debt. Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The nonspendable fund balance Deferred Outflows/Inflows of Resources component represents amounts that are not in spendable form or are legally or contractually required to In addition to assets, the statement of net position will sometimes report a separate section for deferred be maintained intact. outflows of resources. This separate financial statement element represents a consumption of net position Amounts in the restricted fund balance classification are intended to be used when externally imposed that applies to future periods and will not be recognized as an outflow of resources (expense/expenditure) constraints are placed on the use of the resources by grantors, contributors, or laws or regulations of other until then. governments. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time.
37 38 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies (Continued) Note 1 - Significant Accounting Policies (Continued) The committed fund balance classification includes amounts that can be used only for the specific Proprietary Funds Operating Classification purposes determined by a formal action of the County’s highest level of decision-making authority. The board of commissioners is the highest level of decision-making authority for the County that can authorize Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating a resolution prior to the end of the fiscal year to commit fund balance. Once adopted, the limitation revenue and expenses generally result from providing services and producing and delivering goods in imposed by the resolution remains in place until a similar action is taken (the adoption of another connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of resolution) to remove or revise the limitation or the committed resources are expended. proprietary funds are charges to customers for sales or services. Operating expenses for these funds include the cost of sales or services and administrative expenses and may include depreciation on capital Amounts in the assigned fund balance classification are intended to be used by the government for assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and specific purposes but do not meet the criteria to be classified as committed. The County has, by expenses. resolution, authorized the county controller and the director of financial services to assign fund balance. The board of commissioners may also assign fund balance as it does when appropriating fund balance to Use of Estimates cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. The preparation of financial statements in conformity with accounting principles generally accepted in the Unlike commitments, assignments generally only exist temporarily. In other words, an additional action United States of America requires management to make estimates and assumptions that affect the does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of additional action is essential to either remove or revise a commitment. the financial statements and the reported amounts of revenue and expenses during the period. Actual Unassigned fund balance is the residual classification used for the General Fund. results could differ from those estimates. Pension Upcoming Accounting Pronouncements The County offers a defined benefit pension plan to its employees. The County records a net pension In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations, which establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding C-21 liability for the difference between the total pension liability calculated by the actuary and the pension plan’s fiduciary net position. For the purpose of measuring the net pension liability, deferred outflows of deferred outflow of resources for asset retirement obligations. The County is currently evaluating the resources and deferred inflows of resources related to pensions, and pension expense, information about impact this standard will have on the financial statements when adopted. The provisions of this statement the fiduciary net position of the pension plan and additions to/deductions from the pension plan’s fiduciary were originally effective for the County's financial statements for the year ended December 31, 2019 but net position have been determined on the same basis as they are reported by the pension plan. For this were extended to December 31, 2020 with the issuance of GASB Statement No. 95, Postponement of the purpose, benefit payments (including refunds of employee contributions) are recognized when due and Effective Dates of Certain Authoritative Guidance. payable in accordance with the benefit terms. Investments are reported at fair value. In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. This statement establishes Other Postemployment Benefit Costs criteria for identifying fiduciary activities of all state and local governments. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. The County is currently evaluating The County offers retiree healthcare benefits to retirees. The County records a net OPEB liability for the the impact this standard will have on the financial statements when adopted. The provisions of this difference between the total OPEB liability calculated by the actuary and the OPEB plan’s fiduciary net statement were originally effective for the County's financial statements for the year ended December 31, position. For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred 2019 but were extended to December 31, 2020 with the issuance of GASB Statement No. 95, inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of Postponement of the Effective Dates of Certain Authoritative Guidance. the OPEB plan and additions to/deductions from the OPEB plan’s fiduciary net position have been determined on the same basis as they are reported by the OPEB plan. For this purpose, benefit payments In June 2017, the GASB issued Statement No. 87, Leases, which improves accounting and financial are recognized when due and payable in accordance with the benefit terms. Investments are reported at reporting for leases by governments. This statement requires recognition of certain lease assets and fair value. liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single Compensated Absences (Vacation and Sick Leave) model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an It is the County's policy to permit employees to accumulate earned but unused sick and vacation pay intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred benefits. Sick pay is accrued for the estimated amount that the County will pay upon employment inflow of resources. The County is currently evaluating the impact this standard will have on the financial termination; vacation pay is accrued when incurred. Both of these are reported in the government-wide statements when adopted. The provisions of this statement were originally effective for the County's and proprietary fund financial statements. A liability for these amounts is reported in governmental funds financial statements for the year ending December 31, 2020, but were extended to December 31, 2022 only for employee terminations as of year end. Generally, the funds that report each employee’s with the issuance of GASB Statement No. 95, Postponement of the Effective Dates of Certain compensation are used to liquidate the obligations. Authoritative Guidance.
39 40 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 1 - Significant Accounting Policies (Continued) Note 2 - Stewardship, Compliance, and Accountability (Continued) In March 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct No later than December 31 of each year, the proposed budget is presented to the county board of Borrowings and Direct Placements. This statement establishes criteria to improve the information that is commissioners. The board holds public hearings and may add to, subtract from, or change appropriations. disclosed in the notes to the government financial statements related to debt, including direct The budget is then legally enacted through passage of a board resolution. Any changes in the budget borrowings and direct placements. It also clarifies which liabilities governments should include when must be within the revenue and reserves estimated as available by the county controller, or the revenue disclosing information related to debt. The County is currently evaluating the impact this standard will have estimates must be changed by an affirmative vote of a majority of the board of commissioners. on the financial statements when adopted. The provisions of this statement were originally effective for the County's financial statements for the year ended December 31, 2019, but were extended to December 31, For internal purposes, budgetary control over expenditures is maintained at the line-item level for most 2020 with the issuance of GASB Statement No. 95, Postponement of the Effective Dates of Certain governmental funds. However, the board of commissioners has authorized the controller to make Authoritative Guidance. budgetary transfers between all budgeted funds, activities, and line items where determined necessary by the controller to ensure budgetary compliance at the activity or cost category basis. Supplemental In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of budgetary appropriations were made during the year but were not in amounts considered material for a Construction Period, which simplifies accounting for interest cost incurred before the end of construction specific disclosure herein. The County has made budget adjustments subsequent to year end based upon and requires those costs to be expensed in the period incurred. As a result, interest cost incurred before board authorization. the end of a construction period will not be capitalized and included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This statement also reiterates that, in financial There was not a budget created or approved for the Criminal Justice Training Fund, CMH and Animal statements prepared using the current financial resources measurement focus, interest cost incurred capital projects fund, or the Jail capital projects Fund during 2019. before the end of a construction period should be recognized as an expenditure on a basis consistent with Excess of Expenditures Over Appropriations in Budgeted Funds governmental fund accounting principles. The requirements of the standard will be applied prospectively and result in increased interest expense during periods of construction. The provisions of this statement During the year, the County incurred expenditures in excess of the amounts budgeted in following funds are effective for the County's financial statements for the December 31, 2021 fiscal year. as follows: C-22 Subsequent Events Variance with Budget Actual Budget The financial statements and related disclosures include evaluation of events up through and including June 23, 2020, which is the date the financial statements were available to be issued. Emergency Telephone Fund - Capital outlay $ 424,258 $ 23,993,460 $ (23,569,202) Road Fund - Capital outlay 852,009 874,698 (22,689) In March 2020, the United States and Michigan declared a state of emergency due to the global pandemic Animal Control Millage Fund - Public Safety 220 2,027 (1,807) (COVID-19). As a result, the County's S&P bond rating was downgraded to AA from AA+ due to Hotel/Motel Accommodation Tax Fund - Transfers out 316,808 349,465 (32,657) anticipation of County spending down some reserve balances in response to the pandemic. In response to Grady Porter Refunding 2010 Fund - Interest and the pandemic, the County has furloughed employees and reduced nonessential expenditures and has fiscal charges 687,115 69,958 (1,843) also provided vacation payouts to employees impacted directly by the pandemic. The impact on the Social Welfare Fund - Social services 71,812 142,443 (70,631) Family Court Child Care Fund - Transfers out - 50,033 (50,033) County's future operating costs, reductions to revenue, and any recovery from emergency funding, either Homeland Security Grant Fund - Capital outlay 30,000 55,936 (25,936) federal or state, cannot be estimated. Juvenile Justice Millage Fund - Social services 227,976 257,368 (29,392) Justice Complex Millage Fund - Capital outlay 472,081 498,655 (26,574) Note 2 - Stewardship, Compliance, and Accountability Jail Renovation 2003 Fund - Interest and fiscal charges 27,375 34,688 (7,313) Budgetary Information 911 Building Fund - Interest and fiscal charges 123,535 123,890 (355) Annual budgets are adopted on a basis consistent with generally accepted accounting principles and state Tobias-Linn Water/Sewer Fund - Principal 65,000 120,000 (55,000) Animal Control Shelter Fund - Interest and fiscal law for the General Fund and all special revenue funds, debt service funds, and the capital projects fund. charges 163,500 163,660 (160) All annual appropriations lapse at fiscal year end. The General Fund budget and the budgets for the following special revenue funds are adopted on an activity and cost category basis: Road Fund, Health The variance in the Emergency Telephone Fund was due to a $23,993,460 capital lease transaction. The Fund, Friend of the Court Service, Register of Deeds Automation, Zoo, Anti-Drug Abuse Grant, County did not budget the debt proceeds or the related capital outlay expenditure. All other variances Community Corrections, Family Court Child Care, and Cooperative Reimbursement Prosecuting Attorney. related to additional expenditures that became necessary during the year. For the purpose of the above, the cost categories include personnel services, controllable costs, Noncompliance with Legal or Contractual Provisions noncontrollable costs, capital outlay, and debt service principal and interest. Budgets for all other funds are adopted on an activity basis. The County budgeted a deficit in the Trails and Parks Millage, Anti-Drug Abuse Grant, Community Corrections, and Homeland Security Grant funds. This is in violation of Michigan Public Act 2 of 1968. Each year prior to October 1, county departments, in conjunction with the controller’s staff, prepare and submit their proposed operating and capital budgets for the calendar year commencing the following January 1. Both the operating and capital budgets include proposed expenditures and the resources to finance them. The budget includes information on the past year, current year estimates, and requested appropriations for the next fiscal year.
41 42 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 3 - Deposits and Investments Note 3 - Deposits and Investments (Continued) The county treasurer maintains a cash management pool that is available for use by all funds and Following is a summary of the County’s investments as of December 31, 2019: component units. Each fund or component unit’s portion of the pool is included in the pooled cash and investments caption in the accompanying financial statements. Interest earned from investments U.S. agencies $ 21,502,593 purchased with pooled cash is allocated to all debt service funds and certain special revenue, proprietary, Commercial paper 994,663 Municipal bonds 5,141,913 and fiduciary funds based on average cash balances. The remaining interest earned is allocated to the Michigan CLASS investment pool 41,603,830 General Fund. The cash for the component units is pooled within the County’s investments, and they do not have separate investments to report. Total $ 69,242,999
In addition to the cash management pool, a substantial number of depository accounts are maintained by Interest Rate Risk various county departments for the deposit of fees, fines, and other revenue. These monies are transferred to the county treasurer on a regular basis. Depository accounts are also used, in some Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates. instances, where the County acts as a collection agent (e.g., court-ordered child support). Year-end book State law limits the allowable investments and the maturities of some investments, as identified in the balances in these depository accounts are included in pooled cash and investments for financial reporting summary of significant accounting policies. The County's investment policy does not restrict investment purposes. maturities other than commercial paper, which can only be purchased with a 270-day maturity. Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes local Concentration of Credit Risk governmental units to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations that have offices in Michigan. The law also allows investments outside At year end, the County had the following investments and maturities: the state of Michigan when fully insured. The local unit is allowed to invest in bonds, securities, and other Less Than 1 More Than 10 direct obligations of the United States or any agency or instrumentality of the United States; repurchase Primary Government Fair Value Year 1-5 Years 6-10 Years Years
C-23 agreements; bankers’ acceptances of United States banks; commercial paper rated within the two highest classifications that matures not more than 270 days after the date of purchase; obligations of the State of U.S. agencies $ 21,502,593 $ 2,000,076 $ 10,504,929 $ 8,997,588 $ - Michigan or its political subdivisions that are rated as investment grade; and mutual funds composed of Commercial paper 994,663 994,663 - - - investment vehicles that are legal for direct investment by local units of government in Michigan. Municipal bonds 5,141,913 3,441,663 1,700,250 - - Michigan CLASS The County's cash and investments are subject to several types of risk, which are examined in more detail investment pool 41,603,830 41,603,830 - - - below: Total $ 69,242,999 $ 48,040,232 $ 12,205,179 $ 8,997,588 $- Custodial Credit Risk of Bank Deposits Credit Risk Custodial credit risk is the risk that, in the event of a bank failure, the County's deposits may not be returned to it. Federal Deposit Insurance Corporation (FDIC) insurance on government accounts is Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. $250,000 per official custodian, with more coverage available subject for specific conditions. State law State law limits investments in commercial paper to the top two ratings issued by nationally recognized does not require, and the County does not have, a policy for any additional deposit custodial credit risk. statistical rating organizations. Ratings are not required for U.S. Treasury securities or money market accounts. The Michigan CLASS money market fund is rated by S&P. At year end, $23,722,724 of the combined bank balance of $29,534,282 was exposed to custodial credit risk. The County believes that, due to the dollar amounts of cash deposits and the limits of FDIC As of December 31, 2019, all of the County’s investments in securities of U.S. agencies were rated Aaa by insurance, it is impractical to insure all bank deposits. As a result, the county treasurer evaluates each Moody's and AA+ by Standard & Poor’s. The County’s holdings in municipal bonds were rated by Moody’s financial institution with which it deposits funds and assesses the bank to be at an acceptable level of risk. as follows: Aa1 - $931,838, Aa3 - $950,000, and Standards & Poor's as follows: AA - $3,260,075. Custodial Credit Risk of Investments As of December 31, 2019, the one piece of commercial paper was rated Moody's - A1, Standard & Poor's - P2, and Fitch - F1. Custodial credit risk is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside Concentration of Credit Risk party. State law does not require and the County does not have a policy for investment custodial credit State law limits allowable investments but does not limit concentration of credit risk, as identified in the list risk. of authorized investments above. The County’s investment policy does not have specific limits in excess The County’s investments in U.S. agencies, commercial paper, and municipal bonds are held by the of state law on concentration of credit risk. investment’s counterparty, not in the name of the County.
43 44 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 3 - Deposits and Investments (Continued) Note 3 - Deposits and Investments (Continued) At December 31, 2019, the County had greater than 5 percent of its total investments concentrated as Concentration of Credit Risk follows: Concentration of credit risk is the risk of loss attributed to the magnitude of the trust’s investment in a Percent of single issuer. At December 31, 2019, as reported by the trust’s investment managers, there is no Investment Portfolio concentration of credit risk.
Michigan CLASS 48.92 % Interest Rate Risk Federal Farm Credit Bank 18.23 MSU Credit Union 7.82 Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an Federal Home Loan Bank 7.06 investment. The trust’s investment policy does not discuss the maximum maturity for any single fixed- income security or the weighted-average portfolio maturity. Other Postemployment Benefit Trust Fund Investments As of December 31, 2019, weighted-average maturities in the bond mutual fund holdings were as follows: The trust's investments are primarily held in a bank-administered trust fund. Following is a summary of the $101,978 mature in less than 1 year, $7,094,775 mature in 1-5 years, $4,618,160 mature in 5-10 years, trust's investments as of December 31, 2019: and $2,753,414 mature in greater than 10 years. Medical Care Fair Value Measurements County Facility Total The County categorizes its fair value measurements within the fair value hierarchy established by Investments at fair value, as determined by quoted generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure market price - Exchange-traded funds: the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 Domestic equities $ 9,880,876 $ 2,112,748 $ 11,993,624 International equities 4,112,913 879,570 4,992,483 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. C-24 Emerging markets equity 1,392,934 300,795 1,693,729 Investments that are measured at fair value using net asset value (NAV) per share (or its equivalent) as a Bond mutual funds 12,022,421 2,545,906 14,568,327 practical expedient are not classified in the fair value hierarchy below. Cash/Money market 147,781 187,952 335,733 In instances whereby inputs used to measure fair value fall into different levels in the above fair value Total investments $ 27,556,925 $ 6,026,971 $ 33,583,896 hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The County’s assessment of the significance of particular inputs to these fair The Michigan Public Employee Retirement System Investment Act, Public Act 314 of 1965, as amended, value measurements requires judgment and considers factors specific to each asset. authorizes the system to invest in domestic and foreign stocks, government securities, corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The County has the following recurring fair value measurements as of December 31, 2019: Assets Measured at Carrying Value on a Recurring Basis at Credit Risk December 31, 2019 Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Quoted Prices in trust's investment policy emphasizes appropriate risk/return parameters and compliance with Public Act Active Markets Significant Other Significant 314 of 1965 and gives discretionary authority to its investment managers, as opposed to establishing for Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, specific credit rating benchmarks. (Level 1) (Level 2) (Level 3) 2019 United States Treasury securities are explicitly guaranteed by the U.S. government and not considered to have credit risk. Ratings are derived from Moody's Investors Service, Fitch Ratings, and Standard & Assets Debt securities: Poor's. When ratings from all three agencies are available, the median rating is used. When ratings are Agency bonds $ - $ 21,502,593 $ - $ 21,502,593 available from two of the agencies, the lower rating is used. When one rating is available, that rating is Commercial paper - 994,663 - 994,663 used. The trust's investments in debt securities were rated as follows: $9,833,621- Aaa, $495,323 - Aa, Bond ETFs 14,568,327 - - 14,568,327 $1,660,789 - A, and $2,578,594 - Baa. Municipal bonds - 5,141,913 - 5,141,913
Custodial Credit Risk Total debt securities 14,568,327 27,639,169 - 42,207,496 For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty to a Equity securities - Common transaction, the trust will not be able to recover the value of its investments or collateral securities that are stock 18,679,836 - - 18,679,836 in the possession of an outside party. The trust’s investment policy requires that securities be held in trust Total $ 33,248,163 $ 27,639,169 $-60,887,332 by a third-party institution in the trust’s name or its nominee custodian’s name or in bearer form. Although uninsured and unregistered, the trust’s investments are not exposed to custodial credit risk since the Investments measured at NAV - securities are held by the counterparty’s trust department or agent in the trust’s name. Short-term Michigan CLASS 41,603,830 investments in money market funds and open-end mutual funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book form. Total assets $ 102,491,162
45 46 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 3 - Deposits and Investments (Continued) Note 4 - Capital Assets Debt and equity securities classified in Level 1 are valued using prices quoted in active markets for those Capital asset activity for the year ended December 31, 2019 of the County's governmental and business- securities. type activities was as follows: The fair value of all other investments at December 31, 2019 was determined primarily based on Level 2 Governmental Activities inputs. The County estimates the fair value of these investments using other inputs, such as interest rates Balance Balance and yield curves, that are observable at commonly quoted intervals. January 1, Disposals and December 31, The valuation method for investments measured at net asset value per share (or its equivalent) is 2019 Reclassifications Additions Adjustments 2019 presented in the table below. Capital assets not being Investments in Entities that Calculate Net Asset Value per Share depreciated: Intangible assets $ 7,589,888 $ - $ 668,819 $ - $ 8,258,707 The County holds shares or interests in investment companies whereby the fair value of the investments Land 8,973,190 - 2,040 - 8,975,230 is measured on a recurring basis using net asset value per share (or its equivalent) of the investment Road-related land companies as a practical expedient. improvements 30,805,267 (19,075) 598,848 - 31,385,040 Machinery not yet in service 777,035 (909,710) 387,036 - 254,361 At December 31, 2019, the fair value, unfunded commitments, and redemption rules of those investments Construction in progress 17,938,119 (4,605,913) 29,452,660 - 42,784,866 are as follows: Subtotal 66,083,499 (5,534,698) 31,109,403 - 91,658,204 Redemption Unfunded Frequency, if Redemption Capital assets being depreciated: Carrying Value Commitments Eligible Notice Period Buildings and improvements 99,021,873 4,751,903 3,955,175 - 107,728,951 Equipment and furniture 37,777,922 782,795 1,465,158 (214,314) 39,811,561 C-25 Michigan CLASS $ 41,603,830 $ - N/A N/A Infrastructure - Signals 1,116,938 - 79,174 - 1,196,112 Infrastructure - Roads 187,012,526 - 4,165,727 - 191,178,253 The Michigan CLASS investment pool invests in U.S. Treasury obligations, federal agency obligations of Infrastructure - Bridges 27,251,954 - 466 - 27,252,420 the U.S. government, high-grade commercial paper (rated "A1" or better), collateralized bank deposits, Infrastructure - Subdivisions 10,226,088 - - - 10,226,088 repurchase agreements (collateralized at 102 percent by treasuries and agencies), and approved money Subtotal 362,407,301 5,534,698 9,665,700 (214,314) 377,393,385 market funds. The program is designed to meet the needs of Michigan public sector investors. It purchases securities that are legally permissible under state statutes and are available for investment by Accumulated depreciation: Michigan counties, cities, townships, school districts, authorities, and other public agencies. Buildings and improvements 71,241,389 - 2,425,327 - 73,666,716 Equipment and furniture 31,161,259 - 2,163,068 (133,840) 33,190,487 Infrastructure - Signals 522,816 - 79,741 - 602,557 Infrastructure - Roads 126,653,281 - 6,484,652 - 133,137,933 Infrastructure - Bridges 6,665,982 - 543,626 - 7,209,608 Infrastructure - Subdivisions 4,348,849 - 204,522 - 4,553,371
Total accumulated depreciation 240,593,576 - 11,900,936 (133,840) 252,360,672
Net capital assets being depreciated 121,813,725 5,534,698 (2,235,236) (80,474) 125,032,713
Net governmental activities capital assets $ 187,897,224 $-$ 28,874,167 $ (80,474) $ 216,690,917
47 48 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 4 - Capital Assets (Continued) Note 4 - Capital Assets (Continued) Business-type Activities Capital asset activity for the County's component units for the year ended December 31, 2019 was as follows: Balance Balance January 1, Disposals and December 31, Component Units 2019 Reclassifications Additions Adjustments 2019 Balance Balance Capital assets not being January 1, Disposals and December 31, depreciated: 2019 Reclassifications Additions Adjustments 2019 Land $ 137,912 $ - $ - $ - $ 137,912 Construction in progress 16,213,884 - 3,710,743 - 19,924,627 Capital assets not being depreciated: Subtotal 16,351,796 - 3,710,743 - 20,062,539 Land $ 328,078 $ - $ - $ - $ 328,078 Capital assets being depreciated: Construction in progress 22,317,298 (5,405,351) 6,278,365 - 23,190,312 Land improvements 635,033 - - - 635,033 Other nondepreciable assets 2,530,908 - 474,700 - 3,005,608 Buildings and improvements 27,968,883 - 759,680 (68,233) 28,660,330 Subtotal 25,176,284 (5,405,351) 6,753,065 - 26,523,998 Equipment and furniture 3,472,594 - 127,476 (155,702) 3,444,368 Capital assets being depreciated: Subtotal 32,076,510 - 887,156 (223,935) 32,739,731 Rental property 630,224 - 8,927 (61,168) 577,983 Accumulated depreciation: Infrastructure 87,023,748 5,405,351 134,270 - 92,563,369 Land improvements 280,564 - 37,171 - 317,735 Buildings and improvements 5,524,877 - 12,380 - 5,537,257 Buildings and improvements 15,591,345 - 1,116,263 (68,233) 16,639,375 Equipment 1,722,837 - 11,277 (780) 1,733,334
C-26 Equipment and furniture 2,599,648 - 231,859 (155,702) 2,675,805 Subtotal 94,901,686 5,405,351 166,854 (61,948) 100,411,943 Subtotal 18,471,557 - 1,385,293 (223,935) 19,632,915 Accumulated depreciation: Rental property 171,677 - 30,058 (16,615) 185,120 Net capital assets being Infrastructure 32,268,255 - 2,911,990 - 35,180,245 depreciated 13,604,953 - (498,137) - 13,106,816 Buildings and improvements 4,628,303 - 84,570 - 4,712,873 Net business-type activities Equipment 1,614,355 - 37,673 (780) 1,651,248 capital assets $ 29,956,749 $-$ 3,212,606 $-$ 33,169,355 Subtotal 38,682,590 - 3,064,291 (17,395) 41,729,486
Net capital assets being depreciated 56,219,096 5,405,351 (2,897,437) (44,553) 58,682,457
Net component units capital assets $ 81,395,380 $-$ 3,855,628 $ (44,553) $ 85,206,455
Depreciation expense was charged to programs of the primary government as follows:
Governmental activities: General government $ 726,900 Public safety 1,216,752 Judicial 40,466 Health 489,567 Culture and recreation 565,436 Public works 8,109,950 Capital assets held by internal service funds are charged to the various functions based on their usage of the assets 751,865
Total governmental activities $ 11,900,936
Business-type activities: Medical Care Facility $ 951,897 Community Health Center Network 266,711 Fair Board 131,369 Inmate Stores 35,316
Total business-type activities $ 1,385,293
49 50 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 4 - Capital Assets (Continued) Note 5 - Interfund Receivables, Payables, and Transfers (Continued)
Component unit activities: The due to/from balances result primarily from the time lag between the dates that interfund goods and Housing Commission $ 78,685 services are provided or reimbursable expenditures occur, transactions are recorded in the accounting Land Bank 42,098 system, and/or payments between funds are made. Outstanding advances between funds relate to Drain Commission 2,943,508 working capital loans made to various funds. Total component unit activities $ 3,064,291 Interfund transfers are used to move unrestricted revenue collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations and to move revenue Note 5 - Interfund Receivables, Payables, and Transfers from the fund that is required to collect it to the fund that is required or allowed to expend it. The composition of interfund balances is as follows: Note 6 - Leases Receivable Fund Payable Fund Amount Operating Leases General Fund Community Mental Health Debt Service The County leases certain buildings and office space under noncancelable operating leases. Total costs Fund $ 496,797 for such leases were $831,337 for the current year. The future minimum lease payments for these leases Nonmajor governmental funds 2,832,386 are as follows: Delinquent Tax Revolving Fund 2,500,000 Community Health Center Network Fund 420,897 Years Ending Total
Total General Fund $ 6,250,080 2020 $ 409,426 2021 353,421 The County has made the following long-term advances between funds: 2022 353,844 C-27 2023 185,900 Fund Borrowed From Fund Loaned To Amount 2024 123,933
General Fund Internal service funds $ 61,463 Total $ 1,426,524 The balance of amounts loaned to discretely presented component units is as follows: The County leases certain buildings and office space to other agencies under cancelable lease Receivable Payable Amount agreements. The lease payments are charged to other governmental entities at the pro rata portion of operating and maintenance costs. The assets leased to other governmental entities under such General Fund Drain Commission $ 1,000,000 arrangements were included in governmental activities at December 31, 2019; these assets (i.e., buildings and improvements) cost $20,452,807, with accumulated depreciation as of December 31, 2019 of Interfund transfers reported in the fund financial statements are composed of the following: $17,854,994 (for a net book value of $2,597,813). Paying Fund (Transfer Out) Receiving Fund (Transfer In) Amount Capital Leases General Fund Health Fund $ 6,698,549 The County has borrowed to fund an addition to Tri-County Mental Health building through the County's Community Health Network Fund 930,807 Nonmajor governmental funds 7,522,120 Building Authority. The lease with Tri-County Mental Health (CMH) meets the qualification of a capital Internal service funds 987,349 lease, and the lease payments are the annual debt service payments. A lease receivable of $9,665,000 and deferred revenue of $9,315,000 are shown in the Community Mental Health debt service fund. The Total General Fund 16,138,825 future minimum lease obligations to be repaid to the County and the net present value are as follows: Emergency Telephone Fund Nonmajor governmental funds 217,880 Years Ending Amount Trails and Parks Millage Fund General Fund 51,500 2020 $ 1,296,175 Delinquent Tax Revolving Fund General Fund 2,500,000 2021 654,388 2022 657,988 Nonmajor governmental funds Nonmajor governmental funds 8,098,445 2023 661,138 General Fund 870,066 2024 663,838 Nonmajor enterprise funds 403,057 2025-2029 3,382,588 Internal service funds 79,892 2030-2037 5,688,613
Total nonmajor governmental funds 9,451,460 Total 13,004,728 Nonmajor enterprise funds General Fund 74,367 Less amount representing interest 3,339,728 Total $ 28,434,032 Present value $ 9,665,000
51 52 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 6 - Leases (Continued) Note 7 - Long-term Debt (Continued) The County leases certain equipment for the emergency telephone fund operations under a capital lease. Component Units The lease began in 2019, and the first payment is due in 2020. The future minimum lease payments for Beginning Due within these leases and the net present value are as follows: Balance Additions Reductions Ending Balance One Year Years Ending Amount Housing Commission - 2020 $ 2,927,641 Compensated absences $ 25,256 $ 1,883 $ - $ 27,139 $ 15,506 2021 2,927,641 Land Bank - Notes payable 2,927,556 21,309 (1,217,563) 1,731,302 - 2022 2,927,641 Drain Commission: 2023 2,927,641 Drain bonds and notes 71,142,511 32,255,625 (29,555,204) 73,842,932 25,998,438 2024 2,927,641 Deferred amounts for: Thereafter 14,638,201 Issuance premiums 141,497 374,800 (13,749) 502,548 - Total 29,276,406 Issuance discounts (93,038) - 6,087 (86,951) - Compensated absences 34,000 45,100 (22,100) 57,000 37,050 Less amount Installment obligations payable - 445,585 - 445,585 83,376 representing interest (5,282,946) Total Drain Commission 71,224,970 33,121,110 (29,584,966) 74,761,114 26,118,864 Total $ 23,993,460 Brownfield Redevelopment: General obligation bonds 3,285,000 - (340,000) 2,945,000 360,000 Note 7 - Long-term Debt Deferred amounts for: Issuance premiums 8,061 - (1,008) 7,053 -
C-28 Long-term debt activity for the year ended December 31, 2019 can be summarized as follows: Issuance discounts (8,789) - 977 (7,812) -
Governmental Activities Total Brownfield Redevelopment 3,284,272 - (340,031) 2,944,241 360,000 Beginning Due within Balance Additions Reductions Ending Balance One Year Total component units long-term debt $ 77,462,054 $ 33,144,302 $ (31,142,560) $ 79,463,796 $ 26,494,370 General obligation bonds - County $ 19,430,000 $ - $ (2,550,000) $ 16,880,000 $ 2,625,000 General obligation bonds - Other General Obligation Bonds governments 515,000 - (120,000) 395,000 125,000 Leases payable - 23,993,460 - 23,993,460 2,015,667 The County issues general obligation bonds to provide for the acquisition and construction of major capital Drain assessments 4,561 - (4,561) - - facilities. General obligations have been issued for both governmental and business-type activities. Deferred amounts for issuance premiums 277,539 - (57,616) 219,923 - General obligation bonds are direct obligations and pledge the full faith and credit of the County. County Compensated absences 5,375,361 5,759,239 (6,179,000) 4,955,600 3,221,140 contractual agreements and installment purchase agreements are also general obligations of the County. These bonds are typically issued as 10-20 year serial bonds with varying amounts of principal maturing Total governmental each year. General obligations outstanding at December 31, 2019 are as follows: activities long-term debt $ 25,602,461 $ 29,752,699 $ (8,911,177) $ 46,443,983 $ 7,986,807 Purpose Interest Rates Amount Business-type Activities Beginning Due within Governmental Activities Balance Additions Reductions Ending Balance One Year Building Authority 2.5 - 6.5% $ 16,880,000 Local unit infrastructure 4.0 - 6.0% 395,000 Delinquent tax notes $ 9,150,000 $ 12,000,000 $ (14,250,000) $ 6,900,000 $ - Total governmental activities $ 17,275,000 General obligation bonds 9,075,000 - (540,000) 8,535,000 550,000 Deferred amounts for issuance Business-type Activities premiums 477,604 11,536 - 489,140 (11,136) General obligation bonds 2.0 - 3.0% $ 8,535,000 Compensated absences 1,264,413 1,872,201 (1,773,616) 1,362,998 1,139,873 Component Units Total business-type General obligation bonds 4.0 - 4.25% $ 2,945,000 activities long-term debt $ 19,967,017 $ 13,883,737 $ (16,563,616) $ 17,287,138 $ 1,678,737
53 54 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 7 - Long-term Debt (Continued) Note 8 - Risk Management (Continued) Delinquent Tax Notes The County estimates the liability for general, workers' compensation, and medical claims that have been incurred through the end of the fiscal year, including claims that have been reported and those that have The County issues general obligation limited tax notes to finance the purchase of delinquent real property not yet been reported. Changes in the estimated liability for the past two fiscal years were as follows: taxes receivable from each taxing district in the County. During the year ended December 31, 2019, the County issued $12,000,000 in delinquent tax notes. These notes are reported in the Delinquent Tax Claims Liability Workers' Compensation Medical Claims Revolving Fund (enterprise fund), as they are expected to be repaid from fund revenue. Each series of 2019 2018 2019 2018 2019 2018 delinquent tax notes is subject to variable interest rates, which are determined on a weekly basis by the County's remarketing agent using established criteria and legal limitations. Principal and interest payments Unpaid claims - Beginning of are predicated upon actual collections of delinquent property taxes, which are subject to collection over a year $ 822,000 $ 425,000 $ 507,000 $ 500,000 $ 34,106 $ 35,416 period not to exceed two years; accordingly, because of the two-year collection and tax note repayment Incurred claims (including IBNR) 417,155 991,930 156,278 236,739 36,830 49,800 Claim payments (404,155) (594,930) (213,278) (229,739) (35,936) (51,110) period, the notes are considered long-term debt. A delinquent tax note of $6,900,000 from the 2019 series was outstanding at December 31, 2019. Unpaid claims - End of year $ 835,000 $ 822,000 $ 450,000 $ 507,000 $ 35,000 $ 34,106 Drain Bonds and Notes Note 9 - Contingent Liabilities The drain commissioner is authorized under state statutes to issue special assessment bonds and drain notes for the construction or maintenance of drainage districts. Such bonds and notes are repaid from Amounts received or receivable from grantor agencies and healthcare intermediaries, including Medicare special assessments levied upon the benefiting property owners. At December 31, 2019, drain bonds and and Medicaid, are subject to audit and adjustment by those grantor agencies or intermediaries. Any notes totaling $73,842,932 were outstanding; $32,255,625 of new bonds and notes were issued during the disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. current year. Drain bonds and notes carry interest at rates ranging from 1 to 5 percent. The amount, if any, of expenditures/expenses that may be disallowed by the grantors or intermediaries cannot be determined at this time, although the government expects such amounts, if any, to be
C-29 Other Long-term Liabilities immaterial. Compensated absences attributable to the governmental activities will be liquidated primarily by the The County and its component units, individually or jointly, are defendants in pending or threatened General Fund. lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the County and component units' counsel that resolution of these matters will not have a material adverse Debt Service Requirements to Maturity effect on the financial condition of the County. Annual debt service requirements to maturity for the above bonds and note obligations are as follows: Note 10 - Property Taxes Governmental Activities Business-type Activities Component Unit Activities Years Ending County general operating property taxes are levied annually on July 1 (the lien date) to fund operations for December 31 Principal Interest Total Principal Interest Total Principal Interest Total the current year. The property taxes are due in full within nine months (prior to March 1), at which time 2020 $ 4,765,667 $ 1,513,920 $ 6,279,587 $ 550,000 $ 250,550 $ 800,550 $ 26,441,814 $ 2,318,690 $ 28,760,504 uncollected taxes became delinquent. The assessed value of real and personal property is established by 2021 4,919,682 1,334,176 6,253,858 7,465,000 239,550 7,704,550 4,952,966 1,646,091 6,599,057 the local units, accepted by the County, and equalized under state statute at approximately 50 percent of 2022 4,239,071 1,150,543 5,389,614 580,000 222,600 802,600 5,802,136 1,495,596 7,297,732 2023 2,826,468 1,012,688 3,839,156 595,000 205,200 800,200 3,999,799 1,348,266 5,348,065 the current estimated market value. In March 1994, Michigan voters approved Proposal A, which requires 2024 2,931,988 905,666 3,837,654 615,000 187,350 802,350 3,739,687 174,427 3,914,114 property taxes to be levied based on the taxable value of the underlying property. Annual increases in Thereafter 21,585,584 3,519,474 25,105,058 5,630,000 786,450 6,416,450 34,028,417 8,245,827 42,274,244 taxable value are limited to the lesser of 5 percent or the rate of inflation. Taxable value reverts to 50 Total $ 41,268,460 $ 9,436,467 $ 50,704,927 $ 15,435,000 $ 1,891,700 $ 17,326,700 $ 78,964,819 $ 15,228,897 $ 94,193,716 percent of true cash value when the property is sold. Taxable value is determined by using such factors as equalized, assessed, and capped values. Note 8 - Risk Management The taxable value of real and personal property for the July 1, 2019 general operating levy was $8.1 The County is exposed to various risks of loss related to property loss, torts, errors and omissions, and billion. The general operating tax rate for this levy was 6.7670 mills, which is the maximum allowable employee injuries (workers' compensation), as well as medical benefits provided to employees. The millage levy per the Headlee Amendment to the Michigan Constitution. County manages its risk exposures and provides certain employee benefits through a combination of self- The County also had a voter-approved tax of 0.6000 mills for public transportation, 0.8500 mills for the insurance programs, risk management pools, commercial insurance, and excess coverage policies. For emergency telephone service, 0.6000 mills for the juvenile justice activity, 0.4100 mills for Potter Park Zoo risks that are commercially insured, settlements have not exceeded insurance coverage in any of the past operations, 0.1400 mills for farmland preservation initiatives, 0.2400 mills for animal control, 0.3500 mills three years. Following is a summary of these self-insurance programs and risk management pool for health services, 0.5000 mills for parks and trails, 0.0330 mills for veterans' support, and 0.8500 for the participation. justice complex. With the exception of the veterans' support millage, all of these taxes are levied as of The Michigan Municipal Risk Management Authority risk pool program operates as a common risk- December 1 for the next year. This results in substantial deferred inflows being reported in these special sharing management program for local units of government in Michigan; member premiums are used to revenue funds. purchase commercial excess insurance coverage and to pay member claims in excess of deductible amounts. The County maintains a self-insurance program for workers' compensation coverage, which is accounted for in the Workers' Compensation internal service fund and the Medical Care Facility enterprise fund.
55 56 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 10 - Property Taxes (Continued) Note 12 - Pension Plans (Continued) By agreement with various taxing authorities, the County purchases at face value the real property taxes 02 - Sheriff FOP Supervisory Closed to New Hires returned delinquent each March 1 and records a corresponding delinquent taxes receivable. These receivables ($12.6 million at December 31, 2019) are pledged for repayment of the delinquent tax notes Benefit multiplier 3.20% multiplier (80% max) payable; subsequent collection of the receivables, along with interest and collection fees thereon and Normal retirement age 60 Vesting 10 years investment earnings, are used to retire the debt. Early retirement (unreduced) 55/15 or 25 and out Final average compensation 3 years Note 11 - Tax Abatements Employee contributions 19.61% The County receives reduced property tax revenue as a result of industrial facilities tax exemptions (PA 198 of 1974) and brownfield redevelopment agreements granted by cities, villages, and townships within the boundaries of the County. Industrial facility exemptions are intended to promote construction of new 06 - 911 Supervisors Closed to New Hires industrial facilities or to rehabilitate historical facilities; brownfield redevelopment agreements are intended to reimburse taxpayers that remediate environmental contamination on their properties. Benefit multiplier 2.8% for first 12 yrs 9 months, 1.8% for next 8 yrs 5 months, 2.0% for svc after 12/31/2012 (no max) For the fiscal year ended December 31, 2019, the County’s property tax revenue was reduced by Normal retirement age 58 $2,394,891 under these programs. Vesting 8 years Early retirement (unreduced) 50/25 There are no significant abatements made by the County. Early retirement (reduced) 55/15 Final average compensation 2 years Note 12 - Pension Plans Employee contributions 1.70%
C-30 Plan Description The County participates in the Municipal Employees' Retirement System of Michigan (MERS), an agent 09 - Judges Closed to New Hires 90 - Assistant Prosecuting Attorneys Closed to New Hires multiple-employer plan administered by the retirement board of MERS. Act No. 427 of the Public Acts of 1984, as amended, establishes and amends the benefit provisions of the participants in MERS. Benefit multiplier 2.50 multiplier (80% max) MERS issues a publicly available financial report, which includes the financial statements and required Normal retirement age 60 Vesting 6 years supplemental information of this defined benefit plan. This report can be obtained at Early retirement (unreduced) 55/15 www.mersofmichigan.com or in writing to MERS at 1134 Municipal Way, Lansing, MI 48917. Early retirement (reduced) 50/25 Benefits Provided Final average compensation 5 years Employee contributions are 3.14% and 1.40%, respectively The plan provides certain retirement, disability, and death benefits to members and beneficiaries. PA 427 of 1984, as amended, established and amends the benefit provisions of the participants in MERS. 04 - MCF Closed to New Hires The MERS plan covers the following: 11 - General Library Closed to New Hires 01 - Confidentials Closed to New Hires 93 - Legal Research Clerks Closed to New Hires 10 - General Management Closed to New Hires 19 - County-wide Elected Officials Closed to New Hires Benefit multiplier Svc times (1.20% times FAC<$4,200, 44 - MCF Executive Manager Closed to New Hires plus 1.70% times FAC>$4,200) Normal retirement age 60 Benefit multiplier 2.50% multiplier (80% max) Vesting 10 years Normal retirement age 60 Early retirement (reduced) 50/25 or 55/15 Vesting 6 years Final average compensation 5 years Early retirement (unreduced) 55/15 Employee contributions are 0.00%, 0.00%, and 1.20%, respectively Early retirement (reduced) 50/25 Final average compensation 3 years Employee contributions are 6.56%, 7.59%, 9.66%, and 0.00%, 12 - General ICEA Professionals Closed to New Hires respectively Benefit multiplier 2.50% multiplier (80% max) Normal retirement age 60 Vesting 10 years Early retirement age (unreduced) 55/15 Early retirement age (reduced) 50/25 Final average compensation 5 years COLA for future retirees 2.50% (noncompound) Employee contributions 13.42% 57 58 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 12 - Pension Plans (Continued) Note 12 - Pension Plans (Continued) 13 - General OPEIU Court Closed to New Hires 17 - ICEA Nurses Closed to New Hires 98 - MNA Nurses Closed to New Hires Benefit multiplier 2.50% multiplier (80% max) Normal retirement age 60 Benefit multiplier 2.25% multiplier (80% max) Vesting 10 years Normal retirement age 60 Early retirement (unreduced) 55/15 Vesting 6 years Early retirement (reduced) 50/25 Early retirement (unreduced) 55/15 Final average compensation 3 years Early retirement (reduced) 50/25 Employee contributions 9.71% Final average compensation 3 years COLA for future retirees 2.50% (noncompound) Employee contributions are 11.87% and 13.07%, respectively 14 - General TOPS UAW Closed to New Hires
Benefit multiplier 2.50% multiplier (80% max) 18 - ICEA Court Professionals Closed to New Hires Normal retirement age 60 Vesting 10 years Benefit multiplier 2.25% multiplier (80% max) Early retirement (unreduced) 55/15 Normal retirement age 60 Early retirement (reduced) 50/25 Vesting 10 years Final average compensation 5 years Early retirement (unreduced) 55/15 or 20 and out Employee contributions 4.82% Final average compensation 5 years Employee contributions 9.84% C-31 15 - Animal Control FOP Closed to New Hires 21 - FOP Sheriff Deputies Closed to New Hires Benefit multiplier 2.50% multiplier (80% max) 24 - Sheriff Deputies MAP Closed to New Hires Normal retirement age 60 Vesting 10 years Benefit multiplier 3.20% multiplier (80% max) Early retirement (unreduced) 55/15 or 25 and out Normal retirement age 60 Final average compensation 3 years Vesting 10 years COLA for future retirees 2.50% (noncompound) Early retirement (unreduced) 55/15 or 25 and out Employee contributions 15.49% Final average compensation 5 years Employee contributions are 10.96% and 12.16%, respectively
16 - General Commissioners Closed to New Hires 41 - MCF Management Closed to New Hires 22 - FOP 911 Nonsupervisory Former East Lansing Closed to New Hires 43 - ICEA Unit 1 Closed to New Hires Benefit multiplier 2.50% multiplier (80% max) Benefit multiplier 2.00% multiplier to Social Security age (no max), Normal retirement age 60 1.70% multiplier after Social Security age (no max) Vesting 10 years Normal retirement age 60 Early retirement (unreduced) 50/25 Vesting 6 years Early retirement (reduced) 55/15 Early retirement (unreduced) 55/15 Final average compensation 3 years Early retirement (reduced) 50/25 Employee contributions 1.20% Final average compensation 5 years Employee contributions are 4.76%, 0.00%, and 2.50%, respectively 23 - FOP Nonsupervisory Former Lansing Closed to New Hires
Benefit multiplier Bridged Benefit: 1.60% multiplier (no max) Termination FAC: 2.00% multiplier (no max) Bridged benefit date 12/31/2012 Normal retirement age 58 Vesting 8 years Early retirement (unreduced) 50/25 Early retirement (reduced) 55/15 Final average compensation 2 years Employee contributions 2.70%
59 60 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 12 - Pension Plans (Continued) Note 12 - Pension Plans (Continued) 40 - ICEA Unit 111 Closed to New Hires 95 - UAW Local 2256 Open Division 96 - City Zoo Director Closed to New Hires Benefit multiplier 2.00% multiplier to Social Security age 1.70% multiplier paid after Social Security Age (no Benefit multiplier 2.80% multiplier for svc < 35 yrs, max) 1.50% multiplier for svc > 35 yrs (100% max) Normal retirement age 60 Normal retirement age 58 Vesting 10 years Vesting 8 years Early retirement (unreduced) 55/15 Early retirement (unreduced) Rule of 65 Early retirement (reduced) 50/25 Final average compensation 2 years Final average compensation 5 years Employee contributions are 2.90% and 3.50%, respectively Employee contributions 2.50%
97 - Teamsters Local 580 Supervisors Former Lansing Closed to New Hires 42 - ICEA Unit 11 Closed to New Hires Benefit multiplier Bridged Benefit: 1.80% multiplier (no max) Benefit multiplier 2.00% multiplier paid to Social Security age Termination FAC: 2.00% multiplier (no max) 1.70% multiplier paid after Social Security age (no Bridged benefit date 12/31/2012 max) Normal retirement age 58 Normal retirement age 60 Vesting 8 years Vesting 6 years Early retirement (unreduced) 50/25 Early retirement (unreduced) 55/15 Early retirement (reduced) 55/15
C-32 Early retirement (reduced) 50/25 Final average compensation 2 years Final average compensation 3 years Employee contributions 1.70% Employee contributions 3.45%
99 - Teamsters Local 580 Zoo Hired prior to 4/1/2013 Closed to New Hires 91 - Parks Union Employees Closed to New Hires Benefit multiplier 2.00% multiplier (80% max) Benefit multiplier 2.25% multiplier (80% max) Normal retirement age 60 Normal retirement age 60 Vesting 8 years Vesting 10 years Early retirement (reduced) 50/25 or 55/15 Early retirement (reduced) 50/25 or 55/15 Final average compensation 5 years Final average compensation 5 years Employee contributions 1.20% Employee contributions 1.20%
HA - County-wide Elected Officials Hired after 1/1/2013 92 - Parks Nonunion Employees Closed to New Hires HB - Commissioners Hired after 1/1/2013 Open Division HC - General Management & Confidentials Hired after 1/1/2013 Open Division Benefit multiplier 2.50% multiplier (80% max) HD - FOP 911 Nonsupervisory Hired after 1/1/2013 Open Division Normal retirement age 60 HW - Management & Professional Road Department Hired after Open Division Vesting 10 years 6/1/2017 Open Division Early retirement (unreduced) 55/25 Early retirement (reduced) 50/25 or 55/15 Benefit multiplier 1.00% multiplier (no max) Final average compensation 3 years Normal retirement age 60 Employee contributions 1.20% Vesting 6 years Final average compensation 3 years Employee contributions 0.00% 94 - Zoo Hired after 7/1/2007 Closed to New Hires
Benefit multiplier 2.00% multiplier (no max) Normal retirement age 60 Vesting 10 years Early retirement (reduced) 50/25 or 55/15 Final average compensation 5 years Employee contributions 1.20%
61 62 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 12 - Pension Plans (Continued) Note 12 - Pension Plans (Continued) HF - TOPS UAW Hired after 3/1/2013 Open Division HQ - AFSCME Hired after 1/1/2014 Open Division HI - Animal Control FOP Hired after 4/1/2013 Open Division HJ - General ICEA Professionals Hired after 1/1/2013 Open Division Benefit multiplier 1.25% multiplier (no max) HK - Assistant Prosecuting Attorneys Hired after 4/1/2013 Open Division Normal retirement age 60 HL - ICEA Nurses Hired after 4/1/2013 Open Division Vesting 6 years HM - UAW Zoo Hired after 5/1/2013 Open Division Final average compensation 3 years HN - General OPEIU Court Hired after 1/1/2013 Open Division Employee contributions 0.00% HP - MNA Nurse Practitioners/Clinic Hired after 1/1/2014 Open Division HR - Parks Union Hired after 1/1/2014 Open Division Employees Covered by Benefit Terms HS - OPEIU Technical/Clerical Hired after 1/1/2014 Open Division HT - ICEA Court Professionals Hired after 4/15/2014 Open Division The following members were covered by the benefit terms: HU - Teamsters Local 580 Zoo Hired after 4/1/2013 Open Division Date of member count December 31, 2018 Benefit multiplier 1.25% multiplier (no max) Inactive plan members or beneficiaries currently receiving benefits 1,409 Normal retirement age 60 Inactive plan members entitled to but not yet receiving benefits 291 Vesting 6 years Active plan members 1,226 Final average compensation 3 years Employee contributions 0.00% Total employees covered by the plan 2,926
Contributions HE - Sheriff/Deputies Hired after 1/1/2013 Open Division Article 9, Section 24 of the State of Michigan constitution requires that financial benefits arising on account
C-33 HG - FOP Sheriff/Deputies Hired after 1/1/2013 Open Division of employee service rendered each year be funded during the year. Accordingly, MERS retains an Benefit multiplier 1.50% multiplier (no max) independent actuary to determine the annual contribution. The employer is required to contribute amounts Normal retirement age 60 at least equal to the actuarially determined rate, as established by the MERS retirement board. The Vesting 6 years actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by Early retirement (unreduced) 55/25 plan members during the year, with an additional amount to finance any unfunded accrued liability. The Final average compensation 3 years employer may establish contribution rates to be paid by its covered employees. Employee contributions 0.00% For the year ended December 31, 2018, the average active employee contribution rate was 4.91 percent of annual pay, and the County's average contribution was 19.76 percent of annual payroll. Department of Road Employees Net Pension Liability 07 - Hourly/AFSCME Closed to New Hires The County has chosen to use the December 31 measurement date as its measurement date for the net 70 - Administrative Salaried Closed to New Hires 71 - Administrative/Union/OPEIU Closed to New Hires pension liability. The December 31, 2019 fiscal year end reported net pension liability was determined 73 - Department Heads Closed to New Hires using a measure of the total pension liability and the pension net position as of the December 31, 2018 measurement date. The December 31, 2018 measurement date total pension liability was determined by Benefit multiplier 2.50% multiplier (80% max) an actuarial valuation performed as of that date. Normal retirement age 60 Vesting 8 years Early retirement (unreduced) 55/20 Early retirement (reduced) 50/25 or 55/15 Final average compensation 3 years Employee contributions 1.20%
74 - AFSCME Hired after 9/19/2011 Closed to New Hires 75 - Administrative/OPEIU Professionals Hired after 7/1/2011 Closed to New Hires 76 - OPEIU Supervisory/Administrative Salary Hired after 7/1/2011 Closed to New Hires
Benefit multiplier 1.50% multiplier (no max) Normal retirement age 60 Vesting 10 years Early retirement (reduced) 50/25 or 55/15 Final average compensation 5 years Employee contributions 1.20%
63 64 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 12 - Pension Plans (Continued) Note 12 - Pension Plans (Continued) Changes in the net pension liability during the measurement year were as follows: Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (note that employer contributions subsequent to the Increase (Decrease) measurement date will reduce the net pension liability and, therefore, will not be included in future pension Total Pension Plan Net Net Pension expense): Changes in Net Pension Liability Liability Position Liability Years Ending Balance at January 1, 2018 $ 459,503,818 $ 306,873,483 $ 152,630,335 December 31 Amount
Changes for the year: 2020 $ 5,287,684 Service cost 7,353,561 - 7,353,561 2021 1,651,768 Interest 35,901,843 - 35,901,843 2022 4,239,539 Changes in benefits 5,140 - 5,140 2023 7,061,783 Differences between expected and actual experience (479,516) - (479,516) Total $ 18,240,774 Contributions - Employer - 13,749,694 (13,749,694) Contributions - Employee - 3,418,416 (3,418,416) Actuarial Assumptions Net investment loss - (11,690,639) 11,690,639 Benefit payments, including refunds (28,815,140) (28,815,140) - The total pension liability in the December 31, 2018 actuarial valuation was determined using an inflation Administrative expenses - (586,552) 586,552 assumption of 2.5 percent, assumed salary increases (including inflation) of 3.75 percent (with merit Net changes 13,965,888 (23,924,221) 37,890,109 increases totaling up to 11 percent, for a total of 3.75 percent - 14.75 percent), and an investment rate of return (net of investment expenses) of 7.75 percent.
C-34 Balance at December 31, 2018 $ 473,469,706 $ 282,949,262 $ 190,520,444 Mortality rates were based on 50 percent male - 50 percent female blend of the RP-2014 Healthy The plan's fiduciary net position represents 59.8 percent of the total pension liability. Annuitant Mortality Tables, with rates multiplied by 105 percent; RP-2014 Employee Mortality Tables; and RP-2014 Juvenile Mortality Tables. For disabled plan members, rates were based on a blend of the 50 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related percent male - 50 percent RP-2014 Disabled Retiree Mortality Tables. to Pensions These assumptions were applied to all periods in the measurement and are based on an experience study For the year ended December 31, 2019, the County recognized pension expense of $28,370,013. conducted for the period from January 1, 2009 through December 31, 2013. At December 31, 2019, the County reported deferred outflows of resources and deferred inflows of Discount Rate resources related to pensions from the following sources: The discount rate used to measure the total pension liability was 8.0 percent. The projection of cash flows Deferred Deferred used to determine the discount rate assumed that employee contributions will be made at the current Outflows of Inflows of contribution rate and that county contributions will be made at rates equal to the difference between Resources Resources actuarially determined contribution rates and the employee rate. Difference between expected and actual experience $ 418,885 $ (3,598,328) Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to Net difference between projected and actual earnings on pension plan make all projected future benefit payments of current active and inactive employees. Therefore, the long- investments 21,420,217 - term expected rate of return on pension plan investments was applied to all periods of projected benefit Employer contributions to the plan subsequent to the measurement payments to determine the total pension liability. date 15,530,069 - Investment Rate of Return Total $ 37,369,171 $ (3,598,328) Best estimates of arithmetic real rates of return as of the December 31, 2018 measurement date for each major asset class included in the pension plan's target asset allocation, as disclosed in the investment footnote, are summarized in the following table: Long-term Expected Real Asset Class Target Allocation Rate of Return
Global equity 55.50 % 6.15 % Global fixed income 18.50 1.26 Real assets 13.50 7.22 Diversifying strategies 12.50 5.00
65 66 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 12 - Pension Plans (Continued) Note 15 - Other Postemployment Benefit Plan Sensitivity of the Net Pension Liability to Changes in the Discount Rate Plan Description The following presents the net pension liability of the County, calculated using the discount rate of 8.0 The County provides OPEB for all employees who meet eligibility requirements. The benefits are provided percent, as well as what the County's net pension liability would be if it were calculated using a discount through the Ingham County Retiree Health Care Plan (the "OPEB Plan"), a single-employer plan rate that is 1 percentage point lower or 1 percentage point higher than the current rate: administered by the Ingham County retiree health care board, and Ingham County Medical Care Facility Health Care Plan (the "MCF Plan"), a single-employer plan administered by the Ingham County 1 Percentage Current 1 Percentage Department of Health and Human Services board. Point Decrease Discount Rate Point Increase (7.0%) (8.0%) (9.0%) The financial statements of each OPEB plan are included in these financial statements as an other employee benefit trust fund (a fiduciary fund). Net pension liability $ 241,220,507 $ 190,520,444 $ 147,598,354 Management of the OPEB Plan is vested in the Ingham County retiree health care board (the "Board"), Pension Plan Fiduciary Net Position which consists of three members who have been appointed by the county board of commissioners. These Detailed information about the plan’s fiduciary net position is available in the separately issued financial include the controller, director of financial services, and county treasurer. report. For the purpose of measuring the net pension liability, deferred outflows of resources and deferred Management of the MCF Plan is vested in the trustees, which consist of three members who have been inflows of resources related to pensions, and pension expense, information about the plan’s fiduciary net appointed by the board of commissioners. These include the administrator and controller of the Ingham position and additions to/deductions from fiduciary net position have been determined on the same basis County Medical Care Facility and the Ingham County treasurer. as they are reported by the plan. The plan uses the economic resources measurement focus and the full accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as Benefits Provided contributions are due, pursuant to legal requirements. Benefit payments and refunds of employee contributions are recognized as expense when due and payable in accordance with the benefit terms. The OPEB Plan provides a healthcare and a small life insurance policy to eligible retirees. Benefits are C-35 provided through a third-party insurer, and the County's cost of benefits is covered by the plan. Retirees Note 13 - Pension Allocations over 65 are covered by a Medicare supplemental plan, and retirees under 65 have the choice of three plans with different contribution rates. The County provides coverage to the retiree only for the vast The reconciliation of the pension activity is as follows: majority of our retirees. The only exception are the retirees of the Road Fund, who are provided Governmental Business-type Component beneficiary coverage. Activities Activities Units Total The MCF Plan provides healthcare and life insurance policies to eligible retirees. Benefits are provided through a third-party insurer, with the exception of dental and vision coverage, which is self-insured. The Net pension liability $ 187,072,593 $ 1,365,477 $ 2,082,374 $ 190,520,444 Deferred inflows of resources 3,241,877 263,157 93,294 3,598,328 MCF Plan pays the full cost of the benefits. In the actuary report for December 31, 2018, an increase in Deferred outflows of resources 34,342,916 2,609,534 416,721 37,369,171 benefits was noted due to certain premiums being reimbursed for current retirees and future retirees hired Pension expense 26,648,483 1,411,233 310,297 28,370,013 before January 1, 2013. Note 14 - Defined Contribution Retirement Plan Employees Covered by Benefit Terms In the labor agreements ratified since 2013, it was agreed that all new hires would be eligible for a hybrid The following members were covered by the benefit terms: defined benefit contribution plan administered by the Municipal Employees' Retirement System. The start Ingham County date of the plan varies by bargaining unit. Ingham County Medical Care Retiree Health Care Facility Health Care The employer and employees contribution rates range from 1.0 to 2.5 percent of salaries for the defined Plan Plan contribution portion of the plan, as defined by the County's labor agreements. The vesting period for the defined contribution plan is five years. Date of member count December 31, 2019 December 31, 2019 The defined benefit portion ranges from a multiplier of 1.0 to 1.5 percent. The cost of the defined benefit Inactive plan members or beneficiaries currently receiving plan is paid exclusively by the County. The employees can elect to contribute an additional amount to the benefits 798 69 defined contribution plan on an after-tax basis. The vesting period for the defined benefit portion is six Active plan members 1,094 253 years. Total plan members 1,892 322 Once established, only the contribution rate for the defined contribution portion can be changed, and this can only occur through revisions to the labor agreements. The County's contribution to the defined contribution plan during 2019 totaled $416,904. The contributions to the defined benefit portion of the plan are included in Note 12.
67 68 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 15 - Other Postemployment Benefit Plan (Continued) Note 15 - Other Postemployment Benefit Plan (Continued) Contributions Changes in the net OPEB liability during the measurement year were as follows: OPEB Plan Ingham County Retiree Health Care Plan The contribution requirements of plan members and the OPEB trust are established and may be amended Increase (Decrease) by the trustees, subject to applicable labor contracts. Total OPEB Plan Net Net OPEB Changes in Net OPEB Liability Liability Position Liability Nonroad retirees under age 65 - The contributions for these retirees are based on an annual benchmark amount, which was $411 in 2019. The County pays the amount of the benchmark and splits any cost Balance at January 1, 2019 $ 102,244,384 $ 20,606,038 $ 81,638,346 above this evenly with the retiree. This benefit is only provided to the retiree. The cost of any other beneficiary is paid 100 percent by the retiree. Changes for the year: Service cost 2,197,658 - 2,197,658 Nonroad retirees over age 65 - A Medicare supplemental plan is provided to these retirees at no cost to Interest 6,081,669 - 6,081,669 the retiree. This benefit is only provided to the retiree. The cost of any other beneficiary is paid 100 Differences between expected and actual percent by the retiree. experience (1,030,999) - (1,030,999) Contributions - Employer - 6,863,719 (6,863,719) Road retirees under the age 65 - The County contributes the medical portion of the premium, and the Net investment income - 3,933,669 (3,933,669) retiree contributes the prescription portion. The benefit is provided to all eligible beneficiaries of the retiree. Benefit payments, including refunds (3,816,635) (3,816,635) - Miscellaneous other charges (73,741) (29,866) (43,875) Road retirees over the age 65 - A Medicare supplemental plan is provided; the County pays the medical portion of the premium, and the retiree pays the prescription portion. The benefit is provided to all eligible Net changes 3,357,952 6,950,887 (3,592,935) beneficiaries of the retiree. Balance at December 31, 2019 $ 105,602,336 $ 27,556,925 $ 78,045,411 C-36 Retiree healthcare costs are paid by the County on a "pay-as-you-go" basis to the OPEB Plan. The County has no obligation to make contributions in advance of when the insurance premiums are due for payment. The plan's fiduciary net position represents 26.1 percent of the total OPEB liability. In the current year, the County paid postemployment healthcare premiums of $3,816,635, plus it Ingham County Medical Care Facility Health Care Plan contributed $3,017,218 into a prefunded retiree healthcare fund, which is reported in this financial statement as a pension and other employee benefit trust fund type. Increase (Decrease) Total OPEB Plan Net Net OPEB MCF Plan Changes in Net OPEB Liability (Asset) Liability Position Liability (Asset)
The contribution requirements of plan members and the MCF Plan are established and may be amended Balance at January 1, 2019 $ 5,625,794 $ 4,967,216 $ 658,578 by the Ingham County Department of Health and Human Services board, subject to applicable labor contracts. Plan members are not required to contribute. During the year ended December 31, 2019, the Changes for the year: MCF Plan contributed $389,803, which included the actuarially determined contribution. Service cost 85,381 - 85,381 Interest 383,151 - 383,151 Net OPEB Liability Changes in benefits 1,260,150 - 1,260,150 Differences between expected and actual The County chooses a date for each OPEB plan to measure its net OPEB liability. This is based on the experience (1,168,538) - (1,168,538) measurement date of each OPEB plan, which may be based on a comprehensive valuation as of that date Changes in assumptions (102,478) - (102,478) or based on an earlier valuation that has used procedures to roll the information forward to the Contributions - Employer - 389,803 (389,803) measurement date. Net investment income - 902,996 (902,996) Benefit payments, including refunds (389,803) (389,803) - Ingham County Ingham County Medical Care Net changes 67,863 902,996 (835,133) Retiree Health Care Facility Health Care Plan Plan Balance at December 31, 2019 $ 5,693,657 $ 5,870,212 $ (176,555)
Measurement date used for the net OPEB liability December 31, 2019 December 31, 2019 The plan's fiduciary net position represents 103.10 percent of the total OPEB liability. Based on a comprehensive actuarial valuation as of December 31, 2017 December 31, 2018
69 70 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 15 - Other Postemployment Benefit Plan (Continued) Note 15 - Other Postemployment Benefit Plan (Continued) OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Discount Rate OPEB As shown below, the discount rate used to measure the total OPEB liability was determined after For the year ended December 31, 2019, the County recognized OPEB expense of $(340,588) from all considering a projection of the cash flows to determine whether the future contributions (made at the plans. current contribution rates) will be sufficient to allow the OPEB plans' fiduciary net position to make all projected future benefit payments of current active and inactive employees. At December 31, 2019, the County reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Ingham County Medical Ingham County Retiree Care Facility Health Care Deferred Deferred Health Care Plan Plan Outflows of Inflows of Resources Resources Assumed investment rate of return 6.0% 6.5%
Difference between expected and actual experience $ - $ (7,057,988) Are contributions expected to be sufficient to allow Changes in assumptions - (22,446,050) fiduciary net position to pay future benefits? Yes Yes Net difference between projected and actual earnings on OPEB plan investments - (717,749) Discount rate used to measure total OPEB liability 6.0% 6.5% Investment Rate of Return Total $ - $ (30,221,787) The long-term expected rate of return on OPEB plan investments was determined using a building-block Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB method in which best-estimate ranges of expected future real rates of return (expected returns, net of will be recognized in OPEB expense as follows: OPEB plan investment expense and inflation) are developed for each major asset class. These ranges C-37 Years Ending are combined to produce the long-term expected rate of return by weighting the expected future real rates December 31 Amount of return by the target asset allocation percentage and adding expected inflation. Best estimates of arithmetic real rates of return as of the December 31, 2019 measurement date for each major asset class 2020 $ (8,650,008) included in the OPEB plan's target asset allocation, as disclosed in the investment footnote, are 2021 (8,650,008) summarized in the following tables: 2022 (8,650,009) 2023 (3,698,714) Ingham County Retiree Health Care Plan 2024 (218,715) Thereafter (354,333) Long-term Expected Real Total $ (30,221,787) Asset Class Target Allocation Rate of Return
Actuarial Assumptions U.S. large-cap growth 12.00 % 4.80 % U.S. large-cap value 20.00 3.60 The total OPEB liability in each actuarial valuation was determined using the following actuarial U.S. mid-cap growth 1.00 2.20 assumptions applied to all periods included in the measurement: U.S. mid-cap value 1.00 8.10 U.S. small-cap growth 1.00 4.40 Ingham County Medical U.S. small-cap value 1.00 10.00 Ingham County Retiree Care Facility Health Care International equities 15.00 6.90 Health Care Plan Plan Emerging market equities 5.00 5.00 U.S. taxable core 44.00 1.50 Inflation 2.5% 2.5% Salary increases (including inflation) 3.75 - 14.75% 3.0 - 14.0% Ingham County Medical Care Facility Health Care Plan Investment rate of return (net of investment expenses) 6.0% 6.5% Long-term Healthcare cost trend rate 8.25%, decreasing 0.45% 8.25%, decreasing Expected Real per year to an ultimate 0.475% per year to an Asset Class Target Allocation Rate of Return rate of 3.75% for 2028 ultimate rate of 3.5% for and later 2028 and later Domestic equity 37.00 % 5.20 % Mortality rates RP-2014 Mortality Table RP-2014 Mortality Tables International equity 20.00 4.10 U.S. government or agency fixed income 43.00 3.00 Cash or cash equivalents - 0.30
71 72 Ingham County, Michigan Ingham County, Michigan Notes to Financial Statements Notes to Financial Statements December 31, 2019 December 31, 2019 Note 15 - Other Postemployment Benefit Plan (Continued) Note 16 - Pension and Other Employee Benefit Trust Funds Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following are condensed financial statements for the individual postemployment healthcare plans: The following presents the net OPEB liability of the County, calculated using the discount rate of 6.0 Other Employee percent for the OPEB Plan and 6.5 for the MCF Plan, as well as what the County's net OPEB liability Other Employee Benefits Trust - would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point Benefits Trust - Medical Care higher than the current rate: Ingham County Facility Total 1 Percentage Current 1 Percentage Statement of Net Position Point Decrease Discount Rate Point Increase Cash and investments $ 27,556,925 $ 6,026,971 $ 33,583,896 (OPEB Plan: (OPEB Plan: (OPEB Plan: 5.0% 6.0% 7.0% Statement of Changes in Net Position MCF Plan: MCF Plan: MCF Plan: Investment gain $ 3,933,669 $ 902,996 $ 4,836,665 5.5%) 6.5%) 7.5%) Contributions 6,863,719 389,803 7,253,522 Benefit payments (3,846,501) (389,803) (4,236,304) Net OPEB liability of the Ingham County Retiree Health Care Plan $ 91,283,271 $ 78,045,411 $ 67,024,556 Net change in net position $ 6,950,887 $ 902,996 $ 7,853,883 Net OPEB liability of the Ingham County Medical Care Facility Health Care Plan 559,156 (176,555) (785,266)
Total $ 91,842,427 $ 77,868,856 $ 66,239,290
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate C-38 The following presents the net OPEB liability of the County, calculated using the healthcare cost trend rate of 8.25 percent, as well as what the County's net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1 percentage point lower or 1 percentage point higher than the current rate: Current 1 Percentage Healthcare Cost 1 Percentage Point Decrease Trend Rate Point Increase (7.25%) (8.25%) (9.25%)
Net OPEB liability of the Ingham County Retiree Health Care Plan $ 68,173,870 $ 78,045,411 $ 89,612,334 Net OPEB liability of the Ingham County Medical Care Facility Health Care Plan (853,426) (176,555) 659,765
Total $ 67,320,444 $ 77,868,856 $ 90,272,099
OPEB Plan Fiduciary Net Position Detailed information about the plan’s fiduciary net position is available within this financial report. For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the plans' fiduciary net position and additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by the plans. The plans use the economic resources measurement focus and the full accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as contributions are due, pursuant to legal requirements. Benefit payments and refunds of employee contributions are recognized as expense when due and payable in accordance with the benefit terms.
73 74 Ingham County, Michigan Required Supplemental Information Budgetary Comparison Schedule General Fund Year Ended December 31, 2019
Variance with Amended Amended Original Budget Budget Actual Budget
Revenue Taxes $ 53,568,883 $ 53,568,883 $ 53,525,119 $ (43,764) Intergovernmental: Federal sources 6,318,726 6,597,712 6,861,281 263,569 State sources 8,000,055 8,000,055 9,015,315 1,015,260 Charges for services 10,027,238 10,027,238 9,311,110 (716,128) Required Supplemental Information Fines and forfeitures 366,500 366,500 375,424 8,924 Licenses and permits 440,517 440,517 385,395 (55,122) Interest and rentals 518,695 518,695 664,703 146,008 Other revenue 1,408,755 1,608,755 1,780,201 171,446 Total revenue 80,649,369 81,128,355 81,918,548 790,193 Expenditures Current services: C-39 General government 17,115,548 17,082,111 16,870,421 211,690 Judicial 17,879,876 17,107,953 16,466,767 641,186 Public safety 23,518,344 23,795,857 23,549,943 245,914 Public works 520,000 515,322 498,649 16,673 Social services 4,869,670 8,076,673 7,444,339 632,334 Community and economic development 988,089 988,089 949,877 38,212 Recreation and culture 2,686,363 2,857,552 2,739,244 118,308 Capital outlay - 2,773,779 1,583,960 1,189,819 Debt service - 4,678 4,678 - Total expenditures 67,577,890 73,202,014 70,107,878 3,094,136 Excess of Revenue Over Expenditures 13,071,479 7,926,341 11,810,670 3,884,329 Other Financing Sources (Uses) Transfers in 3,673,164 3,614,653 3,495,933 (118,720) Transfers out (18,811,417) (17,000,352) (16,138,825) 861,527 Sale of capital assets 35,000 35,000 695 (34,305) Total other financing uses (15,103,253) (13,350,699) (12,642,197) 708,502 Net Change in Fund Balance (2,031,774) (5,424,358) (831,527) 4,592,831 Fund Balance - Beginning of year 33,659,891 33,659,891 33,659,891 -
Fund Balance - End of year $ 31,628,117 $ 28,235,533 $ 32,828,364 $ 4,592,831
75 76 Ingham County, Michigan Ingham County, Michigan Required Supplemental Information Required Supplemental Information Budgetary Comparison Schedule - Major Special Revenue Funds Budgetary Comparison Schedule - Major Special Revenue Funds (Continued) Road Fund Health Fund Year Ended December 31, 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Actual Budget Original Budget Budget Actual Budget
Revenue Revenue Intergovernmental: Intergovernmental $ 8,957,098 $ 9,503,348 $ 8,745,540 $ (757,808) Federal sources $ 2,291,300 $ 2,291,300 $ 496,768 $ (1,794,532) Charges for services 5,330,153 5,330,153 6,121,091 790,938 State sources 19,417,504 19,417,504 21,350,049 1,932,545 Other revenue 100 100 96,014 95,914 Local sources 1,240,050 1,240,050 1,819,559 579,509 Charges for services 5,000 5,000 4,363 (637) Total revenue 14,287,351 14,833,601 14,962,645 129,044 Interest and rentals 45,000 45,000 132,315 87,315 Expenditures - Social services 20,964,213 21,540,963 20,480,991 1,059,972 Other revenue - - 9,040 9,040 Excess of Expenditures Over Revenue (6,676,862) (6,707,362) (5,518,346) 1,189,016 Total revenue 22,998,854 22,998,854 23,812,094 813,240 Other Financing Sources - Transfers in 6,351,862 6,382,362 6,698,549 316,187 Expenditures Current services - Public works 22,660,194 22,660,194 21,832,783 827,411 Net Change in Fund Balance (325,000) (325,000) 1,180,203 1,505,203 Capital outlay 414,509 852,009 874,698 (22,689) Fund Balance - Beginning of year 1,315,168 1,315,168 1,315,168 -
C-40 Total expenditures 23,074,703 23,512,203 22,707,481 804,722 Fund Balance - End of year $ 990,168 $ 990,168 $ 2,495,371 $ 1,505,203 Excess of Revenue (Under) Over Expenditures (75,849) (513,349) 1,104,613 1,617,962 Other Financing Sources - Sale of capital assets 5,000 28,500 - (28,500) Net Change in Fund Balance (70,849) (484,849) 1,104,613 1,589,462 Fund Balance - Beginning of year 7,261,625 7,261,625 7,261,625 -
Fund Balance - End of year $ 7,190,776 $ 6,776,776 $ 8,366,238 $ 1,589,462
77 78 Ingham County, Michigan Ingham County, Michigan Required Supplemental Information Required Supplemental Information Budgetary Comparison Schedule - Major Special Revenue Funds (Continued) Budgetary Comparison Schedule - Major Special Revenue Funds (Continued) Trails and Parks Millage Fund Emergency Telephone Fund Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Actual Budget Original Budget Budget Actual Budget
Revenue Revenue Taxes $ 3,705,762 $ 3,705,762 $ 3,714,443 $ 8,681 Taxes $ 6,315,861 $ 6,315,861 $ 6,312,603 $ (3,258) Intergovernmental 62,951 62,951 96,574 33,623 Intergovernmental 606,497 606,497 784,109 177,612 Interest and rentals 15,000 15,000 263,496 248,496 Charges for services 1,200,000 1,200,000 3,016,293 1,816,293 Interest and rentals 18,000 18,000 174,809 156,809 Total revenue 3,783,713 3,783,713 4,074,513 290,800 Other revenue 140,000 140,000 158,047 18,047 Expenditures Total revenue 8,280,358 8,280,358 10,445,861 2,165,503 Recreation and culture 473,084 15,704,313 4,767,152 10,937,161 Capital outlay - 975,435 466,612 508,823 Expenditures Current services - Public safety 8,047,234 8,590,276 8,322,479 267,797 Total expenditures 473,084 16,679,748 5,233,764 11,445,984 Capital outlay 125,123 424,258 23,993,460 (23,569,202) Excess of Revenue Over (Under) Total expenditures 8,172,357 9,014,534 32,315,939 (23,301,405) Expenditures 3,310,629 (12,896,035) (1,159,251) 11,736,784
C-41 Excess of Revenue Over (Under) Other Financing Sources (Uses) Expenditures 108,001 (734,176) (21,870,078) (21,135,902) Transfers in - 87,680 - (87,680) Transfers out (51,500) (51,500) (51,500) - Other Financing (Uses) Sources Transfers out (207,785) (217,881) (217,880) 1 Total other financing (uses) Issuance of debt - - 23,993,460 23,993,460 sources (51,500) 36,180 (51,500) (87,680) Total other financing (uses) Net Change in Fund Balance 3,259,129 (12,859,855) (1,210,751) 11,649,104 sources (207,785) (217,881) 23,775,580 23,993,461 9,712,965 9,712,965 9,712,965 - Fund Balance - Beginning of year Net Change in Fund Balance (99,784) (952,057) 1,905,502 2,857,559 Fund Balance - End of year $ 12,972,094 $ (3,146,890) $ 8,502,214 $ 11,649,104 Fund Balance - Beginning of year 4,063,286 4,063,286 4,063,286 -
Fund Balance - End of year $ 3,963,502 $ 3,111,229 $ 5,968,788 $ 2,857,559
79 80 Ingham County, Michigan Required Supplemental Information Schedule of Changes in the Net Pension Liability and Related Ratios Last Five Fiscal Years
2019 2018 2017 2016 2015
Total Pension Liability Service cost $ 7,353,561 $ 7,601,938 $ 7,964,327 $ 8,437,242 $ 8,340,133 Interest 35,901,843 34,952,140 34,121,845 32,007,463 31,321,551 Changes in benefit terms 5,140 - - (3,914) - Differences between expected and actual experience (479,516) (2,362,648) (6,140,673) 3,308,318 - Changes in assumptions - - - 20,196,487 - Benefit payments, including refunds (28,815,140) (27,572,697) (25,553,732) (24,211,818) (23,168,183)
Net Change in Total Pension Liability 13,965,888 12,618,733 10,391,767 39,733,778 16,493,501 Total Pension Liability - Beginning of year 459,503,818 446,885,085 436,493,318 396,759,540 380,266,039
Total Pension Liability - End of year $ 473,469,706 $ 459,503,818 $ 446,885,085 $ 436,493,318 $ 396,759,540
Plan Fiduciary Net Position Contributions - Employer $ 13,749,694 $ 12,696,005 $ 13,882,450 $ 13,630,987 $ 10,576,306 Contributions - Member 3,418,416 3,660,381 4,094,076 4,524,180 5,094,128 Net investment (loss) income (11,690,639) 36,725,788 29,316,820 (4,018,135) 16,511,548 Administrative expenses (586,552) (582,172) (579,114) (589,041) (606,136)
C-42 Benefit payments, including refunds (28,815,140) (27,572,697) (25,553,732) (24,211,818) (23,168,183) Other - - - 16,415 - [THIS PAGE INTENTIONALLY LEFT BLANK] Net Change in Plan Fiduciary Net Position (23,924,221) 24,927,305 21,160,500 (10,647,412) 8,407,663 Plan Fiduciary Net Position - Beginning of year 306,873,483 281,946,178 260,785,678 271,433,090 263,025,427
Plan Fiduciary Net Position - End of year $ 282,949,262 $ 306,873,483 $ 281,946,178 $ 260,785,678 $ 271,433,090
County's Net Pension Liability - Ending $ 190,520,444 $ 152,630,335 $ 164,938,907 $ 175,707,640 $ 125,326,450
Plan Fiduciary Net Position as a Percentage of Total Pension Liability 59.76 % %66.78 %63.09 %59.75 %68.41 Covered Payroll $ 69,595,869 $ 70,321,127 $ 73,389,107 $ 76,503,544 $ 71,575,329 County's Net Pension Liability as a Percentage of Covered Payroll 273.75 % 217.05 % %224.75 %229.67 %175.10
81 Ingham County, Michigan Required Supplemental Information Schedule of Pension Contributions MERS Pension Plan Last Ten Fiscal Years Years Ended December 31
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Statutorily required contribution $ 15,530,069 $ 13,749,694 $ 12,696,005 $ 12,981,273 $ 11,299,006 $ 10,997,025 $ 10,332,612 $ 9,569,879 $ 8,257,346 $ 8,029,505 Contributions in relation to the statutorily required contribution 15,530,069 13,749,694 12,696,005 12,981,273 11,299,006 10,997,025 10,332,612 9,569,879 8,257,346 8,029,505
Contribution Excess (Deficiency) $ - $-$-$-$-$-$-$-$-$-
County's Covered Payroll $ 69,595,869 $ 69,595,869 $ 70,321,127 $ 73,389,017 $ 76,503,544 $ 71,575,329 $ 67,352,760 $ 65,159,458 $ 66,775,601 $ 65,847,408
Contributions as a Percentage of Covered Payroll 22.31 % %19.76 %18.05 %17.69 %14.77 %15.36 %15.34 %14.69 %12.37 %12.19
Notes to Schedule of Pension Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of December 31, two years prior to the end of the fiscal year in which the contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age Amortization method Level percentage of payroll, closed Remaining amortization period 20 Asset valuation method 10-year smoothed Inflation 2.5 percent in the long term Salary increase 3.75 percent Investment rate of return 7.75 percent Retirement age 60 years Mortality 50 percent female/50 percent male RP-2014 Healthy Annuity Mortality Table (rates are multiplied by 105 percent), RP-2014 Mortality Table, and RP-2014 Juvenile Mortality Table. For disabled retirees, RP-2017 Disabled Retiree Mortality Table, 50 percent male and 50 percent female blend Other information None
82
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C-43 Ingham County, Michigan Ingham County, Michigan Required Supplemental Information Required Supplemental Information Schedule of Changes in the Net OPEB Liability and Related Ratios Schedule of Changes in the Net OPEB Liability and Related Ratios Ingham County Retiree Health Care Plan Ingham County Medical Care Facility Retiree Health Care Plan Last Three Fiscal Years Last Three Fiscal Years
2019 2018 2017 2019 2018 2017
Total OPEB Liability Total OPEB Liability Service cost $ 2,197,658 $ 4,092,294 $ 4,061,106 Service cost $ 85,381 $ 101,528 $ 109,749 Interest 6,081,669 5,363,271 5,316,191 Interest 383,151 384,715 373,574 Differences between expected and actual experience (1,030,999) (8,293,286) (758,443) Changes in benefit terms 1,260,150 (133,779) - Changes in assumptions* - (35,788,982) 6,908,358 Differences between expected and actual experience (1,168,538) (16,124) (17,153) Benefit payments, including refunds (3,816,635) (4,273,811) (3,398,946) Changes in assumptions (102,478) - - Miscellaneous (73,741) - - Benefit payments, including refunds (389,803) (311,411) (294,406) Net Change in Total OPEB Liability 3,357,952 (38,900,514) 12,128,266 Net Change in Total OPEB Liability 67,863 24,929 171,764 Total OPEB Liability - Beginning of year 102,244,384 141,144,898 129,016,632 Total OPEB Liability - Beginning of year 5,625,794 5,600,865 5,429,101 Total OPEB Liability - End of year $ 105,602,336 $ 102,244,384 $ 141,144,898 Total OPEB Liability - End of year $ 5,693,657 $ 5,625,794 $ 5,600,865
Plan Fiduciary Net Position Plan Fiduciary Net Position Contributions - Employer $ 6,833,853 $ 7,218,187 $ 6,260,400 Contributions - Employer $ 389,803 $ 137,451 $ 500,000 Net investment income (loss) 3,933,669 (1,146,974) 2,025,042 Net investment income (loss) 902,996 (279,044) 201,872
C-44 Administrative expenses - (116,182) - Administrative expenses - (5,238) - Benefit payments, including refunds (3,816,635) (4,273,811) (3,398,946) Benefit payments, including refunds (389,803) (311,411) (294,406) Net Change in Plan Fiduciary Net Position 6,950,887 1,681,220 4,886,496 Net Change in Plan Fiduciary Net Position 902,996 (458,242) 407,466 Plan Fiduciary Net Position - Beginning of year 20,606,038 18,924,818 14,038,322 Plan Fiduciary Net Position - Beginning of year 4,967,216 5,425,458 5,017,992 Plan Fiduciary Net Position - End of year $ 27,556,925 $ 20,606,038 $ 18,924,818 Plan Fiduciary Net Position - End of year $ 5,870,212 $ 4,967,216 $ 5,425,458
Net OPEB Liability - Ending $ 78,045,411 $ 81,638,346 $ 122,220,080 Net OPEB (Asset) Liability - Ending $ (176,555) $ 658,578 $ 175,407
Plan Fiduciary Net Position as a Percentage of Total Plan Fiduciary Net Position as a Percentage of Total OPEB Liability 26.09 % %20.15 %13.41 OPEB Liability 103.10 % %88.29 %96.87 Covered Payroll $ 68,002,582 $ 64,221,689 $ 63,631,808 Covered Payroll $ 14,842,271 $ 15,485,447 $ 14,253,950 Net OPEB Liability as a Percentage of Covered Payroll 114.77 % %127.12 %192.07 Net OPEB (Asset) Liability as a Percentage of Covered Payroll (1.19)% 4.25 % %1.23 *The single discount rate of 6 percent used to measure the total OPEB liability as of December 31, 2018 represents a change in assumption. The single discount rate used to measure the total OPEB liability as of Note - 2019 benefits increased due to certain premiums being reimbursed for current retirees and future retirees December 31, 2017 was 3.75 percent. The single discount rate changed due to a change in the County's funding hired before January 1, 2013. and the projection of plan cash flows performed by the County's actuary.
83 84 Ingham County, Michigan Required Supplemental Information Schedule of OPEB Contributions Ingham County Retiree Health Care Plan Last Ten Fiscal Years Years Ended December 31
2019 2018 2017 2016 2015 2014 2013 2012 2011* 2010*
Actuarially determined contribution $ 7,789,816 $ 7,949,795 $ 7,644,034 $ 8,152,054 $ 7,838,514 $ 7,673,086 $ 7,377,967 $ 7,593,999 $ 7,793,142 $ 7,739,348 Contributions in relation to the actuarially determined contribution 6,863,719 7,218,187 5,999,151 6,135,244 5,459,560 4,504,579 3,963,968 3,156,733 3,325,234 3,138,608
Contribution Deficiency $ (926,097) $ (731,608) $ (1,644,883) $ (2,016,810) $ (2,378,954) $ (3,168,507) $ (3,413,999) $ (4,437,266) $ (4,467,908) $ (4,600,740)
Covered Payroll $ 68,002,582 $ 64,221,689 $ 63,666,708 $ 61,335,303 $ 61,335,303 $ 59,057,174 $ 56,057,177 $ 56,414,726 $ 66,312,897 $ 64,737,245
Contributions as a Percentage of Covered Payroll 10.09 % %11.24 9.42 % 10.00 % 8.90 % %7.63 %7.07 %5.60 %5.01 %4.85
*The Ingham County Road Commission merged with the County in June 2012. The information for 2009 to 2011 includes the activity for the former road commission. For years 2009 to 2011, the Medical Care Facility Fund is included in the above.
Notes to Schedule of Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of December 31 of the prior year, which is an entire year prior to the beginning of the fiscal year in which the contributions are required.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal Amortization method Level percentage of pay, open Remaining amortization period 20 years, closed Asset valuation method Market value of assets Price inflation 2.50 percent Wage inflation 3.75 percent Healthcare cost trend rates Initial trend of 8.25 percent gradually decreasing to an ultimate trend rate of 3.75 percent in year 10 Salary increase 3.75 to 14.75 percent, including wage inflation Investment rate of return 6 percent, net of OPEB plan investment expenses for all non-Road Fund members 4 percent, net of OPEB plan investment expenses for all Road Fund members Retirement age Experience-based table of rates that are specific to the type of eligibility condition Mortality A 50 percent male/50 percent female blend of the RP-2014 Healthy An uitant Mortality Tables, with rates multiplied by 105 perc nt, the RP-2014 Employee Mortality Tables, and the RP-2014 Juvenile Mortality Tables. Aging factors Based on the 2013 Society of Actuaries study "Health Care Costs - From Birth to Death" Other information There were no benefit changes during the year.
85
Ingham County, Michigan Required Supplemental Information Schedule of OPEB Contributions Ingham County Medical Care Facility Retiree Health Care Plan Last Eight Fiscal Years Years Ended December 31
2019 2018 2017 2016 2015 2014 2013 2012
Actuarially determined contribution $ 151,373 $ 137,451 $ 145,672 $ 784,204 $ 801,299 $ 592,839 $ 603,625 $ 528,382 Contributions in relation to the actuarially determined contribution 389,803 137,451 500,000 5,242,214 225,441 231,941 214,661 220,074
Contribution Excess (Deficiency) $ 238,430 $-$ 354,328 $ 4,458,010 $ (575,858) $ (360,898) $ (388,964) $ (308,308)
Covered Payroll $ 14,842,271 $ 15,485,447 $ 14,253,950 $ 10,299,132 $ 10,299,132 $ 9,942,346 $ 9,942,346 $ 9,517,974 Contributions as a Percentage of Covered Payroll 2.63 % %0.89 %3.51 50.90 % 2.19 % %2.33 %2.16 %2.31
For years 2010 to 2011, the Medical Care Facility Fund is included in the overall county information provided on the prior page. Notes to Schedule of Contributions Actuarial valuation information relative to the determination of contributions: Valuation date Actuarially determined contribution rates are calculated as of December 31 of the prior year, two years prior to the end of the fiscal year in which the contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level dollar closed Remaining amortization period 21 years Asset valuation method Market value of assets Inflation 2.50 percent Healthcare cost trend rates Initial trend of 8.25 percent gradually decreasing to an ultimate trend of 3.50 percent in year 10 Salary increase 4.00 to 17.00 percent including inflation Investment rate of return 7.00 percent, net of OPEB plan investment expenses Retirement age Experience-based table of rates that are specific to the type of eligibility condition Mortality 50 percent female/50 percent male 1994 Group Annuity Mortality Table
86 C-45 Ingham County, Michigan Ingham County, Michigan Required Supplemental Information Required Supplemental Information Schedule of OPEB Investment Returns Schedule of OPEB Investment Returns Ingham County Retiree Health Care Plan Ingham County Medical Care Facility Retiree Health Care Plan Last Three Fiscal Years Last Three Fiscal Years Years Ended December 31 Years Ended December 31
2019 2018 2017 2019 2018 2017
Annual money-weighted rate of return - Net of investment Annual money-weighted rate of return - Net of investment expense 17.93 % (5.79)% 12.30 % expense 3.90 % (5.03)% 4.00 % C-46
87 88 Ingham County, Michigan Other Supplemental Information Budgetary Comparison Schedule - CMH Debt Service Fund Year Ended December 31, 2019
Variance with Amended Amended Original Budget Budget Actual Budget
Revenue Interest and rentals $ - $ - $ 1,626 $ 1,626 Other revenue 646,338 646,338 645,838 (500) Total revenue 646,338 646,338 647,464 1,126 Expenditures - Debt service 646,338 646,338 645,838 500 Other Supplemental Information Net Change in Fund Balance - - 1,626 1,626 Fund Balance - Beginning of year - - - -
Fund Balance - End of year $-$-$ 1,626 $ 1,626 C-47
89 90 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Nonmajor Governmental Funds Nonmajor Governmental Funds Fund Descriptions Fund Descriptions (Continued)
Special Revenue Funds Local Correction Training Family Counseling Service This fund is used to account for the collection of the County's jail booking fee, which is used to fund the training of local corrections officers. This fund is used to account for the operations of a family counseling service. The financing is provided by marriage license fees. Anti-Drug Abuse Grant Animal Control Millage This fund is used to account for the legal cost of drug forfeiture proceedings. Financing is provided through a local grant. This fund is used to account for the proceeds from a special millage to staff and fund the construction of a new animal control shelter. Community Corrections Homestead Property Tax Administration This fund is used to account for the County's state-funded community corrections program. This fund has a September 30 year end. This fund is used to account for the County's portion of interest and penalty collected due to the denial of the State's principal residence exemption. This revenue is used solely for the administration of the principal residence Law Library exemption. This fund is used to record revenue provided for the maintenance of a law library. Money for the operation of this Friend of the Court Service fund is provided by the statutory transfer of penal fines. This fund is used to account for mediation services regarding custody or visitation rights of parties involved in Criminal Justice Training divorce. The financing is provided by state and federal sources and is restricted for this purpose. This fund also This fund is used to account for the distribution of criminal justice training funds from the State of Michigan
C-48 receives an annual General Fund appropriation. This fund has a September 30 year end. pursuant to Public Acts 301 and 302 of 1982. These proceeds are used to train police officers. Register of Deeds (ROD) Automation Department of Human Services (DHS) Child Care The State of Michigan requires that a portion of all property recording fees be used to upgrade the technology associated with the Register of Deed's Office. This fund accounts for this activity. This fund is used to account for the operations necessary to provide care and supervision of children requiring out- of-home placement and to provide support and assistance to families in need. Financing is provided through a Hotel/Motel Accommodation Tax state grant and county appropriations. This fund has a September 30 year end. This fund is used to account for the collection and distribution of the 5 percent hotel room tax. State law limits the Social Welfare use of this revenue for development and promotion of convention and entertainment facilities. This fund is used to account for funds that are provided by county, state, and federal governments to administer Work Study Program the social welfare department and assist eligible recipients. This fund has a September 30 year end. This fund is used to account for the payment of wages and fringe benefits for students working for Ingham County, Family Court Child Care Michigan in an effort to supplement their education. Financing is provided through reimbursement from local educational institutions and General Fund appropriation. This fund is used to account for the foster care of children. Funding is provided by state and federal governments along with county appropriations. This fund has a September 30 year end. Farmland Preservation Community Development Block Grant This fund is used to account for the proceeds from a special millage to protect farmland and other open spaces. This fund is used to account for residential assistance under this federal program. This fund has a September 30 Zoo year end. This fund is used to account for the proceeds from a special millage for the operation, maintenance, and Cooperative Reimbursement Prosecuting Attorney improvement of Potter Park Zoo. This fund is used to account for grant monies that are used to provide child support services to eligible recipients. Concealed Pistol Funding is provided by state and federal sources and through the DHS Office of Child Support. This fund has a September 30 year end. In 2015, the State of Michigan passed a law that restricts how fees paid for a concealed pistol license can be used. This fund accounts for those fees. Homeland Security Grant Drug Law Enforcement Ingham County, Michigan acts as the fiduciary for a Homeland Security grant for many other governmental entities within Michigan. This fund accounts for this grant. This fund is used to account for property forfeited pursuant to the Enforcement of Controlled Substances, Public Act 135 of 1985. Financing is provided from the sale of forfeited property. These funds can be used to pay for the expense of seizure, court cost, maintenance and expense of sale, and drug enforcement activities.
91 92 Ingham County, Michigan Other Supplemental Information Nonmajor Governmental Funds Fund Descriptions (Continued)
Veterans' Support Millage This fund is used to account for the proceeds from the special veterans' tax levy that provides funding to assist low-income veterans. Juvenile Justice Millage This fund is used to account for a special property tax millage that provides funding for court-related activity for juveniles. Health Services Millage This fund is used to account for the proceeds from the health services millage, which provides funding for basic healthcare services to lower-income Ingham County, Michigan residents. County Transportation System This fund is used to account for the operations of a transportation service for elderly and disabled county residents. Financing is provided by a specific county tax levy. Indigent Defense This fund accounts for state revenue received by the County for the purposes of providing court-appointed C-49 defense for individuals who cannot afford their own legal defense. This fund has a September 30 year end. [THIS PAGE INTENTIONALLY LEFT BLANK] Justice Complex Millage This fund is used to account for the proceeds from the justice complex millage, which provides funding for a new justice complex. Debt Service Funds The County has five debt service funds that are used to account for individual bond issues ranging from the 911 Center to the Tobias-Linn water and sewer project. Capital Projects Funds The County has two capital projects funds that are used to account for the purchase or construction of major capital facilities or other capital projects/purchases that are not financed by other county funds.
93 Ingham County, Michigan Other Supplemental Information Combining Balance Sheet Nonmajor Governmental Funds December 31, 2019
Special Revenue Funds
Homestead Hotel/Motel Family Counseling Animal Control Property Tax Friend of the Accommodation Work Study Farmland Service Millage Administration Court Service ROD Automation Tax Program Preservation Zoo Concealed Pistol
Assets Pooled cash and investments $ 53,784 $ 868,541 $ 14,805 $ - $ 212,603 $ 555,387 $ - $ 3,081,645 $ 1,302,709 $ 244,403 Receivables: Property taxes receivable - 1,668,136 -----962,055 2,849,730 - Special assessments receivable ------Accounts receivable - Net -----190,766 ---- Accrued interest receivable - 3,058 93 - 765 - - 11,145 5,158 941 Other receivables ------Due from other governments - 17,377 - 662,451 - - - 10,138 29,701 - Inventory ------57,580 - Prepaids and other assets ------90,876 - Restricted cash - Restricted checking and savings accounts ------
$ 53,784 $ 2,557,112 $ 14,898 $ 662,451 $ 213,368 $ 746,153 $-$ 4,064,983 $ 4,335,754 $ 245,344 Total assets
Liabilities Accounts payable $ - $ - $ - $ 4,525 $ 30,520 $ 398,243 $ - $ 27,401 $ 62,754 $ 2,965 Due to other funds - - - 495,293 ------Accrued liabilities and other - - - 162,633 ----65,334 1,620 Provision for property tax refunds - 13,000 -----7,500 22,000 - Unearned revenue ------
Total liabilities - 13,000 - 662,451 30,520 398,243 - 34,901 150,088 4,585
Deferred Inflows of Resources Unavailable revenue - 4,486 -----2,617 7,663 - Property taxes levied for the following year - 1,800,000 - - - - - 1,050,000 3,075,000 -
Total deferred inflows of resources - 1,804,486 - - - - - 1,052,617 3,082,663 -
Total liabilities and deferred inflows of resources - 1,817,486 - 662,451 30,520 398,243 - 1,087,518 3,232,751 4,585
Fund Balances Nonspendable: Inventory ------57,580 - Prepaids ------90,876 - Restricted: Transportation and roads ------General administration - - 14,898 - 182,848 ----- Welfare ------Economic development ------2,977,465 - - Public safety ------240,759 Animal shelter - 739,626 ------Education 53,784 ------Recreation and culture -----347,910 - - 954,547 - Public health services ------Capital outlay ------Committed - Debt service ------
Total fund balances 53,784 739,626 14,898 - 182,848 347,910 - 2,977,465 1,103,003 240,759
Total liabilities, deferred inflows of resources, $ 53,784 $ 2,557,112 $ 14,898 $ 662,451 $ 213,368 $ 746,153 $-$ 4,064,983 $ 4,335,754 $ 245,344 and fund balances 94
Ingham County, Michigan Other Supplemental Information Combining Balance Sheet (Continued) Nonmajor Governmental Funds December 31, 2019
Special Revenue Funds
Community Drug Law Local Correction Anti-Drug Abuse Community Criminal Justice Family Court Child Development Enforcement Training Grant Corrections Law Library Training DHS Child Care Social Welfare Care Block Grant
Assets Pooled cash and investments $ 67,475 $ 119,866 $ 61,004 $ - $ 23,247 $ 28,097 $ - $ 3,350 $ - $ 72,905 Receivables: Property taxes receivable ------Special assessments receivable ------Accounts receivable - Net ------Accrued interest receivable - 472 ------Other receivables ------2,104,686 Due from other governments - - 13,301 77,916 - - 771,302 - 1,930,970 - Inventory ------Prepaids and other assets - 3,337 ------Restricted cash - Restricted checking and savings accounts ------
$ 67,475 $ 123,675 $ 74,305 $ 77,916 $ 23,247 $ 28,097 $ 771,302 $ 3,350 $ 1,930,970 $ 2,177,591 Total assets
Liabilities Accounts payable $ - $ 2,593 $ - $ 33,819 $ 2,207 $ - $ 100,462 $ 3,350 $ 377,947 $ - Due to other funds - - - 11,176 - - 670,840 - 1,324,569 - Accrued liabilities and other - - 2,307 5,306 ----226,502 - Provision for property tax refunds ------Unearned revenue ------1,952 72,905
Total liabilities - 2,593 2,307 50,301 2,207 - 771,302 3,350 1,930,970 72,905
Deferred Inflows of Resources Unavailable revenue ------2,104,686 Property taxes levied for the following year ------
Total deferred inflows of resources ------2,104,686
Total liabilities and deferred inflows of resources - 2,593 2,307 50,301 2,207 - 771,302 3,350 1,930,970 2,177,591
Fund Balances Nonspendable: Inventory ------Prepaids - 3,337 ------Restricted: Transportation and roads ------General administration ------Welfare ------Economic development ------Public safety 67,475 117,745 71,998 27,615 21,040 28,097 ---- Animal shelter ------Education ------Recreation and culture ------Public health services ------Capital outlay ------Committed - Debt service ------
Total fund balances 67,475 121,082 71,998 27,615 21,040 28,097 - - - -
Total liabilities, deferred inflows of resources, $ 67,475 $ 123,675 $ 74,305 $ 77,916 $ 23,247 $ 28,097 $ 771,302 $ 3,350 $ 1,930,970 $ 2,177,591 and fund balances 95 C-50 Ingham County, Michigan Other Supplemental Information Combining Balance Sheet (Continued) Nonmajor Governmental Funds December 31, 2019
Debt Service Special Revenue Funds Funds Cooperative Reimbursement County Prosecuting Homeland Veterans' Support Juvenile Justice Health Services Transportation Justice Complex Total Special Jail Renovation Attorney Security Grant Millage Millage Millage System Indigent Defense Millage Revenue Funds 2003
Assets Pooled cash and investments $ - $ 7,891 $ 20,074 $ 2,721,574 $ 1,587,138 $ 3,515,820 $ 2,276,673 $ 6,039,054 $ 22,878,045 $ 2,087 Receivables: Property taxes receivable - - 1,045 4,170,330 2,432,694 4,160,237 - 5,895,214 22,139,441 - Special assessments receivable ------Accounts receivable - Net ------190,766 - Accrued interest receivable - - 534 8,748 5,161 11,917 - - 47,992 - Other receivables ------2,104,686 - Due from other governments 104,875 475,026 2,383 43,462 25,354 43,462 - 64,307 4,272,025 - Inventory ------57,580 - Prepaids and other assets ------1,574 - 95,787 - Restricted cash - Restricted checking and savings accounts ------
$ 104,875 $ 482,917 $ 24,036 $ 6,944,114 $ 4,050,347 $ 7,731,436 $ 2,278,247 $ 11,998,575 $ 51,786,322 $ 2,087 Total assets
Liabilities Accounts payable $ 1,683 $ 231,690 $ - $ - $ 472,617 $ 1,177,980 $ 138,494 $ 85,423 $ 3,154,673 $ - Due to other funds 80,337 250,171 ------2,832,386 - Accrued liabilities and other 22,855 1,056 ----137,552 2,150 627,315 - Provision for property tax refunds - - 5,250 32,000 19,000 32,000 - 45,000 175,750 - Unearned revenue ------2,000,627 1,134 2,076,618 -
Total liabilities 104,875 482,917 5,250 32,000 491,617 1,209,980 2,276,673 133,707 8,866,742 -
Deferred Inflows of Resources Unavailable revenue - - 62 11,214 6,542 1,121 - - 2,138,391 - Property taxes levied for the following year - - - 4,500,000 2,625,000 4,500,000 - 6,377,000 23,927,000 -
Total deferred inflows of resources - - 62 4,511,214 2,631,542 4,501,121 - 6,377,000 26,065,391 -
Total liabilities and deferred inflows of resources 104,875 482,917 5,312 4,543,214 3,123,159 5,711,101 2,276,673 6,510,707 34,932,133 -
Fund Balances Nonspendable: Inventory ------57,580 - Prepaids ------1,574 - 95,787 - Restricted: Transportation and roads -----2,020,335 - - 2,020,335 - General administration ------197,746 - Welfare - - 18,724 2,400,900 ----2,419,624 - Economic development ------2,977,465 - Public safety ------574,729 - Animal shelter ------739,626 - Education ------53,784 - Recreation and culture ------1,302,457 - Public health services ----927,188 - - - 927,188 - Capital outlay ------5,487,868 5,487,868 - Committed - Debt service ------2,087
Total fund balances - - 18,724 2,400,900 927,188 2,020,335 1,574 5,487,868 16,854,189 2,087
Total liabilities, deferred inflows of resources, $ 104,875 $ 482,917 $ 24,036 $ 6,944,114 $ 4,050,347 $ 7,731,436 $ 2,278,247 $ 11,998,575 $ 51,786,322 $ 2,087 and fund balances 96
Ingham County, Michigan Other Supplemental Information Combining Balance Sheet (Continued) Nonmajor Governmental Funds December 31, 2019
Debt Service Funds Capital Project Funds
Grady Porter Tobias-Linn Animal Control Total Debt Service Total Capital Refunding 2010 911 Building Water/Sewer Shelter Funds CMH and Animal Jail Project Funds Total
Assets Pooled cash and investments $ 1,185 $ 1,818 $ 518 $ 1,540 $ 7,148 $ 187,379 $ 71,114 $ 258,493 $ 23,143,686 Receivables: Property taxes receivable ------22,139,441 Special assessments receivable - - 411,930 - 411,930 - - - 411,930 Accounts receivable - Net ------190,766 Accrued interest receivable ----- 511-51148,503 Other receivables ------2,104,686 Due from other governments ------4,272,025 Inventory ------57,580 Prepaids and other assets ------95,787 Restricted cash - Restricted checking and savings accounts - - - - - 37 - 37 37
$ 1,185 $ 1,818 $ 412,448 $ 1,540 $ 419,078 $ 187,927 $ 71,114 $ 259,041 $ 52,464,441 Total assets
Liabilities Accounts payable $ - $ 500 $ - $ - $ 500 $ 187,927 $ 71,114 $ 259,041 $ 3,414,214 Due to other funds ------2,832,386 Accrued liabilities and other ------627,315 Provision for property tax refunds ------175,750 Unearned revenue ------2,076,618
Total liabilities - 500 - - 500 187,927 71,114 259,041 9,126,283
Deferred Inflows of Resources Unavailable revenue - - 411,930 - 411,930 - - - 2,550,321 Property taxes levied for the following year ------23,927,000
Total deferred inflows of resources - - 411,930 - 411,930 - - - 26,477,321
Total liabilities and deferred inflows of resources - 500 411,930 - 412,430 187,927 71,114 259,041 35,603,604
Fund Balances Nonspendable: Inventory ------57,580 Prepaids ------95,787 Restricted: Transportation and roads ------2,020,335 General administration ------197,746 Welfare ------2,419,624 Economic development ------2,977,465 Public safety ------574,729 Animal shelter ------739,626 Education ------53,784 Recreation and culture ------1,302,457 Public health services ------927,188 Capital outlay ------5,487,868 Committed - Debt service 1,185 1,318 518 1,540 6,648 - - - 6,648
Total fund balances 1,185 1,318 518 1,540 6,648 - - - 16,860,837
Total liabilities, deferred inflows of resources, $ 1,185 $ 1,818 $ 412,448 $ 1,540 $ 419,078 $ 187,927 $ 71,114 $ 259,041 $ 52,464,441 and fund balances 97 C-51 Ingham County, Michigan Other Supplemental Information Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended December 31, 2019
Special Revenue Funds
Family Homestead Hotel/Motel Counseling Animal Control Property Tax Friend of the ROD Accommodation Work Study Farmland Concealed Service Millage Administration Court Service Automation Tax Program Preservation Zoo Pistol
Revenue Taxes $ - $ 1,783,966 $ - $ - $ - $ 3,248,125 $ - $ 1,043,729 $ 3,046,280 $ - Special assessments ------Intergovernmental - 46,351 - 4,021,750 - - 12,767 184,378 75,133 - Charges for services - - - 123,296 215,915 - - - 1,528,184 87,457 Interest and rentals - 33,191 16,258 - 3,593 - - 70,627 52,393 5,655 Other revenue 25,430 ------75,205 -
Total revenue 25,430 1,863,508 16,258 4,145,046 219,508 3,248,125 12,767 1,298,734 4,777,195 93,112
Expenditures Current services: General government - - - 5,736,948 79,966 ----- Public safety - 2,027 ------67,723 Public works ------Social services 8,530 -----14,902 - - - Community and economic development ------135,211 - - Recreation and culture -----2,923,312 - - 4,546,926 - Capital outlay - - - 18,230 - - - 668,819 - - Debt service: Principal ------Interest and fiscal charges ------
Total expenditures 8,530 2,027 - 5,755,178 79,966 2,923,312 14,902 804,030 4,546,926 67,723
Excess of Revenue Over (Under) Expenditures 16,900 1,861,481 16,258 (1,610,132) 139,542 324,813 (2,135) 494,704 230,269 25,389
Other Financing Sources (Uses) Transfers in - - - 1,590,132 - - 2,135 - - - Transfers out (15,000) (3,745,559) (21,963) - - (349,465) - - - (10,000)
Total other financing (uses) sources (15,000) (3,745,559) (21,963) 1,590,132 - (349,465) 2,135 - - (10,000)
Net Change in Fund Balances 1,900 (1,884,078) (5,705) (20,000) 139,542 (24,652) - 494,704 230,269 15,389
Fund Balances - Beginning of year 51,884 2,623,704 20,603 20,000 43,306 372,562 - 2,482,761 872,734 225,370
$ 53,784 $ 739,626 $ 14,898 $-$ 182,848 $ 347,910 $-$ 2,977,465 $ 1,103,003 $ 240,759 Fund Balances - End of year
98
Ingham County, Michigan Other Supplemental Information Combining Statement of Revenue, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds Year Ended December 31, 2019
Special Revenue Funds
Community Drug Law Local Correction Anti-Drug Community Criminal Justice Family Court Development Enforcement Training Abuse Grant Corrections Law Library Training DHS Child Care Social Welfare Child Care Block Grant
Revenue Taxes $ -$ -$ -$ -$ -$ -$ -$ -$ -$ - Special assessments ------Intergovernmental - - 41,844 291,656 - 13,488 1,920,337 - 5,577,636 44,154 Charges for services - 33,630 -----120,000 84,469 - Interest and rentals - 2,959 ------Other revenue - 2,073 259,336 - 17,000 - - - 10,320 -
Total revenue - 38,662 301,180 291,656 17,000 13,488 1,920,337 120,000 5,672,425 44,154
Expenditures Current services: General government ------Public safety 1,049 44,922 359,488 466,173 32,232 13,296 ---- Public works ------Social services ------3,654,844 142,443 11,547,296 44,154 Community and economic development ------Recreation and culture ------Capital outlay ------Debt service: Principal ------Interest and fiscal charges ------
Total expenditures 1,049 44,922 359,488 466,173 32,232 13,296 3,654,844 142,443 11,547,296 44,154
Excess of Revenue Over (Under) Expenditures (1,049) (6,260) (58,308) (174,517) (15,232) 192 (1,734,507) (22,443) (5,874,871) -
Other Financing Sources (Uses) Transfers in - - 130,306 196,753 - - 1,734,507 22,443 5,874,871 - Transfers out ------
Total other financing (uses) sources - - 130,306 196,753 - - 1,734,507 22,443 5,874,871 -
Net Change in Fund Balances (1,049) (6,260) 71,998 22,236 (15,232) 192 ----
Fund Balances - Beginning of year 68,524 127,342 - 5,379 36,272 27,905 - - - -
$ 67,475 $ 121,082 $ 71,998 $ 27,615 $ 21,040 $ 28,097 $-$-$-$- Fund Balances - End of year
99 C-52 Ingham County, Michigan Other Supplemental Information Combining Statement of Revenue, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds Year Ended December 31, 2019
Debt Service Special Revenue Funds Funds Cooperative Reimbursement County Justice Prosecuting Homeland Veterans' Juvenile Justice Health Services Transportation Indigent Complex Total Special Jail Renovation Attorney Security Grant Support Millage Millage Millage System Defense Millage Revenue Funds 2003
Revenue Taxes $ - $ - $ 238,145 $ 4,456,512 $ 2,595,243 $ 4,456,778 $ - $ 6,265,386 $ 27,134,164 $ - Special assessments ------Intergovernmental 689,403 1,158,028 6,049 109,943 64,133 109,943 2,557,467 72,968 16,997,428 - Charges for services ------2,192,951 - Interest and rentals - - 2,029 127,977 49,669 106,825 - 132,391 603,567 - Other revenue ------389,364 -
Total revenue 689,403 1,158,028 246,223 4,694,432 2,709,045 4,673,546 2,557,467 6,470,745 47,317,474 -
Expenditures Current services: General government ------5,816,914 - Public safety - 988,260 ------1,975,170 - Public works -----4,334,992 - - 4,334,992 - Social services 1,048,031 - 47 257,368 2,832,092 - 3,420,307 502,905 23,472,919 - Community and economic development ------135,211 - Recreation and culture ------7,470,238 - Capital outlay - 55,936 - 39,001 ----781,986 - Debt service: Principal ------160,000 Interest and fiscal charges ------34,688
Total expenditures 1,048,031 1,044,196 47 296,369 2,832,092 4,334,992 3,420,307 502,905 43,987,430 194,688
Excess of Revenue Over (Under) Expenditures (358,628) 113,832 246,176 4,398,063 (123,047) 338,554 (862,840) 5,967,840 3,330,044 (194,688)
Other Financing Sources (Uses) Transfers in 358,628 15,280 ----864,414 - 10,789,469 196,275 Transfers out - - (251,499) (4,347,859) - (131,568) - (498,655) (9,371,568) -
Total other financing (uses) sources 358,628 15,280 (251,499) (4,347,859) - (131,568) 864,414 (498,655) 1,417,901 196,275
Net Change in Fund Balances - 129,112 (5,323) 50,204 (123,047) 206,986 1,574 5,469,185 4,747,945 1,587
Fund Balances - Beginning of year - (129,112) 24,047 2,350,696 1,050,235 1,813,349 - 18,683 12,106,244 500
$-$-$ 18,724 $ 2,400,900 $ 927,188 $ 2,020,335 $ 1,574 $ 5,487,868 $ 16,854,189 $ 2,087 Fund Balances - End of year
100
Ingham County, Michigan Other Supplemental Information Combining Statement of Revenue, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Governmental Funds Year Ended December 31, 2019
Debt Service Funds Capital Project Funds
Grady Porter Tobias-Linn Animal Control Total Debt CMH and Total Capital Refunding 2010 911 Building Water/Sewer Shelter Service Funds Animal Jail Project Funds Total
Revenue Taxes $ -$ -$ -$ -$ -$ -$ - $ - $ 27,134,164 Special assessments - - 142,955 - 142,955 - - - 142,955 Intergovernmental - 51,828 - - 51,828 - - - 17,049,256 Charges for services ------2,192,951 Interest and rentals -----541-541604,108 Other revenue ------389,364
Total revenue - 51,828 142,955 - 194,783 541 - 541 47,512,798
Expenditures Current services: General government ------5,816,914 Public safety ------1,975,170 Public works ------4,334,992 Social services ------23,472,919 Community and economic development ------135,211 Recreation and culture ------7,470,238 Capital outlay -----2,684,289 498,655 3,182,944 3,964,930 Debt service: Principal 775,000 145,000 120,000 1,120,000 2,320,000 - - - 2,320,000 Interest and fiscal charges 69,958 123,890 23,355 163,660 415,551 - - - 415,551
Total expenditures 844,958 268,890 143,355 1,283,660 2,735,551 2,684,289 498,655 3,182,944 49,905,925
Excess of Revenue Over (Under) Expenditures (844,958) (217,062) (400) (1,283,660) (2,540,768) (2,683,748) (498,655) (3,182,403) (2,393,127)
Other Financing Sources (Uses) Transfers in 845,643 217,880 - 1,285,200 2,544,998 2,005,323 498,655 2,503,978 15,838,445 Transfers out - - - - - (79,892) - (79,892) (9,451,460)
Total other financing (uses) sources 845,643 217,880 - 1,285,200 2,544,998 1,925,431 498,655 2,424,086 6,386,985
Net Change in Fund Balances 685 818 (400) 1,540 4,230 (758,317) - (758,317) 3,993,858
Fund Balances - Beginning of year 500 500 918 - 2,418 758,317 - 758,317 12,866,979
$ 1,185 $ 1,318 $ 518 $ 1,540 $ 6,648 $-$-$-$ 16,860,837 Fund Balances - End of year
101 C-53 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds Family Counseling Service (Continued) Year Ended December 31, 2019 Animal Control Millage Year Ended December 31, 2019 Variance with Amended Amended Original Budget Budget Budget Variance with (Unaudited) (Unaudited) Actual (Unaudited) Amended Amended Original Budget Budget Budget Revenue - Other revenue $ 27,500 $ 27,500 $ 25,430 $ (2,070) (Unaudited) (Unaudited) Actual (Unaudited) Expenditures - Education 12,500 12,500 8,530 3,970 Revenue Taxes $ 1,776,102 $ 1,776,102 $ 1,783,966 $ 7,864 Excess of Revenue Over Expenditures 15,000 15,000 16,900 1,900 Intergovernmental 27,529 27,529 46,351 18,822 Other Financing Uses - Transfers out (15,000) (15,000) (15,000) - Interest - - 33,191 33,191 Net Change in Fund Balance - - 1,900 1,900 Total revenue 1,803,631 1,803,631 1,863,508 59,877 Fund Balance - Beginning of year 51,884 51,884 51,884 - Expenditures - Public safety - 220 2,027 (1,807) Excess of Revenue Over Expenditures 1,803,631 1,803,411 1,861,481 58,070 Fund Balance - End of year $ 51,884 $ 51,884 $ 53,784 $ 1,900 Other Financing Uses - Transfers out (487,830) (3,745,560) (3,745,559) 1
C-54 Net Change in Fund Balance 1,315,801 (1,942,149) (1,884,078) 58,071 Fund Balance - Beginning of year 2,623,704 2,623,704 2,623,704 -
Fund Balance - End of year $ 3,939,505 $ 681,555 $ 739,626 $ 58,071
102 103 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Homestead Property Tax Administration Friend of the Court Service Year Ended December 31, 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Interest $ 21,963 $ 21,963 $ 16,258 $ (5,705) Revenue Intergovernmental $ 4,075,731 $ 4,075,731 $ 4,021,750 $ (53,981) - - - - Expenditures Charges for services 167,400 167,400 123,296 (44,104) Excess of Revenue Over Expenditures 21,963 21,963 16,258 (5,705) Other revenue 100 100 - (100) Other Financing Uses - Transfers out (21,963) (21,963) (21,963) - Total revenue 4,243,231 4,243,231 4,145,046 (98,185) Net Change in Fund Balance - - (5,705) (5,705) Expenditures Current services - General government 5,963,669 5,963,669 5,736,948 226,721 Fund Balance - Beginning of year 20,603 20,603 20,603 - Capital outlay 70,000 90,000 18,230 71,770 Fund Balance - End of year $ 20,603 $ 20,603 $ 14,898 $ (5,705) Total expenditures 6,033,669 6,053,669 5,755,178 298,491
C-55 Excess of Expenditures Over Revenue (1,790,438) (1,810,438) (1,610,132) 200,306 Other Financing Sources - Transfers in 1,790,438 1,790,438 1,590,132 (200,306) Net Change in Fund Balance - (20,000) (20,000) - Fund Balance - Beginning of year 20,000 20,000 20,000 -
Fund Balance - End of year $ 20,000 $-$-$-
104 105 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Register of Deeds Automation Hotel/Motel Accommodation Tax Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue - Taxes $ 3,200,000 $ 3,240,121 $ 3,248,125 $ 8,004 Charges for services $ 265,000 $ 265,000 $ 215,915 $ (49,085) 2,900,000 2,923,313 2,923,312 1 Interest - - 3,593 3,593 Expenditures - Recreation and culture Excess of Revenue Over Expenditures 300,000 316,808 324,813 8,005 Total revenue 265,000 265,000 219,508 (45,492) Other Financing Uses - Transfers out (50,000) (316,808) (349,465) (32,657) Expenditures - General government 119,495 142,499 79,966 62,533 Net Change in Fund Balance 250,000 - (24,652) (24,652) Net Change in Fund Balance 145,505 122,501 139,542 17,041 Fund Balance - Beginning of year 372,562 372,562 372,562 - Fund Balance - Beginning of year 43,306 43,306 43,306 - Fund Balance - End of year $ 622,562 $ 372,562 $ 347,910 $ (24,652) Fund Balance - End of year $ 188,811 $ 165,807 $ 182,848 $ 17,041 C-56
106 107 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Work Study Program Farmland Preservation Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Intergovernmental $ 38,107 $ 38,107 $ 12,767 $ (25,340) Revenue Taxes $ 1,042,719 $ 1,042,719 $ 1,043,729 $ 1,010 56,211 56,211 14,902 41,309 Expenditures - Social services Intergovernmental 17,558 17,558 184,378 166,820 Excess of Expenditures Over Revenue (18,104) (18,104) (2,135) 15,969 Interest and rentals 9,500 9,500 70,627 61,127 Other Financing Sources - Transfers in 18,104 18,104 2,135 (15,969) Total revenue 1,069,777 1,069,777 1,298,734 228,957 Net Change in Fund Balance ---- Expenditures Current services - Community and economic Fund Balance - Beginning of year - - - - development 175,227 175,227 135,211 40,016 Capital outlay 828,912 828,912 668,819 160,093 Fund Balance - End of year $-$-$-$-
C-57 Total expenditures 1,004,139 1,004,139 804,030 200,109 Excess of Revenue Over Expenditures 65,638 65,638 494,704 429,066 Other Financing Uses - Transfers out (6,488) (6,488) - 6,488 Net Change in Fund Balance 59,150 59,150 494,704 435,554 Fund Balance - Beginning of year 2,482,761 2,482,761 2,482,761 -
Fund Balance - End of year $ 2,541,911 $ 2,541,911 $ 2,977,465 $ 435,554
108 109 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Zoo Concealed Pistol Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue Taxes $ 3,047,474 $ 3,047,474 $ 3,046,280 $ (1,194) Charges for services $ 80,000 $ 80,000 $ 87,457 $ 7,457 Intergovernmental 54,528 54,528 75,133 20,605 Interest and rentals - - 5,655 5,655 Charges for services 1,361,000 1,361,000 1,528,184 167,184 Interest and rentals 18,000 18,000 52,393 34,393 Total revenue 80,000 80,000 93,112 13,112 Other revenue 54,000 54,000 75,205 21,205 Expenditures - Current services - Public safety 70,000 145,000 67,723 77,277 Total revenue 4,535,002 4,535,002 4,777,195 242,193 Excess of Revenue Over (Under) Expenditures - Current services - Recreation Expenditures 10,000 (65,000) 25,389 90,389 and culture 4,320,243 4,552,155 4,546,926 5,229 Other Financing Uses - Transfers out (10,000) (10,000) (10,000) -
C-58 Net Change in Fund Balance 214,759 (17,153) 230,269 247,422 Net Change in Fund Balance - (75,000) 15,389 90,389 Fund Balance - Beginning of year 872,734 872,734 872,734 - Fund Balance - Beginning of year 225,370 225,370 225,370 - $ 1,087,493 $ 855,581 $ 1,103,003 $ 247,422 Fund Balance - End of year Fund Balance - End of year $ 225,370 $ 150,370 $ 240,759 $ 90,389
110 111 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Drug Law Enforcement Local Correction Training Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Other $ 1,000 $ 1,000 $ - $ (1,000) Revenue Charges for services $ 46,000 $ 46,000 $ 33,630 $ (12,370) 10,000 10,000 1,049 8,951 Expenditures - Public safety Interest and rentals 4,000 4,000 2,959 (1,041) Net Change in Fund Balance (9,000) (9,000) (1,049) 7,951 Other revenue - - 2,073 2,073 Fund Balance - Beginning of year 68,524 68,524 68,524 - Total revenue 50,000 50,000 38,662 (11,338) Expenditures - Public safety 50,000 50,000 44,922 5,078 Fund Balance - End of year $ 59,524 $ 59,524 $ 67,475 $ 7,951 Net Change in Fund Balance - - (6,260) (6,260) Fund Balance - Beginning of year 127,342 127,342 127,342 -
C-59 Fund Balance - End of year $ 127,342 $ 127,342 $ 121,082 $ (6,260)
112 113 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Anti-Drug Abuse Grant Community Corrections Year Ended December 31, 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue - Intergovernmental $ 300,175 $ 300,175 $ 291,656 $ (8,519) Intergovernmental $ 39,849 $ 39,849 $ 41,844 $ 1,995 467,821 467,821 466,173 1,648 Other revenue 229,583 229,583 259,336 29,753 Expenditures - Public safety Excess of Expenditures Over Revenue (167,646) (167,646) (174,517) (6,871) Total revenue 269,432 269,432 301,180 31,748 Other Financing Sources - Transfers in 140,236 140,236 196,753 56,517 Expenditures - Public safety 372,028 372,028 359,488 12,540 Net Change in Fund Balance (27,410) (27,410) 22,236 49,646 Excess of Expenditures Over Revenue (102,596) (102,596) (58,308) 44,288 Fund Balance - Beginning of year 5,379 5,379 5,379 - Other Financing Sources (Uses) Transfers in 102,596 102,596 130,306 27,710 Fund Balance - End of year $ (22,031) $ (22,031) $ 27,615 $ 49,646 Transfers out (23,804) (23,804) - 23,804 C-60 Total other financing sources 78,792 78,792 130,306 51,514 Net Change in Fund Balance (23,804) (23,804) 71,998 95,802 Fund Balance - Beginning of year - - - -
Fund Balance - End of year $ (23,804) $ (23,804) $ 71,998 $ 95,802
114 115 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Law Library DHS Child Care Year Ended December 31, 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Other $ 17,000 $ 32,233 $ 17,000 $ (15,233) Revenue - Intergovernmental $ 1,930,416 $ 1,930,416 $ 1,920,337 $ (10,079) Expenditures - Public safety 17,000 32,233 32,232 1 Expenditures - Social services 3,860,832 3,860,832 3,654,844 205,988 Net Change in Fund Balance - - (15,232) (15,232) Excess of Expenditures Over Revenue (1,930,416) (1,930,416) (1,734,507) 195,909 Fund Balance - Beginning of year 36,272 36,272 36,272 - Other Financing Sources - Transfers in 1,930,416 1,930,416 1,734,507 (195,909)
Fund Balance - End of year $ 36,272 $ 36,272 $ 21,040 $ (15,232) Net Change in Fund Balance ---- Fund Balance - Beginning of year - - - -
Fund Balance - End of year $-$-$-$- C-61
116 117 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Social Welfare Family Court Child Care Year Ended , 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Charges for services $ - $ - $ 120,000 $ 120,000 Revenue Intergovernmental $ 6,303,460 $ 6,248,460 $ 5,577,636 $ (670,824) 71,812 71,812 142,443 (70,631) Expenditures - Social services Charges for services 43,750 43,750 84,469 40,719 Excess of Expenditures Over Revenue (71,812) (71,812) (22,443) 49,369 Other revenue - - 10,320 10,320 Other Financing Sources - Transfers in 71,812 71,812 22,443 (49,369) Total revenue 6,347,210 6,292,210 5,672,425 (619,785) Net Change in Fund Balance ---- Expenditures - Social services 13,202,407 13,086,407 11,547,296 1,539,111 Fund Balance - Beginning of year - - - - Excess of Expenditures Over Revenue (6,855,197) (6,794,197) (5,874,871) 919,326 Other Financing Sources - Transfers in 6,855,197 6,794,197 5,874,871 (919,326) Fund Balance - End of year $-$-$-$-
C-62 Net Change in Fund Balance ---- Fund Balance - Beginning of year - - - -
Fund Balance - End of year $-$-$-$-
118 119 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Community Development Block Grant Cooperative Reimbursement Prosecuting Attorney Year Ended , 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Intergovernmental $ - $ 256,880 $ 44,154 $ (212,726) Revenue - Intergovernmental $ 785,556 $ 785,556 $ 689,403 $ (96,153) Expenditures - Social services - 256,880 44,154 212,726 Expenditures Current services - Social services 1,194,657 1,188,157 1,048,031 140,126 Net Change in Fund Balance ---- Capital outlay - 6,500 - 6,500 Fund Balance - Beginning of year - - - - Total expenditures 1,194,657 1,194,657 1,048,031 146,626 $-$-$-$- Fund Balance - End of year Excess of Expenditures Over Revenue (409,101) (409,101) (358,628) 50,473 Other Financing Sources - Transfers in 409,101 409,101 358,628 (50,473) Net Change in Fund Balance ---- C-63 Fund Balance - Beginning of year - - - -
Fund Balance - End of year $-$-$-$-
120 121 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Homeland Security Grant Veterans' Support Millage Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue - Intergovernmental $ 1,019,320 $ 1,157,320 $ 1,158,028 $ 708 Revenue Taxes $ 251,499 $ 251,499 $ 238,145 $ (13,354) Expenditures Intergovernmental - - 6,049 6,049 Current services - Public safety 989,320 1,127,320 988,260 139,060 Interest and rentals 200 200 2,029 1,829 Capital outlay 30,000 30,000 55,936 (25,936) Total revenue 251,699 251,699 246,223 (5,476) Total expenditures 1,019,320 1,157,320 1,044,196 113,124 Expenditures - Social services 200 200 47 153 Excess of Revenue Over Expenditures - - 113,832 113,832 Excess of Revenue Over Expenditures 251,499 251,499 246,176 (5,323) Other Financing Sources - Transfers in - 7,389 15,280 7,891 Other Financing Uses - Transfers out (251,499) (251,499) (251,499) - Net Change in Fund Balance - 7,389 129,112 121,723
C-64 Net Change in Fund Balance - - (5,323) (5,323) Fund Balance - Beginning of year (129,112) (129,112) (129,112) - Fund Balance - Beginning of year 24,047 24,047 24,047 - Fund Balance - End of year $ (129,112) $ (121,723) $-$ 121,723 Fund Balance - End of year $ 24,047 $ 24,047 $ 18,724 $ (5,323)
122 123 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Juvenile Justice Millage Health Services Millage Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue Taxes $ 4,467,855 $ 4,467,855 $ 4,456,512 $ (11,343) Taxes $ 2,607,693 $ 2,607,693 $ 2,595,243 $ (12,450) Intergovernmental 75,821 75,821 109,943 34,122 Intergovernmental 44,146 44,146 64,133 19,987 Interest and rentals 32,600 32,600 127,977 95,377 Interest and rentals 8,000 8,000 49,669 41,669 Total revenue 4,576,276 4,576,276 4,694,432 118,156 Total revenue 2,659,839 2,659,839 2,709,045 49,206 Expenditures Expenditures - Social services 2,332,269 2,832,269 2,832,092 177 Current services - Social services 227,976 227,976 257,368 (29,392) Capital outlay - 42,000 39,001 2,999 Net Change in Fund Balance 327,570 (172,430) (123,047) 49,383 Fund Balance - Beginning of year 1,050,235 1,050,235 1,050,235 - Total expenditures 227,976 269,976 296,369 (26,393)
C-65 $ 1,377,805 $ 877,805 $ 927,188 $ 49,383 Excess of Revenue Over Expenditures 4,348,300 4,306,300 4,398,063 91,763 Fund Balance - End of year Other Financing Uses - Transfers out (4,583,977) (4,583,977) (4,347,859) 236,118 Net Change in Fund Balance (235,677) (277,677) 50,204 327,881 Fund Balance - Beginning of year 2,350,696 2,350,696 2,350,696 -
Fund Balance - End of year $ 2,115,019 $ 2,073,019 $ 2,400,900 $ 327,881
124 125 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) County Transportation System Indigent Defense Year Ended December 31, 2019 Year Ended , 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Actual Budget (Unaudited) (Unaudited) Actual (Unaudited) Revenue - Intergovernmental $ - $ 4,558,185 $ 2,557,467 $ (2,000,718) Revenue - 5,422,599 3,420,307 2,002,292 Taxes $ 4,455,955 $ 4,455,955 $ 4,456,778 $ 823 Expenditures - Social services Intergovernmental 75,621 75,621 109,943 34,322 Excess of Expenditures Over Revenue - (864,414) (862,840) 1,574 Interest and rentals 10,000 10,000 106,825 96,825 Other Financing Sources - Transfers in - 864,414 864,414 - Total revenue 4,541,576 4,541,576 4,673,546 131,970 Net Change in Fund Balances - - 1,574 1,574 Expenditures - Public works 4,410,008 4,410,008 4,334,992 75,016 Fund Balances - Beginning of year - - - - Excess of Revenue Over Expenditures 131,568 131,568 338,554 206,986 Fund Balances - End of year $-$-$ 1,574 $ 1,574 Other Financing Uses - Transfers out (131,568) (131,568) (131,568) -
C-66 Net Change in Fund Balance - - 206,986 206,986 Fund Balance - Beginning of year 1,813,349 1,813,349 1,813,349 -
Fund Balance - End of year $ 1,813,349 $ 1,813,349 $ 2,020,335 $ 206,986
126 127 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Justice Complex Millage Jail Renovation 2003 Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue $-$-$-$- Taxes $ - $ 6,256,227 $ 6,265,386 $ 9,159 Intergovernmental - - 72,968 72,968 Expenditures Debt service: Interest and rentals - - 132,391 132,391 Principal 160,000 160,000 160,000 - Total revenue - 6,256,227 6,470,745 214,518 Interest and fiscal charges 26,775 27,375 34,688 (7,313) Expenditures - Current services - Social Total expenditures 186,775 187,375 194,688 (7,313) services - 897,670 502,905 394,765 Excess of Expenditures Over Revenue (186,775) (187,375) (194,688) (7,313) Excess of Revenue Over Expenditures - 5,358,557 5,967,840 609,283 Other Financing Sources - Transfers in 186,775 187,375 196,275 8,900 Other Financing Uses - Transfers out - (472,081) (498,655) (26,574)
C-67 Net Change in Fund Balance - - 1,587 1,587 Net Change in Fund Balance - 4,886,476 5,469,185 582,709 Fund Balance - Beginning of year 500 500 500 - Fund Balance - Beginning of year 18,683 18,683 18,683 - Fund Balance - End of year $ 500 $ 500 $ 2,087 $ 1,587 Fund Balance - End of year $ 18,683 $ 4,905,159 $ 5,487,868 $ 582,709
128 129 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Grady Porter Refunding 2010 911 Building Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue $-$-$-$- Revenue - Intergovernmental $ 60,000 $ 60,000 $ 51,828 $ (8,172) Expenditures Expenditures Debt service: Debt service: Principal 775,000 775,000 775,000 - Principal 145,000 145,000 145,000 - Interest and fiscal charges 68,115 68,115 69,958 (1,843) Interest and fiscal charges 122,785 123,535 123,890 (355) Total expenditures 843,115 843,115 844,958 (1,843) Total expenditures 267,785 268,535 268,890 (355) Excess of Expenditures Over Revenue (843,115) (843,115) (844,958) (1,843) Excess of Expenditures Over Revenue (207,785) (208,535) (217,062) (8,527) Other Financing Sources - Transfers in 843,115 843,115 845,643 2,528 Other Financing Sources - Transfers in 207,785 208,535 217,880 9,345
C-68 Net Change in Fund Balance - - 685 685 Net Change in Fund Balance - - 818 818 Fund Balance - Beginning of year 500 500 500 - Fund Balance - Beginning of year 500 500 500 -
Fund Balance - End of year $ 500 $ 500 $ 1,185 $ 685 Fund Balance - End of year $ 500 $ 500 $ 1,318 $ 818
130 131 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Budgetary Comparison Schedules - Nonmajor Governmental Funds Budgetary Comparison Schedules - Nonmajor Governmental Funds (Continued) (Continued) Tobias-Linn Water/Sewer Animal Control Shelter Year Ended December 31, 2019 Year Ended December 31, 2019
Variance with Variance with Amended Amended Amended Amended Original Budget Budget Budget Original Budget Budget Budget (Unaudited) (Unaudited) Actual (Unaudited) (Unaudited) (Unaudited) Actual (Unaudited)
Revenue Revenue $-$-$-$- Special assessments $ 114,655 $ 114,655 $ 142,955 $ 28,300 Interest and rentals 51 51 - (51) Expenditures Debt service: Total revenue 114,706 114,706 142,955 28,249 Principal - 1,120,000 1,120,000 - Interest and fiscal charges - 163,500 163,660 (160) Expenditures Debt service: Total expenditures - 1,283,500 1,283,660 (160) Principal 65,000 65,000 120,000 (55,000) Interest and fiscal charges 49,706 49,706 23,355 26,351 Excess of Expenditures Over Revenue - (1,283,500) (1,283,660) (160) Other Financing Sources - Transfers in - 1,283,500 1,285,200 1,700 Total expenditures 114,706 114,706 143,355 (28,649)
C-69 Net Change in Fund Balance - - 1,540 1,540 Net Change in Fund Balance - - (400) (400) Fund Balance - Beginning of year - - - - Fund Balance - Beginning of year 918 918 918 - Fund Balance - End of year $-$-$ 1,540 $ 1,540 Fund Balance - End of year $ 918 $ 918 $ 518 $ (400)
132 133 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Nonmajor Enterprise Funds Combining Statement of Net Position Fund Descriptions Nonmajor Enterprise Funds December 31, 2019 Restricted Tax Sale Proceeds This fund is used to account for the administration of the delinquent tax properties through forfeiture, foreclosure, Restricted Tax Total Nonmajor and sale proceeds. Sale Proceeds Fair Board Inmate Stores Enterprise Funds Assets Fair Board Current assets: Pooled cash and investments $ 2,131,588 $ 334,324 $ 550,746 $ 3,016,658 This fund is used to account for the Ingham County Fair and the operation and maintenance of the fair grounds. Receivables: Funding is provided by user charges. In addition, hotel/motel tax revenue is available to be used exclusively for Accrued interest receivable 7,902 16 - 7,918 repair, maintenance, and construction at the fairgrounds. Other receivables - - 12,985 12,985 Inmate Stores Total current assets 2,139,490 334,340 563,731 3,037,561 This fund is used to account for the operations of the store for the Ingham County, Michigan jail inmate. Funding is Noncurrent assets: Restricted cash - 401,000 - 401,000 provided through the sale of merchandise. Capital assets: Assets not subject to depreciation - 5,080 - 5,080 Assets subject to depreciation - Net - 1,577,072 119,192 1,696,264
Total noncurrent assets - 1,983,152 119,192 2,102,344
Total assets 2,139,490 2,317,492 682,923 5,139,905
Deferred Outflows of Resources - Deferred pension costs - 81,151 16,623 97,774 C-70 Liabilities Current liabilities: Accounts payable 770 229,450 29,745 259,965 Refundable deposits and bonds - 13,481 - 13,481 Accrued liabilities and other - 5,781 1,538 7,319 Compensated absences - 4,290 6,370 10,660
Total current liabilities 770 253,002 37,653 291,425
Noncurrent liabilities: Compensated absences - Net of current portion - 2,310 3,430 5,740 Net pension liability - 433,131 88,720 521,851 Net OPEB liability - 309,790 90,480 400,270
Total noncurrent liabilities - 745,231 182,630 927,861
Total liabilities 770 998,233 220,283 1,219,286
Deferred Inflows of Resources Deferred pension cost reductions - 7,660 1,569 9,229 Deferred OPEB cost reductions - 115,375 33,697 149,072
Total deferred inflows of resources - 123,035 35,266 158,301
Net Position Net investment in capital assets - 1,582,152 119,192 1,701,344 Restricted: Police activity - - 524,340 524,340 Education - 17,810 - 17,810 Unrestricted 2,138,720 (322,587) (199,535) 1,616,598
$ 2,138,720 $ 1,277,375 $ 443,997 $ 3,860,092 Total net position
134 135 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Combining Statement of Revenue, Expenses, and Changes in Net Position Combining Statement of Cash Flows Nonmajor Enterprise Funds Nonmajor Enterprise Funds Year Ended December 31, 2019 Year Ended December 31, 2019
Restricted Tax Total Nonmajor Restricted Tax Total Nonmajor Sale Proceeds Fair Board Inmate Stores Enterprise Funds Sale Proceeds Fair Board Inmate Stores Enterprise Funds
Operating Revenue Cash Flows from Operating Activities Charges for services $ - $ 798,616 $ 88,269 $ 886,885 Receipts from customers $ 700,047 $ 798,616 $ 502,319 $ 2,000,982 Other sales 699,524 - 419,248 1,118,772 Payments on interfund services and reimbursements - - (14,271) (14,271) Payments to suppliers - (370,451) (429,888) (800,339) Total operating revenue 699,524 798,616 507,517 2,005,657 Payments to employees and fringes - (338,484) (74,923) (413,407)
Operating Expenses Net cash and cash equivalents provided by Administrative costs 247 321,395 45,922 367,564 (used in) operating activities 700,047 89,681 (16,763) 772,965 Operating expenses - 529,584 419,776 949,360 Depreciation - 131,369 35,316 166,685 Cash Flows from Noncapital Financing Activities Transfers from other funds - 403,057 - 403,057 Total operating expenses 247 982,348 501,014 1,483,609 Transfers to other funds - - (74,367) (74,367)
Operating Income (Loss) 699,277 (183,732) 6,503 522,048 Net cash and cash equivalents provided by (used in) noncapital financing activities - 403,057 (74,367) 328,690 Nonoperating Revenue - Investment income 41,974 263 - 42,237 Cash Flows from Financing Activities Income (Loss) - Before capital contributions 741,251 (183,469) 6,503 564,285 Receipt of capital grants - - 2,243 2,243 Capital Contributions - Capital grants - - 2,243 2,243 Purchase of capital assets - (245,295) (47,183) (292,478)
C-71 Income (Loss) - Before transfers 741,251 (183,469) 8,746 566,528 Net cash and cash equivalents used in capital and related financing activities - (245,295) (44,940) (290,235) Transfers In - 403,057 - 403,057 Cash Flows Provided by Investing Activities - Interest Transfers Out - - (74,367) (74,367) received on investments 40,847 263 - 41,110
Change in Net Position 741,251 219,588 (65,621) 895,218 Net Increase (Decrease) in Cash and Cash Equivalents 740,894 247,706 (136,070) 852,530
Net Position - Beginning of year 1,397,469 1,057,787 509,618 2,964,874 Cash and Cash Equivalents - Beginning of year 1,390,694 487,618 686,816 2,565,128 $ 2,138,720 $ 1,277,375 $ 443,997 $ 3,860,092 Net Position - End of year Cash and Cash Equivalents - End of year $ 2,131,588 $ 735,324 $ 550,746 $ 3,417,658
Classification of Cash and Cash Equivalents Cash and investments $ 2,131,588 $ 334,324 $ 550,746 $ 3,016,658 Restricted cash - 401,000 - 401,000
$ 2,131,588 $ 735,324 $ 550,746 $ 3,417,658 Total cash and cash equivalents
Reconciliation of Operating Income (Loss) to Net Cash from Operating Activities Operating income (loss) $ 699,277 $ (183,732) $ 6,503 $ 522,048 Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation and amortization - 131,369 35,316 166,685 Changes in assets and liabilities: Receivables - - (5,198) (5,198) Due to and from other funds - - (14,271) (14,271) Prepaid and other assets - 235 - 235 Accounts payable 770 159,858 (10,112) 150,516 Net pension or OPEB liability - 65,154 12,101 77,255 Deferrals related to pension or OPEB - (71,196) (16,274) (87,470) Accrued and other liabilities - (12,007) (24,828) (36,835)
Total adjustments 770 273,413 (23,266) 250,917
Net cash and cash equivalents provided by $ 700,047 $ 89,681 $ (16,763) $ 772,965 (used in) operating activities
136 137 Ingham County, Michigan Other Supplemental Information Internal Service Funds Fund Descriptions
Building Authority Operations This fund is used to record the rent collections and operating cost of the County's Building Authority facilities. Innovation and Technology This fund is used to account for the operations of the County's innovation and technology department. Funding is provided through departmental user charges. Intergovernmental Service This fund is used to account for the operations of the County's print shop, central stores, courier services, and internal telephones. Funding is provided through user service, fees, and sales to internal customers. Office Equipment Pool This fund is used to account for the purchase of office equipment in most governmental fund types. Funding is provided by user charges. Insurance This fund is used to account for the liability insurance coverage to the County. Funding for the operation of this fund is supplied by charges to various funds involved in the self-insurance fund. C-72 Utilities Revolving [THIS PAGE INTENTIONALLY LEFT BLANK] This fund is used to account for the budgeting and payment of the utilities services throughout the County. Funding for the operation of this fund is provided by charges to the various funds involved. Workers' Compensation This fund is used to record workers' compensation expenses and premium coverage for the excess insurance coverage. Funding for this fund is provided by departmental user contributions. Employee Benefits This fund is used to account for health, dental, life, pension, and unemployment benefits for the County's employees and retirees. Funding for this fund is provided by revenue collected from user departments.
138 Ingham County, Michigan Other Supplemental Information Combining Statement of Net Position Internal Service Funds December 31, 2019
Building Authority Innovation and Intergovernmental Office Equipment Workers' Total Internal Operations Technology Service Pool Insurance Utilities Revolving Compensation Employee Benefits Service Funds
Assets Current assets: Pooled cash and investments $ 7,042 $ 1,168,116 $ 126,196 $ 2,026,980 $ 581,800 $ 141,878 $ 452,468 $ 7,095,778 $ 11,600,258 Receivables: Accounts receivable - Net 701,485 29,803 - - - - - 72,181 803,469 Accrued interest receivable 1,176 3,366 - - 1,996 - 1,870 - 8,408 Due from other governments 170,108 ------170,108 Due from component units - 24,627 ------24,627 Inventory - - 10,000 - ----10,000 Prepaids and other assets - 264,062 - - 287,265 - - - 551,327
Total current assets 879,811 1,489,974 136,196 2,026,980 871,061 141,878 454,338 7,167,959 13,168,197
Noncurrent assets: Restricted cash ---- 957,204 - 2,227,500 240,280 3,424,984 Capital assets: Assets not subject to depreciation 5,200 637,310 - 709,242 ----1,351,752 Assets subject to depreciation - Net 649,243 1,415,319 96,219 584,964 ----2,745,745 Other noncurrent assets 217,253 ------217,253
C-73 Total noncurrent assets 871,696 2,052,629 96,219 1,294,206 957,204 - 2,227,500 240,280 7,739,734
Total assets 1,751,507 3,542,603 232,415 3,321,186 1,828,265 141,878 2,681,838 7,408,239 20,907,931
Deferred Outflows of Resources - Deferred pension costs 213,008 647,030 30,644 - - - - 82,213 972,895
Liabilities Current liabilities: Accounts payable 126,728 57,733 12,704 330 3,523 103,613 31,161 2,230,719 2,566,511 Accrued liabilities and other 16,275 55,293 2,735 - - - - 24,574 98,877 Compensated absences 44,200 62,400 6,760 - - - - 5,005 118,365 Provision for claims - - - - 835,000 - 450,000 - 1,285,000
Total current liabilities 187,203 175,426 22,199 330 838,523 103,613 481,161 2,260,298 4,068,753
Noncurrent liabilities: Advances from other funds 61,463 ------61,463 Compensated absences - Net of current portion 23,800 33,600 3,640 - - - - 2,695 63,735 Net pension liability 1,136,896 3,453,418 163,559 - - - - 438,796 5,192,669 Net OPEB liability 937,025 1,858,473 180,959 - - - - 309,199 3,285,656
Total noncurrent liabilities 2,159,184 5,345,491 348,158 - - - - 750,690 8,603,523
Total liabilities 2,346,387 5,520,917 370,357 330 838,523 103,613 481,161 3,010,988 12,672,276
Deferred Inflows of Resources Deferred pension cost reductions 20,106 61,072 2,892 - - - - 7,768 91,838 Deferred OPEB cost reductions 348,977 692,150 67,394 - - - - 115,155 1,223,676
Total deferred inflows of resources 369,083 753,222 70,286 - - - - 122,923 1,315,514
Net Position Net investment in capital assets 654,443 2,052,629 96,219 1,294,206 ----4,097,497 Unrestricted (1,405,398) (4,137,135) (273,803) 2,026,650 989,742 38,265 2,200,677 4,356,541 3,795,539
$ (750,955) $ (2,084,506) $ (177,584) $ 3,320,856 $ 989,742 $ 38,265 $ 2,200,677 $ 4,356,541 $ 7,893,036 Total net position (deficit)
139 140 Ingham County, Michigan Other Supplemental Information Combining Statement of Revenue, Expenses, and Changes in Net Position Internal Service Funds Year Ended December 31, 2019
Building Authority Innovation and Intergovernmental Office Equipment Workers' Total Internal Operations Technology Service Pool Insurance Utilities Revolving Compensation Employee Benefits Service Funds
Operating Revenue Charges for services $ 3,664,623 $ 5,286,789 $ 251,553 $ 368,628 $ 822,226 $ 578,560 $ - $ 35,318,088 $ 46,290,467 Other - 23,864 - - 911,413 - - 2,106 937,383
Total operating revenue 3,664,623 5,310,653 251,553 368,628 1,733,639 578,560 - 35,320,194 47,227,850
Operating Expenses Cost of insurance claims and employee benefits expenses ---- 1,516,283 - 298,174 32,829,110 34,643,567 Administrative costs 801,536 2,554,547 131,172 - - - - 1,375,420 4,862,675 Operating expenses 3,163,694 1,963,359 132,823 384,180 - 571,793 40,587 11,010 6,267,446 Depreciation 35,790 451,837 27,176 237,062 - - - - 751,865
Total operating expenses 4,001,020 4,969,743 291,171 621,242 1,516,283 571,793 338,761 34,215,540 46,525,553
Operating (Loss) Income (336,397) 340,910 (39,618) (252,614) 217,356 6,767 (338,761) 1,104,654 702,297
Nonoperating (Expense) Revenue Loss on sale of assets - - (9,351) - ----(9,351) Investment income 21,248 16,772 - - 46,430 - 95,610 - 180,060 C-74 Total nonoperating revenue (expense) 21,248 16,772 (9,351) - 46,430 - 95,610 - 170,709
Transfers In 545,718 - 122,720 398,803 - - - - 1,067,241
Change in Net Position 230,569 357,682 73,751 146,189 263,786 6,767 (243,151) 1,104,654 1,940,247
Net Position (Deficit) - Beginning of year (981,524) (2,442,188) (251,335) 3,174,667 725,956 31,498 2,443,828 3,251,887 5,952,789
$ (750,955) $ (2,084,506) $ (177,584) $ 3,320,856 $ 989,742 $ 38,265 $ 2,200,677 $ 4,356,541 $ 7,893,036 Net Position (Deficit) - End of year
141 142 Ingham County, Michigan Other Supplemental Information Combining Statement of Cash Flows Internal Service Funds Year Ended December 31, 2019
Building Authority Innovation and Intergovernmental Office Equipment Workers' Total Internal Operations Technology Service Pool Insurance Utilities Revolving Compensation Employee Benefits Service Funds
Cash Flows from Operating Activities Receipts from interfund services and reimbursements $ 3,353,435 $ 5,310,540 $ 251,553 $ 369,536 $ 822,226 $ 578,560 $ - $ 35,378,834 $ 46,064,684 Payments to suppliers (3,152,552) (1,959,514) (135,328) (496,523) - (505,284) (9,426) (11,010) (6,269,637) Payments to employees and fringes (810,494) (2,512,475) (138,711) - - - - (1,391,766) (4,853,446) Claims paid ---- (1,517,287) - (279,412) (31,805,837) (33,602,536) Other receipts - - - - 913,903 - - - 913,903
Net cash and cash equivalents (used in) provided by operating activities (609,611) 838,551 (22,486) (126,987) 218,842 73,276 (288,838) 2,170,221 2,252,968
Cash Flows Provided by Noncapital Financing Activities - Transfers from other funds 545,718 - 122,720 398,803 ----1,067,241
Cash Flows Used in Financing Activities - Purchase of capital assets (25,799) (818,515) (76,661) (145,775) ----(1,066,750)
Cash Flows Provided by Investing Activities - Interest received on investments 26,028 18,513 - - 45,918 - 94,837 - 185,296
Net (Decrease) Increase in Cash and Cash Equivalents (63,664) 38,549 23,573 126,041 264,760 73,276 (194,001) 2,170,221 2,438,755 C-75 Cash and Cash Equivalents - Beginning of year 70,706 1,129,567 102,623 1,900,939 1,274,244 68,602 2,873,969 5,165,837 12,586,487
Cash and Cash Equivalents - End of year $ 7,042 $ 1,168,116 $ 126,196 $ 2,026,980 $ 1,539,004 $ 141,878 $ 2,679,968 $ 7,336,058 $ 15,025,242
Classification of Cash and Cash Equivalents Cash and investments $ 7,042 $ 1,168,116 $ 126,196 $ 2,026,980 $ 581,800 $ 141,878 $ 452,468 $ 7,095,778 $ 11,600,258 Restricted cash - - - - 957,204 - 2,227,500 240,280 3,424,984
$ 7,042 $ 1,168,116 $ 126,196 $ 2,026,980 $ 1,539,004 $ 141,878 $ 2,679,968 $ 7,336,058 $ 15,025,242 Total cash and cash equivalents
Reconciliation of Operating (Loss) Income to Net Cash from Operating Activities Operating (loss) income $ (187,880) $ 340,910 $ (39,618) $ (252,614) $ 217,356 $ 6,767 $ (338,761) $ 1,104,654 $ 850,814 Adjustments to reconcile operating (loss) income to net cash from operating activities: Depreciation and amortization 35,790 451,837 27,176 237,062 ----751,865 Changes in assets and liabilities: Receivables (311,188) (113) - 908 2,490 - - 58,640 (249,263) Prepaid and other assets - 98,172 - - (11,487) - 75,762 - 162,447 Accounts payable 25,374 (94,327) (2,505) (112,343) (2,517) 66,509 31,161 - (88,648) Claims liability ---- 13,000 - (57,000) 1,023,273 979,273 Net pension or OPEB liability 165,310 547,661 21,655 - - - - 66,220 800,846 Deferrals related to pension or OPEB (194,625) (529,412) (30,886) - - - - (71,829) (826,752) Accrued and other liabilities 6,125 23,823 1,692 - - - - (10,737) 20,903
Total adjustments (273,214) 497,641 17,132 125,627 1,486 66,509 49,923 1,065,567 1,550,671
Net cash and cash equivalents (used in) $ (461,094) $ 838,551 $ (22,486) $ (126,987) $ 218,842 $ 73,276 $ (288,838) $ 2,170,221 $ 2,401,485 provided by operating activities
143 144 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Statement of Assets and Liabilities Statement of Changes in Assets and Liabilities Agency Funds Agency Funds December 31, 2019 Year Ended December 31, 2019
Library Penal Total Agency Library Penal Fines Fund Fines Fund Agency Funds Funds January 1, December 31, 2019 Additions Deductions 2019 Assets - Pooled cash and investments $ 227,435 $ 1,453,577 $ 1,681,012 Assets - Pooled cash and investments $ 274,694 $ 745,823 $ (793,082) $ 227,435 Liabilities - Accounts payable $ 227,435 $ 1,453,577 $ 1,681,012 Liabilities - Accounts payable $ 274,694 $ 745,823 $ (793,082) $ 227,435
Agency Funds January 1, December 31, 2019 Additions Deductions 2019
Assets - Pooled cash and investments $ 925,322 $ 224,728,496 $(224,200,241) $ 1,453,577
Liabilities - Accounts payable $ 925,322 $ 224,728,496 $(224,200,241) $ 1,453,577
Payroll Fund January 1, December 31, C-76 2019 Additions Deductions 2019
Assets - Pooled cash and investments $ 450,065 $ 34,272,966 $ (34,723,031) $-
Liabilities - Accounts payable $ 450,065 $ 34,272,966 $ (34,723,031) $-
Agency Funds Totals January 1, December 31, 2019 Additions Deductions 2019
Assets - Pooled cash and investments $ 1,650,081 $ 259,747,285 $(259,716,354) $ 1,681,012
Liabilities - Accounts payable $ 1,650,081 $ 259,747,285 $(259,716,354) $ 1,681,012
145 146 Ingham County, Michigan Ingham County, Michigan Other Supplemental Information Other Supplemental Information Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Fiduciary Funds Fiduciary Funds December 31, 2019 Year Ended December 31, 2019
Pension and OPEB Funds Pension and OPEB Funds Other Employee Other Employee Other Employee Benefits Trust - Other Employee Benefits Trust - Benefits Trust - Medical Care Benefits Trust - Medical Care Ingham County Facility Total Ingham County Facility Total
Assets Additions Investments: Investment income: Domestic equities $ 9,880,876 $ 2,112,748 $ 11,993,624 Interest and dividends $ 801,058 $ - $ 801,058 International equities 4,112,913 879,570 4,992,483 Net increase in fair value of investments 3,132,611 902,996 4,035,607 Emerging markets equities 1,392,934 300,795 1,693,729 Bond mutual funds and other fixed-income securities 12,022,421 2,545,906 14,568,327 Net investment income 3,933,669 902,996 4,836,665 Money market 147,781 187,952 335,733 Contributions - Employer contributions 6,863,719 389,803 7,253,522 27,556,925 6,026,971 33,583,896 Total assets Total additions 10,797,388 1,292,799 12,090,187 Liabilities - 156,759 156,759 Deductions - Benefit payments 3,846,501 389,803 4,236,304 Net Position Restricted for OPEB $ 27,556,925 $ 5,870,212 $ 33,427,137 Net Increase in Net Position Held in Trust 6,950,887 902,996 7,853,883 C-77 Net Position Restricted for OPEB - Beginning of year 20,606,038 4,967,216 25,573,254
Net Position Restricted for OPEB - End of year $ 27,556,925 $ 5,870,212 $ 33,427,137
147 148 Ingham County, Michigan Ingham County, Michigan Statement of Net Position and Governmental Funds Balance Sheet Statement of Activities and Governmental Funds Revenue, Brownfield Redevelopment Authority Expenditures, and Changes in Fund Balance December 31, 2019 Brownfield Redevelopment Authority For the Year Ended December 31, 2019 Brownfield Brownfield Brownfield Redevelopment Project - Land Project Statement of Authority Bank Lansing Total Adjustments Net Position Brownfield Brownfield Brownfield Redevelopment Project - Land Project Statement of Assets Authority Bank Lansing Total Adjustments Activities Pooled cash and investments $14,162 $ 5,617 $16,630 $36,409 $ -$36,409 Receivables - Revenue Property taxes receivable - 260,000 149,600 409,600 -409,600 Taxes $ 128,970 $ 299,410 $ 146,569 $ 574,949 $ - $ 574,949 Accrued interest receivable 30 522 - 552 - 552 Interest and rentals 1,567 - - 1,567 - 1,567 Other revenue - - 340,000 340,000 - 340,000 Total assets $ 14,192 $ 266,139 $ 166,230 $ 446,561 $ -$ 446,561
Liabilities Total revenue 130,537 299,410 486,569 916,516 - 916,516 Accrued liabilities and other - - - - 55,188 55,188 Expenses Noncurrent liabilities Current: Due within one year: Community and Economic Development 129,499 - - 129,499 - 129,499 Current portion of long-term debt - - - -360,000 360,000 Debt service: - - - Due in more than one year: Principal - 110,000 230,000 340,000 (340,000) - Long-term debt - Net of current portion - - - - 2,584,241 2,584,241 Interest - 49,488 98,638 148,126 (11,043) 137,083
Total liabilities - - - - 2,999,429 2,999,429 Total expenses 129,499 159,488 328,638 617,625 (351,043) 266,582 Net Position Excess of Revenue Over Expenses 1,038 139,922 157,931 298,891 351,043 649,934 Unrestricted (deficit) $ 14,192 $ 266,139 $ 166,230 $ 446,561 $ (2,999,429) $ (2,552,868)
Net Position (Deficit) - Beginning of year 13,154 126,217 8,299 147,670 (3,350,472) (3,202,802)
Net Position (Deficit) - End of year $ 14,192 $ 266,139 $ 166,230 $ 446,561 $ (2,999,429) $ (2,552,868) C-78
149 150 Ingham County, Michigan Ingham County, Michigan Statement of Net Position and Governmental Funds Balance Sheet Statement of Activities and Governmental Funds Revenue, Drain Commission Expenditures, and Changes in Fund Balance December 31, 2019 Drain Commission For the Year Ended December 31, 2019 Equipment Drain Commission Governmental Revolving Equipment Governmental Fund Net Internal Service Statement of Drain Commission Governmental Revolving Fund Adjustments Position Fund Net Position Governmental Fund Net Internal Service Statement of Assets Fund Adjustments Position Fund Activities Pooled cash and investments $ 12,200,637 $ - $ 12,200,637 $ 1,061,694 $ 13,262,331 Revenue Receivables: - -Special assessments $ 10,345,702 $ (865,300) $ 9,480,402 $ - $ 9,480,402 Special assessments receivable 54,157,329 - 54,157,329 - 54,157,329 Intergovernmental 899,774 - 899,774 - 899,774 Accrued interest receivable 66,386 - 66,386 2,845 69,231 Charges for services - - - 324,389 324,389 Other receivables 2,648 - 2,648 5,688 8,336 Interest and rentals 371,732 - 371,732 19,866 391,598 Due from other governments 3,325 - 3,325 - 3,325 Other revenue 66,631 -66,631 643 67,274 Noncurrent assets: Restricted cash 532,000 - 532,000 446,501 978,501 Total revenue 11,683,839 (865,300) 10,818,539 344,898 11,163,437 Capital Assets: Expenses Assets not subject to depreciation - 26,195,920 26,195,920 - 26,195,920 Maintenance 5,182,446 - 5,182,446 181,533 5,363,979 Assets subject to depreciation - 57,383,124 57,383,124 54,338 57,437,462 Depreciation - 2,911,990 2,911,990 31,518 2,943,508 Total assets $ 66,962,325 $ 83,579,044 $ 150,541,369 $ 1,571,066 $ 152,112,435 Capital outlay 7,158,229 (6,887,335) 270,894 - 270,894 Debt service: Deferred Outflows of Resources - Deferred pension costs - - - 307,130 307,130 Principal 29,555,204 (29,555,204) - - - Liabilities Interest 2,628,048 (4,662) 2,623,386 - 2,623,386 Accounts payable $ 2,146,423 $ - $ 2,146,423 $ 22,971 $ 2,169,394 Due to other governmental units - - - - - Total expenses 44,523,927 (33,535,211) 10,988,716 213,051 11,201,767 Advances from primary government 1,000,000 - 1,000,000 - 1,000,000 C-79 Excess of Revenue (Under) Over Expenses (32,840,088) 32,669,911 (170,177) 131,847 (38,330) Due to primary government - - - - - Due to fiduciary funds 52,913 - 52,913 - 52,913 Other Financing Sources Due to component units 39,844 484,831 524,675 23,998 548,673 New debt issued 32,255,625 (32,255,625) - - - Unearned revenue - - - 139,238 139,238 Debt premium on notes issued 371,800 (371,800) -- - Noncurrent liabilities Total other financing sources 32,627,425 (32,627,425) -- - Due within one year: Compensated absences - - - 37,050 37,050 Change in Net Position (212,663) 42,486 (170,177) 131,847 (38,330) Current portion of long-term debt - 25,998,438 25,998,438 83,376 26,081,814 Net Position (Deficit) - Beginning of year Due in more than one year: 9,834,665 62,894,341 72,729,006 (2,247,294) 70,481,712 Compensated absences, net of current portion - - - 19,950 19,950 Net Position (Deficit) - End of year $ 9,622,002 $ 62,936,827 $ 72,558,829 $ (2,115,447) $ 70,443,382 Net pension liability - - - 1,639,258 1,639,258 Net OPEB liability - - - 1,192,487 1,192,487 Long-term debt - Net of current portion - 48 ,260,091 48 ,260,091 362,209 48 ,622,300
Total liabilities 3,239,180 74,743,360 77,982,540 3,520,537 81,503,077
Deferred Inflows of Resources
Deferred pension cost reductions - - - 28,989 28,989
Deferred OPEB cost reductions - - - 444,117 444,117 Unavailable revenue - special assessments 54,101,143 (54,101,143) -- -
Total deferred outflows of resources 54,101,143 (54,101,143) - 473,106 473,106
Net Position Net investment in capital assets - 9,320,515 9,320,515 (391,247) 8,929,268 Restricted for debt service and capital projects 9,622,002 53,616,312 63,238,314 63,238,314 Unrestricted (deficit) - - - (1,724,200) (1,724,200)
Total net position (deficit) $ 9,622,002 $ 62,936,827 $ 72,558,829 $ (2,115,447) $ 70,443,382
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APPENDIX Di CITY OF LANSING GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION
iUnless otherwise noted, the information in Appendix D was provided by the City.
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APPENDIX D
CITY OF LANSING GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION
Description
The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the “City”), the capital of the State of Michigan (the “State”), encompasses an area of approximately 35 square miles in the northwestern corner of Ingham County and the northeastern corner of Eaton County.
The City is located the following distances from these commercial and industrial areas:
63 miles northwest of Ann Arbor 65 miles southeast of Grand Rapids 73 miles northeast of Kalamazoo 85 miles northwest of Detroit
Form of Government
The City was incorporated in 1859. In 1909, the City came under the provisions of Act 279, Public Acts of Michigan, 1909, as amended (“Home Rule City Act”). The City operates under a mayor/council form of government. The Mayor is the chief executive of the City and is elected on an at-large basis to serve a four-year term of office. The City Council (the “Council”) consists of eight members who are also each elected to serve a four-year term of office. Four Council members are elected by ward and four are elected at-large. The terms of office of the Council members are staggered so that two ward members and two at- large members stand for election every two years. The Council elects from its members a presiding officer and a person to act in the absence of the presiding officer who are referred to as the Council President and Council Vice President, respectively. Each serves a one-year term. During a temporary absence of the Mayor, the President of the Council is the temporary Mayor of the City for the purpose of performing statutory and charter duties of that office.
Property Valuations
Article IX, Section 3, of the Michigan Constitution provides that the proportion of true cash value at which property shall be assessed shall not exceed 50% of true cash value. The Michigan Legislature by statute has provided that property shall be assessed at 50% of its true cash value, except as described below. The Michigan Legislature or the electorate may at some future time reduce the percentage below 50% of true cash value.
On March 15, 1994, the electors of the State approved an amendment to the Michigan Constitution permitting the Legislature to authorize ad valorem taxes on a non-uniform basis. The legislation implementing this constitutional amendment added a new measure of property value known as “Taxable Value.” Beginning in 1995, taxable property has two valuations -- State Equalized Valuation (“SEV”) and Taxable Value. Property taxes are levied on Taxable Value. Generally, Taxable Value of property is the lesser of (a) the Taxable Value of the property in the immediately preceding year, adjusted for losses, multiplied by the lesser of the inflation rate or 5%, plus additions, or (b) the property’s current SEV. Under certain circumstances, therefore, the Taxable Value of property may be different from the same property’s SEV.
D-1 When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing law is 50% of the current true cash value. The Taxable Value of new construction is equal to current SEV. Taxable Value and SEV of existing property are also adjusted annually for additions and losses.
Responsibility for assessing taxable property rests with the local assessing officer of each township and city. Any property owner may appeal the assessment to the local assessor, to the local board of review and ultimately to the Michigan Tax Tribunal.
The Michigan Constitution also mandates a system of equalization for assessments. Although the assessors for each local unit of government within a county are responsible for actually assessing at 50% of true cash value, adjusted for Taxable Value purposes, the final SEV and Taxable Value are arrived at through several steps. Assessments are established initially by the municipal assessor. Municipal assessments are then equalized to the 50% levels as determined by the county’s department of equalization. Thereafter, the State equalizes the various counties in relation to each other. SEV is important, aside from its use in determining Taxable Value for the purpose of levying ad valorem property taxes, because its role in the spreading of taxes between overlapping jurisdictions, the distribution of various State aid programs, State revenue sharing and in the calculation of debt limits.
Property that is exempt from property taxes e.g., churches, government property, and public schools is not included in the SEV and Taxable Value data in the Official Statement. Property granted tax abatements under either Act 198, Public Acts of Michigan, 1974, as amended (“Act 198”), or Act 255, Public Acts of Michigan, 1978, as amended, is recorded on separate tax rolls while subject to tax abatement. The valuation of tax abated property is based upon SEV but is not included in either the SEV or Taxable Value data in the Official Statement except as noted. Under limited circumstances, other State laws permit the partial abatement of certain taxes for other types of property for periods of up to 12 years.
Tax Increment Finance Authority (“TIFA”)
A TIFA was established within the City in 1981, under the authority of Act 450, Public Acts of Michigan, 1980, commonly referred to as the TIFA Act. The TIFA Act gave the City the authority to designate certain districts within its city limits as TIFA Districts (defined below). The purpose of the TIFA is to create and execute plans for public improvements, economic development, historic preservation and avoidance of deterioration in property values within these districts through implementing finance and development plans. The TIFA Act also allowed TIFA to issue debt and finance public infrastructure and facilities by capturing certain taxes levied by other local units of government within the TIFA District.
In 2018, the TIFA Act was repealed and recodified as part of the Recodified Tax Increment Financing Act, Act 57, Public Acts of Michigan, 2018 (the “Act 57”), which authorizes the designation of specific districts known as Tax Increment Finance Authority (“TIFA”) Districts, Downtown Development Authority (“DDA”) Districts, and Local Development Finance Authority (“LDFA”) Districts. Act 381 of the Public Act of Michigan, 1996, as amended (the “Brownfield Act”) authorizes the designation of specific districts known as Brownfield Redevelopment Authority (“BRDA”) Districts. (Each of these four types of districts is referred to as a “TIF District”). These two acts authorize the formulation of tax increment financing plans for public improvements, economic development, neighborhood revitalization, historic preservation and environmental cleanup within the TIF Districts.
Tax increment financing permits a TIFA, DDA, LDFA, or BRDA to capture tax revenues attributable to increases in value (“TIF Captured Value”) of real and personal property located within an approved development area while any tax increment financing plans by an established TIF District are in place. These captured revenues are used by the TIF District and are not passed on to the local taxing authorities.
D-2 Table 1 provides the TIFA’s historical, audited Tax Increment Revenue for the fiscal years ending 2015 through 2019.
Table 1 - TIFA Historical Tax Increment Revenue Fiscal Year Total Tax Increment Percent Change in Total Tax Year Ending Revenue Tax Increment Revenue 2018 2019 $2,879,420 -2.40% 2017 2018 2,950,103 11.93 2016 2017 2,635,591 -10.83 2015 2016 2,955,764 8.28 2014 2015 2,729,735 8.52 Source: Audited financial statement of the TIFA.
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D-3 GENERAL FINANCIAL INFORMATION
Michigan Property Tax Reform
The voters of the State approved enactment of Acts 153 and 154, Public Acts of Michigan, 2013 and Acts 80 and 86 through 93, Public Acts of Michigan, 2014 by referendum on August 5, 2014 (collectively, the “PPT Reform Acts”), which significantly reformed personal property tax in Michigan.
Under the PPT Reform Acts, owners of certain industrial and commercial personal property may file an affidavit claiming a personal property tax exemption. To be eligible for the exemption, all of the commercial or industrial personal property within a city or township that is owned by, leased to, or controlled by the claimant must have an accumulated true cash value of $80,000 or less. Beginning in calendar year 2016, owners of certain manufacturing personal property that was either purchased after December 31, 2012, or that is at least 10 years old may claim an exemption from personal property tax. By 2022, all eligible manufacturing personal property will be at least 10 years old or purchased after December 31, 2012, and so it could be exempted from personal property tax.
To replace personal property tax revenues lost by local governments, including cities, the PPT Reform Acts divided the existing state use tax into two components, a “state share tax” and a “local community stabilization share tax,” and established the Local Community Stabilization Authority (the “LCSA”) to administer distribution of the local community stabilization share. The Michigan Department of Treasury collects the local community stabilization share tax on behalf of LCSA. The local community stabilization share tax revenues are not subject to the annual appropriations process and are provided to the LCSA for distribution pursuant to a statutory formula. The statutory formula is anticipated to provide 100% reimbursement to local governments for losses due to the new personal property tax exemptions. The LCSA began distributions of the local community stabilization share tax to local governments, including cities, on November 21, 2016. The City received $970,628 from the LCSA to replace personal property tax revenue lost during fiscal year 2019.
The ultimate nature, extent and impact of any other future amendments to Michigan’s property tax laws on a local unit’s finances cannot be predicted. Purchasers of the Bonds should consult with their legal counsel and financial advisors as to the consequences of any such legislation on the market price or marketability of the Bonds, the security therefor and the operations of the City.
Historical Valuation
Table 2 - Equalized and Taxable Valuation Personal Fiscal Year Real Property Property Total Assessed Taxable Tax Year Ending June 30 Valuation Valuation (SEV) Valuation Valuation 2020 2021 $2,680,302,476 $157,132,900 $2,837,435,376 $2,296,435,219 2019 2020 2,423,395,000 143,567,100 2,566,962,100 2,177,263,492 2018 2019 2,218,070,700 131,685,690 2,349,756,390 2,078,506,415 2017 2018 2,123,515,400 144,076,700 2,267,592,100 2,022,923,906 2016 2017 1,996,672,985 151,357,000 2,148,029,985 1,978,013,387 2015 2016 1,893,973,800 189,669,791 2,083,643,591 1,986,340,364 Source: Equalization Departments of Clinton, Eaton, and Ingham County.
D-4 2020 Taxable Valuation $2,296,435,219 Plus: 2020 IFT Equivalent Taxable Value 17,579,729 Total 2020 Taxable & IFT Valuation: $2,314,014,948
Table Per Capita Valuation Using the City’s 2010 Census population of 114,297, Table 3 provides the per capita valuation by type of valuation.
Table 3 - Per Capita Valuation 2020 Per Capita Taxable Valuation $20,091.82 2020 Per Capita State Equalized Valuation $24,825.11 2020 Total Taxable & IFT Valuation $20,245.63
Industrial Facilities Tax
Act 198 provides significant property tax incentives to industry to renovate and expand aging plants and to build new industrial facilities in Michigan. Under the provisions of Act 198, qualifying cities, villages and townships may establish districts in which industrial firms are offered certain property tax incentives to encourage restoration or replacement of obsolete industrial facilities and to attract new industrial facilities.
Property tax owners situated in such districts pay an Industrial Facility Tax (“IFT”) in lieu of ad valorem taxes on the facility and equipment for a period of up to 12 years. For rehabilitated plant and equipment, the IFT is determined by calculating the product of the SEV of the obsolete industrial property in the year before the effective date of the Act 198 abatement certificate multiplied by the total mills levied by all taxing units within which the facility and equipment is situated in the current year. New plants and equipment receiving their abatement certificate prior to January 1, 1994 are taxed at one-half the total mills levied by all taxing units, other than mills levied for local and intermediate school district operating purposes or under the State Education Tax Act, plus one-half of the number of mills levied for school operating purposes in 1993. For new facility abatements granted after 1993, new plants and equipment are taxed at one-half of the total mills levied as ad valorem property taxes by all taxing units within which the facility and equipment is situated except mills levied under the State Education Tax Act, plus the number of mills levied under the State Education Act. For new facility abatements granted after 1993, the State Treasurer may permit abatement of all, none or one-half of the mills levied under the State Education Tax Act. It must be emphasized, however, that ad valorem property taxes on land are not reduced in any way since land is specifically excluded under Act 198.
There are several Act 198 abatements within the City’s boundaries. The 2020 equivalent taxable value for all Act 198 abated property within the City’s boundaries is $17,579,279.
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D-5 Major Taxpayers
The top ten taxpayers in the City and their 2020 Taxable Valuations and equivalent Industrial Facilities Tax Valuations are as follows:
Table 4 - Top Ten Taxpayers - City of Lansing Equivalent Taxable IFT Total Taxpayer Product/Service Valuation Valuation Valuation General Motors Corp. Automotive $64,837,788 $4,438,959 $69,276,747 Consumers Energy Utility 46,076,843 - 46,076,843 Jackson National Life Ins Co Insurance 37,280,474 - 37,280,474 Phoenix Development Partners LLC Office (AF Group) 27,170,056 - 27,170,056 Lansing Properties LLC Apartments (SkyVue) 24,590,660 - 24,590,660 Lansing Retail Center LLC Shopping Center 12,170,056 - 12,170,056 McLaren Health Care Corp Medical 11,878,066 - 11,878,066 Emergent Biodefense Operations Research/Industrial 7,384,360 2,758,637 10,142,997 Eyde Knapp Redevelopment LLC Office/Residential 8,699,322 - 8,699,322 WP Lansing-MI Owner LLC Apartments 8,685,000 - 8,685,000 Edward Rose Reality Inc. Apartments 7,456,488 - 7,456,488 TOTAL $256,229,113 $7,197,596 $263,426,709 Source: City of Lansing and the Equalization Departments of Ingham, Eaton, and Clinton Counties.
The Total Valuation of the above taxpayers represent 11.38% of the City’s 2020 Taxable & equivalent IFT Valuation of $2,314,014,948.
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D-6 Tax Rates (Per $1,000 of Valuation)
Each school district, county, township, special authority and city has a geographical definition which constitutes a tax district. Since local school districts and the county overlap either a township or a city, and intermediate school districts overlap local school districts and county boundaries, the result is many different tax rate districts. The following table provides tax rates for fiscal years 2016 through 2020 for the City and other taxing jurisdictions within the City’s boundaries.
Table 5 - Tax Rates-City of Lansing (Fiscal Year End June 30) 2020 2019 2018 2017 2016 City Operating 19.4400 19.4400 19.4400 19.4400 19.4400 City Debt Millage 0.0000 0.2600 0.2600 0.2600 0.2600 Total City Millage 19.4400 19.7000 19.7000 19.7000 19.7000 Ingham County Millage 11.3400 11.3400 10.0742 10.0673 10.1963 Lansing School Millage – Homestead (1)* 7.7600 4.6000 4.6800 4.6500 3.9000 Lansing School Millage Non- Homestead (2)* 25.5392 22.5028 22.6008 22.5708 21.8262 State Education Tax* 6.0000 6.0000 6.0000 6.0000 6.0000 Community College Millage 3.8072 3.8072 3.8072 3.8072 3.8072 Other Millage (3) 11.0647 11.0647 11.2541 11.2541 11.2541 Total Millage – Homestead 59.4119 56.5119 55.5155 55.4786 54.8576 Total Millage – Non-Homestead 77.1911 74.4147 73.4363 73.3994 72.7838
(1) Includes sinking fund and debt millages only. (2) Includes operating non-homestead, sinking fund and debt millages only. (3) Includes Intermediate School District, Airport Authority, Capital Area Transit Authority, Capital Area District Library and Zoo. ∗ Pursuant to a ballot proposal approved by the electors of the State of Michigan on March 15, 1994, the State of Michigan levies 6.00 mills for school operating purposes on all homestead and non-homestead property located within a school district. School districts can levy 18.00 mills of voted operating millage on non-homestead property and authorized debt millage on all homestead and non-homestead property located with a school district.
Tax Rate Limitation
The City is authorized by its Charter to levy up to 20 mills. For fiscal year 2020, the City is authorized to levy 19.4400 mills.
The City also has authority to levy, but does not currently levy, taxes in excess of its Charter limit pursuant to State law for the following purposes:
Maximum Rate per $1,000 of Purpose Authority SEV Refuse Collection and Disposal Act 298, P.A. of MI, 1917, as Amount required to fund expenses up amended to 3 mills Police & Fire Pensions Act 345, P.A. of MI, 1937, as Amount required to make amended contribution
D-7 Constitutional Millage Rollback
Article IX, Section 31 of the Michigan Constitution (also referred to herein as the “Headlee rollback”) requires that if the total value of existing taxable property (State Equalized Valuation) in a local taxing unit, exclusive of new construction and improvements, increases faster than the U.S. Consumer Price Index from one year to the next, the maximum authorized tax rate for that local taxing unit must be reduced to yield the same gross revenue from existing taxable property, adjusted for changes in the U.S. Consumer Price Index, as could have been collected at the existing authorized rate on the prior assessed value, unless new millage is authorized by a vote of the electorate of the local taxing unit.
Tax Levies and Collections
The City’s fiscal year begins July 1 and ends June 30. City property taxes are due July 1 of each fiscal year and are payable without penalty or interest on or before August 31 of that year. Property owners who have not paid their property taxes on or before August 31 are required to pay interest at the rate of 12% per annum from September 1 and penalties of 4% on such unpaid taxes. All real property taxes remaining unpaid on March 1st of the year following the levy are turned over to the County Treasurers for collection. County Treasurers of Ingham and Eaton Counties historically have paid from their Delinquent Tax Revolving Funds for delinquent taxes on real property to all taxing units in Ingham or Eaton County, including the City, shortly after the date delinquent taxes are returned to the County Treasurers for collection.
Table 6 - City Tax Levies and Collections Fiscal Year Percent of Delinquent Collections as a Tax Ended Property Tax Current Tax Tax Levy Tax Total Tax Percent of Tax Year June 30 Levy Collection Collected Collection(1) Collection Levy 2020 2021 $44,590,282 In Process of Collection 2019 2020 42,475,000 $42,129,956 99.19% 17,342 $42,147,298 99.23% 2018 2019 40,231,255 40,203,313 99.93 42,639 40,245,952 100.04 2017 2018 39,243,692 39,232,925 99.99 67,648 39,300,573 100.17 2016 2017 38,431,072 38,370,929 99.84 50,344 38,421,273 99.97 2015 2016 38,538,226 38,461,152 99.80 52,758 38,513,910 99.94 (1) Net of charge backs from the County Delinquent Tax Revolving Funds for taxes still delinquent after three years. Source: City of Lansing
The Delinquent Tax Revolving Funds are financed through the issuance of General Obligation Limited Tax Notes (GOLTNs) by Ingham or Eaton County (the “Counties”). Although the City anticipates the continuance of this program by the Counties, the ability of the Counties to issue such GOLTNs is subject to market conditions at the time of offering. In addition, Act 206, Public Acts of Michigan, 1893, as amended, provides in part that: “The primary obligation to pay to the county the amount of taxes and interest thereon shall rest with the local taxing units, and if the delinquent taxes which are due and payable to the county are not received by the county for any reason, the county has full right of recourse against the taxing unit to recover the amount thereof and interest thereon...”. On the first Tuesday in May in each year, a tax sale is held by the Counties at which lands delinquent for taxes assessed in the second year preceding the sale, or in a prior year, are sold for the total of the unpaid taxes of those years.
D-8 City Income Tax
In 1968, the electorate of the City authorized the implementation of an income tax. The income tax is imposed on certain income earned within the City regardless of the residence of the taxpayer and on certain income of City residents. Residents pay one percent (1%) and nonresidents pay one-half of one percent (1/2%) tax rates on taxable income. With minor exceptions, taxable income includes all corporate and individual income subject to taxation by the United States. Personal and dependency exemptions of $600 are permitted. Deductions from City income taxation include alimony, unreimbursed business expenses, disability income, unemployment compensation, social security income, Keogh and IRA contributions pursuant to the United States Internal Revenue Code, moving expenses into the City and other miscellaneous items. The following table is a five-year history of income tax collections.
Table 7 - Income Tax Collections Fiscal Year Ended June 30 Collections, Net of Refunds 2020 (1) $30,516,002 2019 37,021,436 2018 38,455,297 2017 35,694,010 2016 34,573,131 2015 31,660,923 Source: City of Lansing (1) As of June 30, 2020
Gas and Weight Tax Receipts from State of Michigan
The State of Michigan collects moneys from license taxes for vehicles owned and operated in Michigan based on the weight or value of the vehicle, and from gasoline and other motor fuel taxes per gallon of fuel purchased, pursuant to statutory authorization. These taxes are distributed to state road improvement funds and to counties, cities, and villages. The moneys are distributed to the City, after deductions, on the basis of mileage and population and for type of road compared to the total for the State. State law requires that the City must first expend such state-returned money for payment of debt service on its Michigan Transportation Fund Bonds and Notes before any other purpose. Listed below are the City’s gas and weight tax receipts for the last five years.
Table 8 - Historical Receipts of Gas and Weight Taxes State of Michigan Fiscal Year Gas and Weight Taxes Ended September 30 Received 2019 $13,680,303 2018 12,586,928 2017 11,284,581 2016 8,987,335 2015 8,436,872 Source: Michigan Department of Transportation
D-9 A breakdown of the City’s gas and weight tax receipts for the fiscal year ended June 30, 2019, available for Michigan Transportation Fund bond debt service requirements is shown in the table below. For fiscal year ended June 30, 2019, the annual debt service for the City’s Michigan Transportation Fund bonds was $32,641.
Available for Debt Service Category Amount of Tax Receipts (50% of Amount) Major Streets $10,281,319 $5,140,659 Local Streets 3,015,323 1,507,661 TOTAL $13,296,642 $6,648,320 Source: City of Lansing
Revenues from the State of Michigan
The City receives revenue sharing payments from the State of Michigan under the State Constitution and the State Revenue Sharing Act of 1971, Act 140, Public Acts of Michigan, 1971, as amended. The revenue sharing payments are composed of two components — a constitutional distribution and a statutory distribution.
The constitutional distribution is mandated by the State Constitution and distributed on a per capita basis to townships, cities and villages. The amount of the constitutionally mandated revenue sharing component distributed to the City can vary depending on the population of the City and the receipt of sales tax revenues by the State. The statutory distribution is authorized by legislative action and distribution is subject to annual appropriation by the State Legislature. Statutory distributions may be reduced or delayed by Executive Order during any State fiscal year in which the Governor, with the approval of the State Legislature’s appropriations committees, determines that actual revenues will be less than the revenue estimates on which appropriations were based.
On September 29, 2018, Governor Whitmer signed into law the budget for fiscal year 2020 as Act 56, Public Acts of Michigan, 2019. The budget includes a constitutional revenue sharing distribution to cities, villages and townships of approximately $865.4 million. The budget continues the incentive-based revenue sharing program known as the City, Village, and Township Revenue Sharing (or “CVTRS”) program begun in fiscal year 2015, similar to the Economic Vitality Incentive Program that, from fiscal year 2012 through fiscal year 2014, distributed revenue sharing to cities, villages and townships that meet requirements for accountability and transparency, including making a citizen’s guide to its finances, a performance dashboard, a debt service report and a two-year budget projection available for public viewing. The fiscal year 2020 budget appropriated approximately $261 million for distribution to eligible cities, villages and townships based on population in six bimonthly payments. The fiscal year 2020 budget continued fiscal year 2019-level funding for the revenue sharing grant program for financially distressed communities at $2.5 million, reduced from $5 million in fiscal year 2018. Any portion of the CVTRS payment that the City would be eligible to receive would be subject to certain benchmarks that the City would need to meet, and there can be no assurance what amount, if any, the City would receive under the CVTRS program.
Purchasers of the Bonds should be alerted to further modifications to revenue sharing payments to Michigan local governmental units, to potential consequent impact on the City’s general fund condition, and to the potential impact upon the market price or marketability of the Bonds resulting from changes in revenues received by the City from the State. Additionally, see “POTENTIAL IMPACT OF THE COVID- 19 PANDEMIC” section in this official statement.
D-10 The following table sets forth the annual revenue sharing payments and other moneys received by the City. Table 9 - Revenue Sharing Payments Fiscal Year Ended Total Revenue Sharing June 30 Payments (1) Constitutional Amount Statutory/EVIP 2021 (Estimated) $14,028,928 $8,490,672 $5,538,256 2020 (Estimated) 15,123,289 9,718,383 5,404,906 2019 15,086,424 9,875,512 5,210,912 2018 14,272,007 8,983,760 5,288,247 2017 13,959,398 8,748,486 5,210,912 2016 13,481,671 8,270,759 5,210,912
(1) Amounts do not include state gas and weight tax distributions or fire reimbursement monies. Source: Michigan Department of Treasury: https://www.michigan.gov/treasury/0,4679,7-121-1751_2197_58826_62375-518734- -,00.html
Labor Force
A breakdown of the number of budgeted full-time positions of the City of Lansing and their affiliations with organized groups is as follows:
Table 10 - Labor Force Organized Groups Bargaining Unit Full-Time (1) Contract Expiration International Assoc. of Firefighters 168 6/30/2019* Capital City Labor Program – Non-Supervisors 165 6/30/2022 Capital City Labor Program – Supervisory 45 6/30/2022 U.A.W. Local 2256 137 9/30/2022 Teamster’s Local 243 – Supervisory 43 1/31/2021 Teamster’s Local 243 – Clerical, Technical, and Professional 133 1/31/2021 Teamster’s Local 243 – District Court 23 6/30/2021 Teamster’s Local 243 – Supervisory/Non-Supervisory 22 12/31/2021 Elected Officials 14 N/A Non-Affiliated 55 N/A TOTAL 805 (1) As of June 30, 2020 *Currently in negotiations.
Accrued and Insured Liabilities
Vacation and Sick Leave Liability The City’s policy provides that vacation is earned with every pay period and can be carried over to future years within certain limits based on length of service. Exceptions are the sworn members of Police and Fire that are credited vacation at the beginning of the year and must initiate the vacation prior to that year end (i.e. start the vacation prior to December 31st of that year).
City employees earn approximately one day of sick leave for each month worked. One-half of accumulated sick leave in an amount up to 85 days (680 hours) maybe paid upon retirement. Should an employee terminate with the City prior to retirement, all sick leave benefits are forfeited. The exception is
D-11 vested employees in the Defined Contribution Plan (DCP), who will receive one-half of their sick leave (up to 680 hours) if they are vested (three years of credited service) and United Auto Workers employees, who are paid out at 100% of accumulated sick leave up to a maximum of 680 hours. There is a four-day buy-out provision in the current Fraternal Order of Police (FOP) and International Association of Firefighters (IAFF) contracts which will pay up to four days if fewer than four days of sick leave are utilized during the year, and a five-day buy-out provision in the Teamsters 212 contract, which pays up to five days when a person accumulates 480 hours of sick leave. District Court personnel receive 9 days of sick leave per year, and each December District Court personnel may be reimbursed for accumulated sick leave, except for a mandatory three days which must be carried over to the next year. District Court employees are reimbursed 100% of their sick leave earned after 1980, except the current year credit, at termination. The sick leave earned prior to 1980 is paid at 50% at retirement. Sick leave buy-out on retirement is budgeted on an annual basis and is projected on an estimated number of retirements. The City also pays annual health care insurance premiums for eligible retired employees and their spouses.
In 1984, the City retroactively recorded compensated absences (unpaid vacation and sick leave) and workers’ compensation claims payable as required by NCGA Statement 4, “Accounting and Financial Reporting Principles for Claims and Judgments and Compensated Absences.”
Workers Compensation Insurance The City maintains self-funded insurance for liability associated with workers compensation. The City has liability insurance covering statutory workers compensation losses with a $750,000 deductible.
General Liability Insurance The City is insured by the Michigan Municipal Risk Management Authority up to $15,000,000 per occurrence. Several lawsuits asserting various claims against the City are in progress for which it is probable that the City will incur losses, all of which is expected to be covered by general liability insurance. In addition, civil lawsuits of various types are in progress against the City for which there is a reasonable possibility that the City will incur losses, all of which is expected to be covered by general liability insurance. The City does maintain a $1,000,000 Self-Insured Retention (deductible) per occurrence.
The City maintains all-risk replacement cost property insurance on all buildings and contents owned by the City. The current replacement cost of insured property is approximately $548,235,000.
Retirement Systems
The City administers two defined benefit retirement systems - the Employees’ Retirement System (“ERS”) and the Police and Fire Retirement System (“PFRS”) as well as a defined contribution system, the Employees’ Money Purchase Pension Plan (“EMPP Plan”). These three plans cover virtually all of its employees. The benefits to the participants of the defined contribution plan, the EMPP Plan, depend solely on the returns earned on the investments of the contributions. For the EMPP Plan, the City contributes an amount equal to 4.0% of the employees’ wages and there are no employee contributions.
D-12 Employees Retirement System
The ERS covers general full-time employees of the City and the employees of the 54-A District Court (not including police officers and firefighters who are members of the PFRS or elected officials who are members of the EMPP plan). The ERS was established and may be amended by the City Council and is administered by a nine-member Board of Trustees. The ERS Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, the City Human Resources Director, three members of the ERS to be elected by the members of the ERS under rules adopted by the ERS Board, two residents of the State of Michigan appointed by the Mayor, by and with the consent of the City Council, one of whom is a retiree of the ERS. Participants in the ERS contribute between 3.00% and 6.50% of their gross wages, depending on bargaining unit and hire date.
As of December 31, 2018, plan membership consisted of 916 retirees and beneficiaries currently receiving benefits, 133 terminated employees entitled to but not yet receiving benefits, and 405 vested and non-vested active participants.
Table 11- Schedule of Employer Contributions for the Employee Retirement System
Fiscal Year Ending Valuation Date Annual Required Percentage June 30 December 31 Contributions (1) Contributed 2019 2018 $10,880,932 100.0% 2018 2017 10,185,060 106.0 2017 2016 10,246,872 100.0 2016 2015 10,181,620 100.0 2015 2014 10,547,556 100.0 (1) Due September 1 Source: City of Lansing
Table 12 - Funding Progress for the Employee Retirement System Plan Net Net Pension Position as a Liability as a Fiscal Year Total % of Total % of Ended Pension Plan Net Net Pension Pension Covered Covered June 30 Liability Position Liability Liability Payroll Payroll 2019 $303,730,647 $165,585,569 $138,145,078 54.5% $23,265,437 593.7% 2018 305,528,755 168,558,816 136,969,939 55.2 22,672,891 604.1 2017 307,450,034 169,965,440 137,484,594 55.3 20,901,389 657.8 2016 324,725,530 164,049,912 160,675,618 50.5 23,085,894 696.0 2015 319,702,427 178,556,474 141,145,953 55.9 19,769,460 714.0 Excluding the contingency reserves in the Reserve for Retired Benefit Payments. Source: Audited Financial Statements and the City of Lansing
Police and Fire Retirement System
The PFRS covers police officers and firefighters. The PFRS was established and may be amended by the City Council and is administered by an eight-member Board of Trustees. The PFRS Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, a resident of the City appointed by the Mayor, by and with the consent of Council, and two members each of the police and fire departments elected by all the members of their respective departments. Participants in the PFRS contribute approximately 7.00% to 10.00% of their gross wages, depending on bargaining unit, rank and hire date.
D-13 As of December 31, 2018, plan membership consisted of 750 retirees and beneficiaries currently receiving benefits, 49 terminated employees entitled to but not yet receiving benefits, and 372 vested and non-vested active participants. Table 13 -Employer Contributions for the Police and Fire Retirement System
Fiscal Year Ending Valuation Date Annual Required Percentage June 30 December 31 Contributions (1) Contributed 2019 2018 $13,554,239 100% 2018 2017 12,562,547 101 2017 2016 11,521,768 100 2016 2015 10,884,312 100 2015 2014 10,050,091 100 (1) Due September 1
Table 14 -Funding Progress for the Police and Fire Retirement System Plan Net Net Pension Position as a Liability as a Fiscal Year Total % of Total % of Ended Pension Plan Net Net Pension Pension Covered Covered June 30 Liability Position Liability Liability Payroll Payroll 2019 $461,355,972 $294,240,379 $167,115,593 63.8% $29,638,532 563.8% 2018 444,999,992 291,879,983 153,120,009 65.6 28,435,952 538.5 2017 429,670,098 288,441,203 141,228,895 67.1 27,585,521 512.0 2016 418,348,450 273,115,398 145,233,052 65.3 27,078,405 536.3 2015 400,117,548 295,296,649 104,820,899 73.8 24,407,740 429.5
Employees’ Money Purchase Pension Plan
Newly hired employees are eligible to participate in the City's defined contribution plan. Eligible employees include those normally scheduled to work at least 1,000 hours during a plan year. To receive benefits under the plan, the participant must have met the age and service requirements outlined in his or her applicable bargaining unit agreement. Distributions are calculated based on the employee's vesting percentage and the individual's allocation of investment funds. In accordance with the EMPP Plan agreement, the City contributes 4% of employees' base pay to the plan. The defined contribution plan is administered by the Board of Trustees as designed in the City of Lansing Defined Contribution Plan, which stipulates that the trustees have such authority. All amendments to the EMPP Plan, including funding requirements, must be approved by the City Council subject to the terms of collective bargaining agreements. City contributions for the year ended June 30, 2019 were $172,888 for plan members. Employee contributions for the year ended June 30, 2019 were $162,606. All amendments to the EMPP Plan, including funding requirements, must be approved by the City Council. The assets of the plan are held in trust for the exclusive benefit of participants and their beneficiaries.
Other Post-Employment Benefits
The City contributes to the Employees’ Retirement System, the Police and Fire Retirement System and the Voluntary Employees Beneficiary Association (VEBA), amounts to pre-fund post-employment health care. In the Employees’ Retirement System and the Police and Fire Retirement System, these other post-employment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under the respective
D-14 pension plans, with the exception of Teamster 580 employees hired after May 2014. OPEB plan provisions are established and may be amended by the City Council, subject to the City’s various collective bargaining agreements.
Voluntary Employees Beneficiary Association (“VEBA”) The City of Lansing Voluntary Employees Beneficiary Association (“VEBA”) is a single-employer defined benefit postemployment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City’s pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During 2019, the City contributed $620,000 to VEBA. It is accounted for as a separate OPEB trust fund.
Table 15 -Employer Contributions for the OPEB Employee’s Retirement System and VEBA Fiscal Year Ending Valuation Date Annual Required Percentage June 30 January 1 Contributions Contributed 2019 2018 $10,198,194 116% 2018 2017 10,910,284 104 2017 2016 10,582,235 106 2016 2015 11,447,334 77 2015 2014 13,270,701 69
Table 16 -Funding Progress for the OPEB Employee’s Retirement System and VEBA Plan Net Net OPEB Position as a Liability as a Fiscal Year % of Total % of Ended Total OPEB Plan Net Net OPEB OPEB Covered Covered June 30 Liability Position Liability Liability Payroll Payroll 2019 $231,415,357 $63,482,044 $167,933,313 27.4% $23,720,424 708.0% 2018 223,906,447 59,715,303 164,191,144 26.7% 21,251,418 772.6 2017 231,583,031 54,680,726 176,902,305 23.6% 20,901,389 846.4
Table 17 -Employer Contributions for the OPEB Police and Fire Fiscal Year Ending Valuation Date Annual Required Percentage June 30 January 1 Contributions Contributed 2019 2018 $15,218,062 88% 2018 2017 15,968,029 77 2017 2016 19,759,521 62 2016 2015 17,276,901 74 2015 2014 17,923,366 64
Table 18 -Funding Progress for the OPEB Employee’s Retirement System Plan Net Net OPEB Position as a Liability as a Fiscal Year % of Total % of Ended Total OPEB Plan Net Net OPEB OPEB Covered Covered June 30 Liability Position Liability Liability Payroll Payroll 2019 $302,529,360 $39,200,746 $263,328,614 13.0% $28,435,953 926.0% 2018 277,078,552 38,308,203 238,770,349 13.8% 20,667,007 1155.3% 2017 294,892,197 34,133,238 260,758,959 11.6% 27,585,521 945.3%
D-15 Debt Statement1 Table 19 - Direct Debt (As of August 14, 2020)
Par Amount Dated Date Outstanding GENERAL OBLIGATION BONDS GOLT Refunding Bonds 01/15/2013 1,595,000 GOLT Lansing Center Refunding Bonds 12/17/2015 2,950,000 GOLT Refunding Bonds 04/24/2019 13,595,000 GOLT Capital Improvement & Refunding Bonds 08/13/2020 9,405,000 Subtotal General Obligation Bonds $27,545,000
GENERAL OBLIGATION-SELF SUPPORTING BONDS CSO Sewer #5005-12 03/30/2000 $577,830 CSO Sewer #5005-13 03/29/2001 1,293,046 CSO Sewer #5005-14 03/28/2002 2,931,131 CSO Sewer #5005-15 03/27/2003 2,995,688 CSO Sewer #5005-16 03/25/2004 1,297,649 CSO Sewer #5005-17 03/25/2004 2,673,778 CSO Sewer #5005-18 03/31/2005 4,749,371 CSO Sewer #5005-19 03/30/2006 7,751,346 CSO Sewer #5005-20 03/29/2007 11,334,726 CSO Sewer #5005-21 04/01/2008 15,365,453 CSO Sewer #5005-22 04/17/2009 9,450,604 CSO Sewer #5411-01 01/22/2010 5,938,000 CSO Sewer #5211-01 04/09/2014 2,677,405 CSO Sewer #5411-02 07/09/2014 1,715,065 CSO Sewer #5581-01 04/11/2016 2,946,310 CSO Sewer #5005-23 04/10/2018 9,395,000 CSO Sewer #5672-01 06/07/2019 9,840,000 Subtotal General Obligation Self-Supporting Bonds $92,932,402
REVENUE BONDS Board of Water & Light Revenue Bonds 06/15/2011 $3,965,000 Sewage Disposal Revenue Refunding Bonds 12/27/2012 12,525,000 Board of Water & Light Revenue Refunding Bonds 03/26/2013 11,795,000 Board of Water & Light Revenue Refunding Bonds 02/15/2017 27,085,000 Board of Water & Light Revenue Bonds 06/13/2019 319,875,000 Board of Water & Light Revenue Refunding Bonds 12/19/2019 251,995,000 Subtotal Revenue Bonds $627,240,000
MICHIGAN TRANSPORTATION FUND BONDS MTF Bonds Subtotal Michigan Transportation Fund Bonds 09/27/2018 $1,125,000 $1,125,000
1 Preliminary, subject to change.
D-16 AUTHORITY BONDS (with City LTGO Pledge) Building Authority Refunding Bonds - CABs 10/08/2009 $2,767,491 TIFA Refunding Bonds 12/21/2017 10,805,000 Building Authority Refunding Bonds 12/21/2017 16,150,000 TIFA Refunding Bonds 05/08/2019 7,730,000 Building Authority Refunding Bonds 08/13/2020 8,735,000 TIFA Refunding Bonds 08/13/2020 4,485,000 Subtotal Authority Bonds (with City GOLT Pledge) $50,672,491
AUTHORITY BONDS (without City GOLT Pledge) Brownfield Redevelopment Authority Bonds 06/05/2020 $19,260,000 Subtotal Authority Bonds (without City GOLT Pledge) $19,260,000
SHARE OF COUNTY ISSUED BONDS Groesbeck Park Drain District Bonds 11/24/2015 $602,645 Smith Consolidated Drain District Bonds 07/28/2016 89,531 Stimson Drain District Bonds 07/28/2016 221,264 Melkvik (Grovenburg Farms) Drain District Bonds 08/09/2019 27,789 Gilbert and West Town Drain Refunding Bonds 05/22/2019 47,836 Montgomery Drain Drainage District2 09/01/2020 20,037,600 Subtotal Share of County Issued Bonds $21,026,665
TOTAL DIRECT DEBT $839,801,558
Less: Michigan Transportation Fund Bonds ($1,125,000) Less: Self-Supporting Bonds – Authority Bonds (19,260,000) Less: Self-Supporting Bonds – Share of County Bonds2 (21,026,665) Less: Pollution Abatement Bonds (92,932,402) Less: Revenue Bonds (627,240,000) ($761,584,067)
NET DIRECT DEBT $78,217,491 Source: Municipal Advisory Council of Michigan, the City’s Audited Financial Statements and Official Statements.
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2 Preliminary, subject to change.
D-17 Table 20 - Overlapping Debt (As of August 14, 2020)
Percent Par Amount Overlap Municipality Outstanding City’s Share 5.34% East Lansing School District $102,413,377 $5,468,874 1.73 Grand Ledge School District 84,665,000 1,464,705 0.98 Holt School District 36,580,895 358,493 79.34 Lansing School District 104,075,000 82,573,105 1.34 Mason Ingham School District 35,655,000 477,777 4.39 Okemos Public Schools 32,098,033 1,408,709 0.26 Waverly Public Schools 13,435,000 34,931 0.28 Clinton County 7,727,626 21,637 1.92 Eaton County 19,088,071 366,491 25.35 Ingham County 42,555,585 10,787,841 0.88 Eaton ISD 3,175,000 27,940 21.87 Ingham ISD 1,002,000 219,137 17.92 Lansing Community College 98,220,000 17,601,024 NET OVERLAPPING DEBT $120,810,664
TOTAL NET DIRECT AND OVERLAPPING DEBT $199,028,155 Source: Municipal Advisory Council of Michigan
Other Debt
The City has entered into contracts for purchase of lands, property or equipment to be paid for in installments under Act 99, Public Acts of Michigan, 1933, as amended (“Act 99”). The outstanding balance of all purchases authorized under Act 99, exclusive of interest, is limited to 1 1/4 % of the taxable value of the real and personal property in the City. The City has pledged its limited full faith and credit for the payment of these installment purchase agreements.
2020 Taxable Value $2,296,435,219 Act 99 Debt Limit: 1 ¼% of Taxable Value 28,705,440 Outstanding Balance of Act 99 Debt (1) (10,154,184) Additional Act 99 Debt which could be legally incurred $18,551,256 (1) As of July 30, 2020. See below.
The City has the following Act 99 debt outstanding as of August 13, 2020:
Date Description Interest Rate Maturity Date Balance 02/13/2015 IPA – 2015 Ballpark Improvement 3.00% 02/01/2030 $9,486,334 09/12/2013 IPA – 2013 Recycling Carts 1.96% 04/01/2022 667,850 Total $10,154,184
D-18 Debt Ratios
Table 21 - Debt Ratios3 (As of August 14, 2020) Per Capita (114,297) Net Direct Debt ($78,217,491) ...... $684.34 Net Direct and Overlapping Debt ($199,028,155) ...... $1,741.32
Ratio to 2020 Taxable Valuation ($2,296,435,219) Net Direct Debt ($78,217,491) ...... 3.41% Net Direct and Overlapping Debt ($199,028,155) ...... 8.67%
Ratio to 2020 State Equalized Valuation ($2,837,435,376) Net Direct Debt ($78,217,491) ...... 2.76% Net Direct and Overlapping Debt ($199,028,155) ...... 7.01%
Ratio to 2020 Estimated True Cash Value ($5,674,870,752) Net Direct Debt ($78,217,491) ...... 1.38% Net Direct and Overlapping Debt ($199,028,155) ...... 3.51%
Debt History
The City nor any of its authorities have a record of default.
Future Financing3
1.) Installment Purchase Agreement in an amount not to exceed $1,500,000 to finance the purchase of a fire truck and equipment, and associated costs of issuance in September 2020; 2.) Tax Anticipation Notes have been authorized in an amount not to exceed $21,815,000 payable from the City’s ad valorem property taxes to be received to pay certain operating expenditures in fiscal years 2020-2021 and/or 2021-2022; 3.) City’s share of the bonds to be issued by the Montgomery Drain Drainage District, County of Ingham in three series beginning August 2020 through May 2021 is approximately $33,690,000; and 4.) Brownfield Redevelopment Authority anticipates issuing $5,595,000 Limited Obligation Tax Increment Revenue Bonds, Series 2020-2 in October 2020, $2,770,000 Limited Obligation Tax Increment Revenue Bonds, Series 2020-3 in the spring of 2021, and $7,425,0003 Limited Obligation Tax Increment Revenue Bonds, Series 2020-4 in summer of 2021. These Brownfield Redevelopment Authority bond issues will NOT be a limited tax general obligation of the City.
3 Preliminary, subject to change.
D-19 Legal Debt Margin
The net indebtedness of the City shall not exceed 10% of the state equalized valuation of all real and personal property. Obligations which are not included in the computation of legal debt margin according to the statutes incorporating the unit of government are: (1) Special Assessment Bonds; (2) Mortgage Bonds; (3) Michigan Transportation Fund Bonds; (4) Revenue Bonds; (5) Bonds issued, or contracts or assessment obligations, incurred, to comply with an order of the Water Resources Commission (now the Department of Environment, Great Lakes & Energy) or a court of competent jurisdiction; (6) Other obligations incurred for water supply, sewage, drainage or refuse disposal projects necessary to protect the public health by abating pollution.
Table 22 - Legal Debt Margin4 (As of August 14, 2020) 2020 State Equalized Valuation Excluding IFT Valuation $2,837,435,376 Plus: 2019 IFT State Equalized Valuation 46,278,100 Total State Equalized Valuation $2,883,713,476
Debt Limit: 10% of State Equalized Valuation $288,371,347
Amount of Direct Debt Outstanding $839,801,558 Less: Transportation Fund Bonds: ($1,125,000) Share of County Debt (21,026,665) Revenue Bonds (Brownfield Authority) (19,260,000) Revenue Bonds (627,240,000) Pollution Abatement Bonds (92,932,402) ($761,584,067)
Total Subject to Debt Limit $78,217,491
Additional Debt which Could be Legally Incurred $210,153,856
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4 Preliminary, subject to change.
D-20 GENERAL DEMOGRAPHIC INFORMATION
Population by Age
The 2010 U.S. Census estimate of population by age for the City is as follows:
Table 23 - Population by Age, 2010
Number Percent Total Population 114,297 100.00% 0 through 19 years 30,906 27.40% 20 through 64 years 72,346 63.30% 65 years and over 11,045 9.66% Median Age 32.3 -
Income
The U.S. Census 2014-2018 American Community Survey estimates of household income for the City are as follows:
Table 24 - Household Income
Number Percent HOUSEHOLDS BY INCOME 48,926 100.00% Less than $10,000 4,951 10.1 $10,000 to $14,999 3,318 6.8 $15,000 to $24,999 6,669 13.6 $25,000 to $34,999 6,270 12.8 $35,000 to $49,999 8,372 17.1 $50,000 to $74,999 9,576 19.6 $75,000 to $99,999 4,693 9.6 $100,000 to $149,999 3,726 7.6 $150,000 to $199,999 943 1.9 $200,000 or more 408 0.8 Median Income $40,325 -
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D-21 Employment Characteristics
The following companies located in the Lansing region offer employment opportunities for residents.
Table 25 - Employment Characteristics Approx. No. Lansing Region (500 or more employed) Product/Service Employed State of Michigan Government 14,390 Michigan State University Higher education 10,253 Sparrow Health System Healthcare 7,600 General Motors Auto assembly 4,549 Lansing Community College Higher education 3,144 McLaren Regional Medical Center Healthcare 3,000 Auto Owners Insurance (HQ) Insurance 2,578 Peckham Industries Textiles, auto parts 2,510 Jackson National Life Insurance Insurance 2,500 Dart Container Corp. Containers 2,000 Meijer Distribution Center Logistics 1,500 Dean Transportation Transportation Equipment 800 Delta Dental Insurance 800 MSUFCU Financial Services 800 Michigan Farm Bureau Family of Co. Insurance 750 Quality Dairy Food Processing 730 Spartan Motors Chassis Automotive 730 Dakkota Integrated Systems Automotive 670 Multi-packaging Solutions (John Henry) Logistics 600 Neogen Corp Biotech 550 Bridgewater Interiors (Johnson Controls) Automotive 500 Orchid Orthopedic Solutions Medical Device 500 Pratt & Whitney Aerospace 500 PNC Bank Financial Services 500 The approximate number of employees listed above is as reported in the sources indicated below. Because of reporting time lags and other factors inherent in collecting and reporting such information, the numbers may not reflect recent changes in employment levels, if any.
Source: Data current as of August 27, 2019 and updated annually. http://www.purelansing.com/Demographics/Largest-Employers
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D-22 Employment Breakdown
The U.S. Census 2014-2018 American Community Survey estimates the occupational breakdown of persons 16 years and over in the City as follows:
Table 26 - Employment by Occupation
Number Percent PERSONS BY OCCUPATION 55,844 100.00% Professional Specialty Occupations 17,751 31.8 Service Occupations 12,793 22.9 Sales & Office Occupations 12,281 22.0 Construction & Maintenance Occupations 3,447 6.2 Transportation & Material Moving Occupations 9,572 17.1
The U.S. Census 2014-2018 American Community Survey estimates the breakdown by industry for persons 16 years and over in the City is as follows:
Table 27 - Employment by Industry
Number Percent PERSONS BY INDUSTRY 55,844 100.00% Agriculture, Forestry, Fishing, Hunting & Mining 157 0.3 Construction 2,172 3.9 Manufacturing 6,275 11.2 Wholesale Trade 900 1.6 Retail Trade 6,793 12.2 Transportation 2,755 4.9 Information 869 1.6 Finance, Insurance, & Real Estate 3,241 5.8 Professional & Management Services 5,758 10.3 Educational, Health & Social Services 13,465 24.1 Arts, Entertainment, Recreation & Food Services 6,549 11.7 Other Professional and Related Services 3,295 5.9 Public Administration 3,615 6.5
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D-23 Unemployment
The Michigan Department of Technology, Management & Budget, Bureau of Labor Market Information and Strategic Initiatives, reports unemployment averages for the City and the State of Michigan as follows: Table 28 - Unemployment Lansing MSA State of Michigan 2020 (June) 16.0% 14.9% 2019 Annual Average 5.0 4.1 2018 Annual Average 5.2 4.1 2017 Annual Average 6.1 4.6 2016 Annual Average 6.1 5.0 2015 Annual Average 6.6 5.4 2014 Annual Average 8.7 7.2
Source: http://milmi.org/DataSearch/LAUS
Building Permits The City reports of the total number of building permits issued and the construction value of the permits is as follows:
Table 29 - Building Permits and Construction Value Year No. of Permits Value of Permits 2020 (1) 812 $121,146,315 2019 2,128 299,578,099 2018 2,019 83,863,060 2017 1,933 100,641,396 2016 1,822 106,406,779 2015 1,744 198,539,891 2014 1,597 207,146,589 2013 1,444 88,283,911 2012 1,539 118,718,317 Totals 15,038 $1,324,324,357 (1) As of July 21, 2020.
D-24 The number of building permits for privately owned residential property and the dollar value on the permits within the City is as follows:
Table 30 – Types of Permits Issued Roofing Commercial Site Plan Year Demolition & Siding Signs Electrical Mechanical Plumbing Plan Reviews Reviews 2020 (1) 27 289 27 809 1,086 729 220 17 2019 67 719 81 1,905 2,273 1,910 336 34 2018 125 658 78 1,732 2,316 1,665 246 32 2017 97 566 76 1,582 2,057 1,459 270 27 2016 107 432 82 1,567 2,004 1,456 247 36 2015 313 107 (2) 91 1,554 1,828 1,447 240 37 (2) 2014 120 96 1,816 1,698 1,785 193 2013 91 100 1,312 1,540 1,364 198 2012 139 67 1,208 1,612 1,501 234 (1) As of July 21, 2020. (2) Started gathering data.
Economic Development
New Development Projects Unlike so many regions, the Greater Lansing region can tout a successful, vibrant and financially robust city at its core: Lansing, which also serves as Michigan’s capital city. The Greater Lansing area works with a number of community partners, such as the Lansing Economic Area Partnership (LEAP) and Michigan State University (MSU). Aggressive economic development activities within the City and the surrounding areas in 2018 and 2019 have resulted in a number of economic projects that have commenced in 2020, some of which are highlighted below: • The City of Lansing created two Corridor Improvement Authorities, located on South Martin Luther King Jr. Boulevard and North Grand River Avenue, providing the City with four redevelopment authorities which were created to help focus on the City’s revitalization initiatives. • In 2018, the City of Lansing signed an agreement with the Gillespie Group to begin building an urban market owned by Meijer and a hotel and apartments in the 600 block of Michigan Avenue. • Last year in 2019, Lansing Mayor Andy Schor announced significant investments in the City and resulted in an increase of more than $200 million of construction projects including revitalization of a lot planned for the south side of Lansing and reactivating the former Electronic Data Systems site, which had been vacant for a decade. • The City began several new development projects in 2019 including the Red Cedar Development, linking Lansing to East Lansing, and a mixed-use space near the Cooley Law School stadium. Both projects have a combined value over $300 million. • Opened in the fall of 2019, The HUB serves as a housing complex for students of Michigan State University located in close proximity to downtown East Lansing and the University’s campus. The HUB is a 10-story, mixed-use development, which included 347 student-oriented apartments, 12,220 square feet of retail space (anchored by Target) and a 158 space parking structure with 158 parking spaces.
D-25 • Nearly 15 miles of road improvements were completed in 2019 including East and West Mount Hope Avenue, Miller Road, Capitol Avenue, among others. The City received State funding to convert six of the City’s downtown streets to accommodate two-way traffic – Capitol Avenue, Grand Avenue, Ottawa Street, Allegan Street, Pine Street and Walnut Street. Two-way streets have been shown to slow traffic, make streets more pedestrian-friendly, for City residents and visitors, and more beneficial to businesses by increasing visibility. • The City’s Arts grant program continues to support local organizations including the Lansing Art Gallery, Impression 5 and the Lansing Symphony Orchestra. In addition, the City will be providing $75,000 of arts impact grant annually beginning in 2020. • Mayor Andy Schor addressed the importance of creating events to allow neighborhoods to engage with the City such as the Love your Block work, which has been funded through the Cities of Service program. Mayor Schor’s focus is on two neighborhoods specifically - the Baker neighborhood and Southwest Lansing at Pleasant Groves and Holmes. In the Baker neighborhood, the Mayor and his administration has worked with several organizations to help revitalize the area including the Potter Park Zoo, the Ingham County Land Bank, CATA, Sycamore Creek Church, and Habitat for Humanity who has given a three-year commitment to work on homes in the neighborhood. • The City of East Lansing is looking ahead toward the opening of the Facility for Rare Isotope Beams (FRIB). The FRIB is a national user facility of the U.S. Department of Energy, which will provide research opportunities for approximately 1,000 scientists and researchers and result in nearly $1 billion of economic activity in the region. Construction of the facility is expected to be completed in 2022. The City fosters an environment for high growth, a place where one can expect a good return on investment. Lansing is poised to benefit from the new generation of young people, entrepreneurs and new economy businesses who are now demanding an urban environment for living and working: its economy is diverse; its work force creative. LEAP, Inc. The Lansing Economic Area Partnership (LEAP) was established to create an environment for businesses to grow and be prosperous. Partnering with the City’s Economic Development Corporation, LEAP focuses on Ingham, Clinton and Eaton Counties. Total population for this tri-county region totals to 457,943 according to the 2010 U.S. Census Bureau. LEAP’s mission is building stronger companies and greater communities. To accomplish this, LEAP aids entrepreneurs starting new businesses and helps existing businesses thrive. They are currently seeking to work with various industries including advanced manufacturing, health care, information technology, insurance and financial services, supply chain and logistics as well as the Facility for Rare Isotope Beams mentioned above.
D-26
APPENDIX E CITY OF LANSING GENERAL FUND BUDGET SUMMARY AND COMPARATIVE FINANCIAL STATEMENTS [THIS PAGE INTENTIONALLY LEFT BLANK] CITY LANSING GENERAL FUND BUDGET
FY2020 Adopted FY2021 Adopted Budget Budget Beginning Fund Balance $10,031,490 $6,894,240 GENERAL FUND REVENUE Property Taxes $43,360,000 $45,631,500 Income Taxes 36,500,000 31,380,800 Return on Equity 23,100,000 25,000,000 State Revenues 19,147,000 17,126,766 Charges for Services 8,321,800 8,642,703 Fines & Forfeitures 1,349,200 1,803,100 Licenses and Permits 2,029,000 1,761,700 Other Revenues 203,000 353,000 Interest & Rents 215,000 140,000 Total General Fund Revenue $134,225,000 $131,839,569 GENERAL FUND EXPENDITURES Council $711,977 $668,682 Internal Audit 161,000 170,601 Courts 6,216,952 6,429,780 Mayor’s Office 1,286,335 1,230,864 Office of Community Media 478,000 540,669 City Clerk’s Office 1,482,186 1,502,908 Neighborhood & Citizen Engagement 1,141,000 1,053,914 Economic Development & Planning 5,284,319 4,778,684 Finance/Operations 1,724,797 2,106,317 Assessing 1,550,702 1,737,056 Treasury 2,028,004 2,260,256 Human Resources 2,191,627 2,260,520 Attorney’s Office 2,060,883 2,265,661 Police Department 45,170,051 46,493,846 Fire Department 36,300,309 36,704,247 Public Service 12,162,686 11,843,878 Human Relations & Community Service 1,656,911 1,725,334 Parks & Recreation 8,371,761 8,094,706 Human Service Agency Support 1,725,000 1,560,400 City Supported Agencies 262,500 102,500 Non-Departmental Vacancy Factor 0 (1,400,000) Library Lease 145,000 150,000 Debt Service 1,265,000 1,303,000 Net Transfers 3,985,250 2,942,155 Total Expenditures $137,362,250 $136,525,977 Fund Balance Increase/(Decrease) ($3,137,250) ($4,852,294) Total Fund Balance, Ending $6,894,240 $2,041,946 Note: Additional information can be found on City’s website: https://www.lansingmi.gov/
E-1 CITY OF LANSING COMPARISON OF REVENUES AND EXPENDITURES
FY2017 FY2018 FY2019 Beginning Fund Balance $13,328,403 $15,697,266 $17,326,512 GENERAL FUND REVENUE Property Taxes and Special Assessments $39,597,810 $38,485,677 $40,594,678 Income Taxes 35,694,010 38,455,296 37,021,436 Licenses and Permits 1,494,298 2,113,824 1,399,881 Intergovernmental 16,211,983 18,851,971 18,402,995 Charges for Services 9,113,089 9,268,198 9,024,331 Fines and Forfeitures 2,240,100 2,134,860 2,050,717 Interest and Rents 161,228 154,898 226,344 Contributions 21,973,270 20,688,205 21,255,032 Other Revenue 158,592 209,605 387,451 Total General Fund Revenue $126,644,380 $130,362,534 $130,362,865
GENERAL FUND EXPENDITURES Current Expenditures: General Government $20,690,998 $18,838,243 $24,027,129 76,775,769 Public Safety 74,307,165 72,140,597 Public Works 11,200,151 11,087,884 11,615,556 Recreation and Culture 7,749,245 8,236,872 8,138,369 Community Development 0 8,302,397 9,175,051 Debt Service: Principal 1,661,987 1,725,169 1,859,052 Interest 537,720 494,028 448,745 Total Expenditures $116,691,677 $122,991,758 $132,039,671 Revenues Over (Under Expenditures) $9,952,703 $7,370,776 ($1,676,806) Other Financing Sources (Uses) ($7,583,840) ($5,741,530) ($5,618,216) Net Change in Fund Balance $2,368,863 $1,629,246 ($7,295,022) Total Fund Balance, Ending $15,697,266 $17,326,512 $10,031,490 Note: Additional information can be found on City’s website: https://www.lansingmi.gov/
E-2 CITY OF LANSING COMPARISON OF ASSETS AND LIABILITIES – GENERAL FUND
FY 2017 FY 2018 FY 2019 ASSETS Cash and Cash Equivalents $2,685,128 $2,480,337 $3,420,179 Equity in Pooled Cash and Investments 7,978,332 9,381,498 10,033,485 Accounts Receivable, Net 8,114,762 8,663,232 8,805,431 Taxes Receivable 49,729 166,977 635,163 Accrued Interest Receivable 0 0 500 Due From Other Governments 4,954,572 5,051,411 2,761,330 Inventories 20,513 17,660 29,575 Prepaids 7,829 21,777 9,030 Total Assets $23,810,865 $25,782,892 $25,694,693 LIABILITIES Accounts Payable $3,629,204 $3,375,118 $6,299,107 Accrued Payroll 1,439,279 1,810,790 2,536,288 Due to Other Funds 0 272,825 2 Due to Other Governments 1,120,882 996,663 3,273,824 Unearned Revenue 88,077 42,124 568,924 Other 835,191 731,068 821,915 Total Liabilities $7,112,633 $7,228,588 $13,500,060
DEFERRED INFLOWS OF RESOURCES Unavailable Revenue $1,000,966 $1,227,792 $2,163,143
FUND BALANCE Non-Spendable 28,342 39,437 38,605 Committed 385,067 283,815 0 Unassigned (Deficit) 15,283,857 17,003,260 9,992,885 TOTAL FUND BALANCE (DEFICIT) $15,697,266 $17,326,512 $10,031,490 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE $23,810,865 $25,782,892 $25,694,693 (DEFICIT) Note: Additional information can be found on City’s website: https://www.lansingmi.gov/
E-3 [THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX F CITY OF LANSING AUDITED FINANCIAL STATEMENTS The auditor was not requested to examine or review and therefore has not examined or reviewed any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly has not conducted any post-audit review procedures and will not express any opinion with respect to the accuracy or completeness of such financial documents, statements or materials.
[THIS PAGE INTENTIONALLY LEFT BLANK] Rehmann Robson
2330 East Paris Ave. SE Grand Rapids, MI 49546 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for Ph: 616.975.4100 our audit opinions. Fx: 616.975.4400 rehmann.com Opinions
INDEPENDENT AUDITORS' REPORT In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate December 19, 2019 discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan, as of June 30, 2019, and the respective changes in financial position Honorable Mayor and and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the Members of the City Council year then ended in conformity with accounting principles generally accepted in the United States of City of Lansing, Michigan America.
Report on the Financial Statements Required Supplementary Information
We have audited the accompanying financial statements of the governmental activities, the business- Accounting principles generally accepted in the United States of America require that the type activities, the aggregate discretely presented component units, each major fund, and the management’s discussion and analysis and the schedules for the pension and other postemployment aggregate remaining fund information of the City of Lansing, Michigan (the “City”), as of and for the benefits plans, as listed in the table of contents, be presented to supplement the basic financial year ended June 30, 2019, and the related notes to the financial statements, which collectively statements. Such information, although not a part of the basic financial statements, is required by the comprise the City’s basic financial statements as listed in the table of contents. 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. Management's Responsibility for the Financial Statements 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
F-1 Management is responsible for the preparation and fair presentation of these financial statements in of management about the methods of preparing the information and comparing the information for accordance with accounting principles generally accepted in the United States of America; this includes consistency with management's responses to our inquiries, the basic financial statements, and other the design, implementation, and maintenance of internal control relevant to the preparation and fair knowledge we obtained during our audit of the basic financial statements. We do not express an opinion presentation of financial statements that are free from material misstatement, whether due to fraud or or provide any assurance on the information because the limited procedures do not provide us with error. sufficient evidence to express an opinion or provide any assurance.
Independent Auditors' Responsibility Other Information
Our responsibility is to express opinions on these financial statements based on our audit. We conducted Our audit was conducted for the purpose of forming opinions on the financial statements that our audit in accordance with auditing standards generally accepted in the United States of America and collectively comprise the City’s basic financial statements. The combining and individual fund financial the standards applicable to financial audits contained in Government Auditing Standards, issued by the statements and schedules, and the introductory section and statistical tables are presented for purposes Comptroller General of the United States. Those standards require that we plan and perform the audit of additional analysis and are not a required part of the basic financial statements. 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 auditors' 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.
11 12 The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section and statistical tables 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 19, 2019, on our consideration of the City of Lansing, Michigan’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, This page intentionally left blank. contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in
F-2 considering the City's internal control over financial reporting and compliance.
13 14 CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis
The management of the City of Lansing, Michigan (“the City”) provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2019 for the benefit of the readers of these financial statements. This management’s discussion and analysis (“MD&A”) is intended to assist the reader in focusing on significant financial issues and provide an overview of the City’s financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section.
Financial Highlights
· Total net position $ (231,286,435) · Change in total net position (3,369,244) · Fund balances, governmental funds 39,054,736 · Change in fund balances, governmental funds 1,194,217 · Unassigned fund balance, general fund 9,992,885 · Change in fund balance, general fund (7,295,022) · Long-term debt outstanding 178,948,144 MANAGEMENT'S DISCUSSION AND ANALYSIS · Change in long-term debt (24,270,118) Overview of the Financial Statements
This MD&A is an introduction to the City’s basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
F-3 report also contains other required supplementary information in addition to the basic financial statements.
Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position and the Statement of Activities are two financial statements that report information about the City, as a whole, and about its activities, which provide measurements of long-term trends that should help answer this question: Is the City, as a whole, better off or worse off as a result of this year’s activities? Unlike the governmental funds, the current year’s revenues and expenses are taken into account regardless of when cash is received or paid, known as “full accrual accounting”.
The Statement of Net Position presents all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the these categories reported as “net position”. Over time, increases and decreases in net position are an indicator of whether the City’s long-term financial position is improving or deteriorating, but can also change as a result of governmental accounting standards.
The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
The Statement of Net Position and the Statement of Activities report three activities, as follows:
· Governmental Activities. Most of the City’s basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch), the District Court (judicial branch), and general operations of the executive branch departments, such as police, fire, parks, public works, and other general staff departments fall within the governmental activities.
15 16 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis Management's Discussion and Analysis
· Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain Fund Financial Statements. The City’s major funds are identified as the General Fund, Sewage Disposal System Fund, services it provides. Sewage collection and treatment and commercial area parking are examples of business-type and Municipal Parking System Fund. Data for all other funds, termed "nonmajor funds", are combined into a single, activities. aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. · Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has various discretely presented units: · Governmental funds. Most of the City’s basic services are reported in the governmental funds, which focus on the Brownfield Redevelopment Authority, the Tax Increment Finance Authority, and the Lansing Entertainment how money flows into and out of those funds and the balances left at year-end that are available for future and Public Facilities Authority. spending. The governmental fund financial statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps determine These financial statements include two schedules that reconcile the amounts reported on the governmental fund whether there are greater or fewer financial resources that can be spent in the near future to finance the City’s financial statements (modified accrual accounting) with governmental activities (full accrual accounting) on the programs. These funds are reported using modified accrual accounting, which measures cash and all other appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual financial assets that can readily be converted to cash. Governmental funds include the General Fund and special to full accrual accounting: revenue, capital projects, debt service, and permanent funds.
· Capital assets used in governmental activities are not reported on governmental fund statements. · Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds · Certain revenues that are earned, but not available for use within the reporting period, are reported as revenues (enterprise and internal service) utilize full accrual accounting; the same method used by private sector for governmental activities, but are reported as deferred inflows of resources on the governmental fund businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples statements. are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. · Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements, but not deferred on the government-wide statements. · Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment
F-4 benefit plans. It is also responsible for other assets that, because of a trust arrangement, can be used only for the · Internal service funds are reported as governmental activities, but reported as proprietary funds in the fund trust beneficiaries. The City’s fiduciary activities are reported in separate Statements of Fiduciary Net Position financial statements. and Changes in Fiduciary Net Position. These funds, which include pension and other postemployment benefit funds, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund · Bond discounts and premiums in connection with the issuance of long-term debt are reported as other financing activities and balances because these assets are restricted in purpose and do not represent spendable assets of sources/uses in governmental fund statements, but are capitalized and amortized in the government-wide the City to finance its operations. statements. Required Supplementary Information · Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, and others only appear as liabilities in the government-wide statements. Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required · Capital outlay spending in excess of capitalization thresholds are recorded as capital assets on the government- pension and other postemployment benefit supplementary information. wide statements, but are reported as expenditures on the governmental fund statements. Other Supplementary Information · Bond and note proceeds result in liabilities on the government-wide statements, but are recorded as other financing sources on the governmental fund statements. Other supplementary information includes combining and individual fund financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single · Certain other outflows, such as debt service principal payments, represent decreases in liabilities on the columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental government-wide statements, but are reported as expenditures on the governmental fund statements. fund financial statements.
· Pension and other postemployment benefits liabilities and related deferrals relating to governmental funds are only reported in the government-wide statements.
The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.
17 18 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis Management's Discussion and Analysis
Government-wide Financial Analysis The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City’s net position changed during the fiscal year: The City’s combined net position decreased $3.4 million over the course of this fiscal year’s operations, and came to a total of $(231.3) million. Net position of governmental activities decreased $(16.9) million, and business-type Change in Net Position activities increased $13.5 million. Explanations for those changes are described below under the governmental Governmental Activities Business-type Activities Total activities and business-type activities sections of this Management Discussion and Analysis. 2019 2018 2019 2018 2019 2018 Program revenues Net Position Charges for services $ 15,573,751 $ 12,727,522 $ 50,916,057 $ 48,926,712 $ 66,489,808 $ 61,654,234 Governmental Activities Business-type Activities Total Operating grants 29,663,253 28,983,936 6,648,917 1,603,942 36,312,170 30,587,878 2019 2018 2019 2018 2019 2018 Capital grants 3,313,872 855,760 - - 3,313,872 855,760 General revenues Current and other assets $ 70,031,080 $ 60,223,657 $ 91,700,607 $ 84,766,314 $ 161,731,687 $ 144,989,971 Taxes 78,714,366 78,028,764 - - 78,714,366 78,028,764 Capital assets, net 179,267,839 183,112,603 338,450,763 354,396,144 517,718,602 537,508,747 State shared revenues 15,178,768 14,748,491 - - 15,178,768 14,748,491 Total assets 249,298,919 243,336,260 430,151,370 439,162,458 679,450,289 682,498,718 Unrestricted grants and contributions 24,351,305 24,671,167 - - 24,351,305 24,671,167 Deferred outflows of Unrestricted investment resources 43,806,456 36,024,546 6,075,602 6,400,785 49,882,058 42,425,331 earnings 463,685 216,239 - - 463,685 216,239 Gain on sale of Long-term debt outstanding 45,721,172 47,341,836 133,226,972 155,876,426 178,948,144 203,218,262 capital assets 64,820 - - - 64,820 - Other liabilities 688,526,465 638,249,867 73,982,282 72,354,918 762,508,747 710,604,785 Total revenues 167,323,820 160,231,879 57,564,974 50,530,654 224,888,794 210,762,533 Total liabilities 734,247,637 685,591,703 207,209,254 228,231,344 941,456,891 913,823,047 Expenses
F-5 Deferred inflows of General government 26,679,840 16,995,976 - - 26,679,840 16,995,976 resources 18,786,464 36,845,515 375,427 2,172,678 19,161,891 39,018,193 Public safety 97,391,612 87,352,251 - - 97,391,612 87,352,251 Public works 29,644,398 26,485,877 - - 29,644,398 26,485,877 Net position Recreation and culture 7,650,889 8,302,243 - - 7,650,889 8,302,243 Net investment in Community development 21,046,090 16,150,417 - - 21,046,090 16,150,417 capital assets 146,153,309 148,263,240 233,988,263 227,127,434 380,141,572 375,390,674 Interest on long-term debt 1,182,488 1,137,561 - - 1,182,488 1,137,561 Restricted 23,505,738 18,989,889 1,953,175 1,886,620 25,458,913 20,876,509 Sewage disposal system - - 31,939,976 28,552,143 31,939,976 28,552,143 Unrestricted (deficit) (629,587,773) (610,329,541) (7,299,147) (13,854,833) (636,886,920) (624,184,374) Municipal parking system - - 7,081,998 9,888,246 7,081,998 9,888,246 Cemetery - - 470,220 1,379,877 470,220 1,379,877 Total net position $ (459,928,726) $ (443,076,412) $ 228,642,291 $ 215,159,221 $ (231,286,435) $ (227,917,191) Golf - - 278,501 (372,775) 278,501 (372,775) Garbage and rubbish The largest component of the City’s net position reflects its net investment in capital assets (e.g. land, buildings, collection - - 1,035,262 3,101,893 1,035,262 3,101,893 equipment, infrastructure, and others). Restricted net position is the next largest component, which represents Recycling - - 3,856,764 3,859,496 3,856,764 3,859,496 amounts subject to external restrictions such as bond covenants, State legislation or Constitutional provision. The Total expenses 183,595,317 156,424,325 44,662,721 46,408,880 228,258,038 202,833,205 remaining portion, unrestricted net position are resources that may be used at the City’s discretion, but often have limitations based on policy action. The large decrease in unrestricted net position of governmental activities was Change in net position, primarily due to the increase in the net pension and net other postemployment benefits liabilities of $14.5 million and before transfers (16,271,497) 3,807,554 12,902,253 4,121,774 (3,369,244) 7,929,328 $28.3 million, respectively. The increase in restricted net position for governmental activities was primarily due to Transfers (580,817) (912,186) 580,817 912,186 - - increases in the major and local street fund balances, as intergovernmental revenues exceeded current year projects. Change in net position (16,852,314) 2,895,368 13,483,070 5,033,960 (3,369,244) 7,929,328
Net position: Beginning of year (443,076,412) (445,971,780) 215,159,221 210,125,261 (227,917,191) (235,846,519)
End of year $ (459,928,726) $ (443,076,412) $ 228,642,291 $ 215,159,221 $ (231,286,435) $ (227,917,191)
19 20 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis Management's Discussion and Analysis
Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: The following chart depicts expenses of the governmental activities for the fiscal year:
Revenues - Governmental Activities Expenses - Governmental Activities Fiscal Year Ending June 30, 2019 Fiscal Year Ending June 30, 2019 Property tax and special assessments 24.9% Income tax Interest on long-term 22.1% Community development debt 11.5% 0.6% General government 14.5% Recreation and culture 4.2%
Other revenues 0.3% Charges for services 9.3% Public works Unrestricted grants and contributions 16.1% 14.6% Operating grants Public safety Capital grants 17.7% 53.1% State shared revenues 2.0% 9.1% Total expenses for governmental activities increased $27.2 million, 17.4%, from FY 2018 to FY 2019, with trends of the major expense categories as follows: In total, governmental activity revenues increased $7.1 million from FY 2018 to FY 2019, with trends of the major revenue categories as follows: The largest component of governmental activities was public safety, accounting for 53.0%, or $97.4 million, a 11.5%
F-6 ($10.0 million) increase from FY 2018, largely due to investment in supplies and repairs. Property taxes comprised the largest portion of governmental activity revenue at 24.9%, or $41.7 million, a $2.1 million, or 5.4% increase from fiscal year 2018, due largely to rising property values and a decrease in taxroll Public works comprises the next largest component of governmental activity expenses, at 16.1%, or $29.6 million, a adjustments from the previous year. 11.9% ($3.2 million) increase from FY 2018, due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. Income taxes comprised 22.1%, or $37.0 million, of governmental activity revenue, the full amount of which is revenue to the General Fund. This represents a $1.4 million, or 3.7%, decrease from fiscal year 2018. Local income tax rates At $26.7 million, general government expenses, representing general and internal City services, comprised 14.5% of are prescribed by State law, and limited in Lansing’s case to 1% of resident income and 0.5% of the income of persons governmental activities. This category increased by $9.7 million in operational costs, a 60.0% overall increase from FY working in the City, but living outside of its corporate boundaries. Local income tax rates are also limited to 0.5% for 2018, due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. Lansing residents working subject to East Lansing's income tax as part of a reciprocal agreement. Community development represented 11.5%, or $21.0 million, of total governmental activities expenses. This category Restricted operating and capital grants and contributions made up $33.0 million, or 19.7% of governmental activity increased $4.9 million, or 30.3% from FY 2018, due mainly to a change in Code Compliance operations from the Fire revenue for fiscal year 2019, a $3.1 million, or 10.5% increase from fiscal year 2018. This increase was largely Department (public safety) to the Economic Development and Planning Department (community development). attributable to an increase in State gas and weight tax revenue distributions and an increase in federal grant revenue from the Community Development Block Grant. Business-type Activities. Net position of the business-type activities increased by $13.5 million from FY 2018 to $228.6 million. The increase was mainly attributable to the increase in sewer and municipal parking system funds net Unrestricted grants and contributions (including state shared sales tax revenue) comprised 23.7%, or $39.5 million, of position for the fiscal year. The increase in the sewer fund is necessary to fund future debt needs associated with revenues, a $110.0 thousand, or 0.3% increase from fiscal year 2018. A little more than one-third of this category, U.S. Environmental Projection Agency and Michigan Department of Environmental Quality-mandated sewer separation $15.2 million, is attributed to State revenue sharing, an amount distributed to municipalities by the State of Michigan projects. The increase in the municipal parking fund (operating grants and contributions) was due to the sale of the by formula allocation of portions of the State sales tax. Townsend parking ramp and payoff of the corresponding debt.
Charges for services are program-specific revenues generated for services provided. Governmental activity charges for Financial Analysis of the City’s Funds services increased $2.8 million from FY 2018 to FY 2019. As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $39.1 million, a $1.2 million increase from fiscal year 2018. Of the $39.1 million fiscal year 2019 combined ending fund balance, $3.0 million is unavailable to spend (i.e. amounts tied up in inventories, prepaids and endowments), $17.0 million is legally restricted, and $9.2 million is committed for designated projects, leaving $9.9 million unassigned.
21 22 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis Management's Discussion and Analysis
The unassigned fund balance for the General Fund was $10.0 million, a decrease of $7.0 million from FY 2018, which is Debt Administration. The City, along with the Lansing Building Authority (LBA), a blended component unit of the City, further described in the General Fund Budgetary Highlights section. is empowered by law to authorize, issue, and sell debt obligations. Limited tax and unlimited tax general obligation bonds are backed by the full faith and credit of the City. The City also issues revenue-dedicated bonded debt, whose Sewage Disposal System Fund payment for principal and interest comes solely out of funds that receive legally-restricted revenues. The Sewage Disposal fund has the City’s only dedicated revenue bonds currently outstanding. LBA’s bonds financed the Net position increased $4.8 million to $227.5 million in FY 2019. Unrestricted net position decreased $2.0 million, construction of parking structures, golf courses, and other related improvements. Revenues derived from user fees from $5.7 million to $3.7 million. The decrease in unrestricted net position was the result of significant increases in from persons using parking and golf facilities fund the debt service requirements for related improvements, but they net pension expenses. are also backed by a limited tax pledge.
Municipal Parking System Fund Outstanding Debt 2019 2018 Net position increased $7.0 million to $14.8 million. Unrestricted net position increased $6.7 million, from a deficit of Governmental activities $2.0 million to $4.7 million. The increase in unrestricted net position was the result of the sale of the Townsend General obligation bonds $ 14,163,699 $ 15,330,000 parking ramp and payoff of the corresponding debt. Deferred amounts: For issuance discounts (52,488) (59,321) General Fund Budgetary Highlights For issuance premiums 814,209 55,139 Installment purchase contracts 11,274,020 12,289,396 The FY 2019 General Fund budget was adopted as a balanced budget, based on projected revenues, with a $500,000 Loans 7,242,002 7,476,545 addition to reserves (fund balance). The City budgeted a vacancy factor in its General Fund to account for anticipated Compensated absences 9,968,748 9,957,856 positions that would become vacant during the course of the year. Because vacancies that will occur within each Workers compensation 2,310,982 2,292,221 department cannot be projected, the vacancy factor is budgeted as a single line item of the General Fund and allocated to various departments through a budget amendment during the year. During the course of the fiscal year, Total governmental activities 45,721,172 47,341,836
F-7 the General Fund revenue budget was amended from $134.9 million to $135.4 million. Business-type activities General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) General obligation bonds 115,616,143 137,182,606 decreased $7.3 million from FY 2018 to $10.0 million. Unassigned fund balance decreased $7.0 million, or 41.2% from Deferred amounts: fiscal year 2018. The $7.3 million decrease in total General Fund reserves was mostly attributable to actual For issuance discounts (340,815) (490,338) expenditures exceeding budgeted expenditures by $2.3 million, largely due to IRS filing penalties and a litigation For issuance premiums 2,438,581 1,879,538 settlement. Revenue bonds 14,075,000 15,625,000 Installment purchase Capital Assets. At the end of the fiscal year 2019, the City had invested $517.7 million, net of accumulated agreements 582,920 808,500 depreciation, in a broad range of capital assets (see the table below). Additional information regarding the City's Compensated absences 855,143 871,120 capital assets can be found in Footnote 6 of the of the Notes to the Financial Statements section of the CAFR. Total business-type activities 133,226,972 155,876,426 Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total Total outstanding debt $ 178,948,144 $ 203,218,262 2019 2018 2019 2018 2019 2018 More detailed information regarding these activities and funds can be found in Footnote 9 of the of the Notes to the Land $ 25,302,787 $ 25,302,787 $ 12,470,361 $ 13,292,491 $ 37,773,148 $ 38,595,278 Financial Statements section of the CAFR. Land improvements 14,069,991 11,799,044 14,255,651 14,265,778 28,325,642 26,064,822 Buildings and improvement 45,632,844 50,058,975 69,089,497 84,746,261 114,722,341 134,805,236 Equipment 7,236,992 7,559,948 967,786 1,187,130 8,204,778 8,747,078 Infrastructure 87,025,225 88,391,849 228,122,636 234,662,935 315,147,861 323,054,784 Construction in progress - - 13,544,832 6,241,549 13,544,832 6,241,549 Total capital assets, net $ 179,267,839 $ 183,112,603 $ 338,450,763 $ 354,396,144 $ 517,718,602 $537,508,747
The decrease in the above-noted capital asset amounts from the prior year is due to depreciation and the sale of the Townsend parking ramp in FY 2019.
23 24 CITY OF LANSING, MICHIGAN
Management's Discussion and Analysis
Economic Condition and Outlook
Employment levels and personal income in the City decreased slightly in FY 2019 resulting in decreased income tax revenue. In addition, the East Lansing income tax took effect January 1, 2019, further impacting income tax revenue for City of Lansing residents working in East Lansing. Property values increased; however growth in corresponding property tax revenue is limited by State of Michigan Statute to the rate of inflation for property that does not change hands. The 2018/2019 fiscal year resulted in a $7.3 million decrease to General Fund unassigned reserves, bringing unassigned General Fund reserves down to $10.0 million, or 7.6% of General Fund expenditures, which is below the City's 12%-15% fund balance policy. As a result, the City's General Fund Reserve Policy requires annual appropriations of a minimum of $500,000 until the 12% target is reached. Significant challenges remain in the longer-term. Going forward, State-imposed limitations on municipal revenues, most notably those on property tax growth, will continue to constrain resources, which in context of projected increases in pension, healthcare, and infrastructure needs, will present budgetary challenges. The East Lansing income tax will be in effect for the full duration of FY 2020, and additional decreases in income tax may result from the General Motors strike from September to October 2019.
Strengthening the City's economic base, building back up General Fund reserves, and addressing long-term pension and retiree healthcare obligations are top priorities. The City continues to work diligently with its employees and unions This page intentionally left blank. to address the ongoing structural imbalance between projected revenues and long-term pension and retiree health care costs and has been successful in achieving significant agreements over the past several years on a wide range of cost-saving measures. The City, in conjunction with the Mayor-appointed Financial Health Team engaged a consultant for studies of its long-term pension and retiree healthcare obligations, and those studies were completed in FY 2018.
F-8 The City continues to experience significant economic development and national recognition of its economic development efforts and accomplishments. For more information, please see the "Local Economy" section of the Transmittal Letter.
Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. Copies of this financial report, as well as other financial reports, are available on the City's website, www.lansingmi.gov. If you have any questions about this report or need additional financial information, please feel free to contact the Finance Department at (517) 483-4500.
25 26 BASIC FINANCIAL STATEMENTS This page intentionally left blank. F-9
27 28 CITY OF LANSING, MICHIGAN
Statement of Net Position June 30, 2019
Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 45,129,421 $ 59,182,174 $ 104,311,595 $ 6,251,253 Receivables, net 23,611,894 28,751,368 52,363,262 1,050,927 Internal balances (773,950) 773,950 - - Due from primary government - - - 145 Inventories, prepaids and other assets 2,063,715 415,706 2,479,421 154,302 Restricted cash and investments - 2,577,409 2,577,409 2,838,415 Capital assets not being depreciated 25,302,787 26,015,193 51,317,980 - Capital assets being depreciated, net 153,965,052 312,435,570 466,400,622 23,352
Total assets 249,298,919 430,151,370 679,450,289 10,318,394
Deferred outflows of resources Deferred charge on refunding 320,544 4,352,459 4,673,003 1,090,578 Deferred pension amounts 26,091,730 1,111,065 27,202,795 - Deferred other postemployment benefit amounts 17,394,182 612,078 18,006,260 -
GOVERNMENT-WIDE FINANCIAL STATEMENTS Total deferred outflows of resources 43,806,456 6,075,602 49,882,058 1,090,578
Liabilities Accounts payable and accrued liabilities 19,191,320 2,097,493 21,288,813 2,082,946 Accrued interest payable 333,492 3,066,968 3,400,460 214,705
F-10 Unearned revenue 1,097,724 160,119 1,257,843 501,429 Due to component units - 145 145 - Long-term debt: Due within one year 5,482,381 13,481,419 18,963,800 254,719 Due in more than one year 40,238,791 119,745,553 159,984,344 44,940,618 Net pension liability (due in more than one year) 274,907,636 30,391,923 305,299,559 - Net other postemployment benefit liability (due in more than one year) 392,996,293 38,265,634 431,261,927 -
Total liabilities 734,247,637 207,209,254 941,456,891 47,994,417
Deferred inflows of resources Deferred pension amounts 6,158,087 375,427 6,533,514 - Deferred other postemployment benefit amounts 12,628,377 - 12,628,377 -
Total deferred inflows of resources 18,786,464 375,427 19,161,891 -
Net position Net investment in capital assets 146,153,309 233,988,263 380,141,572 23,352 Restricted for: Public safety 1,588,549 - 1,588,549 - Public works 16,029,533 - 16,029,533 - Community development 3,442,457 - 3,442,457 - Building department 531,033 - 531,033 - Debt service - 1,800,929 1,800,929 - Capital projects - 152,246 152,246 - Cooley Stadium - - - 80,000 Endowments (nonexpendable) 1,914,166 - 1,914,166 - Unrestricted (deficit) (629,587,773) (7,299,147) (636,886,920) (36,688,797)
Total net position $ (459,928,726) $ 228,642,291 $ (231,286,435) $ (36,585,445)
The accompanying notes are an integral part of the financial statements.
29 30 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Statement of Activities Statement of Activities For the Year Ended June 30, 2019 For the Year Ended June 30, 2019
Program Revenues Primary Government Operating Capital Net Governmental Business-type Component Charges Grants and Grants and (Expense) Activities Activities Totals Units Functions / Programs Expenses for Services Contributions Contributions Revenues Changes in net position Net (expense) revenues $ (135,044,441) $ 12,902,253 $ (122,142,188) $ (7,613,592) Primary government Governmental activities: General revenues: General government $ 26,679,840 $ 7,567,720 $ 2,881,563 $ - $ (16,230,557) Property taxes 41,692,930 - 41,692,930 6,302,358 Public safety 97,391,612 3,935,250 4,060,020 - (89,396,342) Income taxes 37,021,436 - 37,021,436 - Public works 29,644,398 2,978,549 16,810,972 3,313,872 (6,541,005) State shared revenues 15,178,768 - 15,178,768 - Recreation and culture 7,650,889 1,092,232 102,709 - (6,455,948) Grants and contributions not Community development 21,046,090 - 5,807,989 - (15,238,101) restricted to specific programs 24,351,305 - 24,351,305 - Interest on long-term debt 1,182,488 - - - (1,182,488) Unrestricted investment earnings 463,685 - 463,685 148,925 Gain on sale of capital assets 64,820 - 64,820 - Total governmental activities 183,595,317 15,573,751 29,663,253 3,313,872 (135,044,441) Transfers - internal activities (580,817) 580,817 - -
Business-type activities: Total general revenues and transfers 118,192,127 580,817 118,772,944 6,451,283 Sewage disposal system 31,939,976 35,752,812 943,555 - 4,756,391 Municipal parking system 7,081,998 8,422,161 5,654,396 - 6,994,559 Change in net position (16,852,314) 13,483,070 (3,369,244) (1,162,309) Cemetery 470,220 415,757 - - (54,463) Golf 278,501 - 13,786 - (264,715) Net position, beginning of year (443,076,412) 215,159,221 (227,917,191) (35,423,136) Garbage and rubbish collection 1,035,262 2,243,627 - - 1,208,365
F-11 Recycling 3,856,764 4,081,700 37,180 - 262,116 Net position, end of year $ (459,928,726) $ 228,642,291 $ (231,286,435) $ (36,585,445)
Total business-type activities 44,662,721 50,916,057 6,648,917 - 12,902,253 concluded
Total primary government $ 228,258,038 $ 66,489,808 $ 36,312,170 $ 3,313,872 $ (122,142,188)
Component units Brownfield redevelopment authority $ 4,250,976 $ - $ 778,932 $ - $ (3,472,044) Tax increment finance authority 3,590,401 - - - (3,590,401) Lansing entertainment & public facilities authority 10,658,863 8,761,416 1,346,300 - (551,147)
Total component units $ 18,500,240 $ 8,761,416 $ 2,125,232 $ - $ (7,613,592)
continued…
The accompanying notes are an integral part of the financial statements.
31 32 FUND FINANCIAL STATEMENTS This page intentionally left blank. F-12
33 34 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN Balance Sheet Governmental Fund Financial Statements Governmental Funds June 30, 2019 Major Fund Nonmajor Governmental General Fund - This is the general operating fund of the City. It is used to account for and report all General Funds Totals financial resources not accounted for and reported in another fund. Assets Cash and cash equivalents $ 3,420,179 $ 171,739 $ 3,591,918 Equity in pooled cash and investments 10,033,485 26,955,975 36,989,460 Nonmajor Funds Accounts receivable, net 8,805,431 120,891 8,926,322 Nonmajor governmental funds are presented, by fund type, within the Combining and Individual Fund Taxes receivable, net 635,163 - 635,163 Financial Statements and Schedules section of this report as noted in the table of contents. Special assessments receivable - 191,201 191,201 Loans receivable - 1,222,523 1,222,523 Accrued interest receivable - 2,172,446 2,172,446 Due from other funds 500 - 500 Due from other governments, net 2,761,330 7,691,569 10,452,899 Inventories 29,575 1,030,305 1,059,880 Prepaids 9,030 7,556 16,586
Total assets $ 25,694,693 $ 39,564,205 $ 65,258,898
Liabilities Negative equity in pooled cash $ - $ 2,889,204 $ 2,889,204 Accounts payable 6,299,107 2,063,759 8,362,866 Deposits payable - 35,020 35,020 Accrued payroll 2,536,288 67,198 2,603,486 Indemnity bonds - 43,867 43,867 Due to other funds 2 624,145 624,147 F-13 Advances from other funds - 150,303 150,303 Due to other governments 3,273,824 587,250 3,861,074 Unearned revenue 568,924 528,800 1,097,724 Other liabilities 821,915 - 821,915
Total liabilities 13,500,060 6,989,546 20,489,606
Deferred inflows of resources Unavailable revenues - fees 2,163,143 - 2,163,143 Unavailable revenues - loans and accrued interest receivable - 3,394,969 3,394,969 Unavailable revenues - special assessments - 156,444 156,444
Total deferred inflows of resources 2,163,143 3,551,413 5,714,556
Fund balances Nonspendable 38,605 2,952,027 2,990,632 Restricted - 17,038,777 17,038,777 Committed - 9,147,988 9,147,988 Unassigned (deficit) 9,992,885 (115,546) 9,877,339
Total fund balances 10,031,490 29,023,246 39,054,736
Total liabilities, deferred inflows of resources and fund balances $ 25,694,693 $ 39,564,205 $ 65,258,898
The accompanying notes are an integral part of the financial statements.
35 36 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Reconciliation Statement of Revenues, Expenditures and Change in Fund Balances Fund Balances of Governmental Funds Governmental Funds to Net Position of Governmental Activities For the Year Ended June 30, 2019 June 30, 2019 Nonmajor Fund balances - total governmental funds $ 39,054,736 Governmental General Funds Totals Amounts reported for governmental activities in the statement of net position are different because: Revenues Property taxes and special assessments $ 40,594,678 $ 1,137,967 $ 41,732,645 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Income taxes 37,021,436 - 37,021,436 Capital assets not being depreciated 25,302,787 Licenses and permits 1,399,881 - 1,399,881 Capital assets being depreciated, net 153,965,052 Intergovernmental 18,402,995 27,183,157 45,586,152 Capital assets accounted for in internal service funds, net (11,341,206) Charges for services 9,024,331 6,211,325 15,235,656 Fines and forfeitures 2,050,717 256,273 2,306,990 Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for Interest and rents 226,344 405,468 631,812 current expenditures. Those assets (i.e., receivables) are offset by deferred inflows of resources in the governmental Contributions 21,255,032 12,500 21,267,532 funds and, therefore, are not included in fund balance. Other revenues 387,451 736,495 1,123,946 Deferred ambulance fees receivable 819,507 Deferred nuisance fees receivable 555,753 Total revenues 130,362,865 35,943,185 166,306,050 Deferred loans receivable 1,222,523 Deferred long-term interest receivable 2,172,446 Expenditures Deferred long-term special assessments receivable 156,444 Current expenditures: Deferred long-term taxes and tax settlement receivables 22,500 General government 24,027,129 3,313,802 27,340,931 Deferred State of Michigan receivables 765,383 Public safety 76,775,769 1,883,913 78,659,682 Public works 11,615,556 17,339 11,632,895 Internal service funds are used by management to charge the costs of certain equipment maintenance to individual Highways and streets - 11,984,896 11,984,896 funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement Recreation and culture 8,138,369 - 8,138,369 of net position. 12,777,701 Community development 9,175,051 10,260,226 19,435,277 F-14 Debt service: Long-term liabilities and related deferred outflows are not due and payable in the current period and therefore are Principal 1,859,052 1,324,543 3,183,595 not reported in the funds. Interest 448,745 551,562 1,000,307 Bonds, loans and installment purchase agreements payable, and deferred discounts/premiums (30,769,406) Capital outlay - 4,798,070 4,798,070 Deferred charge on refunding 320,544 Accrued interest on bonds, loans and leases payable (316,345) Total expenditures 132,039,671 34,134,351 166,174,022 Compensated absences and other long-term liabilities (11,432,664) Revenues over (under) expenditures (1,676,806) 1,808,834 132,028 Certain pension and other postemployment benefit-related amounts, such as the net pension and other postemployment benefit liabilities and deferred amounts are not due and payable in the current period or do not Other financing sources (uses) represent current financial resources and therefore are not reported in the funds. Transfers in 100,000 8,649,296 8,749,296 Net pension liability (274,907,636) Transfers out (5,718,216) (3,611,897) (9,330,113) Deferred outflows related to the net pension liability 26,091,730 Issuance of long-term debt - 1,665,000 1,665,000 Deferred inflows related to the net pension liability (6,158,087) Issuance of long-term refunding debt - 6,938,699 6,938,699 Net other postemployment benefit liability (392,996,293) Bond premium - 780,670 780,670 Deferred outflows related to the net other postemployment benefit liability 17,394,182 Payment to refunding bond escrow agent - (7,741,363) (7,741,363) Deferred inflows related to the net other postemployment benefit liability (12,628,377) Total other financing sources (uses) (5,618,216) 6,680,405 1,062,189 Net position of governmental activities $ (459,928,726) Net change in fund balances (7,295,022) 8,489,239 1,194,217
Fund balances, beginning of year 17,326,512 20,534,007 37,860,519
Fund balances, end of year $ 10,031,490 $ 29,023,246 $ 39,054,736
The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.
37 38 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Reconciliation Net Change in Fund Balances of Governmental Funds Statement of Revenues, Expenditures and Change in Fund Balance to Change in Net Position of Governmental Activities Budget and Actual - General Fund For the Year Ended June 30, 2019 For the Year Ended June 30, 2019
Net change in fund balances - total governmental funds $ 1,194,217 Actual Over Original Final (Under) Final Amounts reported for governmental activities in the statement of activities are different because: Budget Budget Actual Budget Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those Revenues assets is allocated over their estimated useful lives as depreciation expense. Property taxes $ 40,315,000 $ 40,315,000 $ 40,594,678 $ 279,678 Capital assets purchased/constructed 7,499,433 Income taxes 38,500,000 38,500,000 37,021,436 (1,478,564) Depreciation expense (10,469,794) Licenses and permits 1,677,000 1,677,000 1,399,881 (277,119) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in Intergovernmental 19,196,700 19,196,700 18,402,995 (793,705) the funds, but rather are deferred to subsequent fiscal years. Charges for services 9,672,200 9,672,200 9,024,331 (647,869) Change in deferred ambulance fees receivable (69,761) Fines and forfeitures 2,456,100 2,456,100 2,050,717 (405,383) Change in deferred nuisance fees receivable 239,729 Interest and rents 205,000 205,000 226,344 21,344 Change in deferred loans receivable (1,937) Contributions 22,500,000 22,500,000 21,255,032 (1,244,968) Change in deferred long-term interest receivable 59,250 Change in deferred special assessments receivable (39,714) Other revenues 333,000 905,875 387,451 (518,424) Change in deferred State of Michigan receivables 765,383 Total revenues 134,855,000 135,427,875 130,362,865 (5,065,010) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase (decrease) in the net position of the internal service funds is reported with governmental Expenditures activities. Net operating loss from governmental activities in internal service funds (200,473) General government: Gain on sale of capital assets from governmental internal service funds 64,820 Attorney's office 2,168,300 2,168,300 3,181,864 1,013,564
F-15 Interest expense from governmental internal service funds (174,413) City clerk 1,197,000 1,197,000 1,356,153 159,153 Council 714,000 714,000 695,984 (18,016) Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt Courts 6,605,500 6,605,500 6,275,406 (330,094) increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net position. Internal audit 194,900 194,900 192,655 (2,245) Issuance of long-term debt (8,603,699) Finance 5,471,600 5,471,600 8,373,425 2,901,825 Principal payments on long-term debt 3,183,595 Library rental 150,000 150,000 151,846 1,846 Premium on bond issuances (780,670) Human resources 2,118,000 2,118,000 2,121,102 3,102 Payments to refunding bond escrow agent 7,741,363 Mayor 1,296,800 1,296,800 1,256,114 (40,686) Certain expenditures are reported in governmental funds that reduce long-term liabilities for purposes of the statement Office of community media 469,900 469,900 422,580 (47,320) of net position. Budgetary savings from attrition (500,000) (500,000) - 500,000 Change in estimated liability for workers' compensation (18,761) Total general government 19,886,000 19,886,000 24,027,129 4,141,129
Some expenses reported in the statement of activates do not require the use of current financial resources and Public safety: therefore are not reported as expenditures in the funds. Change in accrued interest payable on long-term debt 6,316 Police 43,193,300 43,312,596 42,832,580 (480,016) Amortization of issuance premiums and discounts, and deferred charge on refunding (14,084) Fire 34,129,900 34,129,900 33,943,189 (186,711) Change in the accrual for compensated absences (3,864) Total public safety 77,323,200 77,442,496 76,775,769 (666,727) Change in the net pension liability and related deferred amounts (18,319,605) Change in the net other postemployment benefit liability and related deferred amounts 1,090,355 Public works 11,572,500 11,572,500 11,615,556 43,056 Change in net position of governmental activities $ (16,852,314) Recreation and culture 8,301,000 8,301,000 8,138,369 (162,631)
continued…
The accompanying notes are an integral part of the financial statements.
39 40 CITY OF LANSING, MICHIGAN
Statement of Revenues, Expenditures and Change in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2019
Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Community development: Economic development and planning $ 5,021,300 $ 5,021,300 $ 4,918,772 $ (102,528) Neighborhood and community engagement 863,500 863,500 815,172 (48,328) Human relations / community services 1,598,300 2,343,538 1,493,554 (849,984) Human services / community support 2,041,400 2,041,400 1,947,553 (93,847) Total community development 9,524,500 10,269,738 9,175,051 (1,094,687)
Debt service: Principal 1,859,100 1,859,100 1,859,052 (48) Interest 451,900 451,900 448,745 (3,155) Total debt service 2,311,000 2,311,000 2,307,797 (3,203) This page intentionally left blank.
Total expenditures 128,918,200 129,782,734 132,039,671 2,256,937
Revenues over (under) expenditures 5,936,800 5,645,141 (1,676,806) (7,321,947) F-16 Other financing sources (uses) Transfers in 100,000 100,000 100,000 - Transfers out (6,036,800) (6,036,800) (5,718,216) (318,584) Issuance of long-term debt - 1,725,000 - (1,725,000)
Total other financing sources (uses) (5,936,800) (4,211,800) (5,618,216) (1,406,416)
Net change in fund balance - 1,433,341 (7,295,022) (8,728,363)
Fund balance, beginning of year 17,326,512 17,326,512 17,326,512 -
Fund balance, end of year $ 17,326,512 $ 18,759,853 $ 10,031,490 $ (8,728,363)
concluded
The accompanying notes are an integral part of the financial statements.
41 42 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds Proprietary Fund Financial Statements June 30, 2019
Governmental Major Funds Business-type Activities - Enterprise Funds Activities Sewage Disposal System Fund - This fund accounts for the provision of sewage disposal services to the Sewage Municipal Nonmajor Disposal Parking Enterprise Internal residents of the City. System System Funds Totals Service Funds Assets Current assets: Municipal Parking System Fund - This fund accounts for the operation of City-owned parking facilities. Cash and cash equivalents $ 787 $ 3,221,027 $ 23,568 $ 3,245,382 $ - Equity in pooled cash and investments 39,270,669 14,771,634 1,894,489 55,936,792 7,437,247 Accounts receivable, net 4,828,795 66,092 170,328 5,065,215 11,340 Nonmajor Funds and Internal Service Funds Accrued interest receivable 35,551 93,732 - 129,283 - Due from other funds 2,944 986,515 - 989,459 - Nonmajor enterprise funds and internal service funds are presented, by fund type, within the Combining Lease receivable, current 657,988 - - 657,988 - and Individual Fund Financial Statements and Schedules section of this report as noted in the table of Inventories 238,858 - 52,493 291,351 352,259 Prepaids - 124,355 - 124,355 634,990 contents. Total current assets 45,035,592 19,263,355 2,140,878 66,439,825 8,435,836
Noncurrent assets: Restricted cash and cash equivalents 2,425,163 152,246 - 2,577,409 - Advances to other funds - 150,303 - 150,303 - Lease receivable, net of current portion 6,087,138 16,811,744 - 22,898,882 - Capital assets not being depreciated 13,965,581 11,545,371 504,241 26,015,193 92,892 Capital assets being depreciated, net 307,826,801 2,552,762 2,056,007 312,435,570 11,248,314 Total noncurrent assets 330,304,683 31,212,426 2,560,248 364,077,357 11,341,206
Total assets 375,340,275 50,475,781 4,701,126 430,517,182 19,777,042
Deferred outflows of resources Deferred charge on refunding 1,183,607 3,168,852 - 4,352,459 - Deferred pension amounts 606,035 202,012 303,018 1,111,065 - Deferred other postemployment benefit amounts 358,721 104,375 148,982 612,078 - F-17 Total deferred outflows of resources 2,148,363 3,475,239 452,000 6,075,602 -
Liabilities Current liabilities: Accounts payable 1,529,944 178,846 181,356 1,890,146 2,553,855 Deposits payable - 66,815 - 66,815 - Accrued interest payable 624,234 2,439,877 2,857 3,066,968 17,147 Accrued payroll 90,426 48,261 1,845 140,532 159,237 Claims incurred but not reported - - - - 750,000 Due to other funds 362,870 2,942 - 365,812 - Due to component units - 145 - 145 - Unearned revenues - - 160,119 160,119 - Bonds and notes payable, current portion 12,043,482 1,130,000 230,023 13,403,505 370,290 Compensated absences, current portion 62,571 2,022 13,321 77,914 83,804 Total current liabilities 14,713,527 3,868,908 589,521 19,171,956 3,934,333
Noncurrent liabilities: Bonds and notes payable, net of current portion 95,590,057 23,025,370 352,897 118,968,324 2,301,746 Compensated absences, net of current portion 431,530 168,283 177,416 777,229 763,262 Net pension liability 16,577,409 5,525,803 8,288,711 30,391,923 - Net other postemployment benefit liability 22,426,368 6,525,283 9,313,983 38,265,634 - Total noncurrent liabilities 135,025,364 35,244,739 18,133,007 188,403,110 3,065,008
Total liabilities 149,738,891 39,113,647 18,722,528 207,575,066 6,999,341
Deferred inflows of resources Deferred pension amounts 204,778 68,259 102,390 375,427 -
Net position Net investment in capital assets 222,087,576 9,923,359 1,977,328 233,988,263 8,669,170 Restricted for debt retirement 1,800,929 - - 1,800,929 - Restricted for capital projects - 152,246 - 152,246 - Unrestricted (deficit) 3,656,464 4,693,509 (15,649,120) (7,299,147) 4,108,531
Total net position $ 227,544,969 $ 14,769,114 $ (13,671,792) $ 228,642,291 $ 12,777,701
The accompanying notes are an integral part of the financial statements.
43 44 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Statement of Revenues, Expenses and Changes in Fund Net Position Statement of Cash Flows Proprietary Funds Proprietary Funds For the Year Ended June 30, 2019 For the Year Ended June 30, 2019
Governmental Governmental Business-type Activities - Enterprise Funds Activities Business-type Activities - Enterprise Funds Activities Sewage Municipal Nonmajor Sewage Municipal Nonmajor Disposal Parking Enterprise Internal Disposal Parking Enterprise Internal System System Funds Totals Service Funds System System Funds Totals Service Funds Operating revenues Cash flows from operating activities Charges for services $ 35,752,812 $ 8,422,161 $ 6,741,084 $ 50,916,057 $ 85,397,512 Cash received from customers $ 35,756,653 $ 9,236,731 $ 6,684,983 $ 51,678,367 $ - Cash received from interfund services - - - - 85,938,214 Operating expenses Cash payments for goods and services (9,358,735) (2,296,634) (2,999,286) (14,654,655) (74,132,136) Personnel services 8,371,242 1,872,284 1,961,265 12,204,791 8,644,110 Cash payments to employees (7,265,840) (2,565,758) (3,433,958) (13,265,556) (8,777,275) Purchase of goods and services 10,216,365 2,114,909 3,062,380 15,393,654 74,773,138 Depreciation 10,595,778 980,505 388,030 11,964,313 2,180,737 Net cash provided by operating activities 19,132,078 4,374,339 251,739 23,758,156 3,028,803
Total operating expenses 29,183,385 4,967,698 5,411,675 39,562,758 85,597,985 Cash flows from noncapital financing activities Transfers in - - 613,593 613,593 - Operating income (loss) 6,569,427 3,454,463 1,329,409 11,353,299 (200,473) Transfers out - - (32,776) (32,776) -
Nonoperating revenues (expenses) Net cash provided by noncapital financing activities - - 580,817 580,817 - Interest revenue 943,555 1,451,501 50,966 2,446,022 - Gain on sale of capital assets - 4,202,895 - 4,202,895 64,820 Cash flows from capital and related financing activities Interest expense and fees (2,756,591) (2,114,300) (14,586) (4,885,477) (174,413) Proceeds from sale of capital assets - 17,980,870 - 17,980,870 77,416 Capital contribution to others - - (214,486) (214,486) - Acquisition and construction of capital assets (8,047,242) (1,749,665) - (9,796,907) (1,318,930) Capital contributions to others - - (214,486) (214,486) - Total nonoperating revenue (expenses) (1,813,036) 3,540,096 (178,106) 1,548,954 (109,593) Proceeds from issuance of long-term debt 9,785,317 6,210,000 - 15,995,317 - Premium on issuance of long-term debt 795,207 325,232 - 1,120,439 Income (loss) before transfers 4,756,391 6,994,559 1,151,303 12,902,253 (310,066) Principal paid on long-term debt (11,886,780) (12,515,000) (225,580) (24,627,360) (361,324) Interest paid on long-term debt (2,886,379) (1,525,898) (15,691) (4,427,968) (174,669) Transfers Amount paid to refunding bond escrow agent (8,569,870) (6,556,333) - (15,126,203) - Transfers in - - 613,593 613,593 - Payments received on capital lease 644,653 - - 644,653 - Transfers out - - (32,776) (32,776) - Net cash provided by (used in) capital and related financing activities (20,165,094) 2,169,206 (455,757) (18,451,645) (1,777,507) Total transfers - - 580,817 580,817 - F-18 Cash flows from investing activities Change in net position 4,756,391 6,994,559 1,732,120 13,483,070 (310,066) Interest and dividends received 946,889 374,776 50,966 1,372,631 - Payments received on loans made to others - 46,299 - 46,299 - Net position, beginning of year 222,788,578 7,774,555 (15,403,912) 215,159,221 13,087,767 Net cash provided by investing activities 946,889 421,075 50,966 1,418,930 - Net position, end of year $ 227,544,969 $ 14,769,114 $ (13,671,792) $ 228,642,291 $ 12,777,701 Net change in cash and cash equivalents (86,127) 6,964,620 427,765 7,306,258 1,251,296
Cash and cash equivalents, beginning of year 41,782,746 11,180,287 1,490,292 54,453,325 6,185,951
Cash and cash equivalents, end of year $ 41,696,619 $ 18,144,907 $ 1,918,057 $ 61,759,583 $ 7,437,247
Reconciliation to statement of net position Cash and cash equivalents $ 787 $ 3,221,027 $ 23,568 $ 3,245,382 $ - Equity in pooled cash and investments 39,270,669 14,771,634 1,894,489 55,936,792 7,437,247 Restricted cash and cash equivalents 2,425,163 152,246 - 2,577,409 -
$ 41,696,619 $ 18,144,907 $ 1,918,057 $ 61,759,583 $ 7,437,247
continued…
The accompanying notes are an integral part of the financial statements.
45 46 CITY OF LANSING, MICHIGAN
Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2019
Governmental Business-type Activities - Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 6,569,427 $ 3,454,463 $ 1,329,409 $ 11,353,299 $ (200,473) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 10,595,778 980,505 388,030 11,964,313 2,180,737 Change in: Accounts receivable 3,843 413,032 (44,965) 371,910 540,702 Inventories 105,313 - - 105,313 (10,114) Prepaids - (124,355) - (124,355) (290,033) Due from other funds (2) 401,538 - 401,536 - Deferred outflows - pension 275,239 140,682 267,971 683,892 - Deferred outflows - OPEB (358,721) (104,375) (148,982) (612,078) - Accounts payable 752,317 (56,140) 63,094 759,271 941,149 Accrued payroll 3,913 1,023 22 4,958 9,807 Claims incurred but not reported - - - - (150,000) Due to component units - (1,230) - (1,230) - Unearned revenues - - (11,136) (11,136) - Compensated absences (17,198) (6,434) 7,655 (15,977) 7,028 This page intentionally left blank. Net pension liability 2,006,958 (140,095) (1,151,668) 715,195 - Deferred inflows - pension (138,385) (65,184) (119,949) (323,518) - Net other postemployment benefit liability 189,140 (258,110) 29,466 (39,504) - Deferred inflows - OPEB (855,544) (260,981) (357,208) (1,473,733) -
Net cash provided by operating activities $ 19,132,078 $ 4,374,339 $ 251,739 $ 23,758,156 $ 3,028,803
F-19 concluded
The accompanying notes are an integral part of the financial statements.
47 48 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Fiduciary Fund Financial Statements Statement of Fiduciary Net Position Fiduciary Funds Pension and Other Postemployment Benefit Trust Funds - Employee pension and other postemployment June 30, 2019 benefit trust funds accept payments made by the City, invest fund resources, calculate and pay pensions to retirees (or beneficiaries), and account for postemployment healthcare coverage. Pension and Other Combining schedules for fiduciary funds are presented in the notes to the financial statements. Postemployment Benefit Trust Agency Agency Funds - These funds account for resources held in a trustee or agent capacity for the 54-A Funds Funds District Court. Assets Cash and cash equivalents $ 10,000,828 $ - Equity in pooled cash and investments 4,402,694 76,818 Combining statements for agency funds are presented, by fund type, within the Combining and Individual Investments: Fund Financial Statements and Schedules section of this report as noted in the table of contents. U.S. treasuries 19,401,838 - U.S. agencies 32,829,852 - Collateralized mortgage obligations 930,732 - Mutual funds 364,216,954 - Domestic equities 110,842,048 - International equities 1,955,119 - Emerging market equities 11,692,856 - Money market funds 9,141,606 -
F-20 Dividends and interest receivable 445,695 -
Total assets 565,860,222 $ 76,818
Liabilities Accounts payable 437,701 $ - Undistributed receipts - 76,818
Total liabilities 437,701 $ 76,818
Net position restricted for Pension benefits 462,739,731 Other postemployment benefits 102,682,790
Total net position $ 565,422,521
The accompanying notes are an integral part of the financial statements.
49 50 CITY OF LANSING, MICHIGAN
Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefits Trust Funds For the Year Ended June 30, 2019
Additions Investment income: Net appreciation in fair value of investments $ 30,539,239 Interest income 58,089 Dividend income 898,000 Investment expenses (1,753,200)
Net investment income 29,742,128
Contributions: Employer 49,957,231 Plan members 4,869,154 This page intentionally left blank.
Total contributions 54,826,385
Total additions 84,568,513 F-21 Deductions Participant benefits 78,923,796 Administrative expense 1,272,294
Total deductions 80,196,090
Change in net position 4,372,423
Net position restricted for pension and other postemployment benefits Beginning of year 561,050,098
End of year $ 565,422,521
The accompanying notes are an integral part of the financial statements.
51 52 COMPONENT UNITS This page intentionally left blank. F-22
53 54 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Discretely Presented Component Units Combining Statement of Net Position Discretely Presented Component Units June 30, 2019 Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause Lansing the City’s financial statements to be misleading or incomplete. The City has three discretely presented Tax Entertainment component units: Brownfield Increment & Public Redevelopment Finance Facilities Brownfield Redevelopment Authority Authority Authority Authority Totals Tax Increment Finance Authority Assets Lansing Entertainment and Public Facilities Authority Cash and cash equivalents $ 3,929,091 $ 1,158,738 $ 1,163,424 $ 6,251,253 Receivables, net 189,176 - 861,751 1,050,927 Complete financial statements for each of the individual component units may be obtained from the Due from primary government - 145 - 145 entity's administrative offices. Inventories, prepaids and other assets - - 154,302 154,302 Restricted cash and cash equivalents - 2,758,415 80,000 2,838,415 Capital assets being depreciated, net - - 23,352 23,352
Total assets 4,118,267 3,917,298 2,282,829 10,318,394
Deferred outflows of resources Deferred charge on refunding - 1,090,578 - 1,090,578
Liabilities
F-23 Accounts payable and accrued liabilities 1,345,618 - 737,328 2,082,946 Accrued interest payable - 214,705 - 214,705 Unearned revenues - - 501,429 501,429 Long-term debt: Due within one year - 254,719 - 254,719 Due in more than one year 500,000 44,440,618 - 44,940,618
Total liabilities 1,845,618 44,910,042 1,238,757 47,994,417
Net position Investment in capital assets - - 23,352 23,352 Restricted for Cooley Stadium - - 80,000 80,000 Unrestricted (deficit) 2,272,649 (39,902,166) 940,720 (36,688,797)
Total net position $ 2,272,649 $ (39,902,166) $ 1,044,072 $ (36,585,445)
The accompanying notes are an integral part of the financial statements.
55 56 CITY OF LANSING, MICHIGAN
Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2019
Lansing Tax Entertainment Brownfield Increment & Public Redevelopment Finance Facilities Authority Authority Authority Totals Expenses Brownfield redevelopment $ 4,250,976 $ - $ - $ 4,250,976 Community development - 3,590,401 - 3,590,401 Recreation and culture - - 10,658,863 10,658,863
Total expenses 4,250,976 3,590,401 10,658,863 18,500,240
Program revenues Charges for services - - 8,761,416 8,761,416 Operating grants and contributions 778,932 - 1,346,300 2,125,232 This page intentionally left blank.
Total program revenues 778,932 - 10,107,716 10,886,648
Net program (expense) revenue (3,472,044) (3,590,401) (551,147) (7,613,592) F-24 General revenues Property taxes 3,036,500 2,879,420 386,438 6,302,358 Unrestricted investment earnings 18,311 130,614 - 148,925
Total general revenues 3,054,811 3,010,034 386,438 6,451,283
Changes in net position (417,233) (580,367) (164,709) (1,162,309)
Net position, beginning of year 2,689,882 (39,321,799) 1,208,781 (35,423,136)
Net position, end of year $ 2,272,649 $ (39,902,166) $ 1,044,072 $ (36,585,445)
The accompanying notes are an integral part of the financial statements.
57 58 NOTES TO FINANCIAL STATEMENTS This page intentionally left blank. F-25
59 60 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Index - Notes to Financial Statements Notes to Financial Statements
Page 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Summary of Significant Accounting Policies 62 The City of Lansing (the “City”) was incorporated in 1859. In 1909, the City came under the provisions of Reporting Entity Act 279, P.A. 1909, as amended (“Home Rule City Act”). The City operates under a strong Mayor form of Government-wide and Fund Financial Statements government in which the Mayor is responsible for implementation and administration of City policy as Measurement Focus, Basis of Accounting, and Financial Statement Presentation established by City Council. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity The accounting and reporting policies of the City conform in all material respects to generally accepted 2. Budgetary Information 71 accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for establishing governmental accounting and financial reporting 3. Deficit Fund Equity 73 principles, which are primarily set forth in the GASB’s Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: 4. Deposits and Investments 74 Reporting Entity 5. Receivables 84 As required by generally accepted accounting principles, these financial statements present the City and its 6. Capital Assets 85 component units, entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City’s reporting entity because of the significance of their 7. Accounts Payable and Accrued Liabilities 87 operational or financial relationships with the City.
8. Interfund Receivables, Payables and Transfers 87 Blended Component Unit F-26
9. Long-term Debt 89 A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and its financial data is combined 10. Fund Balances - Governmental Funds 94 with data of the appropriate funds. The City has one blended component unit, the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended 11. Net Investment in Capital Assets 95 unit is described as follows:
12. Segment Information - Enterprise Funds 95 The City of Lansing Building Authority (the “Authority”) was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's 13. Risk Management 95 governing body and designates management. The Authority uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease 14. Property Taxes 96 agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities and equity of the Authority are incorporated within the City’s Municipal Parking System 15. Contingent Liabilities 97 enterprise fund.
16. Pension Plans 97 Discretely Presented Component Units
17. Other Postemployment Benefits 112 Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the 18. Tax Abatements 123 City’s financial statements to be misleading or incomplete. The discretely presented component units are as follows:
61 62 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
The Lansing Brownfield Redevelopment Authority ("LBRA") was established by the City on August 17, 1997, Lansing Entertainment and Public Facilities Authority under the authority contained in Act 381, Michigan Public Acts of 1996 (the “Act”). The Act authorizes the 333 East Michigan Avenue City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Brownfield Lansing, Michigan 48933 Redevelopment Authority is appointed by City Council to preside over such a zone, and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows Joint Venture the LBRA to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property In 1998, the City entered into an agreement with Ingham County (the "County") to form the City of Lansing value deterioration. Tax increment financing plans must be approved by the City. and County of Ingham Joint Building Authority (JBA) for the purpose of constructing and managing a building in downtown Lansing that houses the courts, prosecuting attorney and other related departments. The JBA Tax increment financing permits the LBRA to capture tax revenues which are attributable to increases in is governed by a three-member board composed of one member each appointed by the City and the County the value of real and personal property located within an approved project area. Current activities of the and one appointed jointly by the two units. Both the County and the City contribute cash and/or property LBRA include collections of property tax revenues on project areas for the Rite Aid Pharmacy and the to the JBA. Bonds were issued in 1999 by the JBA to provide the funding necessary to construct the former Motor Wheel Site Plant. building. Because the joint venture agreement does not provide an explicit contractual formula outlining the City's claim to the JBA's assets, it is considered to be a "joint venture with no equity interest" and The Tax Increment Finance Authority (“TIFA”) was established by the City under the authority contained accordingly, no amounts are reported in the accompanying financial statements for an equity interest. in Act 450, Michigan Public Acts of 1981 (“Act 450”). Act 450 authorizes the City to designate specific Financial information for the JBA may be obtained by writing the Ingham County Financial Services Division, districts within its corporate limits as TIFA districts. The TIFA presides over such districts, formulating plans P.O. Box 319, Mason, Michigan 48854. for public improvements, economic development, neighborhood revitalization, and historic preservation within the districts. Act 450 allows the TIFA to participate in a broad range of improvement activities Government-wide and Fund Financial Statements intended to contribute to economic growth and prevent property value deterioration. The TIFA’s governing body is appointed by the Mayor with the advice and consent of the City Council. Bond issuances, to fund the The government-wide financial statements (i.e., the statement of net position and the statement of
F-27 above activities, are approved by the City Council and the legal liability for the debt remains with the City. activities) report information on all of the nonfiduciary activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental The Lansing Entertainment and Public Facilities Authority (“LEPFA”) was established under the charter of revenues, are reported separately from business-type activities, which rely to a significant extent on fees the City of Lansing, Michigan in February 1996, replacing the former Greater Lansing Convention/Exhibition and charges for support. Likewise, the primary government is reported separately from certain component Authority, which had been responsible for operating and managing the Lansing Center and the Lansing Civic units for which the primary government is financially accountable. Arena (the latter through the fiscal year ended June 30, 1995). LEPFA was established to oversee the management and operations of the Lansing Center, the City Market and the Cooley Law School Stadium. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a LEPFA is chartered as a building authority under the provisions of Act 31, Public Acts of Michigan, 1948. In specific function or segment. Program revenues include (1) charges to customers or applicants who the event of dissolution or termination of LEPFA, all assets and rights of the Authority shall revert to the purchase, use, or directly benefit from goods, services, or privileges provided by a given function or City. LEPFA’s Board of Commissioners consists of thirteen members appointed by the Mayor of the City of segment and (2) grants and contributions that are restricted to meeting the operational or capital Lansing and approved by the City Council. requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Component Unit Financial Statements Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, Complete financial statements for the individual component units may be obtained from each entity’s even though the latter are excluded from the government-wide financial statements. Major individual administrative offices. governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing, Michigan 48933
Brownfield Redevelopment Authority / Tax Increment Finance Authority 1000 S Washington Avenue, Suite 201 Lansing, Michigan 48910
63 64 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Measurement Focus, Basis of Accounting, and Financial Statement Presentation Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of The government-wide financial statements are reported using the economic resources measurement focus capital facilities and other capital assets. and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of Permanent Funds account for resources that are legally restricted to the extent that only earnings, and the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are not principal, may be used for purposes that support the government’s programs. levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds, a type of fiduciary fund, are unlike all other types of funds, Enterprise Funds account for those operations that are financed and operated in a manner similar to reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. private business or where the City has decided that the determination of revenues earned, costs incurred They do, however, use the accrual basis of accounting to recognize receivables and payables. and/or net income is necessary for management accountability.
Governmental funds are reported using the current financial resources measurement focus and the modified Internal Service Funds account for operations that provide services to other departments or agencies of accrual basis of accounting. Under this method, revenues are recognized when measurable and available. the City, or to other governments, on a cost-reimbursement basis. This includes operating a maintenance Revenues are considered to be available when they are collectible within the current period or soon enough facility for trucks and equipment used by the Public Service Department, health care and self-insurance thereafter to pay liabilities of the current period. The City considers all revenues reported in the services, and information technology. governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60-day collection period, and Pension and Other Postemployment Benefit Trust Funds account for the accumulation of resources to be reimbursement-based grants that use one year. Expenditures generally are recorded when a liability is used for retirement annuity payments to eligible full-time employees of the City, certain healthcare incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related costs, and other retirement distributions. to compensated absences and claims and judgments, are recorded only when payment is due. The Agency Fund account for resources held in a fiduciary capacity for the 54-A District Court.
F-28 Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current As a general rule the effect of interfund activity has been eliminated from the government-wide financial fiscal period. Only the portion of special assessments receivable due within the current fiscal period is statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the considered to be susceptible to accrual as revenue of the current period. All other revenue items are government. Elimination of these charges would distort the direct costs and program revenues reported for considered to be measurable and available only when cash is received by the City. the various functions concerned.
The City reports the following major governmental fund: Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in General Fund. This fund is the City’s primary operating fund. It accounts for all the financial resources connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the of the primary government, except those accounted for and reported in another fund. City’s enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, The City reports the following major enterprise funds: administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have Additionally, the City reports the following fund types: been satisfied.
Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that Restricted net position are assets that are subject to restrictions beyond the government’s control. The are restricted or committed to expenditure for specified purposes other than debt service or capital restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources projects that comprise, or are expected to comprise a substantial portion of the fund's total reported are available for use, it is the government’s policy to use restricted resources first, then unrestricted inflows. resources as they are needed.
Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest and related costs.
65 66 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity Receivables/Payables
Deposits and Investments All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. The City maintains an investment pool for all City funds. Each fund’s portion of the investment pool is displayed on the statement of net position/balance sheet as “equity in pooled cash.” The City’s cash and Transactions between funds that are representative of lending/borrowing arrangements outstanding at the cash equivalents are considered to be cash on hand, demand deposits and short-term investments with end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of original maturities of three months or less from the date of acquisition. interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances Restricted cash consists of amounts required to be maintained separately in accordance with bond outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. State statutes authorize the City to invest in: Amounts due from other governments include amounts due from grantors for specific programs and capital Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or projects. Program grants and capital grants for capital assets are recorded as receivables and revenues at instrumentality of the United States. the time reimbursable project costs are incurred. Amounts received in advance of project costs being incurred are reported as unearned revenue. Certificates of deposit, savings accounts, deposit accounts or depository receipts of a qualified financial institution. Certain receivables in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of Leases receivable consist of amounts collectible from local municipalities for which the City has irrevocably
F-29 purchase. pledged its full faith and credit as collateral for certain construction and improvement bonds. In accordance with contractual agreements, these entities will provide all future amounts due for bond principal and Bankers’ acceptances of United States banks. accrued interest payable. The receivable has been reported as current based on the amounts to be collected next year to satisfy obligations. Obligations of the State of Michigan and its political subdivisions, that, at the time of purchase are rated as investment grade by at least one standard rating service. Inventories and Prepaids
Mutual funds registered under the Investment Company Act of 1940 with the authority to purchase only All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are investment vehicles that are legal for direct investment by a public corporation. recorded as expenditures when consumed.
External investment pools as authorized by Public Act 20 as amended through December 31, 1997. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. In governmental funds, prepaid Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair items are charged to expenditures using the consumption method. value. Capital Assets Unrealized appreciation or depreciation on pension and other postemployment benefit trust fund investments due to changes in fair value are recognized each year. Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets having a useful life in excess of three years and whose costs exceed $5,000 ($100,000 for buildings). Capital assets are stated at historical cost or estimated historical cost where actual cost information is not available. Donated capital assets are recorded at their estimated acquisition cost as of the donation date.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the asset constructed.
67 68 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Capital assets are depreciated using the straight-line method over the following estimated useful lives: Long-term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, Years long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and Buildings 20-50 discounts are deferred and amortized over the life of the bonds using the straight-line basis. Bonds payable Improvements 8-50 are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses Equipment 3-15 when incurred. Sanitary sewers 50 Infrastructure 10-75 In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other In addition to land and construction in progress, the amount presented as capital assets not being financing sources. Premiums received on debt issuances are reported as other financing sources while depreciated includes intangible assets consisting of land development rights acquired for the purpose of discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld farmland and ranch preservation. Land development rights are deemed to have an indefinite useful life, from the actual debt proceeds received, are reported as debt service expenditures. and therefore are not being amortized. Deferred Inflows of Resources The City reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its fair value. If it is determined that an impairment loss has In addition to liabilities, the statement of financial position will sometimes report a separate section for occurred the asset is written down to its net realizable value and a current charge to income is recognized. deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to one or more future periods and so will not be Deferred Outflows of Resources recognized as an inflow of resources (revenue) until that time. The governmental funds report unavailable
F-30 revenues, which arise only under a modified accrual basis of accounting that are reported as deferred In addition to assets, the statement of financial position will sometimes report a separate section for inflows of resources. These amounts are deferred and recognized as an inflow of resources in the period deferred outflows of resources. This separate financial statement element, deferred outflows of resources, that the amounts become available. The City also reports deferred inflows of resources for changes in represents a consumption of net position that applies to a future period(s) and so will not be recognized as expected and actual investments returns, assumptions, and benefits provided, related to the net pension an outflow of resources (expense/expenditure) until then. The City reports a deferred charge on advance and other postemployment benefit liabilities. bond refunding for the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The City Fund Balances also reports deferred outflows of resources for changes in expected and actual investments returns, assumptions, and benefits provided, related to the net pension and other postemployment benefit Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are liabilities. either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by Compensated Absences grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of It is the City’s policy to permit employees to accumulate earned but unused vacation and compensatory the government’s highest level of decision-making authority, the City Council. A formal resolution of the time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to City Council is required to establish, modify, or rescind a fund balance commitment. The City reports accumulate earned but unused sick leave. All vacation and compensatory time pay and 50% of sick leave are assigned fund balance for amounts that are constrained by the government’s intent to be used for specific accrued when incurred in the government-wide and proprietary fund financial statements. A liability for purposes, but are neither restricted nor committed. The City Council has not delegated the authority to these amounts is reported in governmental funds only if they have matured, for example, as a result of assign fund balance. Unassigned fund balance is the residual classification for the General Fund. In other employee resignations or retirements. funds, the unassigned classification is used to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. Unearned Revenue When the City incurs an expenditure for purposes for which various fund balance classifications can be used, Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure on it is the City’s policy to use restricted fund balance first, then committed, assigned, and finally unassigned. allowable costs.
69 70 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Interfund Transactions · The appropriated budget is prepared by fund, department and the mandatory expenditure accounts as established by the State of Michigan’s Uniform Chart of Accounts. Within the General Fund, the legal level During the course of normal operations, the City has numerous transactions between funds, including of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenditures and transfers of resources to provide services, construct assets, and service debt. The expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other accompanying financial statements generally reflect such transactions as transfers. Operating subsidies are funds, the legal level of budgetary control is the mandatory expenditure accounts (personal services, also recorded as transfers. The amounts recorded as subsidies or advances are determined by the City. supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Balances outstanding at year-end are reported as due to/from other funds. Transfers between governmental Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for Internal service funds are used to record charges for services to all City departments and funds as transfers amounts less than five thousand dollars, but not in excess of 15% of the appropriation in cases where five or operating revenue. All City funds record these payments to the internal service funds as transfers or thousand dollars exceeds 15% of the appropriation. operating expenditures/expenses. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Pension and Other Postemployment Benefit Plans Michigan Avenue, Lansing, Michigan 48933.
For purposes of measuring the net pension and other postemployment benefit liabilities, deferred outflows · The City formally adopts operating budgets for the General Fund and all special revenue funds. of resources and deferred inflows of resources related pensions and other postemployment benefits, and pension and other postemployment benefit expense, information about the fiduciary net position of the · Budgetary integration is employed as a management control device during the year for all budgeted funds. plans and additions to/deductions from the plan fiduciary net position have been determined on the same Except for the General Fund, these budgets are adopted on a basis consistent with generally accepted basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee accounting principles ("GAAP"). In the General Fund, capital lease payments / installment payments are contributions) are recognized when due and payable in accordance with the benefit terms. Investments are budgeted, but capital lease acquisitions are not. There were no capital lease acquisitions during the year reported at fair value. ended June 30, 2019. F-31 Use of Estimates · Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
The City utilizes various investment instruments which are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near-term and that such changes could materially affect the amounts reported in the financial statements.
2. BUDGETARY INFORMATION
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
· On or before the fourth Monday in March, the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1.
· Public hearings are conducted to obtain taxpayer comments.
· Not later than the third Monday in May, the Council adopts a budget through passage of a resolution.
71 72 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of appropriated. During the year ended June 30, 2019, the City incurred expenditures in certain budgetary funds $39,902,166 at June 30, 2019. The deficit is a result of full-accrual accounting for long-term debt, without which were in excess of the amounts appropriated, as follows: reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). Total Amount of Budget Appropriations Expenditures Variance 4. DEPOSITS AND INVESTMENTS General fund: General government: Following is a reconciliation of deposit and investment balances for the primary government (including both Attorney's office $ 2,168,300 $ 3,181,864 $ 1,013,564 pooled cash and investments as well as pension and other postemployment benefit (OPEB) trust fund City clerk 1,197,000 1,356,153 159,153 balances) as of June 30, 2019: Finance 5,471,600 8,373,425 2,901,825 Library rental 150,000 151,846 1,846 Primary Component Human resources 2,118,000 2,121,102 3,102 Government Units Totals Public works 11,572,500 11,615,556 43,056 Statement of net position Nonmajor governmental funds: Cash and investments $ 104,311,595 $ 6,251,253 $ 110,562,848 Major streets fund: Restricted cash and investments 2,577,409 2,838,415 5,415,824 Current expenditures: Principal 376,200 471,930 95,730 Statement of fiduciary net position Interest 150,000 175,055 25,055 Pension and OPEB trust funds: Other financing uses: Cash and cash equivalents 10,000,828 - 10,000,828 Payment to refunding bond escrow agent - 1,995,908 1,995,908 Equity in pooled cash and investments 4,402,694 - 4,402,694 Investments 551,011,005 - 551,011,005 F-32 Local streets fund: Current expenditures: Agency funds: Highways and streets 5,413,600 5,679,276 265,676 Equity in pooled cash and investments 76,818 - 76,818 Interest 279,000 359,124 80,124 Total $ 672,380,349 $ 9,089,668 $ 681,470,017 Other financing uses: Payment to refunding bond escrow agent - 5,745,455 5,745,455 Deposits and investments State and federal grants fund: Bank deposits: Public works - 17,339 17,339 Checking/savings accounts $ 96,412,183 Investment in securities and mutual funds: The above budgeted amounts are presented at the activity level, which is the required minimum level of Pooled investments 31,138,994 control per the Michigan Uniform Budget Manual. Employees' retirement system investments 192,414,946 Police and fire retirement system investments 325,108,126 The budget variance in the attorney's office was due to the settlement of lawsuits of $1,306,000. The Employees' money purchase pension plan investments 2,952,671 variance in finance was due primarily to IRS penalties of $2,500,000 and bad debt write-offs of $287,281. Retiree health care VEBA investments 30,535,262 Tax increment finance authority investments 2,758,415 3. DEFICIT FUND EQUITY Total investment in securities and mutual funds 584,908,414
The Special Assessments Capital Projects Fund reported a deficit fund balance of $115,546. The fund Cash on hand 149,420 received a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. The deficit is the result of deferred special assessments receivable. As special Total $ 681,470,017 assessments are collected, this deficit will be eliminated, and the advance repaid.
The Cemetery, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $2,284,746, $4,642,640, and $8,721,734, respectively, as a result of the net pension and net other postemployment benefit liabilities.
73 74 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a bank failure, the Fair Value Measurement City’s deposits may not be returned. State law does not require and the City does not have a policy for deposit custodial credit risk. As of year-end, $99,363,674 of the City’s bank balance of $102,118,122 was The City categorizes its fair value measurements within the fair value hierarchy established by generally exposed to custodial credit risk because it was uninsured and uncollateralized. accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in The City’s investment policy does not specifically address this risk, although the City believes that due to active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank significant unobservable inputs. deposits. As a result, the City evaluates each financial institution with which it deposits City funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level Securities traded on a national or international exchange are valued at the last reported sales price at are used as depositories. current exchange rates. Debt securities are valued by the City's investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing, Custodial Credit Risk – Investments. For an investment, custodial credit risk is the risk that, in the event of which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities, (e) bids or offers, and (f) reference data. The City's level 2 investments as noted in the table securities that are in the possession of an outside party. State law does not require and the City does not below are valued using significant other observable inputs of the underlying securities. have a policy for investment custodial credit risk. On the investments listed above, there is no custodial credit risk, as these investments are uncategorized as to credit risk. Level 1 Level 2 Level 3 Total Credit Risk. State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and U.S. treasuries $ - $ 2,466,175 $ - $ 2,466,175 ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and Money market funds 2,221,977 - - 2,221,977 qualified external investment pools as identified in the list of authorized investments in the summary of
F-33 significant accounting policies. The City’s investment policy does not have specific limits in excess of state $ 2,221,977 $ 2,466,175 $ - $ 4,688,152 law on investment credit risk. Credit risk ratings, where applicable, are summarized as follows: Investments carried at net asset value: S&P AAAm $ 26,351,987 Michigan CLASS government investment pool 26,450,842 S&P AA+ 1,599,170 Unrated 867,005 Total investments $ 31,138,994 Assets not subject to credit risk 2,320,832
Total $ 31,138,994 Investments in Entities that Calculate Net Asset Value per Share. The City holds shares in Michigan CLASS whereby the fair value of the investment is measured on a recurring basis using net asset value per Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable share (or its equivalent) of the investment pool as a practical expedient. investments as identified in the summary of significant accounting policies. The City’s investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its At year end, the net asset value of the City's investment in Michigan CLASS was $26,450,842. The exposure to fair value losses arising from increasing interest rates. For investments held at year-end investment pool had no unfunded commitments, specific redemption frequency or redemption notice period maturities are as follows: required. The Michigan CLASS investment pool invests in U.S. treasury obligations, federal agency obligations of the U.S. government, high-grade commercial paper (rated ‘A-1’ or better) collateralized bank Due within 1 year $ 26,940,233 deposits, repurchase agreements (collateralized at 102% by Treasuries and agencies), and approved money- 1-5 years 1,877,929 market funds. The program seeks to provide safety, liquidity, convenience, and competitive rates of return, No maturity 2,320,832 and is designed to meet the needs of Michigan public sector investors. It purchases securities that are legally permissible under state statutes and are available for investment by Michigan counties, cities, Total $ 31,138,994 townships, school districts, authorities and other public agencies.
Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of Pension and Other Postemployment Benefit Trust Funds the City’s investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant The deposits and investments of the City’s pension and other postemployment benefit trust funds are accounting policies. The City’s investment policy does not have specific limits in excess of state law on maintained separately from the City’s pooled cash and investments, and are subject to separate investment concentration of credit risk. All investments held at year-end are reported above. policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately.
75 76 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Deposits The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30, 2019: The pension and OPEB trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net position are composed entirely Employees' Police and Fire Employees' Retiree of short-term investments in money market accounts. Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Investments Investments U.S. treasuries: The Michigan Public Employees Retirement Systems’ Investment Act, Public Act 314 of 1965, as amended, Not on securities loan $ 5,304,420 $ 7,329,275 $ - $ - $ 12,633,695 authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real On securities loan 3,353,474 3,414,669 - - 6,768,143 estate, and various other investment instruments, subject to certain limitations. The retirement boards U.S. agencies: have the responsibility and authority to oversee the investment portfolio. Various professional investment Not on securities loan 14,959,810 17,870,042 - - 32,829,852 managers are contracted to assist in managing the pension trust funds’ assets. All investment decisions are On securities loan - - - - - subject to Michigan law and the investment policy established by the retirement boards. Collateralized mortgage obligations 187,346 743,386 - - 930,732 Domestic corporate securities mutual funds: Not on securities loan 21,587,284 33,836,262 - - 55,423,546 Real estate investment funds 19,320,190 24,877,312 - - 44,197,502 Equity mutual funds - - - - - International equity F-34 mutual funds 66,559,683 92,886,663 163,248 3,346,741 162,956,335 Domestic equity mutual funds 17,329,443 37,967,428 2,525,357 12,340,479 70,162,707 Domestic debt securities mutual funds - - 264,066 13,251,852 13,515,918 International debt securities mutual funds - 17,960,946 - - 17,960,946 Private equity partnerships - - - - - Domestic equities: Not on securities loan 28,681,369 59,932,481 - - 88,613,850 On securities loan 8,765,797 13,462,401 - - 22,228,198 International equities: Not on securities loan 679,519 1,275,600 - - 1,955,119 Emerging markets equities 3,580,659 7,283,009 - 829,188 11,692,856 Money market funds 2,105,952 6,268,652 - 767,002 9,141,606
Total investments $ 192,414,946 $ 325,108,126 $ 2,952,671 $ 30,535,262 $ 551,011,005
77 78 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Credit Risk. The City’s pension investment policies provide that at least 90% of its investments in fixed Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect income securities be rated BBB- or better by a nationally recognized statistical rating organization and the the fair value of an investment or deposit. The pension and other postemployment benefits trusts’ exposure remaining 10% be rated at least B- or better. The City’s pension and other postemployment benefits to foreign currency risk is as follows: investments were rated by Standard & Poor’s as follows: Employees' Police and Fire Employees' Retiree Employees' Police and Fire Employees' Retiree Investment Retirement Retirement Money Purchase Health Care Retirement Retirement Money Purchase Health Care (currency in U.S. dollar) System System Pension Plan VEBA Totals System System Pension Plan VEBA Totals International equities: AAA $ 123,687 $ 152,200 $ 23,325 $ - $ 299,212 Canada $ 384,714 $ 697,551 $ - $ - $ 1,082,265 AA - - 173,252 - 173,252 Italy 44,713 109,281 - - 153,994 A - - - 4,405,262 4,405,262 Netherlands 21,669 53,393 - - 75,062 BBB - - - 8,846,590 8,846,590 United Kingdom 15,762 38,823 - - 54,585 BB - - 67,489 - 67,489 France 42,233 103,100 - - 145,333 US government Israel 170,428 273,452 - - 443,880 guaranteed 18,651,049 23,683,255 - - 42,334,304 International mutual funds 66,559,683 110,847,609 163,248 3,346,741 180,917,281 Not rated 28,723,550 45,626,831 - - 74,350,381 Assets not subject Total $ 67,239,202 $ 112,123,209 $ 163,248 $ 3,346,741 $ 182,872,400 to credit risk 144,916,660 255,645,840 2,688,605 17,283,410 420,534,515 Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair $ 192,414,946 $ 325,108,126 $ 2,952,671 $ 30,535,262 $ 551,011,005 market value of an investment. The City’s pension investment policies provide that the average duration of
F-35 fixed income securities shall not deviate from the Lehman Brothers Aggregate Index duration by +/-20%. As Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure of of June 30, 2019, maturities of the City’s pension and other postemployment benefits trust debt securities, the counterparty, the City will not be able to recover the value of its investments or collateral securities money market funds and collateralized mortgage obligations were as follows: that are in the possession of an outside party. The City’s pension investment policies require that investment securities be held in trust by a third-party institution in the name of the pension trust fund. As Investment Maturities (Fair Value) such, although uninsured and unregistered, the City’s pension investments are not exposed to custodial Less than More than credit risk since the securities are held by the counterparty’s trust department in the name of the pension 1 year 1-5 years 6-10 years 10 years Total trust fund. Short-term investments in money market funds and open-end mutual funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book Employees' Retirement System form. U.S. government bonds $ - $ 3,430,542 $ 3,978,355 $ 1,248,997 $ 8,657,894 U.S. agencies 325,448 444,959 - - 770,407 Concentration of Credit Risk. At June 30, 2019, the pension and other postemployment benefits investment U.S. government mortgage portfolio was concentrated as follows: backed securities - 248,805 742,005 12,172,320 13,163,130 U.S. government issued Employees' Police and Fire commercial mortgage Retirement Retirement backed securities - 416,974 123,687 485,612 1,026,273 Investment Type Issuer System System Commercial mortgage backed securities - 41,939 - 145,407 187,346 Corporate bonds Western Asset Funds, Inc. 11.2% 10.4% Common stock Northern Trust Bank, N.A. 8.3% 11.7% Total $ 325,448 $ 4,583,219 $ 4,844,047 $ 14,052,336 23,805,050 U.S. government securities United State of America 6.2% 4.3% Fixed income investments with no maturity: The City’s pension and other postemployment benefits investment policies require diversification of fixed Domestic corporate securities mutual funds 21,587,284 income securities; however, they do not specify percentages of dollar amounts by industry or issuer. Money market funds 2,105,952
Total investments $ 47,498,286
79 80 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Investment Maturities (Fair Value) Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to Less than More than the category for the collateral received on the securities lent. At year-end, the pension trust funds have no 1 year 1-5 years 6-10 years 10 years Total credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2019, the fair value of securities on loan by the Employees’ Police and Fire Retirement System Retirement System and the Police and Fire Retirement System were $12,119,271 and $16,877,070, U.S. government bonds $ - $ 5,440,390 $ 4,067,987 $ 1,235,567 $ 10,743,944 respectively, for which the Plans’ received cash collateral of $12,324,587 and $17,147,852, respectively. U.S. agencies 401,725 616,509 - - 1,018,234 The contract with the pension and other postemployment benefits trust fund custodians require them to U.S. government mortgage indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to backed securities - 208,664 1,465,184 13,753,013 15,426,861 replace the securities lent) or fail to pay the City for income distributions by the securities’ issuers while U.S. government issued the securities are on loan. commercial mortgage backed securities - 756,084 152,200 516,663 1,424,947 Fair Value Measurement Commercial mortgage backed securities - 53,922 - 689,464 743,386 The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair Total $ 401,725 $ 7,075,569 $ 5,685,371 $ 16,194,707 29,357,372 value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are Fixed income investments with no maturity: significant unobservable inputs. Domestic corporate securities mutual funds 33,836,262 Money market funds 6,268,652 Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the Plans' investment custodian using independent
F-36 Total investments $ 69,462,286 pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing, which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark Investment Maturities (Fair Value) securities, (e) bids or offers, and (f) reference data. Asset-backed and mortgage-backed securities funds are valued based on the future cash flows of the principal and interest payments of the underlying collateral of 1-5 years 6-10 years Total mortgages on various assets. The Plans' level 2 investments as noted in the tables below are valued using significant other observable inputs of the underlying securities. Employees' Money Purchase Pension Pan Domestic debt securities $ 173,252 $ 90,814 $ 264,066 The City has the following recurring fair value measurements as of June 30, 2019:
Investment Maturities (Fair Level 1 Level 2 Level 3 Total Value) Employees' Retirement System U.S. treasuries $ - $ 8,657,894 $ - $ 8,657,894 U.S. agencies - 14,959,810 - 14,959,810 1-5 years Collateralized mortgage obligations 187,346 - - 187,346 Mutual funds 105,476,410 19,320,190 - 124,796,600 Retiree Health Care VEBA Domestic equities 37,447,166 - - 37,447,166 Domestic debt securities $ 13,251,852 International equities 679,519 - - 679,519 Emerging market equities 3,580,659 - - 3,580,659 Securities Lending. Under contracts approved by the City, the pension and other postemployment benefits Money market funds 2,105,952 - - 2,105,952 trust funds are permitted to lend their securities to broker-dealers and banks (borrowers) for collateral that will be returned for the same securities in the future. The pension trust and other postemployment benefits $ 149,477,052 $ 42,937,894 $ - $ 192,414,946 funds’ custodial banks manage the securities lending programs and receive cash as collateral. Collateral cash is initially pledged at 100% of the fair value of the securities lent, and may not fall below 95% of the market value of the loaned security during the term of the loan. At all times, collateral cannot be more than $100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned.
81 82 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
5. RECEIVABLES Level 1 Level 2 Level 3 Total Police and Fire Retirement System Receivables are comprised of the following: U.S. treasuries $ - $ 10,743,944 $ - $ 10,743,944 U.S. agencies - 17,870,042 - 17,870,042 Governmental Business-type Component Collateralized mortgage obligations 743,386 - - 743,386 Activities Activities Units Mutual funds 161,618,567 22,882,772 - 184,501,339 Domestic equities 73,394,882 - - 73,394,882 Accounts receivable $ 9,427,662 $ 5,555,246 $ 861,751 International equities 1,275,600 - - 1,275,600 Taxes receivable 845,163 - - Emerging market equities 7,283,009 - - 7,283,009 Special assessments receivable 191,201 - - Money market funds 6,268,652 - - 6,268,652 Loans receivable 1,222,523 - 189,176 Accrued interest receivable 2,172,446 129,283 - $ 250,584,096 $ 51,496,758 $ - 302,080,854 Due from other governments 10,488,669 - - Lease receivable - 23,556,870 - Investments carried at net asset value: Allowance for uncollectible accounts (735,770) (490,031) - Real estate investment trusts 1,994,540 International equity mutual funds 21,032,732 $ 23,611,894 $ 28,751,368 $ 1,050,927 Total investments $ 325,108,126 Amount not expected to be collected within one year $ 3,549,532 $ 22,898,882 $ 160,744 Net Asset Value Investments. Certain investments noted above are carried at net asset value as these are not actively traded. The fair value is estimated based on the dollar value per share as of June 30, 2019.
F-37 These investments are able to be liquidated as needed, to the extent there is a willing buyer in the market. There are not any restrictions related to the sale of these investments. At June 30, 2019, the City had $2,087,085 outstanding on initial commitments of $8,600,000 with the Invesco Mortgage Recovery Fund (the "Fund"). The Fund has a seven year life, and the intent is to sell all of the investments prior to the Fund's maturity. The other investments at net asset value do not contain required redemption periods.
Level 1 Level 2 Level 3 Total
Employees' Money Purchase Pension Plan Mutual funds $ 2,952,671 $ - $ - $ 2,952,671
Level 1 Level 2 Level 3 Total
Retiree Health Care VEBA Emerging market equities $ 829,188 $ - $ - $ 829,188 Mutual funds 28,939,072 - - 28,939,072 Money market funds 767,002 - - 767,002
$ 30,535,262 $ - $ - $ 30,535,262
83 84 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
6. CAPITAL ASSETS Beginning Ending Balance Additions Disposals Transfers Balance Capital asset activity for the year ended June 30, 2019 was as follows: Business-type activities Capital assets, not being depreciated: Beginning Ending Land $ 13,292,491 $ - $ (822,130) $ - $ 12,470,361 Balance Additions Disposals Transfers Balance Construction in progress 6,241,549 7,426,147 - (122,864) 13,544,832 Governmental activities 19,534,040 7,426,147 (822,130) (122,864) 26,015,193 Capital assets, not being depreciated: Land $ 25,302,787 $ - $ - $ - $ 25,302,787 Capital assets, being depreciated: Land improvements 29,054,321 413,038 - 122,864 29,590,223 Capital assets, being depreciated: Equipment and vehicles 7,771,216 288,414 (68,548) - 7,991,082 Land improvements 23,198,836 3,390,050 - - 26,588,886 Buildings 210,801,197 1,220,493 (25,255,312) - 186,766,378 Equipment and vehicles 39,972,462 2,233,901 (1,075,181) - 41,131,182 Sewers 343,700,253 448,815 - - 344,149,068 Buildings 136,275,787 - - - 136,275,787 591,326,987 2,370,760 (25,323,860) 122,864 568,496,751 Infrastructure 302,543,589 3,194,412 - - 305,738,001 Less accumulated depreciation for: 501,990,674 8,818,363 (1,075,181) - 509,733,856 Land improvements (14,788,543) (546,029) - - (15,334,572) Equipment and vehicles (6,584,086) (507,758) 68,548 - (7,023,296) Less accumulated depreciation for: Buildings (126,054,936) (3,921,412) 12,299,467 - (117,676,881) Land improvements (11,399,792) (1,119,103) - - (12,518,895) Sewers (109,037,318) (6,989,114) - - (116,026,432) Equipment and vehicles (32,412,514) (2,544,261) 1,062,585 - (33,894,190) (256,464,883) (11,964,313) 12,368,015 - (256,061,181) Buildings (86,216,812) (4,426,131) - - (90,642,943) Total capital assets
F-38 Infrastructure (214,151,740) (4,561,036) - - (218,712,776) being depreciated, net 334,862,104 (9,593,553) (12,955,845) 122,864 312,435,570 (344,180,858) (12,650,531) 1,062,585 - (355,768,804) Total capital assets Business-type activities being depreciated, net 157,809,816 (3,832,168) (12,596) - 153,965,052 capital assets, net $ 354,396,144 $ (2,167,406) $ (13,777,975) $ - $ 338,450,763
Governmental activities At June 30, 2019, the City’s business-type activities had outstanding commitments through construction capital assets, net $ 183,112,603 $ (3,832,168) $ (12,596) $ - $ 179,267,839 contracts of approximately $5,169,000.
At June 30, 2019, the City’s governmental activities had outstanding commitments through construction Depreciation expense was charged to functions/programs of the primary government as follows: contracts of approximately $5,543,000. Depreciation of governmental activities by function General government $ 434,908 Public safety 673,040 Public works 4,577,035 Recreation and culture 2,972,459 Community development 1,812,352 Internal service funds 2,180,737
Total depreciation expense - governmental activities $ 12,650,531
Depreciation of business-type activities by function Sewage disposal system $ 10,595,778 Municipal parking system 980,505 Cemetery 9,827 Golf 77,191 Recycling 301,012
Total depreciation expense - business-type activities $ 11,964,313
85 86 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Due to and from component units
Accounts payable and accrued liabilities are comprised of the following: Due from Due to primary component Governmental Business-type Component government unit Activities Activities Units Municipal parking system $ - $ 145 Accounts payable $ 9,778,564 $ 1,890,146 $ 1,707,790 Tax increment finance authority 145 - Deposits payable 35,020 66,815 - Accrued payroll 2,762,723 140,532 375,156 Total $ 145 $ 145 Contract retainage payable 1,138,157 - - Due to other governments 3,861,074 - - For the year ended June 30, 2019, interfund transfers consisted of the following: Claims incurred but not reported 750,000 - - Other 865,782 - - Transfers In $ 19,191,320 $ 2,097,493 $ 2,082,946 Nonmajor Nonmajor governmental enterprise 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Transfers Out General fund funds funds Total
The composition of interfund balances as of June 30, 2019, was as follows: General fund $ - $ 5,716,520 $ 1,696 $ 5,718,216 Nonmajor governmental funds 100,000 2,900,000 611,897 3,611,897
F-39 Due to and from primary government funds Nonmajor enterprise funds - 32,776 - 32,776
Due from Due to Other Total $ 100,000 $ 8,649,296 $ 613,593 $ 9,362,889 Other Funds Funds Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is General fund $ 500 $ 2 required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the Nonmajor governmental funds - 624,145 funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use Sewage disposal system 2,944 362,870 unrestricted revenues collected in the General Fund to finance various programs accounted for in other Municipal parking system 986,515 2,942 funds in accordance with budgetary authorizations.
Total $ 989,959 $ 989,959
The above balances generally resulted from a time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made.
Advances to and from primary government funds
Advances to Advances from Other Funds Other Funds
Nonmajor governmental funds $ - $ 150,303 Municipal parking system 150,303 -
Total $ 150,303 $ 150,303
Advances are made to the Special Assessments Fund to prevent a negative equity in pooled cash.
87 88 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
9. LONG-TERM DEBT Interest Original General obligation bonds (concluded) Rate Amount Amount General Obligation Bonds. The government issues general obligation bonds to provide funds for the Business-type activities (concluded): acquisition and construction of major capital facilities. General obligation bonds are direct obligations and 2015 Limited Tax Sewer Bond - 5211-02 2.50% $ 1,977,487 $ 1,810,065 pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds 2016 Limited Tax Sewer Bond - 5581-01 2.50% 1,309,872 3,081,310 with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as 2014 Building Authority Refunding Bonds - Limited Tax 2.00-3.00% 6,765,000 3,465,000 follows: 2017 Building Authority Refunding - Limited Tax 3.31-4.08% 10,805,000 10,805,000 2019 General Obligation Refunding - Limited Tax 2.00-4.00% 7,681,301 7,681,301 Interest Original General obligation bonds Rate Amount Amount $ 228,720,808 $ 115,616,143 Governmental activities: 2013 Energy Efficiently Refunding Bonds - Limited Tax 2.40% $ 5,645,000 $ 2,475,000 Advance Refundings 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,170,000 2015 Lansing Center Refunding Bonds - Limited Tax 2.00-3.00% 1,770,000 915,000 In September 2018, the City issued $6,210,000 of General Obligation Limited Tax Refunding Bonds to 2018 Michigan Transportation Fund Bonds 3.50% 1,665,000 1,665,000 advance refund $6,435,000 of the 2007 Building Authority Refunding Bonds. The proceeds of the bonds were 2019 General Obligation Refunding - Limited Tax 2.00-4.00% 6,938,699 6,938,699 used to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on the refunded debt. The 2007 bonds were all $ 19,218,699 $ 14,163,699 callable during the fiscal year ended June 30, 2019, so no defeasance of prior debt resulted from this transaction. The refunding resulted in a cash gain of $491,430 and an economic gain of $425,017. Business-type activities: 2009 Building Authority Refunding Bonds - Limited Tax 6.014-6.584%$ 8,161,691 $ 2,767,490 In April 2019, the City issued $14,620,000 of General Obligation Limited Tax Refunding Bonds to advance
F-40 2014 Building Authority Refunding Bonds - Limited Tax 4.75% 7,245,000 7,245,000 refund $15,750,000 (of which $7,475,000 was allocated to governmental activities and $8,275,000 to the 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 634,950 Sewage Disposal System enterprise fund) of the Authority's 2009 Capital Improvement Bonds. The proceeds 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 635,000 of the bonds were used to purchase U.S. government securities that were placed in an escrow fund for the 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 1,147,830 purpose of generating resources for all future debt service payments on the refunded debt. The 2009 bonds 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 1,918,046 were all callable during the fiscal year ended June 30, 2019, so no defeasance of prior debt resulted from 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 3,621,131 this transaction. The refunding resulted in a cash gain of $2,470,450 and an economic gain of $2,015,106. 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,145,688 3,560,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,842,649 1,497,649 In-substance Defeasance. During the year ended June 30, 2019, the City sold one of its parking structures. 2005 Limited Tax Sewer Bond - 5005-17 2.13% 8,003,778 3,093,778 The construction of this structure was initially financed by bonds issued by the City. The proceeds from this 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 5,429,371 sale were used to defease the remaining principal of the Authority's 2012 and 2018 Building Authority 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 8,681,346 Refunding Bonds in the amounts of $4,775,000 and $5,750,000, respectively. The proceeds of the sale were 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 12,559,726 used to purchase U.S. government securities that were placed in an escrow fund for the purpose of 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,494,933 16,705,453 generating resources for all future debt service payments on the refunded debt. As a result, the bonds are 2008 Limited Tax Sewer Bond - 5005-22 2.50% 14,455,604 10,120,604 considered defeased and the liability has been removed from the statement of net position. The defeased 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 6,333,000 bonds mature on May 1, 2020 through 2027. Accordingly, $10,525,000 of defeased debt remains outstanding 2015 Limited Tax Sewer Bond - 5211-01 2.50% 3,372,405 2,822,405 at year-end related to this transaction.
Prior Year Defeased Debt
As of June 30, 2019, defeased bonds related to the prior year refunding of the 2005 Building Authority Refunding Bonds were still outstanding in the amount of $3,745,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2020 through 2022.
As of June 30, 2019, defeased bonds related to the prior year refunding of the 2009 Building Authority Capital Appreciation Bonds were still outstanding in the amount of $1,949,200. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2021 through 2024.
89 90 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Revenue Bonds. The City also issues bonds where the income derived from the acquired or constructed Changes in Long-term Debt. Long-term liability activity for the year ended June 30, 2019, was as follows: assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Beginning Ending Due Within Interest Original Balance Additions Reductions Balance One Year Rate Amount Amount Governmental activities Revenue bonds - business type activities General obligation bonds $ 15,330,000 $ 8,603,699 $ 9,770,000 $ 14,163,699 $ 2,371,468 2013 Sewer Revenue and Refunding Bond 2.40% $ 21,765,000 $ 14,075,000 Notes from direct borrowings and direct placements: Pledged Revenues. The City has pledged future sewer customer revenues, net of specified operating Installment purchase expenses, to repay $21,765,000 in sewer revenue and refunding bonds issued in 2013. Proceeds from the agreements 12,289,396 - 1,015,376 11,274,020 1,043,947 bonds provided financing for the construction for various sewer infrastructure projects. The bonds are Loans payable 7,476,545 - 234,543 7,242,002 241,580 payable solely from sewer customer net revenues and are payable through 2028. Annual principal and interest payments on the bonds are expected to require less than 14% of net revenues. The total principal 35,095,941 8,603,699 11,019,919 32,679,721 3,656,995 and interest paid for the current year and total customer net revenues were $2,240,688 and $18,108,760 respectively. Deferred amounts: For issuance discounts (59,321) - (6,833) (52,488) - Installment Purchase Agreements. The government enters into installment purchase agreements for For issuance premiums 55,139 780,670 21,600 814,209 - equipment and related capital assets. Installment purchase agreements outstanding at year-end are as Compensated absences 9,957,856 1,287,949 1,277,057 9,968,748 1,277,057 follows: Accrued workers compensation 2,292,221 978,209 959,448 2,310,982 548,329 Interest Original
F-41 Rate Amount Amount $ 47,341,836 $ 11,650,527 $ 13,271,191 $ 45,721,172 $ 5,482,381 Installment purchase agreements Governmental activities: Business-type activities 2014 Lease Purchase Agreement - Recycling Trucks 1.96% $ 1,550,855 $ 520,243 General obligation bonds$ 137,182,606 $ 15,995,317 $ 37,561,780 $ 115,616,143 $ 11,623,482 2015 Ballpark Improvements Installment Purchase 3.00% 13,500,000 10,753,777 Revenue bonds 15,625,000 - 1,550,000 14,075,000 1,550,000 Notes from direct borrowings $ 15,050,855 $ 11,274,020 and direct placements: Installment purchase Business-type activities: agreements 808,500 - 225,580 582,920 230,023 2014 Lease Purchase Agreement - Recycling Carts 1.96% $ 1,737,000 $ 582,920 153,616,106 15,995,317 39,337,360 130,274,063 13,403,505 Loans payable. The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Deferred amounts: For issuance discounts (490,338) - (149,523) (340,815) - Interest Original For issuance premiums 1,879,538 1,120,439 561,396 2,438,581 - Rate Amount Amount Compensated absences 871,120 61,937 77,914 855,143 77,914 Loans payable Governmental activities: $ 155, 876,426 $ 17,177,693 $ 39,827,147 $ 133,226,972 $ 13,481,419 HUD Section 108 Loan 1.52% $ 5,900,000 $ 5,900,000 2014 SIB Loan 3.00% 1,828,428 1,342,002
$ 7,728,428 $ 7,242,002
91 92 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
For the governmental activities, compensated absences and other long-term debt are generally liquidated 10. FUND BALANCES - GOVERNMENTAL FUNDS by the General Fund. In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Debt service requirements to maturity for the general obligation and revenue bonds of the City are as Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe follows: constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: Year Governmental Activities Business-type Activities Ending Nonmajor June 30, Principal Interest Total Principal Interest Total General Governmental Fund Funds Totals 2020 $ 2,371,468 $ 538,524 $ 2,909,992 $ 13,173,482 $ 3,510,701 $ 16,684,183 Nonspendable 2021 2,475,452 0<= 2,942,585 12,934,227 4,083,141 17,017,368 Inventories $ 29,575 $ 1,030,305 $ 1,059,880 2022 2,232,063 >>< 2,621,249 12,444,891 3,797,527 16,242,418 Prepaids 9,030 7,556 16,586 2023 716,302 0= 1,040,474 10,724,778 3,553,267 14,278,045 Corpus of permanent fund - 1,914,166 1,914,166 2024 747,659 ? 1,038,162 10,634,125 2,961,420 13,595,545 38,605 2,952,027 2,990,632 2025-2029 4,206,365 >=<> 5,086,046 41,756,193 7,627,041 49,383,234 2030-2034 1,414,390 > 1,552,592 15,639,667 3,965,334 19,605,001 Restricted 2035-2039 - - - 11,183,780 1,547,701 12,731,481 Major and local streets - 14,840,386 14,840,386 2040-2041 - - - 1,200,000 24,450 1,224,450 Drug law and narcotics enforcement - 1,583,641 1,583,641 $ 14,163,699 $ 3,027,401 $ 17,191,100 $ 129,691,143 $ 31,070,582 $ 160,761,725 Downtown Lansing - 47,238 47,238
F-42 Debt service - 30,111 30,111 Debt service requirements to maturity for the notes from direct borrowings and direct placements of the Building department - 531,033 531,033 City are as follows: Capital improvements (unexpended bond proceeds) - 6,368 6,368 Year Governmental Activities Business-type Activities - 17,038,777 17,038,777 Ending Committed June 30, Principal Interest Total Principal Interest Total City parks - 484,669 484,669 Capital improvements - 8,663,319 8,663,319 2020 $ 1,285,527 $ 545,467 $ 1,830,994 $ 230,023 $ 10,304 $ 240,327 - 9,147,988 9,147,988 2021 1,707,075 ?? 2,212,184 234,554 5,773 240,327 2022 1,642,029 0?0? 2,101,479 118,343 1,743 120,086 Unassigned (deficit) 9,992,885 (115,546) 9,877,339 2023 1,581,002 0> 1,994,821 - - - 2024 1,626,724 <=?0 1,994,267 - - - Total fund balances - 2025-2029 7,474,117 ?>= 8,624,996 - - - governmental funds $ 10,031,490 $ 29,023,246 $ 39,054,736 2030-2034 3,199,548 =??0? 3,375,093 - - -
$ 18,516,022 $ 3,617,812 $ 22,133,834 $ 582,920 $ 17,820 $ 600,740
93 94 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
11. NET INVESTMENT IN CAPITAL ASSETS The City is self-funded for Blue Cross Blue Shield healthcare coverage for employees and retirees. The City maintains stop/loss coverage that limits its per-case exposure to $250,000. The City estimates healthcare The composition of net investment in capital assets as of June 30, 2019, was as follows: claims that are incurred but not reported as of year-end, which is accounted for in the City's Fringe Benefits Internal Service Fund. Changes in the estimated liability were as follows: Governmental Business-type Component Activities Activities Units Fiscal Year Ended June 30,
Capital assets: 2019 2018 Capital assets not being depreciated $ 25,302,787 $ 26,015,193 $ - Capital assets being depreciated, net 153,965,052 312,435,570 23,352 Estimated liability, beginning of year $ 900,000 $ 885,000 Total capital assets 179,267,839 338,450,763 23,352 Estimated claims incurred, including changes in estimates 9,849,331 9,664,043 Related debt: Claim payments (9,999,331) (9,649,043) General obligation bonds 14,163,699 115,616,143 - Revenue bonds - 14,075,000 - Estimated liability, end of year $ 750,000 $ 900,000 Installment purchase agreements 11,274,020 582,920 - Loans payable 7,242,002 - - The City is self-insured for workers’ compensation costs. The City estimates the liability for workers’ Unamortized bond discounts (52,488) (340,815) - compensation claims that have been incurred through the end of the fiscal year, including those claims that Unamortized bond premiums 814,209 2,438,581 - have been reported as well as those that have not yet been reported to the City. The current liability is Deferred charge on bond refunding (320,544) (4,352,459) - accounted for in the General Fund, with long-term liabilities accounted for in the Statement of Net Amounts under leases receivable - (23,556,870) - Position. The City has liability insurance coverage up to a maximum amount of $16,000,000 per occurrence
F-43 Unexpended bond proceeds (6,368) - - with a $350,000 deductible. Changes in the estimated long-term liability as well as the total estimated cost Total related debt 33,114,530 104,462,500 - of claims for the past two fiscal years were as follows:
Net investment in capital assets $ 146,153,309 $ 233,988,263 $ 23,352 Fiscal Year Ended June 30,
12. SEGMENT INFORMATION - ENTERPRISE FUNDS 2019 2018
The government issued revenue bonds to finance certain improvements to its sewage disposal system. Estimated liability, beginning of year $ 2,292,221 $ 2,417,780 Because the Sewage Disposal System, an individual fund that accounts entirely for the government’s sewage Estimated claims incurred, activities, is a segment and is reported as a major fund in the fund financial statements, separate segment including changes in estimates 978,209 1,031,123 disclosures herein are not required. Claim payments (959,448) (1,156,682)
13. RISK MANAGEMENT Estimated liability, end of year $ 2,310,982 $ 2,292,221
The City of Lansing, Michigan is exposed to various risks of loss related to property loss, torts, errors and 14. PROPERTY TAXES omissions and employee injuries. Property taxes attach as an enforceable lien on property as of the date they are levied. City, community The City carries commercial insurance for claims relating to general liability, property, electronic data college, and 50% of school taxes are levied and due July 1 and become delinquent after August 31. County processing, boiler and machinery, police professional and errors and omissions. The City has not taxes and the balance of school taxes are levied and due December 1 and become delinquent after February experienced settlements in excess of insurance coverage during the past three years. The City is uninsured 14. In March, taxes on real property still delinquent are purchased by the County's tax revolving funds. for acts of nature and environmental clean-up costs. Collections of community college, school, and county taxes and remittances are accounted for in the general fund. City property tax revenues are recognized in the fiscal year for which the taxes are levied to the extent that they result in current receivables (i.e., are collected within 60 days after fiscal year-end).
The City is permitted by charter and state law to levy taxes up to $20.00 per $1,000 of assessed valuation for general operations other than the payment of principal and interest on long-term debt. The tax rate to finance general governmental services other than the payment of principal and interest on long-term debt for the year ended June 30, 2019 was $19.44 per $1,000 of taxable value.
95 96 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
15. CONTINGENT LIABILITIES Plan Membership. At December 31, 2018, plan membership consisted of the following:
Federal Grant Programs. Amounts received or receivable from grantor agencies are subject to audit and Retirees and beneficiaries currently receiving benefits 916 potential adjustment by grantor agencies, principally the federal government. Any disallowed claims, Terminated employees entitled to but not yet receiving benefits 133 including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, Vested and non-vested active participants 405 of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. Total membership 1,454
Risk Management. The government is a defendant in various lawsuits. Although the outcome of these Benefits Provided. Employees who retire with minimum age and years of service requirements are entitled lawsuits is not presently determinable, it is the opinion of the government’s counsel that resolution of these to annual retirement benefits, payable in monthly installments for life, in an amount equal to a percentage matters will not have a material adverse effect on the financial condition of the government. of their final average compensation times years of credited service. Final average compensation is defined as the average of the highest annual compensation paid over 2 consecutive years of credited service within 16. PENSION PLANS the last 10 years of credited service immediately preceding a member's termination of employment. The benefit payments are calculated using the following rates for the various groups of general employees: Employees' Retirement System Bargaining Unit/Employee Multiplier Plan Description. The City sponsors and administers the Employees’ Retirement System (the “Plan”), a Group Percentage single-employer, defined benefit pension plan that covers general full-time employees of the City of Lansing, Michigan and employees of the 54-A District Court. It does not include elected officials, who are United Auto Workers (UAW): members of the Employees’ Money Purchase Pension Plan, nor does it include police officers and Hired after January 9, 2017 1.50% firefighters, who are members of a separate City defined benefit pension plan. The Plan was established Hired after October 18, 2013 1.70%
F-44 and may be amended by the City Council and is administered by a nine member Board of Trustees. The All others 2.75% Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, Teamsters Local 214: the City Treasurer, the City Human Resources Director, three members of the retirement system to be Hired after September 2012 1.25% elected by the members of the system under rules adopted by the board, two residents of the State of All others 1.80% Michigan appointed by the Mayor, by and with the consent of the City Council, one of which is a retiree of Teamsters Local 580: the retirement system. It is accounted for as a separate pension trust fund. Separate financial statements Hired after May 19, 2014 1.25% are not issued for the Plan. All others 1.80% Non-bargaining and all others All members may retire at age 50 with 25 or more years of credited service, or age 58 with 8 or more years Hired after April 1, 2014 1.25% of credited service. Members are vested after completing 8 years of credited service. Retirement options All others 1.60% that provide for survivor benefits are available to members. The plan also provides death and disability District court exempt benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus Hired after June 1, 2014 1.25% interest are refunded to the member or designated beneficiary. Members who are vested and terminate All others 1.60% their employment prior to retirement will receive their benefit as a life annuity beginning at age 58. Contributions. The contribution requirements of Plan members are established and may be amended by the Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the City Council in accordance with City policies, union contracts, and Plan provisions. Employees are required accrual basis of accounting. Plan member contributions are recognized in the period which the contributions to make contributions to the Plan in rates from 3.00 to 6.50% depending on bargaining unit and hire date. are due. The City’s contributions are recognized when due and a formal commitment to provide the The City is required to contribute at actuarially determined rates expressed as a percentage of covered contribution has been made. Benefits and refunds are recognized when due and payable in accordance with payroll. The City’s contribution rate for the plan for the year ended June 30, 2019 was 46.8% of projected the terms of the Plan. Administration of the Plan is funded through the Plan’s investment earnings. valuation payroll.
Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service.
97 98 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Bargaining Unit/Employee Contribution Net Pension Liability. The components of the net pension liability for the employees' retirement system at Group Percentage June 30, 2019 were as follows:
United Auto Workers (UAW) 3.00% Total pension liability $ 303,730,647 Teamsters Local 214: Plan fiduciary net position 165,585,569 Hired after September 2012 5.00% All others 6.50% Net pension liability $ 138,145,078 Teamsters Local 580: Hired after May 9, 2014 5.00% Plan fiduciary net position as All others 6.35% percentage of total pension District court Teamsters: liability 54.5% Hired after April 2014 5.00% All others 5.50% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December District court exempt 5.50% 31, 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods All others 6.50% included in the measurement:
Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be Inflation 2.75% amended by the Board of Trustees. The investment policy has been formulated based on consideration of a Salary increases 2.75%, plus service based increases wide range of policies and describes the prudent investment process that the Board deems appropriate. The Investment rate of return 7.25%, net of investment expense and including Plan's asset allocation policy is shown on the following pages. inflation
F-45 Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on pension Mortality is based on the RP-2000 tables for males and females. For Disabled members, the disabled plan investments, net of pension plan investment expense, was 5.17%. The money-weighted rate of return versions of these tables are used. Each of these tables is projected to 2026 using Scale BB and a 50% factor expresses investment performance, net of investment expense, adjusted for the changing amounts actually is applied for pre-retirement deaths. invested. The actuarial assumptions used in the December 31, 2018 valuation were based on the results of actuarial Concentrations. At June 30, 2019, the Plan held certain investments (other than those issued or explicitly experience analysis conducted in December 2016. guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5% or more of the Plan's fiduciary net position. Please see Footnote Changes in Actuarial Assumptions. There were no changes in actuarial assumptions during fiscal year 2019. 4 for the details of these concentrations.
Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2019 is as follows:
Reserve/Group Balance
Employee savings fund $ 12,745,315 Retirement reserve fund 132,084,679 Pension accumulation fund 5,628,058 Members benefit fund 15,127,517 Health insurance fund 32,946,254
99 100 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
The long-term expected rate of return on pension plan investments was determined using a building-block Changes in the Net Pension Liability. The components of the change in the net pension liability are method in which best-estimates of expected future real rates of return (expected returns, net of pension summarized as follows: plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the Total Pension Plan Fiduciary Net Pension target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Liability Net Position Liability Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected (a) (b) (a) - (b) return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2019, and the final investment return assumption, are Balances at June 30, 2018 $ 305,528,755 $ 168,558,816 $ 136,969,939 summarized in the following table: Changes for the year: Long-term Money- Service cost 2,719,559 - 2,719,559 Target Expected Real Weighted Rate Interest 21,512,099 - 21,512,099 Asset Class Allocation Rate of Return of Return Differences between expected and actual experience (2,559,726) - (2,559,726) Domestic equity 27.00% 5.75% 1.53% Employer contributions - 10,880,932 (10,880,932) International equity - developed 12.00% 5.85% 0.70% Employee contributions - 1,220,657 (1,220,657) International equity - emerging 4.00% 6.25% 0.25% Net investment income - 8,437,568 (8,437,568) Fixed income 25.00% 2.65% 0.66% Benefit payments, including refunds of Real estate 10.00% 4.75% 0.48% employee contributions (23,470,040) (23,470,040) - Global opportunistic fixed income 6.00% 4.10% 0.25% Administrative expense - (42,364) 42,364 Global equity long/short 10.00% 4.50% 0.45% Net changes (1,798,108) (2,973,247) 1,175,139
F-46 Absolute return 6.00% 4.25% 0.27% Balances at June 30, 2019 $ 303,730,647 $ 165,585,569 $ 138,145,078 100.00% 4.59% Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net Inflation 2.75% pension liability of the City, calculated using the discount rate of 7.25%, as well as what the City’s net Risk adjustments -0.09% pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25%) or 1-percentage-point higher (8.25%) than the current rate: Investment rate of return 7.25% One Percent Current One Percent Discount Rate. The discount rate used to measure the total pension liability was 7.25%. The projection of Decrease Discount Rate Increase cash flows used to determine the discount rate assumed that plan member contributions will be made at (6.25%) (7.25%) (8.25%) the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, each Net pension liability $ 164,697,183 $ 138,145,078 $ 115,359,996 plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rates of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
101 102 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Members may retire at age 55, or at any age with 25 or more years of credited service. Members are vested Pensions. For the year ended June 30, 2019, the City recognized pension expense of $13,770,789. At June after completing 10 years of credited service. Members are required to retire at age 60 (Police) or 70 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to (Fire). When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an pensions from the following sources: automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a Net Deferred reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or Deferred Deferred Outflows 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. Outflows of Inflows of (Inflows) of The plan provides death and disability benefits. If a member leaves employment or dies before vesting, Resources Resources Resources accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits Difference between expected and actual experience $ - $ 1,706,484 $ (1,706,484) until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Net difference between projected and actual earnings on pension plan investments 5,050,290 - 5,050,290 Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions Total $ 5,050,290 $ 1,706,484 $ 3,343,806 are due. The City’s contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension the terms of the Plan. Administration of the Plan is funded through the Plan’s investment earnings. will be recognized in pension expense as follows: Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are Year Ended reported at cost, which approximates fair value. Securities traded on a national or international exchange June 30, Amount are valued at the last reported sales price at current exchange rates. Investments for which market
F-47 quotations are not readily available are valued at their fair values as determined by the custodian under the 2020 $ 2,365,018 direction of the Plan Board of Trustees, with the assistance of a valuation service. 2021 (838,377) 2022 1,136,209 Plan Membership. At December 31, 2018, plan membership consisted of the following: 2023 680,956 Retirees and beneficiaries currently receiving benefits 750 Total $ 3,343,806 Terminated employees entitled to but not yet receiving benefits 49 Vested and non-vested active participants 372 Payable to the Pension Plan. At June 30, 2019, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2019. Total membership 1,171
Police and Fire Retirement System Benefits Provided. Annual retirement allowances are determined by multiplying final average compensation by 3.2% for the first 25 years of credited service. The maximum allowance is 80% of final average Plan Description. The City sponsors and administers the Police and Fire Retirement System (the “Plan”), a compensation. Final average compensation is the member's highest wages for 2 consecutive years. single-employer, defined benefit pension plan that covers all police officers and fire fighters who are full- time employees of the City. The Plan was established and may be amended by the City Council and is Contributions. The contribution requirements of Plan members are established and may be amended by the administered by an eight member Board of Trustees. The Board is comprised of the Mayor of the City, one City Council in accordance with City policies, union contracts, and Plan provisions. Fire members are member of the City Council appointed by the City Council, the City Treasurer, a resident of the City who required to contribute 10.0% of their annual wages to the plan, fire members hired after May 19, 2014 are shall be appointed by the Mayor, by and with the consent of Council, two members each of the police and required to contribute 7.00%. Police supervisors are required to contribute 9.52%, police non-supervisors fire departments, to be elected by all the members of their respective departments. It is accounted for as are required to contribute 9.0%, and police non supervisors hired after August 1, 2014 are required to a separate pension trust fund. Separate financial statements are not issued for the Plan. contribute 7.00%. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City’s actuary) not financed by member contributions shall be financed by annual appropriations. The City’s contribution rate for the plan for the year ended June 30, 2019 was 45.7% of projected valuation payroll.
103 104 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and amended by the Board of Trustees. The investment policy has been formulated based on consideration of a females. For Disabled members, the disabled versions of these tables are used. Each of these tables is wide range of policies and describes the prudent investment process that the Board deems appropriate. The projected to 2026 using Scale BB and a 50% factor is applied for pre-retirement deaths. Plan's asset allocation policy is shown on the following pages. The actuarial assumptions used in the December 31, 2018 valuation were based on the results of actuarial Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on pension experience analysis conducted in December 2016. plan investments, net of pension plan investment expense, was 6.30%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually Changes in Actuarial Assumptions. There were no changes in actuarial assumptions during fiscal year 2019. invested. The long-term expected rate of return on pension plan investments was determined using a building-block Concentrations. At June 30, 2019, the Plan held certain investments (other than those issued or explicitly method in which best-estimates of expected future real rates of return (expected returns, net of pension guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) plan investment expense and inflation) are developed for each asset class. These ranges are combined to in certain organizations that represent 5% or more of the Plan's fiduciary net position. Please see Footnote produce the long-term expected rate of return by weighting the expected future real rates of return by the 4 for the details of these concentrations. target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The return. Best estimates of arithmetic real rates of return for each major asset class included in the pension reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating plan’s target asset allocation as of June 30, 2019, and the final investment return assumption, are and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of summarized in the following table: the Plan reserves at June 30, 2019 is as follows: Long-term Money- Target Expected Real Weighted Rate
F-48 Reserve/Group Balance Asset Class Allocation Rate of Return of Return
Retirement reserve fund $ 294,201,491 Domestic equity 32.00% 5.80% 1.85% Health insurance fund 39,200,746 International equity - developed 12.00% 6.10% 0.73% International equity - emerging 4.00% 7.25% 0.29% Net Pension Liability. The components of the net pension liability for the police and fire retirement system Fixed income 22.00% 2.25% 0.50% at June 30, 2019, were as follows: Real estate 10.00% 4.80% 0.48% Global opportunistic fixed income 5.00% 3.25% 0.16% Total pension liability $ 461,355,972 Global equity long/short 10.00% 5.00% 0.50% Plan fiduciary net position 294,201,491 Absolute return 5.00% 4.50% 0.24%
Net pension liability $ 167,154,481 100.00% 4.75%
Plan fiduciary net position as Inflation 2.75% percentage of total pension Risk adjustments -0.25% liability 63.8% Investment rate of return 7.25% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods Discount Rate. The discount rate used to measure the total pension liability was 7.25%. The projection of included in the measurement: cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference Inflation 2.75% between actuarially determined contribution rates and the member rate. Based on those assumptions, each Salary increases 2.75%, plus service-based increases plan’s fiduciary net position was projected to be available to make all projected future benefit payments of Investment rate of return 7.25%, net of investment expense and including current plan members. Therefore, the long-term expected rates of return on pension plan investments was inflation applied to all periods of projected benefit payments to determine the total pension liability.
105 106 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Changes in the Net Pension Liability. The components of the change in the net pension liability are Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to summarized as follows: Pensions. For the year ended June 30, 2019, the City recognized pension expense of $30,059,557. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to Total Pension Plan Fiduciary Net Pension pensions from the following sources: Liability Net Position Liability (a) (b) (a) - (b) Net Deferred Deferred Deferred Outflows Balances at June 30, 2018 $ 444,999,992 $ 291,879,983 $ 153,120,009 Outflows of Inflows of (Inflows) of Resources Resources Resources Changes for the year: Service cost 6,801,669 - 6,801,669 Difference between expected and actual experience$ 12,074,334 $ 4,827,030 $ 7,247,304 Interest 31,573,535 - 31,573,535 Changes in assumptions 7,093,170 - 7,093,170 Differences between expected and Net difference between projected and actual earnings actual experience 10,590,030 - 10,590,030 on pension plan investments 2,985,001 - 2,985,001 Employer contributions - 13,554,239 (13,554,239) Employee contributions - 3,485,891 (3,485,891) Total $ 22,152,505 $ 4,827,030 $ 17,325,475 Net investment income - 17,943,950 (17,943,950) Benefit payments, including refunds of Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension employee contributions (32,609,254) (32,609,254) - will be recognized in pension expense as follows: Administrative expense - (53,318) 53,318 Net changes 16,355,980 2,321,508 14,034,472 Year Ended
F-49 June 30, Amount Balances at June 30, 2019 $ 461,355,972 $ 294,201,491 $ 167,154,481 2020 $ 10,277,161 Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net 2021 3,238,585 pension liability of the City, calculated using the discount rate of 7.25%, as well as what the City’s net 2022 3,270,565 pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower 2023 539,164 (6.25%) or 1-percentage-point higher (8.25%) than the current rate: Total $ 17,325,475 One Percent Current One Percent Decrease Discount Rate Increase Payable to the Pension Plan. At June 30, 2019, the City did not have any outstanding amount of (6.25%) (7.25%) (8.25%) contributions to the pension plan required for the year ended June 30, 2019.
Net pension liability $ 213,013,207 $ 167,154,481 $ 124,427,822 For governmental activities, pension liabilities are expected to be liquidated by the general fund.
Summary Pension Information
The table below summarizes the net pension liability and related deferrals for the Employees' Retirement System and the Police and Fire Retirement System as presented in the Statement of Net Position.
Employees' Police & Fire Retirement Retirement System System Total
Net pension liability $ 138,145,078 $ 167,154,481 $ 305,299,559 Deferred outflows - pension 5,050,290 22,152,505 27,202,795 Deferred inflows - pension 1,706,484 4,827,030 6,533,514
107 108 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Financial statements for individual pension and employee benefit plans: Employees' Money Purchase Pension Plan Pension and Other Postemployment Benefits Net Position Newly hired employees are eligible to participate in the City's defined contribution plan. Eligible employees Employees' Employees' Police Police Employees' include those normally scheduled to work at least 1,000 hours during a plan year. To receive benefits under Retirement Retirement and Fire and Fire Money Retiree the plan, the participant must have met the age and service requirements outline in his or her applicable System System Retirement Retirement Purchase Healthcare bargaining unit agreement. Distributions are calculated based on the employee's vesting percentage and the Pension OPEB System System OPEB Pension Plan VEBA Totals individual's allocation of investment funds. In accordance with the Plan agreement, the City contributes 4% Assets Cash and cash equivalents $ 5,299,765 $ 1,054,484 $ 3,217,822 $ 428,757 $ - $ - $ 10,000,828 of employees' base pay to the plan. The defined contribution plan is administered by the Board of Trustees Equity in pooled cash and as designed in the City of Lansing Defined Contribution Plan which stipulates that the trustees have such investments (215,276) (42,833) 4,112,795 548,008 - - 4,402,694 authority. All amendments to the plan, including funding requirements, must be approved by the City Investments: Council subject to the terms of collective bargaining agreements. City contributions for the year ended U.S. treasuries 7,221,121 1,436,773 9,480,693 1,263,251 - - 19,401,838 June 30, 2019 were $172,888 for plan members. Employee contributions for the year ended June 30, 2019 U.S. agencies 12,477,237 2,482,573 15,768,919 2,101,123 - - 32,829,852 were $162,606. All amendments to the Plan, including funding requirements, must be approved by the City Collateralized mortgage obligations 156,256 31,090 655,980 87,406 - - 930,732 Council. The assets of the plan are held in trust for the exclusive benefit of participants and their Mutual funds 104,086,669 20,709,931 183,127,827 24,400,784 2,952,671 28,939,072 364,216,954 beneficiaries. Domestic equities 31,232,828 6,214,338 64,765,263 8,629,619 - - 110,842,048 International equities 566,753 112,766 1,125,618 149,982 - - 1,955,119 Emerging market equities 2,986,450 594,209 6,426,688 856,321 - 829,188 11,692,856 Money market funds 1,756,470 349,482 5,531,597 737,055 - 767,002 9,141,606 Dividends and interest receivable 163,558 32,543 219,781 29,285 - 528 445,695
Total assets 165,731,831 32,975,356 294,432,983 39,231,591 2,952,671 30,535,790 565,860,222
F-50 Liabilities Accounts payable 146,262 29,102 231,492 30,845 - - 437,701
Net position restricted for Pension benefits 165,585,569 - 294,201,491 - 2,952,671 - 462,739,731 Other postemployment benefits - 32,946,254 - 39,200,746 - 30,535,790 102,682,790
Total net position $ 165,585,569 $ 32,946,254 $ 294,201,491 $ 39,200,746 $ 2,952,671 $ 30,535,790 $ 565,422,521
109 110 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' 17. OTHER POSTEMPLOYMENT BENEFITS Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Primary Government Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Plan Description. The City of Lansing contributes to the Employees’ Retirement System, the Police and Investment income: Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund Net appreciation in fair value of investments $ 8,996,245 $ 1,172,732 $ 18,211,768 $ 290,543 $ - $ 1,867,951 $ 30,539,239 postemployment healthcare. In the Employees’ Retirement System and the Police and Fire Retirement Interest income 16,265 - 12,440 - 29,384 - 58,089 System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their Dividend income 190,000 - 708,000 - - - 898,000 investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a Investment expenses (764,942) - (988,258) - - - (1,753,200) percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of Net investment income 8,437,568 1,172,732 17,943,950 290,543 29,384 1,867,951 29,742,128 return of the retirement systems. Eligible participants include any retirees who receive pension benefits under their respective pension plans, with the exception of Teamster 580 employees hired after May 2014. Contributions: Employer 10,880,932 11,228,485 13,554,239 13,500,687 172,888 620,000 49,957,231 OPEB plan provisions are established and may be amended by the City Council, subject to the City’s Plan members 1,220,657 - 3,485,891 - 162,606 - 4,869,154 various collective bargaining agreements. Separate financial statements are not prepared for the plans. Total contributions 12,101,589 11,228,485 17,040,130 13,500,687 335,494 620,000 54,826,385 Method Used to Value Investments. Plan investments are reported at fair value. Securities traded on a Total additions 20,539,157 12,401,217 34,984,080 13,791,230 364,878 2,487,951 84,568,513 national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as Deductions determined by the custodian under the direction of each plans’ board of trustees, with the assistance of a Participant benefits 23,470,040 10,573,488 32,609,254 12,271,014 - - 78,923,796 Administrative expense 42,364 464,997 53,318 627,673 - 83,942 1,272,294 valuation service.
F-51 Total deductions 23,512,404 11,038,485 32,662,572 12,898,687 - 83,942 80,196,090 Voluntary Employees Beneficiary Association (VEBA)
Change in net position (2,973,247) 1,362,732 2,321,508 892,543 364,878 2,404,009 4,372,423 The City of Lansing Voluntary Employees Beneficiary Association (the “Plan”) is a single-employer defined benefit postemployment healthcare plan established by the City to provide medical and healthcare Net position restricted for pension and other benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension postemployment benefits: benefits under one of the City’s pension plans. The Plan is funded by a trust agreement established Beginning of year 168,558,816 31,583,522 291,879,983 38,308,203 2,587,793 28,131,781 561,050,098 pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During the year, the City contributed $620,000 to the Plan. It is accounted for as a separate OPEB trust fund. End of year $ 165,585,569 $ 32,946,254 $ 294,201,491 $ 39,200,746 $ 2,952,671 $ 30,535,790 $ 565,422,521 Employees' Retirement System
Plan Description. The City provides postemployment health care benefits, in accordance with labor agreements, to full-time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees’ Retirement System are also eligible to receive health care benefits, with the exception of Teamster 580 employees hired after May, 2014. The Plan was established and may be amended by the City Council and is administered by a nine member Board of Trustees. The Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, the City Human Resources Director, three members of the retirement system to be elected by the members of the system under rules adopted by the board, two residents of the State of Michigan appointed by the Mayor, by and with the consent of the City Council, one of which is a retiree of the retirement system. It is accounted for as a separate OPEB trust fund.
111 112 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Membership of the Plan consisted of the following at January 1, 2018, the date of the most recent Actuarial Assumptions. The total OPEB liability was determined by an actuarial valuation as of January 1, actuarial valuation: 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods included in the measurement: Retirees and beneficiaries receiving benefits 848 Terminated plan members entitled to but Inflation 2.75% not yet receiving benefits 77 Investment rate of return 7.25%, net of OPEB plan investment expense, Active plan members 404 including inflation Retirement age Age-based table of rates that are specific to the Total 1,329 type of eligibility condition Healthcare cost trend rate Benefits Provided. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $134.00 per month for each covered Year Beginning retiree and eligible dependent(s) eligible for retiree healthcare. The payments are charged to the fringe July 1, Pre-Medicare Medicare benefit internal service fund of the City and are recognized as expenses as payments are made. 2018 6.00% 4.50% Contributions. The contribution requirements of the Plan members and the City are established and may 2019 5.50% 4.50% be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. 2020 5.00% 4.25% Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under 2021 4.50% 4.00% the various contracts. The required contribution is based on projected pay-as-you-go financing 2022+ 4.50% 4.00% requirements, with an additional amount to prefund benefits as determined through the bi-annual actuarial valuation. For the year ended June 30, 2019, the City contributed $11,848,485 (direct benefit Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy
F-52 payments of $11,038,485 and City contributions of $810,000) to the Plan. tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on investments, net of investment expense, was 4.17%. The money-weighted rate of return expresses Pre-retirement: 50% of base rates investment performance, net of investment expense, adjusted for the changing amounts actually invested. Post-disablement: RP2000 disabled tables with Scale BB
Net OPEB Liability of the City. The components of the net OPEB liability of the City at June 30, 2019, The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial were as follows: experience study conducted in 2016.
Total OPEB liability $ 231,415,357 Changes in Actuarial assumptions. There were no changes in actuarial assumptions, except the change in Plan fiduciary net position 63,482,044 discount rate.
City's net OPEB liability $ 167,933,313 Investment Policy. The Plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration Plan fiduciary net position as of a wide range of policies and describes the prudent investment process that the Board deems percentage of total OPEB appropriate. The Plan's asset allocation policy as of June 30, 2019 is summarized in the table on the liability 27.4% following page.
113 114 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
The long-term expected rate of return on OPEB plan investments was determined using a building-block Changes in the Net OPEB Liability. The components of the change in the net OPEB liability are summarized method in which best-estimates of expected future real rates of return (expected returns, net of OPEB as follows: plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by Total OPEB Plan Fiduciary Net OPEB the target asset allocation percentage and by adding expected inflation. This is then modified through a Liability Net Position Liability Monte-Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline (a) (b) (a) - (b) expected return. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of June 30, 2019 are summarized in the following table: Balances at June 30, 2018 $ 223,906,447 $ 59,715,303 $ 164,191,144
Long-term Money- Changes for the year: Target Expected Real Weighted Rate Service cost 1,477,747 - 1,477,747 Asset Class Allocation Rate of Return of Return Interest on total OPEB liability 12,990,219 - 12,990,219 Changes in assumptions 3,614,432 - 3,614,432 Domestic equity 27.00% 5.80% 1.56% Employer contributions - 11,848,485 (11,848,485) International equity - developed 12.00% 6.10% 0.73% Net investment income - 3,040,683 (3,040,683) International equity - emerging 4.00% 7.25% 0.29% Benefit payments (10,573,488) (10,573,488) - Fixed income - U.S. 25.00% 2.25% 0.56% Administrative expense - (548,939) 548,939 Real assets 10.00% 4.80% 0.48% Net changes 7,508,910 3,766,741 3,742,169 Global opportunistic fixed income 6.00% 3.25% 0.20% Global equity long/short 10.00% 5.00% 0.50% Balances at June 30, 2019 $ 231,415,357 $ 63,482,044 $ 167,933,313 Absolute return 6.00% 4.50% 0.27%
F-53 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate. The following presents the net OPEB 100.00% 4.59% liability of the City, calculated using the discount rate of 5.77%, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.77%) or 1% higher (6.77%) Inflation 2.75% than the current rate: Risk adjustment -0.09% Current Investment rate of return 7.25% 1% Decrease Discount Rate 1% Increase (4.77%) (5.77%) (6.77%) Discount Rate. The discount rate used to measure the total OPEB liability was 5.77% (down from 5.90% in 2018). The City’s funding expectations/policy is to contribute a percentage of payroll each year to their City's net OPEB liability $ 197,723,334 $ 167,933,313 $ 141,540,793 OPEB trust, in addition to paying the annual benefits directly. The City has also assumed that benefits will begin being paid from trust assets once the funding ratio exceeds 50%. Based on this information, the City Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption. The projects that benefits will be paid from the trust from 2034 through 2068. This is done on a closed group following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of basis. Therefore, the expected trust return of 7.25% (between 2034 and 2068) is blended with the 20-year 6.0% pre-Medicare / 4.5% Medicare, trending to an ultimate rate of 4.5% pre-Medicare / 4.0% Medicare, as Aa bond rate of 3.13% (before 2034 and after 2068). well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (5.0% pre-Medicare / 3.5% Medicare, trending to an ultimate rate of 3.5% pre-Medicare / 3.0% Medicare) or 1% higher (7.0% pre-Medicare / 5.5% Medicare, trending to an ultimate rate of 5.5% pre- Medicare / 5.0% Medicare) than the current healthcare cost trend rates:
Healthcare Ultimate Cost 1% Decrease Trend Rates 1% Increase (3.5% / 3.0%) (4.5% / 4.0%) (5.5% / 5.0%)
City's net OPEB liability $ 142,675,624 $ 167,933,313 $ 198,349,318
115 116 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB. Membership of the Plan consisted of the following at January 1, 2018, the date of the most recent For the year ended June 30, 2019, the City recognized OPEB expense of $6,587,467. At June 30, 2019, the actuarial valuation: City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Retirees and beneficiaries receiving benefits 652 Terminated plan members entitled to but Net Deferred not yet receiving benefits 20 Deferred Deferred Outflows Active plan members 365 Outflows of Inflows of (Inflows) of Resources Resources Resources Total 1,037
Net difference between projected and actual earnings Benefits Provided. The City provides the full cost of health benefits to retirees, payable to health care on OPEB plan investments $ 878,960 $ - $ 878,960 vendors, and also reimburses retirees eligible for Medicare benefits of $121.90 per month for each covered Changes in assumptions 1,807,216 - 1,807,216 retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Total $ 2,686,176 $ - $ 2,686,176 Contributions. The contribution requirements of the Plan members and the City are established and may Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. be recognized in OPEB expense as follows: Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under the various contracts. The required contribution is based on projected pay-as-you-go financing Year Ended requirements, with an additional amount to prefund benefits as determined through the bi-annual June 30, Amount actuarial valuation. For the year ended June 30, 2019, the City contributed $13,500,687 (direct benefit
F-54 payments of $12,898,687 and City contributions of $602,000) to the Plan. 2020 $ 2,008,695 2021 201,479 Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on 2022 201,480 investments, net of investment expense, was -0.88%. The money-weighted rate of return expresses 2023 274,522 investment performance, net of investment expense, adjusted for the changing amounts actually invested.
Total $ 2,686,176 Net OPEB Liability of the City. The components of the net OPEB liability of the City at June 30, 2019, were as follows: OPEB Plan Fiduciary Net Position. Detailed information about the OPEB plan’s fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds Total OPEB liability $ 302,529,360 preceding this footnote. Plan fiduciary net position 39,200,746
Payable to the OPEB Plan. At June 30, 2019, the City reported had no amount payable to the OPEB plan. City's net OPEB liability $ 263,328,614
Police and Fire Retirement System Plan fiduciary net position as percentage of total OPEB Plan Description. The City also provides postemployment health care benefits, in accordance with labor liability 13.0% agreements, to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The Plan was established and may be amended by the City Council and is administered by an eight member Board of Trustees. The Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, a resident of the City who shall be appointed by the Mayor, by and with the consent of Council, two members each of the police and fire departments, to be elected by all the members of their respective departments.
117 118 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Actuarial Assumptions. The total OPEB liability was determined by an actuarial valuation as of January 1, The long-term expected rate of return on OPEB plan investments was determined using a building-block 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods method in which best-estimates of expected future real rates of return (expected returns, net of OPEB included in the measurement: plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by Inflation 2.75% the target asset allocation percentage and by adding expected inflation. This is then modified through a Investment rate of return 7.25%, net of OPEB plan investment expense, Monte-Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline including inflation expected return. Best estimates of arithmetic real rates of return for each major asset class included in Retirement age Age-based table of rates that are specific to the the OPEB plan’s target asset allocation as of June 30, 2019 are summarized in the following table: type of eligibility condition Healthcare cost trend rate Long-term Money- Target Expected Real Weighted Rate Year Beginning Asset Class Allocation Rate of Return of Return July 1, Pre-Medicare Medicare Domestic equity 32.00% 5.80% 1.86% 2018 6.00% 4.50% International equity - developed 12.00% 6.10% 0.73% 2019 5.50% 4.50% International equity - emerging 4.00% 7.25% 0.29% 2020 5.00% 4.25% Fixed income - U.S. 22.00% 2.25% 0.50% 2021 4.50% 4.00% Real assets 10.00% 4.80% 0.48% 2022 4.50% 4.00% Global opportunistic fixed income 5.00% 3.25% 0.16% 2023+ 4.50% 4.00% Global equity long/short 10.00% 5.00% 0.50% Absolute return 5.00% 4.50% 0.23%
F-55 Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements 100.00% 4.75% in life expectancy. Adjustments to these rates are as follows: Inflation 2.75% Pre-retirement: 50% of base rates Risk adjustment -0.25% Post-disablement: RP2000 disabled tables with Scale BB Investment rate of return 7.25% The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial experience study conducted in 2016. Discount Rate. The discount rate used to measure the total OPEB liability was 5.19% (down from 5.67% in 2018). The City’s funding expectations/policy is to contribute a percentage of payroll each year to their Changes in Actuarial assumptions. There were no changes in actuarial assumptions, except the change in OPEB trust, in addition to paying the annual benefits directly. The City has assumed that benefits will be discount rate. paid from trust assets once the funding ratio exceeds 50%, and until the fund is depleted. Based on this information, the City projects that benefits will be paid from the trust beginning in 2040. This is done on a Investment Policy. The Plan's policy in regard to the allocation of invested assets is established and may closed group basis. Therefore, the expected trust return of 7.25% (after 2040) is blended with the 20-year be amended by the Board of Trustees. The investment policy has been formulated based on consideration Aa bond rate of 3.13% (before 2040). of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy as of June 30, 2019 is summarized in the table on the following page.
119 120 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Changes in the Net OPEB Liability. The components of the change in the net OPEB liability are summarized OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB. as follows: For the year ended June 30, 2019, the City recognized OPEB expense of $15,546,035. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the Total OPEB Plan Fiduciary Net OPEB following sources: Liability Net Position Liability (a) (b) (a) - (b) Net Deferred Deferred Deferred Outflows Balances at June 30, 2018 $ 277,078,552 $ 38,308,203 $ 238,770,349 Outflows of Inflows of (Inflows) of Resources Resources Resources Changes for the year: Service cost 3,503,096 - 3,503,096 Difference between expected and actual experience $ - $ 8,905,701 $ (8,905,701) Interest on total OPEB liability 15,565,892 - 15,565,892 Changes in assumptions 13,989,625 3,722,676 10,266,949 Changes in assumptions 18,652,834 - 18,652,834 Net difference between projected and actual earnings Employer contributions - 13,500,687 (13,500,687) on OPEB plan investments 1,330,459 - 1,330,459 Net investment income - 290,543 (290,543) Benefit payments (12,271,014) (12,271,014) - Total $ 15,320,084 $ 12,628,377 $ 2,691,707 Administrative expense - (627,673) 627,673 Net changes 25,450,808 892,543 24,558,265 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Balances at June 30, 2019 $ 302,529,360 $ 39,200,746 $ 263,328,614 Year Ended
F-56 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate. The following presents the net OPEB June 30, Amount liability of the City, calculated using the discount rate of 5.19%, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.19%) or 1% higher (6.19%) 2020 $ (1,373,281) than the current rate: 2021 (1,373,280) 2022 4,940,906 Current 2023 497,362 1% Decrease Discount Rate 1% Increase (4.19%) (5.19%) (6.19%) Total $ 2,691,707
City's net OPEB liability $ 306,218,707 $ 263,328,614 $ 225,764,105 OPEB Plan Fiduciary Net Position. Detailed information about the OPEB plan’s fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption. The preceding this footnote. following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of 6.0% pre-Medicare / 4.5% Medicare, trending to an ultimate rate of 4.5% pre-Medicare / 4.0% Medicare, as Payable to the OPEB Plan. At June 30, 2019, the City reported had no amount payable to the OPEB plan. well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (5.0% pre-Medicare / 3.5% Medicare, trending to an ultimate rate of 3.5% pre-Medicare / For governmental activities, other postemployment benefit liabilities are expected to be liquidated by the 3.0% Medicare) or 1% higher (7.0% pre-Medicare / 5.5% Medicare, trending to an ultimate rate of 5.5% pre- general fund. Medicare / 5.0% Medicare) than the current healthcare cost trend rates:
Healthcare Ultimate Cost 1% Decrease Trend Rates 1% Increase (3.5% / 3.0%) (4.5% / 4.0%) (5.5% / 5.0%)
City's net OPEB liability $ 229,039,473 $ 263,328,614 $ 305,217,615
121 122 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Notes to Financial Statements Notes to Financial Statements
Summary OPEB Information · The Brownfield Redevelopment Authority encourages environmental cleanup and economic development through its Brownfield Redevelopment Plan under Public Act 318. A developer performs The table below summarizes the net OPEB liability and related deferrals for the Employees' Retirement redevelopment and cleanup activities at a site that is obsolete or blighted. The increased tax revenues System and the Police and Fire Retirement System as presented in the Statement of Net Position. resulting from the increase in taxable value are captured by the City and used to repay the developer for qualifying expenses. There is no provision for recovery of abated taxes because the developer is Employees' Police & Fire only paid for eligible expenses on a reimbursement-basis. Property taxes abated by the Authority under Retirement Retirement this program for fiscal year 2019, through direct reimbursement to developers from current tax System System Total captures, amounted to $529,215. In addition, there are reserve liabilities reported in the financial statements that represent tax captures set aside for future developer reimbursements. Property taxes Net OPEB liability $ 167,933,313 $ 263,328,614 $ 431,261,927 abated by the Authority under this program for fiscal year 2019 amounted to $150,221. Deferred outflows - OPEB 2,686,176 15,320,084 18,006,260 Deferred inflows - OPEB - 12,628,377 12,628,377
18. TAX ABATEMENTS
Because Lansing is an older city, vacant land, or “green space” for new buildings is scarce, the City offers tax abatements to make redevelopment and rehabilitation of existing buildings economically viable for developers, who must consider the cost of rehabilitating existing, often older, buildings which may involve environmental remediation, against the generally lesser cost of building on vacant land outside the City. These tax abatements are designed to level the “playing field” for urban communities to encourage redevelopment of vacant buildings, and to attract and retain private investment and jobs within the City.
F-57 The City of Lansing provides tax abatements under several different programs:
· Industrial property tax abatements are granted in the State of Michigan under Public Act 198 to promote economic development, creation of jobs, and new or improved facilities. The Industrial Facilities Tax (IFT) Exemption must be approved by both the City (after a public hearing is held) and the State of Michigan. IFT exemptions can cover real and/or personal property. By State law, the exemption must be applied for no later than six months after commencement of the project and must be accompanied by a written agreement between the taxpayer and the local unit. An exemption allows for taxation on IFT property at 50% of the local property tax millage rate for up to 12 years. A certificate may be revoked and taxes recaptured for noncompliance with the terms of the agreement. Property taxes abated by the City under this program for fiscal year 2019 amounted to $450,495.
· The State of Michigan allows for Commercial Rehabilitation Exemption under Public Act 210 if making substantial improvements to a business or multi-family residential facility. The City had no Commercial Rehabilitation Exemptions for fiscal year 2019.
· To incentivize new or expanded businesses, Public Act 328 allows for Personal Property Tax Exemptions for qualified businesses located within eligible distressed communities. The exemption must be approved by the City Commission and the State Treasurer. Once approved, the taxpayer is exempt from personal property tax on new investments after the date of the exemption. The City can recapture the taxes if the business defaults on the terms of the written agreement. Property taxes abated by the City under this program for fiscal year 2019 amounted to $4,623,383.
123 124 CITY OF LANSING, MICHIGAN
Required Supplementary Information Pension Plan Employees' Retirement System
Schedules of Changes in Net Pension Liability and Related Ratios
Fiscal Year Ending June 30, 2019 2018 2017 2016 2015 2014 Total pension liability Service cost $ 2,719,55 9 $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,94 8 $ 2,982,62 4 Interest on total pension liability 21,512,099 21,994,837 22,403,009 22,268,516 22,671,90 9 22,722,63 0 Difference between expected and actual experience (2,559,726) (6,451,827) (23,183,264) (4,937,823) (6,422,330 ) - Assumption changes - 3,099,448 3,706,512 7,575,77 5 - - Benefit payments, including refunds (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net change in total pension liability (1,798,108) (1,921,279) (17,275,496 ) 5,023,103 (3,355,060) 2,914,732
Total pension liability, beginning of year 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755
Total pension liability, end of year 303,730,647 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487
Plan fiduciary net position Employer contributions 10,880,932 10,843,000 10,246,872 10,181,620 10,547,55 6 9,361,00 9 Employee contributions 1,220,657 1,230,857 1,216,519 1,088,943 1,128,12 0 1,290,678 Pension plan net investment income (loss) 8,437,568 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,63 5 Benefit payments (including refunds) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) REQUIRED SUPPLEMENTARY INFORMATION Pension plan administrative expense (42,364) (57,822) (47,217) (126,486) (174,818) (741,037) Net change in plan fiduciary net position (2,973,247) (1,406,624) 5,915,528 (14,506,562 ) (6,562,186) 4,840,906
Plan fiduciary net position, beginning of year 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754
Plan fiduciary net position, end of year 165,585,569 168,558,81 6 169,965,44 0 164,049,912 178,556,474 185,118,660
F-58 Net pension liability $ 138,145,078 $136,969,93 9 $137,484,59 4 $ 160,675,618 $ 141,145,95 3 $ 137,938,827
Plan fiduciary net position as a percentage of total pension liability 54.5% 55.2% 55.3% 50.5% 55.9% 57.3%
Covered payroll $ 23,265,43 7 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,46 0 $ 20,874,14 3
Net pension liability as a percentage of covered payroll 593.8% 604.1% 657.8% 696.0% 714.0% 660.8%
Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.
Assumption changes: There were changes in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return. These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates.
There were changes in actuarial assumptions during fiscal year 2017 based on the experience study completed in December 2016. There was a change in the discount rate due to a higher bond rate.
There were no changes in actuarial assumptions during fiscal year 2016, except for the change in discount rate due to a lower bond rate.
125 126 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Pension Plan Pension Plan Employees' Retirement System Employees' Retirement System
Schedule of the Net Pension Liability Schedule of Contributions
Plan Net Net Pension Actual Position as Liability as Contribution as Fiscal Year Percentage of Percentage of Fiscal Year Actuarially Contribution Percentage of Ending Total Pension Plan Net Net Pension Total Pension Covered Covered Ending Determined Actual Deficiency Covered Covered June 30, Liability Position Liability Liability Payroll Payroll June 30, Contribution* Contribution (Excess)* Payroll Payroll
2014$ 323,057,487 $ 185,118,660 $ 137,938,827 57.3%$ 20,874,143 660.8% 2010 $ 6,472,349 $ 6,043,861 $ 428,488 $ 27,766,628 21.8% 2015 319,702,427 178,556,474 141,145,953 55.9% 19,769,460 714.0% 2011 7,297,083 7,297,083 - 26,068,735 28.0% 2016 324,725,530 164,049,912 160,675,618 50.5% 23,085,894 696.0% 2012 7,596,879 7,523,534 73,345 22,838,598 32.9% 2017 307,450,034 169,965,440 137,484,594 55.3% 20,901,389 657.8% 2013 8,586,536 8,586,536 - 20,874,143 41.1% 2018 305,528,755 168,558,816 136,969,939 55.2% 22,672,891 604.1% 2014 9,361,009 9,361,009 - 21,521,242 43.5% 2019 303,730,647 165,585,569 138,145,078 54.5% 23,265,437 593.8% 2015 10,547,556 10,547,556 - 19,769,460 53.4% 2016 10,181,620 10,181,620 - 23,085,894 44.1% 2017 10,246,872 10,246,872 - 20,901,389 49.0% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data 2018 10,185,060 10,843,000 (657,940) 22,672,891 47.8% will be presented. 2019 10,880,932 10,880,932 - 23,265,437 46.8%
* The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADC from the December 31, 2010 valuation. F-59 The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially determined contribution has been expressed above as a percentage of actual payroll.
Notes to Schedule of Contributions
Valuation Date December 31, 2018 Notes Actuarially determined contribution rates are calculated as of the December 31 that is 6 months prior to the beginning of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 23 years Asset valuation method Closed; 5-year smooth market Inflation 2.75% Salary increases Increases in salary are assumed to increase with inflation annually, plus an additional amount that varies based on the service of the member as shown below:
Years of Service UAW All Others
0-8 2.35% 1.85% 9-10 2.35% 0.60% 11+ 1.35% 0.60%
Investment rate of return 7.25%, net of investment expense and including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality is based on the RP-2000 tables for males and females. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected to 2026 using Scale BB and a 50% factor is applied for pre-retirement deaths.
127 128 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN Required Supplementary Information Required Supplementary Information Pension Plan Pension Plan Police and Fire Retirement System Employees' Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Schedule of Investment Returns Fiscal Year Ending June 30, 2019 2018 2017 2016 2015 2014 Fiscal Year Ending Annual Total pension liability (1) June 30, Return Service cost $ 6,801,669 $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest on total pension liability 31,573,53 5 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 2014 13.67% Benefit changes - 779 - - - - Difference between expected and actual experience 10,590,030 8,263,623 (19,308,117 ) 7,884,167 3,159,99 6 - 2015 2.43% Assumption changes - 1,647,044 25,078,59 2 3,281,341 - - 2016 -1.60% Benefit payments, including refunds (32,609,254 ) (31,757,151 ) (31,102,186 ) (29,503,964 ) (27,969,021 ) (26,270,724 ) 2017 10.91% Net change in total pension liability 16,355,980 15,329,89 4 11,321,64 8 18,230,90 2 10,700,73 5 8,240,987 2018 5.87% 2019 5.17% Total pension liability, beginning of year 444,999,99 2 429,670,09 8 418,348,45 0 400,117,54 8 389,416,81 3 381,175,82 6
Total pension liability, end of year 461,355,972 444,999,99 2 429,670,09 8 418,348,45 0 400,117,54 8 389,416,81 3 (1) Annual money-weighted rate of return, net of investment expenses Plan fiduciary net position Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data Employer contributions 13,554,23 9 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 will be presented. Employee contributions 3,485,891 2,650,01 9 2,840,91 4 2,608,21 4 2,950,83 2 2,911,89 6 Pension plan net investment income (loss) 17,943,95 0 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments (including refunds) (32,609,254 ) (31,757,151 ) (31,102,186 ) (29,503,964 ) (27,969,021 ) (26,852,038 ) Pension plan administrative expense (53,318) (77,237) (50,996) (128,903) (173,849) (1,141,506) Net change in plan fiduciary net position 2,321,508 3,438,78 0 15,325,80 5 (22,181,251 ) (5,176,867) 20,183,83 0
Plan fiduciary net position, beginning of year 291,879,98 3 288,441,20 3 273,115,39 8 295,296,64 9 300,473,51 6 280,289,68 6
Plan fiduciary net position, end of year 294,201,491 291,879,98 3 288,441,20 3 273,115,39 8 295,296,64 9 300,473,51 6 F-60 Net pension liability $ 167,154,481 $153,120,00 9 $141,228,89 5 $145,233,05 2 $104,820,89 9 $ 88,943,297
Plan fiduciary net position as a percentage of total pension liability 63.8% 65.6% 67.1% 65.3% 73.8% 77.2%
Covered payroll $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974
Net pension liability as a percentage of covered payroll 564.0% 538.5% 512.0% 536.3% 429.5% 347.3%
Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.
Assumption changes: There were changes in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return. These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates.
There were changes in actuarial assumptions during fiscal year 2017 based on the experience study completed in December 2016. There was a change in the discount rate due to a higher bond rate.
There were no changes in actuarial assumptions during fiscal year 2016, except for the change in discount rate due to a lower bond rate.
129 130 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Pension Plan Pension Plan Police and Fire Retirement System Police and Fire Retirement System
Schedule of the Net Pension Liability Schedule of Contributions
Plan Net Net Pension Actual Position as Liability as Contribution as Fiscal Year Percentage of Percentage of Fiscal Year Actuarially Contribution Percentage of Ending Total Pension Plan Net Net Pension Total Pension Covered Covered Ending Determined Actual Deficiency Covered Covered June 30, Liability Position Liability Liability Payroll Payroll June 30, Contribution* Contribution (Excess)* Payroll Payroll
2014$ 389,416,813 $ 300,473,516 $ 88,943,297 77.2%$ 25,611,974 347.3% 2010 $ 7,179,360 $ 6,790,757 $ 388,603 $ 28,536,056 23.8% 2015 400,117,548 295,296,649 104,820,899 73.8% 24,407,740 429.5% 2011 8,240,688 8,240,688 - 25,128,835 32.8% 2016 418,348,450 273,115,398 145,233,052 65.3% 27,078,405 536.3% 2012 9,242,173 9,057,080 185,093 26,121,411 34.7% 2017 429,670,098 288,441,203 141,228,895 67.1% 27,585,521 512.0% 2013 10,133,599 10,133,599 - 25,636,626 39.5% 2018 444,999,992 291,879,983 153,120,009 65.6% 28,435,952 538.5% 2014 11,248,857 11,248,857 - 25,611,974 43.9% 2019 461,355,972 294,201,491 167,154,481 63.8% 29,638,532 564.0% 2015 11,050,091 11,050,091 - 24,407,740 45.3% 2016 10,884,312 10,884,312 - 27,078,405 40.2% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data 2017 11,521,768 11,521,768 - 27,585,521 41.8% will be presented. 2018 12,562,547 12,686,000 (123,453) 28,435,952 44.6% 2019 13,554,239 13,554,239 - 29,638,532 45.7%
* The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADC from the F-61 December 31, 2010 valuation.
The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll.
Notes to Schedule of Contributions
Valuation Date December 31, 2018 Notes Actuarially determined contribution rates are calculated as of the December 31 that is 6 months prior to the beginning of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 23 years Asset valuation method Closed; 5-year smooth market Inflation 2.75% Salary increases Increases in salary are assumed to be equal to inflation, plus 7.25% for those with less than 5 years of service or 1.00% for all others Investment rate of return 7.25%, net of investment expense and including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected to 2026 using Scale BB and a 50% factor is applied for pre-retirement deaths.
131 132 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Pension Plan Other Postemployment Benefits Plan Police and Fire Retirement System Employees' Retirement System
Schedule of Investment Returns Schedule of Changes in Net OPEB Liability and Related Ratios
Fiscal Year Fiscal Year Ending June 30, Ending Annual 2019 2018 2017 June 30, Return(1)
Total OPEB liability 2014 17.28% Service cost $ 1,477,747 $ 1,438,19 7 $ 1,550,428 2015 3.04% Interest on total OPEB liability 12,990,219 13,221,134 12,976,683 2016 -2.09% Difference between expected and actual experience - (9,321,837) - 2017 12.06% Changes in assumptions 3,614,432 (2,727,829) - 2018 7.10% Benefit payments (10,573,488) (10,286,249) (10,116,593) 2019 6.30% Net change in total OPEB liability 7,508,910 (7,676,584) 4,410,518
(1) Annual money-weighted rate of return, net of investment expenses Total OPEB liability, beginning of year 223,906,447 231,583,031 227,172,513
Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data Total OPEB liability, end of year 231,415,357 223,906,447 231,583,031 will be presented. Plan fiduciary net position Employer contributions 11,848,485 11,436,222 11,305,756 OPEB plan net investment income 3,040,683 4,329,57 7 5,209,669 Benefit payments (10,573,488) (10,286,249) (10,116,593)
F-62 Administrative expense (548,939) (444,973) (389,163) Net change in plan fiduciary net position 3,766,741 5,034,577 6,009,669
Plan fiduciary net position, beginning of year 59,715,303 54,680,726 48,671,057
Plan fiduciary net position, end of year 63,482,044 59,715,303 54,680,726
Net OPEB liability $ 167,933,313 $ 164,191,14 4 $ 176,902,305
Plan fiduciary net position as a percentage of total OPEB liability 27.4% 26.7% 23.6%
Covered payroll $ 23,720,42 4 $ 21,251,418 $ 20,901,389
Net OPEB liability as a percentage of covered payroll 708.0% 772.6% 846.4%
Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.
Assumption changes: There were no changes in actuarial assumptions during fiscal year 2019 and 2018, except the change in discount rate.
133 134 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Other Postemployment Benefits Plan Other Postemployment Benefits Plan Employees' Retirement System Employees' Retirement System
Schedule of the Net OPEB Liability Schedule of Contributions
Plan Net Net OPEB Actual Position as Liability as Contribution as Fiscal Year Percentage of Percentage of Fiscal Year Actuarially Contribution Percentage of Ending Total OPEB Plan Net Net OPEB Total OPEB Covered Covered Ending Determined Actual Deficiency Covered Covered June 30, Liability Position Liability Liability Payroll Payroll June 30, Contribution Contribution (Excess) Payroll Payroll
2017$ 231,583,031 $ 54,680,726 $ 176,902,305 23.6%$ 20,901,389 846.4% 2010 $ 10,608,281 $ 9,782,538 $ 825,743 $ 27,766,628 35.2% 2018 223,906,447 59,715,303 164,191,144 26.7% 21,251,418 772.6% 2011 8,819,018 9,773,601 (954,583) 26,068,735 37.5% 2019 231,415,357 63,482,044 167,933,313 27.4% 23,720,424 708.0% 2012 14,915,958 10,363,847 4,552,111 22,838,598 45.4% 2013 12,775,667 10,147,780 2,627,887 20,874,143 48.6% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data 2014 14,057,619 11,048,992 3,008,627 21,521,242 51.3% will be presented. 2015 13,270,701 9,212,322 4,058,379 19,769,460 46.6% 2016 11,447,334 8,814,471 2,632,863 23,085,894 38.2% 2017 10,582,235 11,305,756 (723,521) 20,901,389 54.1% 2018 10,910,284 11,436,222 (525,938) 21,251,418 53.8% 2019 10,198,194 11,848,485 (1,650,291) 23,720,424 50.0%
Notes to Schedule of Contributions
Valuation Date January 1, 2018 F-63 Notes Actuarially determined contribution rates are calculated as of the January 1 that is 18 months prior to the beginning of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percentage of pay Remaining amortization period 24 years Asset valuation method Market value Inflation 2.75% Investment rate of return 7.25% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement: 50% of base rates; Post-disablement: RP2000 disabled tables with Scale BB
Health care trend rates Year Beginning July 1, Pre-Medicare Medicare
2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022+ 4.50% 4.00%
135 136 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Other Postemployment Benefits Plan Other Postemployment Benefits Plan Employees' Retirement System Police and Fire Retirement System
Schedule of Investment Returns Schedule of Changes in Net OPEB Liability and Related Ratios
Fiscal Year Fiscal Year Ending June 30, Ending Annual 2019 2018 2017 June 30, Return (1)
Total OPEB liability 2017 9.90% Service cost $ 3,503,096 $ 3,409,339 $ 3,749,359 2018 7.10% Interest on total OPEB liability 15,565,892 15,994,328 15,584,783 2019 4.17% Difference between expected and actual experience - (17,811,401) - Changes in assumptions 18,652,83 4 (7,445,354) - (1) Annual money-weighted rate of return, net of investment expenses Benefit payments (12,271,014) (11,960,557) (11,065,440) Net change in total OPEB liability 25,450,808 (17,813,645) 8,268,702 Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Total OPEB liability, beginning of year 277,078,552 294,892,197 286,623,495
Total OPEB liability, end of year 302,529,360 277,078,552 294,892,197
Plan fiduciary net position Employer contributions 13,500,68 7 13,163,201 12,290,749 OPEB plan net investment income 290,543 3,572,965 3,487,200 Benefit payments (12,271,014) (11,960,557) (11,065,440)
F-64 Administrative expense (627,673) (600,644) (525,309) Net change in plan fiduciary net position 892,543 4,174,965 4,187,200
Plan fiduciary net position, beginning of year 38,308,203 34,133,238 29,946,038
Plan fiduciary net position, end of year 39,200,746 38,308,203 34,133,238
Net OPEB liability $ 263,328,614 $ 238,770,349 $ 260,758,959
Plan fiduciary net position as a percentage of total OPEB liability 13.0% 13.8% 11.6%
Covered payroll $ 28,435,953 $ 20,667,00 7 $ 27,585,521
Net OPEB liability as a percentage of covered payroll 926.0% 1155.3% 945.3%
Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.
Assumption changes: There were no changes in actuarial assumptions during fiscal year 2019 and 2018, except the change in discount rate.
137 138 CITY OF LANSING, MICHIGAN CITY OF LANSING, MICHIGAN
Required Supplementary Information Required Supplementary Information Other Postemployment Benefits Plan Other Postemployment Benefits Plan Police and Fire Retirement System Police and Fire Retirement System
Schedule of the Net OPEB Liability Schedule of Contributions
Plan Net Net OPEB Actual Position as Liability as Contribution as Fiscal Year Percentage of Percentage of Fiscal Year Actuarially Contribution Percentage of Ending Total OPEB Plan Net Net OPEB Total OPEB Covered Covered Ending Determined Actual Deficiency Covered Covered June 30, Liability Position Liability Liability Payroll Payroll June 30, Contribution Contribution (Excess) Payroll Payroll
2017$ 294,892,197 $ 34,133,238 $ 260,758,959 11.6%$ 27,585,521 945.3% 2010 $ 16,563,477 $ 9,585,692 $ 6,977,785 $ 28,536,056 33.6% 2018 277,078,552 38,308,203 238,770,349 13.8% 20,667,007 1155.3% 2011 16,474,153 9,844,226 6,629,927 25,128,835 39.2% 2019 302,529,360 39,200,746 263,328,614 13.0% 28,435,953 926.0% 2012 17,844,155 9,888,796 7,955,359 26,121,411 37.9% 2013 17,489,692 11,170,202 6,319,490 25,636,626 43.6% 2014 16,945,536 11,198,663 5,746,873 26,405,725 42.4% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data 2015 17,923,366 11,561,406 6,361,960 24,407,740 47.4% will be presented. 2016 17,276,901 12,879,016 4,397,885 27,078,405 47.6% 2017 19,759,521 12,290,749 7,468,772 27,585,521 44.6% 2018 15,968,029 13,163,201 2,804,828 28,435,953 46.3% 2019 15,218,062 13,500,687 1,717,375 28,435,953 47.5%
Notes to Schedule of Contributions
Valuation Date January 1, 2018 F-65 Notes Actuarially determined contribution rates are calculated as of the January 1 that is 18 months prior to the beginning of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percentage of pay Remaining amortization period 24 years Asset valuation method Market value Inflation 2.75% Investment rate of return 7.25% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement: 50% of base rates; Post-disablement: RP2000 disabled tables with Scale BB
Health care trend rates Year Beginning July 1, Pre-Medicare Medicare
2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022 4.50% 4.00% 2023+ 4.50% 4.00%
139 140 CITY OF LANSING, MICHIGAN
Required Supplementary Information Other Postemployment Benefits Plan Police and Fire Retirement System
Schedule of Investment Returns
Fiscal Year Ending Annual June 30, Return (1)
2017 9.89% 2018 8.71% 2019 -0.88%
(1) Annual money-weighted rate of return, net of investment expenses
Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.
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APPENDIX Gii CHARTER TOWNSHIP OF LANSING GENERAL FINANCIAL, ECONOMIC & STATISTICAL INFORMATION
LOCATION AND DESCRIPTION
The Charter Township of Lansing (the “Township”) covers an area of approximately 4.9 square miles. The City of Detroit is located approximately 90 miles to the southeast, with Grand Rapids located approximately 68 miles to the west. It is bordered by the following communities: Delta Township, Watertown Township, Dewitt Township, Bath Township, the City of East Lansing, Meridian Township, Windsor Township and the City of Lansing. The Township is located in the northwest corner of Ingham County, in the south central portion of Michigan’s Lower Peninsula.
POPULATION
The U.S. Census reported and 2018 estimated population for the Township is as follows:
Charter Township % of Lansing Change 2018 Estimate 8,240 1.40% 2010 U.S. Census 8,126 -3.93 2000 U.S. Census 8,458 --
FISCAL YEAR
The Township’s fiscal year begins on January 1st and ends on December 31st.
PROPERTY VALUATIONS
Article IX, Section 3, of the Michigan Constitution provides that the proportion of true cash value at which property shall be assessed shall not exceed 50% of true cash value. The Michigan Legislature by statute has provided that property shall be assessed at 50% of its true cash value. The Michigan Legislature or the electorate may at some future time reduce the percentage below 50% of true cash value.
On March 15, 1994, the electors of the State approved an amendment to the Michigan Constitution permitting the Legislature to authorize ad valorem taxes on a non-uniform basis. The legislation implementing this constitutional amendment added a new measure of property value known as “Taxable Value”. Since 1995, taxable property has had two valuations—State Equalized Value (“SEV”) and Taxable Value. Property taxes are levied on Taxable Value. Generally, the Taxable Value of property is the lesser of: (a) the Taxable Value of property in the immediately preceding year, minus any losses, multiplied by the lesser of 1.05, or the inflation rate, plus additions, or (b) the property’s current SEV. Under certain circumstances, therefore, the Taxable Value of property may be different from the same property’s SEV.
This constitutional amendment and the implementing legislation base the Taxable Value of existing property for the year 1995 on the SEV of that property in 1994 and for the years 1996 and thereafter on the Taxable Value of the property in the preceding year. Beginning with the taxes levied in 1995, an increase, if any, in Taxable Value of the existing property is limited to the lesser of the net percentage change in SEV from the preceding year to the current year, 5% or the inflation rate. When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing law is 50% of the current true cash value. The Taxable Value of new construction is equal to current SEV. The Taxable Value and SEV of existing property are also adjusted annually for additions and losses.
Responsibility for assessing taxable property rests with the local assessing officer of each township and city. Any property owner may appeal the assessment to the local assessor, the local Board of Review and ultimately to the Michigan Tax Tribunal.
ii Unless otherwise noted, the information in Appendix G was provided by the Township.
G-1
In addition to limiting the annual increase in Taxable Value, the Michigan Constitution mandates a system of equalization for assessments. Although the assessor for each local unit of government within a county is responsible for actually assessing at 50% of true cash value, adjusted for taxable value purposes, the final SEV and taxable value are arrived at through several steps. Assessments are established initially by the municipal assessor. Municipal assessments are then equalized to the 50% levels as determined by the County Department of Equalization. Thereafter, the State equalizes the various counties in relation to each other. SEV is important, aside from its use in determining Taxable Value for the purpose of levying ad valorem property taxes, because of its role in the spreading of taxes between overlapping jurisdictions, the distribution of various State aid programs, State revenue sharing and in the calculation of debt limits.
Property that is exempt from property taxes (churches, governmental property, public schools) is not included in the SEV or Taxable Value in this Official Statement. Property granted tax abatements under either Act 198, Public Acts of Michigan, 1974, as amended, or Act 255, Public Acts of Michigan 1998, as amended, is recorded on separate tax rolls while subject to tax abatement. The valuation of tax abated property is based upon SEV but is not included in either the SEV or Taxable Value in this Official Statement except as noted. History of Valuations
A history of the property valuations in the Township is shown below:
Property Levy/ Total State Value as Valuation Taxable Percent Equalized Percent of 12/31 Year Value Change Value Change 2019 2020 $322,893,722 4.93% $371,941,100 7.05% 2018 2019 307,726,378 3.89 347,431,300 4.48 2017 2018 296,193,695 3.67 332,548,800 4.10 2016 2017 285,712,443 1.20 319,452,300 1.38 2015 2016 282,316,471 ---- 315,115,400 ----
History of Valuations
$400 $300 $200
Millions $100 $0 2016 2017 2018 2019 2020
Taxable Value State Equalized Value
Source: Ingham County Equalization Department
G-2
Valuation Composition
A breakdown of the Township’s 2020 Taxable Value by class and use is as follows:
2020 Percent By Class: Taxable Value of Total Taxable Value by Use Real Property $297,611,622 92.17% 7.83% Personal Property 25,282,100 7.83 34.41% TOTAL $322,893,722 100.00% By Use: Commercial $184,517,278 57.14% 57.14% Industrial 1,986,480 0.62 0.62% Residential 111,107,864 34.41 Commercial Industrial Residential Personal Personal 25,282,100 7.83 TOTAL $322,893,722 100.00%
Source: Ingham County Equalization Department.
MICHIGAN PROPERTY TAX REFORM
The voters of the State approved enactment of Michigan Public Acts 153 and 154 of 2013 and Acts 80 and 86 through 93 of 2014 by referendum on August 5, 2014 (collectively, the “PPT Reform Acts”), which significantly reformed Personal Property tax in Michigan.
Under the PPT Reform Acts, owners of industrial and commercial Personal Property with a total true cash value of $80,000 or less may file an affidavit claiming a Personal Property tax exemption. To be eligible for the exemption, all of the commercial or industrial Personal Property within a city or township that is owned by, leased to, or controlled by the claimant has to have an accumulated true cash value of $80,000 or less. Beginning in calendar year 2016, owners of certain manufacturing Personal Property that was either purchased after December 31, 2012, or that is at least 10 years old may claim an exemption from Personal Property tax. By 2022, all eligible manufacturing Personal Property will be at least 10 years old or purchased after December 31, 2012, so that it could be exempted from Personal Property tax.
To replace personal property tax revenues lost by local governments, including townships, the PPT Reform Acts divided the existing state use tax into two components, a “state share tax” and a “local community stabilization share tax,” and established the Local Community Stabilization Authority (the “LCSA”) to administer distribution of the local community stabilization share. The Michigan Department of Treasury collects the local community stabilization share tax on behalf of the LCSA. The local community stabilization share tax revenues are not subject to the annual appropriations process and are provided to the LCSA for distribution pursuant to a statutory formula. The statutory formula is anticipated to provide 100% reimbursement to local governments for losses due to the new personal property tax exemptions. The LCSA began distributions of the local community stabilization share tax to local governments, including cities, on November 21, 2016. The Township received $47,591.42 from the LCSA to replace personal property tax revenues lost during fiscal year 2019.
The ultimate nature, extent and impact of any other future amendments to Michigan’s property tax laws on the Township’s finances cannot be predicted. Purchasers of the Bonds should consult with their legal counsel and financial advisors as to the consequences of any such legislation on the market price or marketability of the Bonds, the security therefor and the operations of the Township.
G-3
MAJOR TAXPAYERS
The Township’s top ten taxpayers and their 2020 Taxable Value are as follows:
Taxable Taxpayer Product/Service Value Retail Properties of America Retail Center $29,793,427 Eastwood LLC Construction 16,007,700 NCG Cinema - Lansing, Inc. Cinemas 7,511,229 HP Lansing LLC Hyatt Place Hotel 5,384,478 Heights at Eastwood LLC Apartment Complex 5,157,159 Consumers Energy Utility 4,448,834 Michigan Millers Mutual Insurance Company 4,299,827 Legacy Five LLC Apartment Complex 3,845,234 Eastwood Holdings LLC/Walmart Retail 3,510,300 Sohn Linen Service, INC Food/Beverage/Medical Linens 3,336,711 TOTALS $83,294,899 Total 2020 Taxable Value $322,893,722 Top 10 Taxpayers as a % of 2020 Total Taxable Value 25.80%
CONSTITUTIONAL ROLLBACK AND ASSESSMENT CAPS
Article IX, Section 31 of the Michigan Constitution requires that if the total value of existing taxable property in a local taxing unit, exclusive of new construction and improvements, increases faster than the U.S. Consumer Price Index from one year to the next, the maximum authorized tax rate for that local taxing unit must be reduced through a Millage Reduction Fraction unless reversed by a vote of the electorate of the local taxing unit.
TAX RATES - (Per $1,000 of Valuation)
The following table shows the total Township tax rates for the past five years.
Taxing Jurisdiction 2019 2018 2017 2016 2015 Charter Township of Lansing Operating 4.7565 4.7565 4.7565 4.7565 4.7565 Extra Voted 4.2500 4.2500 4.2500 4.2500 3.7500 City/Township/County Total 9.0065 9.0065 9.0065 9.0065 8.5065
Source: Ingham County Equalization Department
TAX RATE LIMITATIONS
The Township’s current tax rate limitations are as follows:
2019 Millage Maximum Allowable 2019illage Expiration Purpose Authorized Millage after Rollback Levied Date of Levy Operating 5.0000 4.7565 4.7565 N/A Voted - Operating 1.7500 1.7500 1.7500 2023 Voted - Sidewalk 0.5000 0.5000 0.5000 2023 Voted - Operating 1.0000 1.0000 1.0000 2025 Voted - Operating 1.0000 1.0000 1.0000 2025
G-4
The Township has the authority to levy taxes in excess of the above limitations pursuant to state law for the following purposes:
Rate per $1,000 of Purpose Authority Taxable Value Refuse Collection & Disposal Act 298, P.A. of Michigan $3.00 1917, as amended Police & Fire Pension Act 345, P.A. of Michigan Amount required Requirements 1937, as amended to make contribution
On November 7, 1978, Article IX, Section 6, of the 1963 Michigan Constitution was amended placing certain limitations on increases of taxes. The amendment did not, and will not, limit the levy of taxes for the payment of principal and interest on bonds or other evidences of indebtedness outstanding at the time the amendment became effective, nor will the amendment limit taxes imposed for the payment of bonds or other indebtedness issued, or incurred, after their effective date if said bonds, or other indebtedness, have been approved by the voters.
Additionally, Article IX, Section 6, of the 1963 Michigan Constitution, as amended, permits the levy of millage in excess of the above for:
1. All debt service on tax supported bonds or bonds issued prior to December 23, 1978 or tax supported issues which have been approved by the voters. 2. Operating purposes for a specific period of time provided that said increase is approved by a majority of the qualified electors of the local unit. 3. Payment of valid judgments levied in accordance with the State law.
OTHER JURISDICTIONS’ TAX RATES - (Per $1,000 of Valuation)
The following table provides the 2019 and 2018 tax rates for the municipal units of government that are located within the Township boundaries.
2019 2018 County of Ingham 12.0390 12.0390 Lansing Schools Non- Principal Residence 25.5792 22.5028 Principal Residence 7.8000 4.6000 State Education Tax 6.0000 6.0000 Ingham ISD 5.9987 5.9987 Lansing Community College 3.8072 3.8072 Capital Area District Library 1.5600 1.5600
Source: Ingham County Equalization Department
G-5
TAX LEVIES AND COLLECTIONS
The Township’s property taxes are due February 14 of each year. All taxes not paid by their due dates are deemed delinquent. All real property taxes remaining unpaid on March 1 of the year following the levy are turned over to the County Treasurer for collection. Ingham County annually pays from its Tax Revolving Fund delinquent taxes on real property to all taxing units in the County, including the Township’s, shortly after the date delinquent taxes are returned to the County Treasurer for collection. The payments from this fund have resulted in collections of taxes approaching 100% for all taxing units. Delinquent personal property taxes are negligible.
A history of tax levies and collections for the Township is as follows:
Levy Operating Collections to Year Tax Levy March 1, Following Year 2019 $2,611,847 $2,487,921 95.26% 2018 2,520,429 2,413,056 95.74 2017 2,427,498 2,333,749 96.14 2016 2,393,002 2,288,910 95.65 2015 2,472,601 2,357,667 95.35
REVENUES FROM THE STATE OF MICHIGAN
The Township receives revenue sharing payments from the State of Michigan under the State Constitution and the State Revenue Sharing Act of 1971, as amended. The revenue sharing payments are composed of two components – a constitutional distribution and a statutory distribution.
The constitutional distribution is mandated by the State Constitution and distributed on a per capita basis to townships, cities and villages. The amount of the constitutionally mandated revenue sharing component distributed to the Township can vary depending on the population of the Township and the receipt of sales tax revenues by the State.
The statutory distribution is authorized by legislative action and distribution is subject to annual State appropriation by the State Legislature. Statutory distributions may be reduced or delayed by Executive Order during any State fiscal year in which the Governor, with the approval of the State Legislature’s appropriations committees, determines that actual revenues will be less than the revenue estimates on which appropriations were based.
On September 29, 2019, Governor Whitmer signed into law the budget for fiscal year 2020. The budget includes a constitutional revenue sharing distribution to cities, villages and townships of approximately $865.4 million. The budget continues the incentive-based revenue sharing program known as the City, Village, and Township Revenue Sharing (or “CVTRS”) program begun in fiscal year 2015 that distributes revenue sharing to cities, villages and townships that meet requirements for accountability and transparency, including making a citizen’s guide to its finances, a performance dashboard, a debt service report and a two-year budget projection available for public viewing. The CVTRS program is funded at $261.0 million for fiscal year 2020, and each city, village and township that received a CVTRS distribution in fiscal year 2019 is eligible to receive a payment equal to 102.3% of its 2019 distribution. Each city, village or township that is determined to have a retirement pension benefit system in underfunded status under section 5 of Act 202, Public Acts of Michigan, 2017, must allocate the 2020 incremental increase to its unfunded pension liability. The fiscal year 2020 budget continues funding for the revenue sharing grant program for financially distressed communities at the 2019 level of $2.5 million.
Any portion of the CVTRS payment that the Township would be eligible to receive would be subject to certain benchmarks that the Township would need to meet, and there can be no assurance what amount, if any, the Township would receive under the CVTRS program. The Township received CVTRS payments of $137,171 in fiscal year 2019 and anticipates meeting the requirements to receive $140,326 in CVTRS payments for fiscal year 2020.
Purchasers of the Bonds should be alerted to further modifications to revenue sharing payments to Michigan local governmental units, to potential consequent impact on the Township’s general fund condition, and to the potential impact upon the market price or marketability of the Bonds resulting from changes in revenues received by the Township from the State.
G-6
The following table sets forth the annual revenue sharing payments and other moneys received by the Township for the State’s fiscal years ended September 30, 2015 through September 30, 2019 and the estimated revenue sharing payments for the State’s fiscal year ending September 30, 2020.
State of Michigan Total Fiscal Year Ended Constitutional EVIP/CVTRS Revenue Sharing September 30th Payments Payments Payments1 2020 $686,568 $58,280 $744,848 2 2019 702,104 56,970 759,074 2018 671,480 57,003 728,483 2017 654,201 50,405 704,606 2016 618,552 50,405 668,957 2015 619,146 50,405 669,551
1Amounts do not include state gas and weight tax distributions 2Revenues are estimated and anticipated to decrease due to the COVID-19 pandemic. See “POTENTIAL IMPACT OF COVID- 19 PANDEMIC" herein. Source: Department of Treasury via website at www.michigan.gov/treasury
LABOR FORCE
A breakdown of the number of employees of the Township and their affiliation with organized groups follows:
No. of Exp. Date Employee Group Employees Affiliation of Contract Firefighters 13 Firefighters Assoc. of Michigan 12/31/21 Police Officers 16 Police Officers Labor Council 12/31/21 Office & Westside - Water Personnel Full Time 5 Teamsters Local 580 12/31/21 Part Time 1 Teamsters Local 580 12/31/21 Other Offices 8 Non-Affiliated N/A TOTAL 43
The Township has not experienced a strike by any of its bargaining units within the past ten years.
PENSION FUND
Defined Benefit Plan - Michigan Municipal Employees’ Retirement System
Plan Description
The Township participates in the Michigan Municipal Employees’ Retirement System (MERS), an agent multiple employer defined benefit pension plan that covers police employees, Teamsters Local 580 employees, full-time firefighters and non-union employees of the Township. The system provides retirement, disability, and death benefits to plan members and their beneficiaries. The Michigan Municipal Employees’ Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the system. That report may be obtained by writing to the System at 1134 Municipal Way, Lansing, Michigan 48197.
Benefits Provided
The Plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. Public Act 427 of 1984, as amended, established and amends the befit provisions of the participants in MERS. The MERS plan covers all eligible police employees at the Township.
Benefit terms, within the parameters established by MERS, are generally established and amended by authority of the Township Board, generally after negotiations of the terms with the affected unions.
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Plan Membership
As of December 31, 2018, pension plan membership consisted of the following:
Inactive plan members or beneficiaries currently receiving benefits 13 Inactive plan members entitled to but not yet receiving benefits 8 Active employees 45 Total employees covered by MERS 66
Schedule of Changes in Net Pension Liability and Related Ratios
Fiscal year ended December 31, 2018 2017 2016 2015 2014 Total Pension Liability Service Cost $272,466 $265,734 $250,324 $240,277 $213,111 Interest 751,662 705,604 672,778 608,750 548,174 Changes of Benefit Terms (9,572) (15,195) (9,345) (34,337) -- Difference between Expected and Actual Experience (348,049) 35,889 (157,345) 56,648 -- Changes of Assumptions ------438,969 -- Benefit Payments including Employee Refunds (431,905) (407,473) (300,083) (268,729) (262,035) Other -- -- (1) (1) 17,130 Net Change in Total Pension Liability 234,602 584,559 456,328 1,041,577 516,380 Total Pension Liability – Beginning 9,475,487 8,890,928 8,434,600 7,393,023 6,876,643 Total Pension Liability – Ending (a) $9,710,089 $9,475,487 $8,890,928 $8,434,600 $7,393,023
Plan Fiduciary Net Position Contributions - Employer $255,777 $248,140 $239,021 $240,540 $182,496 Contributions - Employee 91,473 62,195 34,274 24,695 20,656 Net Investment Income (Loss) (325,009) 979,637 765,011 (103,488) 409,728 Benefit Payments, Including Employee Refunds (431,905) (407,473) (300,083) (268,729) (262,035) Administrative Expense (16,064) (15,502) (15,091) (15,018) (15,069) Net Change in Plan Fiduciary Net Position (425,728) 866,997 723,132 (122,000) 335,776 Plan Fiduciary Net Position – Beginning 8,275,767 7,408,770 6,685,638 6,807,638 6,471,862 Plan Fiduciary Net Position – Ending (b) $7,850,039 $8,275,767 $7,408,770 $6,685,638 $6,807,638
Net Pension Liability (a-b) $1,860,050 $1,199,720 $1,482,158 $1,748,962 $585,385 Plan Fiduciary Net Position as a % Total Pension Liability 80.84% 87.34% 83.33% 79.26% 92.08% Covered Employee Payroll $2,595,140 $2,569,834 $2,501,656 $2,565,558 $2,276,833 Net Pension Liability as a % of Covered Payroll 71.67% 46.68% 59.25% 68.17% 25.71%
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Schedule of Employer Contributions
Actuarial Actuarially Contribution Contributions as a Valuation Determined Actual Deficiency Covered Percentage of Date Contribution Contribution (Excess) Payroll Covered Payroll 12/31/2019 $252,854 $252,854 $0 $2,776,750 9.11% 12/31/2018 255,777 255,777 0 2,692,388 9.50 12/31/2017 238,140 238,140 0 2,612,004 9.12 12/31/2016 239,021 239,021 0 2,562,786 9.33 12/31/2015 240,540 240,540 0 2,542,394 9.46
For additional information, please see Note 7 – Retirement Plans in the Notes to the Financial Statements of the Township’s Comprehensive Annual Financial Statements in Appendix I herein.
Defined Contribution Plan
The Township also has a defined contribution pension plan covering full‐time employees who opted not to participate in the MERS plan. This benefit is an insurance‐type plan administered under the provisions of Section 401(a) of the Internal Revenue Code. The plan is administered by Massachusetts Mutual Life Insurance Company.
A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual’s account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant’s account and the returns earned on the investments of those contributions. The plan requires the employer to contribute 15 percent of the participating employee’s gross wages up to $32,500, with complete vesting within four years.
During the year, the Township’s required and actual contributions amounted to $3,540.
Source: Audited Financial Statements
OTHER POST-EMPLOYMENT BENEFITS
Plan description
The Township provides certain retiree health care benefits as other post‐employment benefits (OPEB) to all eligible retired employees and elected officials in accordance with union agreements and/or personnel policies. For part‐time elected officials the Township will pay 50% of medical insurance premiums for single or two‐party coverage, whichever they qualify for, after 20 years of service and age 55. For full‐time elected officials the Township will pay for 50% of medical benefits after 16 years of service and age 55 and 100% of medical benefits after 20 years of service and age 55. The Township records the cost of providing these benefits as expenses when paid.
The plan does not issue a separate stand‐alone financial statement.
Plan Membership
As of December 31, 2017, pension plan membership consisted of the following:
Retirees and Beneficiaries 18 Active Plan Members 43 Total 61
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Schedule of Changes in the Net OPEB Liability and Related Ratios
Fiscal year ended December 31, 2018 2017 Total Pension Liability Service Cost $234,011 $227,195 Interest 163,251 153,182 Changes in Assumptions (597,745) -- Differences between Expected & Actual Experience (50,521) -- Benefit Payments (Including Refunds) (103,156) (109,150) Net Change in Total Pension Liability (354,160) 271,227 Total Pension Liability – Beginning of Year 5,259,268 4,988,041 Total Pension Liability – End of Year $4,905,108 $5,259,268
Plan Fiduciary Net Position Contributions – Employer $103,156 $109,150 Net Investment Income 478 2,522 Benefit Payments (Including Refunds) (103,156) (109,150) Net Change in Plan Fiduciary Net Position 478 2,522 Plan Fiduciary Net Position – Beginning of Year 85,587 83,065 Plan Fiduciary Net Position – End of Year $86,065 $85,587
Net Pension Liability (Asset) ‐ End of Year $4,819,043 $5,173,681 Plan Fiduciary Net Position as a % of Total Pension Liability/Asset 1.75% 1.63% Covered Employee Payroll $2,225,607 $2,583,292 Net Pension Liability (Asset) as a % of Covered Employee Payroll 216.53% 200.27%
Source: Audited Financial Statements
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DEBT STATEMENT - (As of 08/13/20 – including the Bonds described herein)
Dated Bond Final Principal Date Purpose Type Maturity Outstanding General Obligation Bonds1 10/01/02 Sewer Bonds LT 10/01/22 $55,000 11/12/10 DDA Bonds, Series A (RZEDB's) LT 07/01/40 9,000,000 11/12/10 DDA Bonds, Series B (BAB's) LT 07/01/32 7,315,000 11/12/10 DDA Bonds, Series C (RZFB's) LT 07/01/23 1,540,000 12/20/12 DDA Refunding LT 05/01/31 6,030,000 Revenue Bonds 06/23/08 Water, DWRF LT 10/01/28 225,000 06/29/09 Water, DWRF LT 10/01/29 360,000 08/11/07 Water LT 08/01/47 1,034,000 08/28/18 Water, Series II LT 08/01/48 1,431,000 Share of County Issued Bonds Drain, Lansing Twp. #2 Stoner 05/01/03 Clement 05/01/23 30,000 11/24/15 Groesbeck Park Drain 05/01/45 5,195,427 __/__/20 Montgomery Drain Share 08/01/50 4,414,002* TOTAL DIRECT DEBT $36,629,429* Less: Revenue Bonds (3,050,000) Drain (Self-Supporting) Bonds ($9,639,429) NET DIRECT DEBT $23,940,000*
OVERLAPPING DEBT:
Percent Net Township's Share Municipality Debt Share 0.02% East Lansing School District $102,413,377 $20,483 7.65 Lansing School District 104,075,000 7,961,738 14.27 Waverly School District 13,435,000 1,917,175 3.81 Ingham County 42,555,585 1,621,368 3.22 Ingham ISD 1,002,000 32,264 2.60 Lansing Community College 98,220,000 2,553,720
TOTAL OVERLAPPING DEBT $14,106,748* NET DIRECT AND OVERLAPPING DEBT $38,046,748*
1The Lansing Township DDA issued Downtown Authority Tax Increment Bonds, Series A & B on 2/28/2013 in the amount of $7,500,000, with a current outstanding balance of $6,890,000. The Township does not provide its full faith & credit pledge to these bonds. *Preliminary, subject to change.
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DEBT RATIOS*
Township's Estimated Population 8,126 2020 Taxable Value $322,893,722 2020 State Equalized Value (SEV) $371,941,100 2020 True Cash Value (TCV) $743,882,200
Per Capita 2020 Taxable Value $39,735.88 Per Capita 2020 State Equalized Value $45,771.73 Per Capita 2020 True Cash Value $91,543.47
Per Capita Net Direct Debt $2,946.10 Per Capita Net Direct and Overlapping Debt $4,671.32
Percent of Net Direct Debt of 2020 Taxable Value 7.41% Percent of Net Direct and Overlapping Debt of 2020 Taxable Value 11.76%
Percent of Net Direct Debt of 2020 SEV 6.44% Percent of Net Direct and Overlapping Debt of 2020 SEV 10.21%
Percent of Net Direct Debt of 2020 TCV 3.22% Percent of Net Direct and Overlapping Debt of 2020 TCV 5.10%
*Preliminary, subject to change.
LEGAL DEBT MARGIN* - (As of 08/13/20 – including the Bonds described herein)
2020 State Equalized Value $371,941,100 Legal Debt Limit - 10% of SEV $37,194,110
Total Bonded Debt Outstanding $36,629,429 Less: Revenue Bonds (3,050,000) Drain (Self-Supporting) Bonds (9,618,911) Net Amount Subject to Legal Debt Limit 23,960,518
LEGAL DEBT MARGIN AVAILABLE $13,233,592
*Preliminary, subject to change.
OTHER BORROWING
The Township has no short-term borrowing outstanding.
DEBT HISTORY
The Township has no record of default on its obligations.
FUTURE FINANCING
The Township does not have plans for additional capital financings in the next 18 months
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UNEMPLOYMENT RATES
The U.S. Department of Labor, Bureau of Labor Statistics reports unemployment averages for the Lansing-East Lansing, MI Metropolitan Statistical Area as compared to the State of Michigan as follows:
Annual Lansing-East Lansing State of Average Lansing MSA Michigan June, 2020* 11.2% 14.9% 2019 3.4 4.1 2018 3.5 4.1 2017 4.1 4.6 2016 4.2 5.0
*The above unemployment figures reflect job losses arising from the recent COVID-19 pandemic.
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APPENDIX H CHARTER TOWNSHIP OF LANSING GENERAL FUND BUDGET SUMMARY AND COMPARATIVE FINANCIAL STATEMENTS
Charter Township of Lansing General Fund Budget
As Adopted 2020 Revenue Taxes $2,247,489 Licenses & Permits 477,550 Grants 125,371 State Shared Revenue 772,457 Local 699,642 Reimbursements & Refunds 256,442 Transfers In 300,000 Total Revenue $4,878,951
Expenditures Township Board $58,059 Supervisor 174,773 Clerk 271,290 Independent Audit 36,000 Board of Review 2,570 Treasurer 143,009 Assessor 44,720 Elections 39,208 Township Hall 115,427 Attorney 169,500 Unallocated 179,900 Police Department 1,551,343 Fire Department 1,742,142 Building Inspector 282,907 Ambulance 84,500 Planning Commission 7,367 Zoning Board of Appeals 2,814 Economic Development 80,845 Recreation 1,500 Parks 39,530 Total Expenditures $5,027,405
Excess of Expenditures (over) under Revenues ($148,454)
Fund Balance - January 1 $1,324,628
Projected Fund Balance - December 31 $1,176,174
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Charter Township of Lansing General Fund
Comparative Balance Sheet
For Fiscal Years Ended December 31 2017 2018 2019* Assets Cash and Cash Equivalents $1,357,127 $1,170,453 $952,571 Investments 112,097 110,689 122,282 Receivables Accounts 110,441 134,319 184,614 Taxes 1,560,325 1,470,143 1,534,569 Interest 1,932 1,932 1,932 Due from Other Funds 26,379 35,360 33,416 Due from Other Governmental Units State 114,720 256,757 273,742 Local 455,459 197,135 590,470 Prepaids 36,978 66,020 72,605 Total Assets $3,775,458 $3,442,808 $3,766,201
Liabilities Accounts Payable $88,178 $54,921 $114,547 Accrued Payroll 58,277 63,790 80,086 Accrued Liabilities 13,227 9,671 18,170 Due to Other Funds 16,432 7,882 5,000 Total Liabilities $176,114 $136,264 $217,803
Deferred Inflows of Resources Unavailable Revenue $122,097 $144,424 $186,727 Property Taxes Levied for Subsequent Year 1,939,246 1,971,527 2,037,043 Total Deferred Inflows of Resources $2,061,343 $2,115,951 $2,223,770
Fund Balances Nonspendable $36,978 $66,020 $72,605 Restricted 324,002 279,442 198,979 Committed 100,000 100,000 100,000 Assigned 256,526 49,466 148,454 Unassigned 820,495 695,665 804,590 Total Fund Balances $1,538,001 $1,190,593 $1,324,628
Total Liabilities, Deferred Inflows of Resources and Fund Balances $3,775,458 $3,442,808 $3,766,201
*The FYE December 31, 2019 Audit is a Draft. Source: Audited Financial Statements
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Charter Township of Lansing General Fund
Comparative Statement of Revenues, Expenditures and Changes in Fund Balance
For Fiscal Years Ended December 31 2017 2018 2019* Revenue Taxes $2,108,197 $2,125,283 $2,183,807 Licenses and Permits 329,192 282,476 307,733 Intergovernmental 1,350,509 1,050,251 1,118,768 Charges for Services 753,462 753,039 777,987 Fines and Forfeits 5,584 11,918 9,226 Interest and Rents 55,219 48,146 71,372 Other 157,336 116,542 190,811 Total Revenue $4,759,499 $4,387,655 $4,659,704
Expenditures Current General Government $1,176,076 $1,454,775 $1,166,531 Public Safety 2,150,553 1,945,546 1,947,373 Health and Welfare 1,344,647 1,266,410 1,299,131 Community and Economic Development 40,977 18,912 79,792 Recreation and Culture 14,044 6,545 7,353 Capital Outlay 300,517 32,875 204,231 Total Expenditures $5,026,814 $4,725,063 $4,704,411
Excess of Revenue Over (Under) Expenditures ($267,315) ($337,408) ($44,707)
Other Financing Sources (Uses) Capital Leases / Installment Purchase Agreement $255,416 $0 $183,742 Operating Transfers In 10,000 -- -- Operating Transfers Out (10,000) (10,000) (5,000) Total Other Financing Sources (Uses) $255,416 ($10,000) $178,742
Excess of Revenue & Other Sources Over (Under) Expenditures & Other Uses ($11,899) ($347,408) $134,035
Fund Balance - Beginning $1,549,900 $1,538,001 $1,190,593
Fund Balance - Ending $1,538,001 $1,190,593 $1,324,628
*The FYE December 31, 2019 Audit is a Draft. Source: Audited Financial Statements
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APPENDIX I CHARTER TOWNSHIP OF LANSING AUDITED FINANCIAL STATEMENTS The auditor was not requested to examine or review and therefore has not examined or reviewed any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly has not conducted any post-audit review procedures and will not express any opinion with respect to the accuracy or completeness of such financial documents, statements or materials.
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Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Charter Township of Lansing, Michigan, as of December 31, 2018, 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.
Emphasis of a Matter - Change in Accounting Principles
As discussed in Note S to the financial statements, the Township implemented Governmental Accounting INDEPENDENT AUDITOR’S REPORT Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB), during the year. Our opinions are not modified with respect to this matter.
Other Matters
Members of the Township Board Required Supplementary Information Charter Township of Lansing Ingham County, Michigan Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, retirement system schedules, and other post- employment benefits schedules, as identified in the table of contents, be presented to supplement the basic Report on the Financial Statements financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for We have audited the accompanying financial statements of the governmental activities, the business-type placing the basic financial statements in an appropriate operational, economic, or historical context. We have activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining applied certain limited procedures to the required supplementary information in accordance with auditing fund information of the Charter Township of Lansing, Michigan (the Township), as of and for the year ended standards generally accepted in the United States of America, which consisted of inquiries of management December 31, 2018, and the related notes to the financial statements which collectively comprise the about the methods of preparing the information and comparing the information for consistency with Township’s basic financial statements as listed in the table of contents. 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 I-1 Management’s Responsibility for the Financial Statements the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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, Other Information 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Charter Township of Lansing’s basic financial statements as a whole. The combining and Auditor’s Responsibility individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the The combining and individual nonmajor fund financial statements are the responsibility of management and standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller were derived from and relate directly to the underlying accounting and other records used to prepare the basic General of the United States. Those standards require that we plan and perform the audit to obtain reasonable financial statements. Such information has been subjected to the auditing procedures applied in the audit of the assurance about whether the financial statements are free from material misstatement. basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statements or to the basic financial statements themselves, and other additional procedures in accordance with financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of auditing standards generally accepted in the United States of America. In our opinion, the combining and the risks of material misstatement of the financial statements, whether due to fraud or error. In making those individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation financial statements as a whole. 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.
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Other Reporting Required by Government Auditing Standards Charter Township of Lansing
In accordance with Government Auditing Standards, we have also issued our report dated June 13, 2019 on our MANAGEMENT’S DISCUSSION AND ANALYSIS consideration of the Charter Township of Lansing’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The December 31, 2018 purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government The following is a discussion and analysis of the Charter Township of Lansing’s (the Township’s) financial Auditing Standards in considering the Charter Township of Lansing’s internal control over financial reporting and performance and position, providing an overview of the activities for the year ended December 31, 2018. This compliance. analysis should be read in conjunction with the Independent Auditor’s Report and with the Township’s financial statements, which follow this section.
FINANCIAL HIGHLIGHTS June 13, 2019 Government-wide:
Total net position as of December 31, 2018, was ($25,054,755) (excluding component units). Governmental activities net position was ($28,318,241). Business-type activity net position was $3,263,486. Component unit net position was $15,612,624.
Fund Level:
At the close of the fiscal year, the Township’s governmental funds reported a combined ending fund balance of $2,501,779 with $1,806,114 being nonspendable, restricted, committed, or assigned for specific purposes (for example debt service). The General Fund realized $16,143 more in revenues and other financing sources than anticipated for the fiscal year. The General Fund operations expended $176,558 less than appropriated. Overall, the General Fund’s fund balance decreased $347,408. I-2
Capital and Long-term Debt Activities:
The net book value of capital assets used in governmental activities increased by $328,125 and business- type activities increased by $1,093,397. Component units decreased by $214,837 during the fiscal year. The total long-term debt (including compensated absences) for the primary government was $29,536,650, a net decrease of $498,233 from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Township’s annual financial report. The annual financial report of the Township consists of the following components: 1) Independent Auditor’s Report; 2) Management’s Discussion and Analysis and 3) the Basic Financial Statements (government-wide financial statements, fund financial statements, notes to the financial statements), 4) Required Supplementary Information such as budget to actual comparisons for the General Fund and major Special Revenue Funds, and 5) Other Supplementary Information including combining financial statements for all nonmajor governmental funds and other funds and component unit funds.
Government-wide Financial Statements (Reporting the Township as a Whole)
The set of government-wide financial statements are made up of the Statement of Net Position and the Statement of Activities, which report information about the Township as a whole, and about its activities. Their purpose is to assist in answering the question, is the Township, in its entirety, better or worse off as a result of this fiscal year’s activities? These statements, which include all nonfiduciary assets and liabilities, are reported on the accrual basis of accounting, similar to a private business. This means revenues are accounted for when they are earned, and expenses are accounted for when incurred, regardless of when the actual cash is received or disbursed.
The Statement of Net Position (page 1) presents all of the Township’s assets and liabilities, recording the difference between the two as “net position”. Over time, increases or decreases in net position measure whether the Township's financial position is improving or deteriorating.
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MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2018 December 31, 2018
The Statement of Activities (page 2) presents information showing how the Township’s net position changed Proprietary Funds - Services for which the Township charges customers (whether outside the Township during 2018. All changes in net position are reported based on the period for which the underlying events giving structure or a Township department) a fee is generally reported in proprietary funds. Proprietary funds use rise to the change occurs, regardless of the timing of related cash flows. Therefore, revenue and expenses are the same accrual basis of accounting used in the government-wide statements and by private business. An reported in these statements for some items that will only result in cash flows in future financial periods, such as example is the West Side Water District Fund. uncollected taxes and earned but unused employee vacation leave. Fiduciary Funds - The Township may act as a trustee or fiduciary in certain instances. It is also responsible Both statements report the following activities: for other assets that, because of trust arrangements, can only be used for the trust beneficiaries. The Township’s fiduciary activities are reported in the separate Statement of Net Position on page 10. These Z Governmental Activities - Most of the Township’s basic services are reported under this category. Taxes, funds, which include trust and agency funds, are reported using the accrual basis of accounting. The charges for services and intergovernmental revenue primarily fund these services. Most of the Township’s government-wide statements exclude the fiduciary fund activities and balances because these assets are general government departments, public safety, public works, health and welfare (ambulance), economic not available to the Township to fund its operations. development, township improvements, street improvements, recreation activities, and other township-wide elected official operations are reported under these activities. Notes to the Financial Statements
Z Business-type Activities - These activities operate like private businesses. The Township charges fees to The Notes to the Financial Statements provide additional information that is essential to a full understanding of the recover the cost of the services provided. The West Side Water District is the Township’s only business- detail provided in the government-wide and fund financial statements. The Notes can be found beginning on page type activity. 14 of this report.
Z Discretely Presented Component Units - Discretely presented component units are legally separate Required Supplementary Information organizations for which the Township Board of Trustees appoints a majority of the organization’s policy board and there is a degree of financial accountability to the Township. Two organizations are included as Following the Basic Financial Statements is additional Required Supplementary Information (RSI), which further discretely presented component units: the Downtown Development Authority and the Economic explains and supports the information in the financial statements. RSI includes budgetary comparison Development Corporation. schedules for the General Fund and the major Special Revenue Funds. I-3 As stated previously, the government-wide statements report on an accrual basis of accounting. However, the Other Supplementary Information governmental funds report on a modified accrual basis. Under modified accrual accounting, revenues are recognized when they are measurable and available to pay obligations of the fiscal period; expenditures are Other Supplementary Information includes combining financial statements for nonmajor governmental funds. recognized when they are due to be paid from available resources. These funds are added together and presented in aggregate single columns in the appropriate basic financial statements. In addition, it should be noted that the government-wide financial statements include the net value of the Township’s general capital assets such as buildings, land, vehicles, computer equipment, etc. These values are not included in the fund financial statements. FINANCIAL ANALYSIS OF THE TOWNSHIP AS A WHOLE
Fund Financial Statements (Reporting the Township’s Major Funds) As previously stated, the Charter Township of Lansing combined net position was ($25,054,755) at the end of this fiscal year’s operations. The net position of the governmental activities was ($28,318,241) the net position The fund financial statements, which begin on page 3, provide information on the Township’s significant (major) of business-type activities was $3,263,486. funds, and aggregated nonmajor funds. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the Township uses to keep track of specific sources of funding and spending for a particular Net Position as of December 31, 2018 and December 31, 2017 purpose. Traditional users of governmental financial statements will find the fund financial statements presentation more familiar. Governmental Business-type Total Primary Activities Activities Government The major funds for the Charter Township of Lansing include the General Fund, 2010 and 2012 Downtown Development Debt Service Fund, Public Safety Assessment Fund, and the West Side Water District Fund. All 2018 2017 2018 2017 2018 2017 other funds are classified as nonmajor funds and are reported in aggregate by the applicable fund type. Current and Other Assets $ 5,519,913 $ 5,753,193 $ 952,842 $ 647,115 $ 6,472,755 $ 6,400,308 Capital Assets 2,162,565 1,496,059 5,446,745 3,474,425 7,609,310 4,970,484 The Township’s funds are divided into three categories - governmental, proprietary, and fiduciary - and use different accounting approaches: Total Assets $ 7,682,478 $ 7,249,252 $ 6,399,587 $ 4,121,540 $ 14,082,065 $ 11,370,792
Governmental Funds - Most of the Township’s basic services are reported in the governmental funds. The Deferred Outflows of Resources$ 544,432 $ 1,130,095 $ 59,487 $ 112,148 $ 603,919 $ 1,242,243 focus of these funds is how cash and other financial assets that can be readily converted to cash, flow in and out during the course of the fiscal year and how the balances left at year-end are available for spending Current Liabilities $ 2,289,731 $ 2,198,592 $ 526,631 $ 471,470 $ 2,816,362 $ 2,670,062 on future services. Consequently, the governmental fund financial statements provide a detailed short-term Noncurrent Liabilities 31,713,345 33,185,438 2,641,029 1,341,359 34,354,374 34,526,797 view that helps determine whether there are more or fewer financial resources that may be expended in the Total Liabilities $ 34,003,076 $ 35,384,030 $ 3,167,660 $ 1,812,829 $ 37,170,736 $ 37,196,859 near future to finance the Township’s programs. Governmental funds include the General Fund, as well as Special Revenue Funds, Capital Projects Funds, and Debt Service Funds.
- v - - vi - Charter Township of Lansing Charter Township of Lansing
MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2018 December 31, 2018
Net Position as of December 31, 2018 and December 31, 2017 - continued Governmental Activities:
Governmental Business-type Total Primary The result of 2018 governmental activity was an increase of $247,094 in net position to ($28,318,241). Of the Activities Activities Government total governmental activities’ net position, $1,180,312 is net investment in capital, $892,491 reported as restricted, meaning these assets are legally committed for a specific purpose through statute, or by another 2018 2017 2018 2017 2018 2017 authority outside the Township government. Because the restrictions on net position and the amount invested Deferred Inflows of Resources$ 2,542,075 $ 2,328,164 $ 27,928 $ - $ 2,570,003 $ 2,328,164 in capital exceed the difference between total assets and total liabilities, the amount of “unrestricted” net position is ($30,391,034). Net Position Net investment in Revenues: capital assets $ 1,180,312 $ 964,619 $ 3,373,224 $ 2,592,779 $ 4,553,536 $ 3,557,398 Restricted 892,481 928,268 23,900 - 916,381 928,268 The two largest revenue categories for governmental activities were grants and contributions at 40% and property Unrestricted (30,391,034) (31,225,734) (133,638) (171,920) (30,524,672) (31,397,654) taxes at 25%. The Township levied a property tax millage for the year ended December 31, 2018, for general government operations at 8.5065 mills and additional amounts for sidewalks and at-large drains. Total Net Position $ (28,318,241) $ (29,332,847) $ 3,263,486 $ 2,420,859 $ (25,054,755) $ (26,911,988)
The following condensed financial information was derived from the government-wide Statement of Activities The Township has put a Public Safety Special Assessment in place for a period of 5 years to pay for and reflects how the Township’s primary government net position changed during the fiscal year. replacement of outdated equipment in order for the Police and Fire Departments.
Changes in Net Position for the Fiscal Years Ended December 31, 2018 and December 31, 2017 Expenses:
2018 2017 2018 2017 2018 2017 The two largest expense areas were public safety at 31% and interest expense at 26% of the governmental Revenues activities total. Program Revenues I-4 Charges for services $ 1,937,091 $ 1,365,896 $ 1,901,888 $ 865,278 $ 3,838,979 $ 2,231,174 Business-type Activities: Grants and Contributions 3,288,125 3,730,767 12,171 - 3,300,296 3,730,767 General Revenues Net position of the business-type activities increased by $771,940 during fiscal year 2018. Of the business-type Property Taxes 2,051,459 1,977,706 - - 2,051,459 1,977,706 activities’ net position, $3,373,224 is net investment in capital, $23,900 is reported as restricted and ($133,638) is State Shared Revenue 750,251 676,337 - - 750,251 676,337 listed as unrestricted, having no legal commitment. Investment Earnings 12,495 27,139 637 3,529 13,132 30,668 Franchise fees 112,526 145,100 - - 112,526 145,100 Miscellaneous 78,736 72,291 - 3,300 78,736 75,591 FINANCIAL ANALYSIS OF THE TOWNSHIP’S MAJOR AND NONMAJOR GOVERNMENTAL FUNDS
Total Revenues 8,230,683 7,995,236 1,914,696 872,107 10,145,379 8,867,343 As the Township completed 2018, its governmental funds reported combined fund balances of $2,501,779. This is a net decrease from the prior year of $283,509. The net changes are summarized in the following chart: Expenses General Government 1,661,411 1,389,298 - - 1,661,411 1,389,298 2010 & 2012 Nonmajor Total Public Safety 2,492,503 2,537,480 - - 2,492,503 2,537,480 Public Works 253,025 370,793 - - 253,025 370,793 DDA Debt Public Safety Governmental Governmental Health and Welfare 1,463,716 1,449,705 - - 1,463,716 1,449,705 General Fund Service Assessment Funds Funds Community and Economic Development 22,047 63,734 - - 22,047 63,734 Fund Balance Recreation and Culture 17,814 22,209 - - 17,814 22,209 12/31/17 $ 1,538,001 $ 523,286 $ 8,709 $ 715,292 $ 2,785,288 Interest on Long-Term Debt 2,073,073 1,898,715 2,073,073 1,898,715 Water - - 1,142,756 922,905 1,142,756 922,905 Fund Balance Total Expenses 7,983,589 7,731,934 1,142,756 922,905 9,126,345 8,654,839 12/31/18 $ 1,190,593 $ 524,157 $ 213,174 $ 573,855 $ 2,501,779
Change in Net Position 247,094 263,302 771,940 (50,798) 1,019,034 212,504 Net Change $ (347,408) $ 871 $ 204,465 $ (141,437) $ (283,509) Net Position - Beginning (28,565,335) (29,596,149) 2,491,546 2,471,657 (26,073,789) (27,124,492)
Net Position - Ending $ (28,318,241) $ (29,332,847) $ 3,263,486 $ 2,420,859 $ (25,054,755) $ (26,911,988) General Fund:
The General Fund is the chief operating fund of the Township. Unless otherwise required by statute, contractual agreement or Board policy, all Township revenues and expenditures are recorded in the General Fund. As of December 31, 2018, the General Fund reported a fund balance of $1,190,593. This amount is a decrease of $347,408 from the fund balance of $1,538,001 reported as of December 31, 2017. The 2018 original budget had called for a $256,527 reduction to fund balance. $695,665 of the fund balance is reported as unassigned.
- vii - - viii -
Charter Township of Lansing
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2018
General Fund Budgetary Highlights:
The Township’s budget is an extremely flexible document. Although adopted by November 1 (prior to the start of the year), the budget is routinely amended during the course of the year to reflect changing operational demands. There were some wide variations in individual revenue accounts reflecting the tightening national and local economy.
Total General Fund revenues and other financing sources for the year were $16,143 greater than budgeted and actual expenditures for the year were $176,558 less than budgeted. The actual decrease in fund balance of $347,408 was $192,701 less of a decrease than the Township had budgeted for.
Capital Asset and Debt Administration:
Capital Assets. At the end of the fiscal year, the Township had approximately $7,609,310 invested in a broad range of governmental and business-type capital assets, including buildings, land, equipment, and vehicles. The most significant capital asset activity during the year was the purchase of a fire truck and new equipment, as well as improvements to the water system. Refer to Note E for further details regarding the Township’s capital assets. BASIC FINANCIAL STATEMENTS
Long-term Debt. The Township’s long-term debt totaled $29,536,650. This amount includes obligations related to the water system bonds totaling $2,073,521. $1,529,992 of the Township’s long-term debt (including compensated absences) was paid off during 2018. Refer to Note F for further details regarding long-term debt.
I-5 Current Economic Factors:
Taxable values continue to increase in Lansing Township. Discussions are still in the works for a second and third hotel in the DDA following the addition of the Homewood Suites. Over the last year, the Township has been working with a developer and finalizing a plan to develop the former site of the Waverly Golf Course. Robinwood Landing, Alzheimer’s Care Facility opened in the fall of 2018. The former GM properties continue to be “under contract” and the Township looks forward to redevelopment of the properties. Other properties that have re-developed in the Township include the former Irwin Union Bank which is approved for Starbucks, and the vacant Hartman Fabco property was redeveloped by TransDev Services in 2018 to provide small bus services for CATA.
Contacting the Township’s Management
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Township’s finances and to demonstrate the Township’s accountability for the money it receives. If there are questions about this report, or a need for additional information, contact the Charter Township of Lansing Treasurer’s Office at (517) 485-7115.
- ix - Charter Township of Lansing
STATEMENT OF NET POSITION
December 31, 2018
Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets Cash and cash equivalents $ 2,702,450 $ 391,290 $ 3,093,740 $ 479,712 Cash and cash equivalents - restricted - 56,455 56,455 - Investments 113,098 - 113,098 - Receivables 2,149,093 315,995 2,465,088 1,080,675 Due from other governmental units 453,892 - 453,892 132,210 Internal balances 35,360 (35,360) -0- - Inventories - 23,192 23,192 - Prepaids 66,020 8,152 74,172 -
Total current assets 5,519,913 759,724 6,279,637 1,692,597
Noncurrent assets Equity interest in joint ventures - - -0- 23,307,972 Investments - 193,118 193,118 - Capital assets not being depreciated 26,245 467,268 493,513 - Capital assets, net of accumulated depreciation 2,136,320 4,979,477 7,115,797 4,518,004
Total noncurrent assets 2,162,565 5,639,863 7,802,428 27,825,976
TOTAL ASSETS 7,682,478 6,399,587 14,082,065 29,518,573
DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions 544,432 59,487 603,919 -0-
LIABILITIES I-6 Current liabilities [THIS PAGE INTENTIONALLY LEFT BLANK] Accounts payable 72,434 23,330 95,764 - Accrued payroll 63,790 7,600 71,390 - Accrued liabilities 14,750 - 14,750 - Due to other governmental units 48,792 347,385 396,177 189,621 Accrued interest payable 634,827 15,222 650,049 - Current portion of compensated absences 142,101 14,094 156,195 - Current portion of long-term debt 1,313,037 119,000 1,432,037 100,000
Total current liabilities 2,289,731 526,631 2,816,362 289,621
Noncurrent liabilities Payable from restricted cash - customer deposits - 32,555 32,555 - Net other post-employment benefits liability 4,664,073 509,608 5,173,681 - Net pension liability 1,081,549 118,171 1,199,720 - Noncurrent portion of compensated absences 263,901 26,174 290,075 - Noncurrent portion of long-term debt 25,703,822 1,954,521 27,658,343 12,508,171
Total noncurrent liabilities 31,713,345 2,641,029 34,354,374 12,508,171
TOTAL LIABILITIES 34,003,076 3,167,660 37,170,736 12,797,792
DEFERRED INFLOWS OF RESOURCES Property taxes levied for subsequent year 2,286,470 - 2,286,470 1,108,157 Deferred inflows of resources related to pensions 255,583 27,926 283,509 - Deferred inflows of resources related to OPEB 22 2 24 -
TOTAL DEFERRED INFLOWS OF RESOURCES 2,542,075 27,928 2,570,003 1,108,157
NET POSITION Net investment in capital assets 1,180,312 3,373,224 4,553,536 (8,090,167) Restricted for public works 33,160 7,500 40,660 - Restricted for public safety 326,480 - 326,480 - Restricted for economic development 65,611 - 65,611 - Restricted for debt service - 16,400 16,400 - Restricted for future capital acquisitions 187,788 - 187,788 31,743 Restricted for building code public safety 279,442 - 279,442 - Unrestricted (30,391,034) (133,638) (30,524,672) 23,671,048
TOTAL NET POSITION $ (28,318,241) $ 3,263,486 $ (25,054,755) $ 15,612,624
See accompanying notes to financial statements. - 1 - Charter Township of Lansing
STATEMENT OF ACTIVITIES
Year Ended December 31, 2018
Net (Expense) Revenue and Changes in Net Position Program Revenues Primary Government Operating Capital Grants Charges for Grants and and Governmental Business-type Component Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Units Primary government Governmental activities General government $ 1,661,411 $ 287,314 $ 11,256 $ - $ (1,362,841) $ - $ (1,362,841) $ - Public safety 2,492,503 163,964 2,467 - (2,326,072) - (2,326,072) - Public works 253,025 677,007 - 18,754 442,736 - 442,736 - Health and welfare 1,463,716 625,955 - - (837,761) - (837,761) - Community and economic development 22,047 177,091 - 300,000 455,044 - 455,044 - Recreation and culture 17,814 5,760 - - (12,054) - (12,054) - Interest expense 2,073,073 - - 2,955,648 882,575 - 882,575 -
Total governmental activities 7,983,589 1,937,091 13,723 3,274,402 (2,758,373) -0- (2,758,373) -0-
Business-type activities West Side Water District 1,142,756 1,901,888 - 12,171 - 771,303 771,303 -
Total primary government $ 9,126,345 $ 3,838,979 $ 13,723 $ 3,286,573 (2,758,373) 771,303 (1,987,070) -0-
Component units Downtown Development Authority $ 2,795,695 $ - $ - $ - - - -0- (2,795,695) Economic Development Authority ------0- -
Total component units $ 2,795,695 $ -0- $ -0- $ -0- -0- -0- -0- (2,795,695)
General revenues Property taxes 2,051,459 - 2,051,459 1,481,844 State shared revenues 750,251 - 750,251 - Investment earnings 12,495 637 13,132 1,966 Franchise fees 112,526 - 112,526 617,584 Miscellaneous 78,736 - 78,736 -
Total general revenues 3,005,467 637 3,006,104 2,101,394
Change in net position 247,094 771,940 1,019,034 (694,301)
Restated net position, beginning of year (28,565,335) 2,491,546 (26,073,789) 16,306,925
Net position, end of year $ (28,318,241) $ 3,263,486 $ (25,054,755) $ 15,612,624
See accompanying notes to financial statements. - 2 -
[THIS PAGE INTENTIONALLY LEFT BLANK]
I-7 Charter Township of Lansing Charter Township of Lansing
Governmental Funds RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION BALANCE SHEET December 31, 2018 December 31, 2018
Total fund balances - governmental funds $ 2,501,779 2010 & 2012 Downtown Public Nonmajor Amounts reported for governmental activities in the statement of net position are different because: Development Safety Governmental General Debt Service Assessment Funds Total ASSETS Capital assets used in governmental activities are not financial resources and therefore are Cash and cash equivalents $ 1,170,453 $ 524,157 $ 303,510 $ 704,330 $ 2,702,450 not reported as assets in the governmental funds. Investments 110,689 - - 2,409 113,098 Receivables The cost of capital assets is $ 5,371,200 Accounts 134,319 - - - 134,319 Accumulated depreciation is (3,208,635) Taxes 1,470,143 - - 241,032 1,711,175 Special assessments - - 271,889 29,778 301,667 Interest 1,932 - - - 1,932 Capital assets, net 2,162,565 Due from other funds 35,360 - - 37,382 72,742 Due from other governmental units Long-term receivables are not available to pay for current period expenditures and are State 256,757 - - - 256,757 therefore reported as deferred inflows of resources in the funds. 531,898 Local 197,135 - - - 197,135 Prepaids 66,020 - - - 66,020 Governmental funds report actual pension/OPEB expenditures for the fiscal year, whereas TOTAL ASSETS $ 3,442,808 $ 524,157 $ 575,399 $ 1,014,931 $ 5,557,295 the governmental activities will recognize the net pension/OPEB liability as of the measurement date. Pension/OPEB contributions subsequent to the measurement date will LIABILITIES be deferred in the statement of net position. In addition, resources related to changes of Accounts payable $ 54,921 $ - $ - $ 17,513 $ 72,434 assumptions, differences between expected and actual experience, and differences Accrued payroll 63,790 - - - 63,790
I-8 between projected and actual pension plan investment earnings will be deferred over time Accrued liabilities 9,671 - - 5,079 14,750 in the government-wide financial statements. These amounts consist of: Due to other funds 7,882 - - 29,500 37,382 Due to other governmental units - - - 48,792 48,792 Deferred outflows of resources related to pensions 544,432 TOTAL LIABILITIES 136,264 -0- -0- 100,884 237,148 Deferred inflows of resources related to pensions (255,583) Deferred inflows of resources related to OPEB (22) DEFERRED INFLOWS OF RESOURCES Unavailable revenue 144,424 - - - 144,424 288,827 Special assessments - - 362,225 25,249 387,474 Property taxes levied for subsequent year 1,971,527 - - 314,943 2,286,470 Long-term liabilities are not due and payable in the current period and therefore are not TOTAL DEFERRED INFLOWS reported in the Governmental Funds Balance Sheet. Long-term liabilities at year-end OF RESOURCES 2,115,951 -0- 362,225 340,192 2,818,368 consist of:
FUND BALANCES Nonspendable 66,020 - - - 66,020 Direct obligations (27,016,859) Restricted 279,442 524,157 213,174 435,924 1,452,697 Accrued interest payable (634,827) Committed 100,000 - - - 100,000 Compensated absences (406,002) Assigned 49,466 - - 137,931 187,397 Net other post-employment benefits liability (4,664,073) Unassigned 695,665 - - - 695,665 Net pension liability (1,081,549)
TOTAL FUND BALANCES 1,190,593 524,157 213,174 573,855 2,501,779 (33,803,310) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES$ 3,442,808 $ 524,157 $ 575,399 $ 1,014,931 $ 5,557,295 Net position of governmental activities $ (28,318,241)
See accompanying notes to financial statements. See accompanying notes to financial statements. - 3 - - 4 - Charter Township of Lansing Charter Township of Lansing
Governmental Funds RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Year Ended December 31, 2018 Year Ended December 31, 2018
Net change in fund balances - total governmental funds $ (283,509) 2010 & 2012 Downtown Public Nonmajor Amounts reported for governmental activities in the statement of activities are different Development Safety Governmental because: General Debt Service Assessment Funds Total REVENUES Taxes $ 2,125,283 $ - $ - $ 216,371 $ 2,341,654 Capital outlays are reported as expenditures in governmental funds. However, in the Licenses and permits 282,476 - - - 282,476 statement of activities, the cost of capital assets is allocated over their estimated useful lives Intergovernmental 1,050,251 2,955,648 - - 4,005,899 as depreciation expense. In the current period, these amounts are: Charges for services 753,039 - - 42,676 795,715 Fines and forfeits 11,918 - - - 11,918 Capital outlay $ 589,085 Interest and rents 48,146 - - 2,973 51,119 Depreciation expense (260,960) Other 116,542 - 464,916 149,846 731,304
TOTAL REVENUES 4,387,655 2,955,648 464,916 411,866 8,220,085 Excess of capital outlay over depreciation expense 328,125
EXPENDITURES Revenues in the statement of activities that do not provide current financial resources are Current not reported as revenues in the funds. 1,898 General government 1,454,775 - - - 1,454,775 Public safety 1,945,546 - - 94,194 2,039,740 Public works - - - 208,452 208,452 Items resulting from the repayment of long-term debt and borrowing of long-term debt is Health and welfare 1,266,410 - - - 1,266,410 reported as expenditures, other financing uses, and other financing sources in governmental Community and economic development 18,912 - - 662 19,574 funds, but the repayment reduces long-term liabilities and the borrowings and other liabilities
I-9 Recreation and culture 6,545 - - - 6,545 increase long-term liabilities in the statement of net position. Also, governmental funds Capital outlay 32,875 - 504,500 89,306 626,681 report the effect of premiums, discounts, and similar items when debt is first issued, Debt service - 2,954,777 174,951 179,389 3,309,117 whereas these amounts are deferred and amortized in the statement of activities. In the current period, these amounts consist of: TOTAL EXPENDITURES 4,725,063 2,954,777 679,451 572,003 8,931,294
EXCESS OF REVENUES OVER Installment loan (419,000) (UNDER) EXPENDITURES (337,408) 871 (214,535) (160,137) (711,209) Principal retirement 1,230,629
OTHER FINANCING SOURCES (USES) 811,629 Proceeds from sale of assets - - - 8,700 8,700 Proceeds from installment purchase - - 419,000 - 419,000 Some items reported in the statement of activities do not require the use of current financial Transfers in - - - 39,500 39,500 resources and therefore are not reported as expenditures in governmental funds. These Transfers out (10,000) - - (29,500) (39,500) activities consist of: TOTAL OTHER FINANCING SOURCES (USES) (10,000) -0- 419,000 18,700 427,700 (Increase) in deferred inflows of resources related to pension (134,235) (Decrease) in deferred outflows of resources related to pension (226,812) NET CHANGE IN FUND BALANCES (347,408) 871 204,465 (141,437) (283,509) Decrease in accrued interest payable 5,415 (Increase) in deferred inflows of resources related to OPEB (22) Fund balances, beginning of year 1,538,001 523,286 8,709 715,292 2,785,288 (Increase) in net other post-employment benefits liability (494,843) Decrease in compensated absences 14,623 Fund balances, end of year $ 1,190,593 $ 524,157 $ 213,174 $ 573,855 $ 2,501,779 Decrease in net pension liability 224,825
(611,049)
Change in net position of governmental activities $ 247,094
See accompanying notes to financial statements. See accompanying notes to financial statements. - 5 - - 6 - Charter Township of Lansing Charter Township of Lansing
Proprietary Fund Proprietary Fund
STATEMENT OF NET POSITION STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
December 31, 2018 Year Ended December 31, 2018
West Side West Side Water District Water District ASSETS Current assets OPERATING REVENUES Cash and cash equivalents $ 391,290 Charges for services $ 935,072 Cash and cash equivalents - restricted 56,455 Collection fees and other charges 24,638 Accounts receivable 311,427 Contract services 873,877 Delinquent utilities receivable 4,568 Inventories 23,192 Rents 68,301 Prepaids 8,152 TOTAL OPERATING REVENUES 1,901,888 Total current assets 795,084
Noncurrent assets OPERATING EXPENSES Investments 193,118 Salaries and wages 311,913 Capital assets not being depreciated 467,268 Fringe benefits 221,371 Capital assets, net of accumulated depreciation 4,979,477 Water purchases 107,187 Total noncurrent assets 5,639,863 Fuel and utilities 17,109 Operating supplies 43,747 TOTAL ASSETS 6,434,947 Contractual services 39,653 DEFERRED OUTFLOWS OF RESOURCES Insurance 9,880 Deferred outflows related to pensions 59,487 Repairs and maintenance 56,260
I-10 Rent 16,802 LIABILITIES Transportation 13,100 Current liabilities Accounts payable 23,330 Other 12,834 Accrued payroll 7,600 Depreciation 238,876 Due to other funds 35,360 Due to other governmental units 347,385 TOTAL OPERATING EXPENSES 1,088,732 Accrued interest payable 15,222 Current portion of compensated absences 14,094 Current portion of long-term debt 119,000 OPERATING INCOME 813,156
Total current liabilities 561,991 NONOPERATING REVENUES (EXPENSES) Noncurrent liabilities Interest revenue 637 Payable from restricted cash - customer deposits 32,555 Capital grant 12,171 Net other post-employment benefits liability 509,608 (Loss) on sale of capital assets (15,184) Net pension liability 118,171 Noncurrent portion of compensated absences 26,174 Interest expense (38,840) Noncurrent portion of long-term debt 1,954,521 TOTAL NONOPERATING REVENUES (EXPENSES) (41,216) Total noncurrent liabilities 2,641,029
TOTAL LIABILITIES 3,203,020 CHANGE IN NET POSITION 771,940
DEFERRED INFLOWS OF RESOURCES Restated net position, beginning of year 2,491,546 Deferred inflows related to pensions 27,926 Deferred inflows related to OPEB 2 Net position, end of year $ 3,263,486 TOTAL DEFERRED INFLOWS OF RESOURCES 27,928
NET POSITION Net investment in capital assets 3,373,224 Restricted for bond reserve 16,400 Restricted for repair, replacement, and improvement 7,500 Unrestricted (133,638)
TOTAL NET POSITION $ 3,263,486
See accompanying notes to financial statements. See accompanying notes to financial statements. - 7 - - 8 - Charter Township of Lansing Charter Township of Lansing
Proprietary Fund Fiduciary Funds
STATEMENT OF CASH FLOWS STATEMENT OF NET POSITION
Year Ended December 31, 2018 December 31, 2018
West Side Employee Water District Sick Leave CASH FLOWS FROM OPERATING ACTIVITIES and Retirement Agency Funds Cash receipts from customers $ 1,896,688 Cash received from other funds 8,981 ASSETS Cash paid to suppliers (338,283) Cash and cash equivalents $ 86,065 $ 1,415,611 Cash paid to employees (306,911) Cash paid for employee benefits (91,360) LIABILITIES Due to other governmental units - $ 1,415,611 NET CASH PROVIDED BY OPERATING ACTIVITIES 1,169,115
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES NET POSITION Capital purchases (1,351,957) Restricted for employee benefits $ 86,065 Interest paid (33,967) Proceeds from capital grant 12,171 Proceeds from sale of assets 4,500 Proceeds from debt issuance 467,000 Principal payments (143,000)
NET CASH (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES (1,045,253)
CASH FLOWS FROM INVESTING ACTIVITIES I-11 Sale of investments 4,294 Interest received 637
NET CASH PROVIDED BY INVESTING ACTIVITIES 4,931
NET INCREASE IN CASH AND CASH EQUIVALENTS 128,793
Cash and cash equivalents, beginning of year 318,952
Cash and cash equivalents, end of year $ 447,745
Reconciliation of operating income to net cash provided by operating activities Operating income $ 813,156 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation 238,876 (Increase) decrease in: Receivables (4,400) Inventories 7,633 Prepaids (989) Deferred outflows of resources 27,228 Increase (decrease) in: Accounts payable (21,508) Accrued liabilities 983 Due to other funds 8,981 Due to other governmental units (6,847) Compensated absences 4,019 Customer deposits payable (800) Net pension liability (28,711) Deferred inflows of resources related to pensions 14,282 Deferred inflows of resources related to OPEB 2 Net other post-employment benefits liability 117,210
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,169,115
See accompanying notes to financial statements. See accompanying notes to financial statements. - 9 - - 10 - Charter Township of Lansing Charter Township of Lansing
Fiduciary Funds Component Units
STATEMENT OF CHANGES IN NET POSITION COMBINING STATEMENT OF NET POSITION
Year Ended December 31, 2018 December 31, 2018
Employee Downtown Economic Sick Leave Development Development and Retirement Authority Corporation Total ADDITIONS ASSETS Interest $ 478 Current assets Cash and cash equivalents $ 447,877 $ 31,835 $ 479,712 DEDUCTIONS - Receivables Accounts 147,553 - 147,553 CHANGE IN NET POSITION 478 Taxes 933,122 - 933,122 Due from other governmental units 132,210 - 132,210 Net position, beginning of year 85,587 Total current assets 1,660,762 31,835 1,692,597 Net position, end of year $ 86,065 Noncurrent assets
Equity interest in joint ventures 23,307,972 - 23,307,972 Capital assets, net of accumulated depreciation 4,518,004 - 4,518,004
Total noncurrent assets 27,825,976 -0- 27,825,976
I-12 TOTAL ASSETS 29,486,738 31,835 29,518,573
LIABILITIES Current liabilities Due to other governmental units 189,621 - 189,621 Current portion of long-term debt 100,000 - 100,000
Total current liabilities 289,621 -0- 289,621
Noncurrent liabilities Noncurrent portion of long-term debt 12,508,171 - 12,508,171
TOTAL LIABILITIES 12,797,792 -0- 12,797,792
DEFERRED INFLOWS OF RESOURCES Property taxes levied for subsequent year 1,108,157 - 1,108,157
NET POSITION Net investment in capital assets (8,090,167) - (8,090,167) Restricted for future capital acquisitions 31,743 - 31,743 Unrestricted 23,639,213 31,835 23,671,048
TOTAL NET POSITION $ 15,580,789 $ 31,835 $ 15,612,624
See accompanying notes to financial statements. See accompanying notes to financial statements. - 11 - - 12 - Charter Township of Lansing
Component Units
COMBINING STATEMENT OF ACTIVITIES
Year Ended December 31, 2018
Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Downtown Economic Charges for Grants and Development Development Functions/Programs Expenses Services Contributions Authority Corporation Total Governmental activities Downtown Development Authority $ 2,795,695 $ - $ - $ (2,795,695) $ - $ (2,795,695) Economic Development Corporation ------0-
$ 2,795,695 $ -0- $ -0- (2,795,695) -0- (2,795,695)
General revenues Property taxes 1,481,844 - 1,481,844 Investment earnings 1,796 170 1,966 Franchise fees 617,584 - 617,584
Total general revenues 2,101,224 170 2,101,394
Change in net position (694,471) 170 (694,301)
Restated net position, beginning of year 16,275,260 31,665 16,306,925
Net position, end of year $ 15,580,789 $ 31,835 $ 15,612,624
See accompanying notes to financial statements. - 13 -
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I-13 Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Charter Township of Lansing, Michigan was organized as a Township under provisions of the constitution and general law of the State of Michigan. The Township is one of sixteen (16) townships in Ingham County. 3. Joint Ventures The Township operates under an elected Township Supervisor and an elected Township Board which consists of a Supervisor, Clerk, Treasurer, and four (4) Trustees and provides services to its residents in many areas The Township’s DDA is involved in two (2) joint ventures related to community and economic development in the including water and sewer, general government, law enforcement, fire protection and prevention, maintenance Eastwood Towne Center area. Towneast, LLC and Towneast Parking, LLC are partnerships between the DDA of highway, streets and bridges, and community enrichment. and private parties to facilitate economic development activity. As of December 31, 2018, the DDA’s ownership interest in Towneast, LLC was 92%, and the DDA’s ownership interest in Towneast Parking, LLC was 91%. The The financial statements of the Township have been prepared in accordance with accounting principles DDA’s ownership interest in Towneast, LLC was valued at $12,701,588 as of December 31, 2018, and the DDA’s generally accepted in the United States of America (GAAP) as applied to township governments. The ownership interest in Towneast Parking, LLC was valued at $10,606,384 as of December 31, 2018. Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Township’s more significant accounting policies 4. Basis of Presentation are described below. GOVERNMENT-WIDE FINANCIAL STATEMENTS 1. Reporting Entity The statement of net position and the statement of activities (the government-wide statements) present As required by accounting principles generally accepted in the United States of America, these financial information for the primary government and its component units as a whole. All nonfiduciary activities of the statements present the financial activities of the Charter Township of Lansing (primary government) and its primary government are included (i.e., fiduciary fund activities are not included in the government-wide component units, entities for which the government is considered to be financially accountable. Discretely statements). For the most part, interfund activity has been eliminated in the preparation of these statements. presented component units are reported in a separate column in the government-wide financial statements to Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported emphasize that they are legally separate from the primary government. separately from business-type activities, which rely to a significant extent on fees and charges for support.
I-14 The inclusion of the activities of various agencies is based on the manifestation of oversight criteria, relying on The statement of activities presents the direct functional expenses of the primary government and its component such guidelines as the selection of the governing authority, the designation of management, the ability to exert units and the program revenues that support them. Direct expenses are specifically associated with a service, significant influence on operations, and the accountability for fiscal matters. The accountability for fiscal matters program, or department and are therefore clearly identifiable to a particular function. Program revenues are considers the possession of the budgetary authority, the responsibility for surplus or deficit, the controlling of associated with specific functions and include charges to recipients of goods or services and grants and fiscal management, and the revenue characteristics, whether a levy or a charge. Consideration is also given to contributions that are restricted to meeting the operational or capital requirements of that function. Revenues the scope of public service. The scope of public service considers whether the activity is for the benefit of the that are not required to be presented as program revenues are general revenues. This includes all taxes, reporting entity and/or its residents and is within the geographic boundaries of the reporting entity and generally interest, and unrestricted State revenue sharing payments and other general revenues and shows how available to its citizens. governmental functions are either self-financing or supported by general revenues.
Based upon the application of these criteria, the financial statements of the Charter Township of Lansing contain FUND FINANCIAL STATEMENTS all the funds controlled by the Township Board. The fund financial statements present the Township’s individual major funds and aggregated nonmajor funds. 2. Discretely Presented Component Units Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental The component units are reported in a separate column to emphasize that, while legally separate, the Charter funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. Township of Lansing remains financially accountable for these entities or the nature and significance of the relationship between the entities and the Township is such that exclusion of the entities would render the The Township reports the following major governmental funds: financial statements misleading or incomplete. The financial statements contain the following discretely presented component units: a. The General Fund is the Township’s primary operating fund. It accounts for all financial resources of the general government except for those that are required to be accounted for in another fund. a. Downtown Development Authority - The governing body of the Downtown Development Authority (Authority, DDA) is appointed by the Township Board. The Authority’s purpose is the collection of tax b. The Public Safety Assessment Fund is used to account for the public safety special assessment activity increment revenues, the issuance and repayment of debt, the construction of public facilities, and the for the Township. promotion and facilitation of economic growth in the development district. The Authority’s budget and debt issuance is subject to the approval of the Township Board. The DDA fund financial statements are c. The 2010 & 2012 Downtown Development Debt Service Fund is used to account for debt service presented as part of Other Supplementary Information and are not audited separately. payments of the 2010 & 2012 Downtown Development Series bond issuances.
b. Economic Development Corporation - The Economic Development Corporation (EDC) was established The Township reports the following major enterprise fund: pursuant to the provisions of Public Act 338 of 1974, as amended. The governing body of the EDC is appointed by the Township Board. The EDC may not issue debt without approval from the Township a. The West Side Water Fund is used to account for the operations of the Township water system. Board. The EDC fund financial statements are presented as part of Other Supplementary Information Revenues are derived primarily from user fees based on water usage. The enterprise fund also bills, and are not audited separately. collects, and remits sewer fees for the City of Lansing and Delta Township.
- 14 - - 15 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CONTINUED
4. Basis of Presentation - continued 6. Basis of Accounting - continued
FUND FINANCIAL STATEMENTS - CONTINUED 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 Additionally, the Township reports a trust fund to account for the accumulation of resources for employee sick proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are leave and retirement payments to qualified employees. charges to customers for sales and services. Operating expenses for enterprise funds include the costs of sales and services, administrative expenses, and other costs of running the activity. All revenues and expenses not The Township also reports agency funds to account for assets held by the Township as an agent for other meeting this definition are reported as nonoperating revenues and expenses. governments, private organizations, or individuals. Agency funds are, by nature, custodial; therefore, operation results are not measured. The Township’s agency funds are the Current Tax Fund and the Trust and Agency If/when both restricted and unrestricted resources are available for use, it is the Township’s policy to use Fund. restricted resources first, then unrestricted resources as they are needed.
5. Measurement Focus 7. Budgets and Budgetary Accounting
The government-wide, proprietary, and non-agency fiduciary fund financial statements are presented using the Budgets are adopted on a basis consistent with the modified accrual basis used to reflect actual results in the economic resources measurement focus, similar to that used by business enterprises or not-for-profit fund financial statements. The Township employs the following procedures in establishing the budgetary data organizations. Because another measurement focus is used in the governmental fund financial statements, reflected in the financial statements. reconciliations to the government-wide statements are provided that explain the differences in detail. a. Prior to September 1, the Supervisor submits a proposed operating budget for the fiscal year All governmental funds are presented using the current financial resources measurement focus. With this commencing the following January 1 to the Township Board. The operating budget includes proposed I-15 measurement focus, only current assets, deferred outflows of resources, current liabilities, and deferred inflows expenditures and the means of financing them. of resources generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing b. Public hearings are conducted at the Township Hall to obtain taxpayer comments. uses) in fund balance. c. Prior to November 1, the budget is adopted through passage of an ordinance. After the budget is There is no measurement focus for agency funds since assets equal liabilities. adopted all transfers of budgeted amounts between activities or any revisions that alter the total expenditures of the fund or activity must be approved by the Township Board. 6. Basis of Accounting d. Formal budgetary integration is employed as a management control device during the year. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the e. The Township does not employ encumbrance accounting as an extension of formal budgetary measurement focus applied. integration in the governmental funds. Appropriations unused at December 31 are not carried forward to the following fiscal year. All governmental funds are accounted for using the modified accrual basis of accounting. Under this method, revenues are recognized when they become susceptible to accrual (when they become both “measurable” and f. Budgeted amounts are reported as originally adopted or amended by the Township Board during the year. “available to finance expenditures of the current period”). The length of time used for “available” for purposes of revenue recognition in the governmental fund financial statements is 60 days. Revenues that are considered 8. Cash, Cash Equivalents, and Investments measurable but not available are recorded as a receivable and unavailable revenue. Revenues are generally considered available when they are received in cash (unless legally restricted to some future period) or when Cash and cash equivalents consist of checking, savings, and investment trust fund accounts. The cash earned and expected to be collected soon enough after year-end to pay liabilities of the current period. equivalents are recorded at cost, which approximates fair value. Significant revenues susceptible to accrual include certain intergovernmental revenues and charges for services. Most licenses and permits, fines and forfeits, and miscellaneous revenue sources generally are Investments consist of certificates of deposit and U.S. Government Securities with original maturities of greater recorded as revenues when received in cash because they are not measurable until actually received. than 90 days from the date of purchase. Investments are recorded at fair value. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred, except for interest on long-term debt which is recorded when due. 9. Cash and Cash Equivalents - Restricted
All proprietary and similar trust funds are accounted for using the accrual basis of accounting. Their revenues Restricted cash is for utility customer deposits being held by the Township. The Township also has restricted are recognized when they are earned, and their expenses are recognized when they are incurred. cash as required by a bonding agreement with the United States Department of Agriculture.
- 16 - - 17 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CONTINUED
10. Receivables 16. Deferred Outflows/Inflows of Resources
Receivables consist of amounts due from various individuals and businesses related to charges for services, In addition to assets and liabilities, the statement of financial position and balance sheet will, when applicable, amounts owed to the Township from special assessments, and taxes levied that have not been collected. report separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources, a separate financial statement element, represents a consumption of net position or fund balance, 11. Due from Other Governmental Units respectively, that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until that time. Deferred inflows of resources, a separate financial statement element, Due from other governmental units consists of amounts due from the State of Michigan or other governments for represents an acquisition of net position or fund balance, respectively, that applies to a future period and so will various payments and grants. not be recognized as an inflow of resources (revenue) until that time.
12. Capital Assets The Township has several items that qualify for reporting in these categories. These items correspond the Township’s net pension and OPEB liability and are related to differences between expected and actual Capital assets are recorded (net of accumulated depreciation, if applicable) in the government-wide financial experience, changes in assumptions, differences between projected and actual pension plan investment statements under the governmental activities, business-type activities, and component unit columns. Capital earnings, and contributions made subsequent to the measurement date. These amounts are deferred and assets are not recorded in the governmental funds. Instead, capital acquisition and construction are reflected as recognized as an outflow or inflow of resources in the period to which they apply. The Township also reports expenditures in governmental funds, and the related assets are reported in the government-wide financial unavailable revenue in the governmental funds, which is related to special assessment revenue, property taxes, statements. All purchased capital assets are valued at cost where historical records are available and at an and other receivables that are not available for collection within 60 days of year-end. Deferred inflows of estimated historical cost where no historical records exist. Donated capital assets are valued at their estimated resources as of December 31, 2018, were as follows: acquisition cost on the date received. Primary Government I-16 The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset Levied for lives are not capitalized. Depreciation is computed using the straight-line method over the following useful lives: Pension and Subsequent OPEB related Unavailable Year Total Land improvements 5 - 25 years Buildings and improvements 10 - 40 years Property Taxes $ - $ - $ 2,286,470 $ 2,286,470 Machinery, equipment, and furniture 5 - 20 years Special Assessments - 387,474 - 387,474 Vehicles 5 - 15 years Water and sewer systems 10 - 75 years Receivables not collected within 60 days - 144,424 - 144,424 Infrastructure 20 - 40 years Deferred inflows related to pensions 283,509 - - 283,509 Deferred inflows related to OPEB 24 - - 24 13. Accrued Interest Payable $ 283,533 $ 531,898 $ 2,286,470 $ 3,101,901 Accrued interest is presented for long-term obligations in the government-wide financial statements. Component Units 14. Compensated Absences Levied for Pension and Subsequent Township employees are granted sick and vacation leave in varying amounts. In the event of termination, an OPEB related Unavailable Year Total employee is paid for accumulated vacation time, and upon meeting retirement requirements, may be paid out a portion of unused sick time. All employees with accumulated unused sick and vacation time pay at December Property Taxes $ -0- $ -0- $ 1,108,157 $ 1,108,157 31, 2018, were vested and the total due to them, along with the related payroll taxes, is recorded entirely in the government-wide financial statements. 17. Property Tax
15. Long-Term Obligations Charter Township of Lansing bills and collects its own property taxes and the tax levy for other governmental units.
The Township’s property tax revenue recognition policy and related tax calendar disclosures are as follows: Long-term debt and other long-term obligations are recognized as a liability in the government-wide financial
statements and proprietary fund when incurred. The portion of those liabilities expected to be paid within the Property taxes are levied on December 1. The tax levies are due February 14. All taxes not paid by their due next year is a current liability with the remaining amounts shown as noncurrent. dates are deemed delinquent. Delinquent real property taxes are turned over to the Ingham County Treasurer
on March 1 of the year following the levy. The Ingham County Treasurer remits payment to all taxing units on all Long-term debt is recognized as a liability of a governmental fund when due or when resources have been delinquent real property taxes. Delinquent personal property taxes are retained by the Township for subsequent accumulated for payment early in the following year. For other long-term obligations, only that portion expected to collection. be financed from expendable available financial resources is reported as a fund liability of a governmental fund.
- 18 - - 19 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE A: DESCRIPTION OF TOWNSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NOTE B: DEPOSITS AND INVESTMENTS CONTINUED In accordance with Michigan Compiled Laws, the Township is authorized to invest in the following investment 17. Property Tax - continued vehicles:
The Township’s property tax is levied each December 1 on the taxable valuation of property located in the 1. Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United Township as of the preceding December 31. Although the Township’s 2018 tax is levied and collectible by States. December 31, 2018, it is the Township’s policy to recognize revenues from the current tax levy in the subsequent year when the proceeds of the levy are budgeted and made available for the financing of Township 2. Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a State or nationally operations. chartered bank or a State or Federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal The Township is permitted to levy up to $8.75 per $1,000 of taxable valuation for general governmental office or branch office located in this State under the laws of the State or the United States, but only if the services, $0.50 per $1,000 of taxable valuation for sidewalks and $2.03071 per $1,000 of taxable valuation for bank, savings and loan association, savings bank, or credit union is eligible to be a depository of surplus at-large drains. For the year ended December 31, 2018, the Township levied 8.5065 mills for general funds belong to the State under Section 5 or 6 of Act No. 105 of the Public Acts of 1855, as amended, being governmental services, and 0.5 mills for sidewalks on the total taxable value of the Township as of December 1, Section 21.145 and 21.146 of Michigan Compiled Laws. 2017. The total taxable value for the 2017 levy for property within the Township was $285,712,443. 3. Commercial paper rated at the time of purchase within the three (3) highest classifications established by 18. Interfund Transactions not less than two (2) standard rating services and which matures not more than 270 days after the date of purchase. During the course of normal operations, the Township has numerous transactions between funds, including expenditures and transfers of resources to provide services, construct assets, and service debt. The 4. The United States government or federal agency obligations repurchase agreements. accompanying financial statements generally reflect such transactions as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial 5. Bankers acceptances of United States banks. I-17 statements. 6. Mutual funds composed of investment vehicles which are legal for direct investment by local units of 19. Restricted Net Position government in Michigan.
Restrictions of net position shown in the government-wide financial statements indicate restrictions that have Deposits been imposed by outside sources which preclude a portion of net position from use for unrestricted purposes. There is a custodial credit risk as it related to deposits. In the case of deposits, this is the risk that in the event 20. Inventories and Prepaids of a bank failure, the Township’s deposits may not be returned to it. As of December 31, 2018, the carrying amount of the Township’s deposits was $5,380,044 and the bank balance was $5,521,270. Inventories are valued on a first-in, first-out cost basis. Prepaid expenditures in the governmental funds, such as insurance premiums and rents, which are expected to be written off within the coming years, are included as Deposits of the Township are at federally insured banks located in the State of Michigan with all accounts assets. Reportable inventories and prepaid expenditures are equally offset by nonspendable fund balance maintained in the name of the Township. As of December 31, 2018, the Township accounts were insured by which indicates they do not constitute “available spendable resources” even though they are a component of federal depository insurance for $1,042,865 and the amount of $4,478,405 was uninsured and uncollateralized. equity. Due to significantly higher cash flow at certain periods during the year, the amount the Township held as cash 21. Net Pension Liability and cash equivalents increased significantly. As a result, the amount of the uninsured and uncollateralized cash and cash equivalents were substantially higher at these peak periods than at year-end. The net pension liability is deemed to be a noncurrent liability and is recognized on the Township’s government- wide and proprietary funds financial statements. Credit Risk
22. Net OPEB Liability State law limits investments in certain types of investments to a prime or better rating issued by nationally recognized statistical rating organizations (NRSRO’s). Rating information as of December 31, 2018, is The net OPEB liability is deemed to be a noncurrent liability and is recognized on the Township’s government- presented below. wide and proprietary funds financial statements. Fair Value Measurements 23. Comparative Data Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly Comparative data for the prior year has not been presented in the accompanying financial statements since transaction between market participants at the measurement date. A fair value hierarchy is also established which their inclusion would make the financial statements unduly complex and difficult to read. requires an entity to maximize the use of observable and minimize the use of observable and minimize the use of unobservable inputs.
- 20 - - 21 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE B: DEPOSITS AND INVESTMENTS - CONTINUED NOTE B: DEPOSITS AND INVESTMENTS - CONTINUED
Fair Value Measurements - continued Concentration of Credit Risk
There are three (3) levels of inputs that may be used to measure fair value: The Township will minimize concentration of credit risk, which is the risk of loss attributed to the magnitude of the Township’s investment in a single issuer, by diversifying the investment portfolio by security type to ensure that Level 1: Quoted prices in active markets for identical securities. potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.
Level 2: Prices determined using other significant observable inputs. Observable inputs are inputs The cash and cash equivalents and investments referred to above have been reported in either the cash and cash that other market participants may use in pricing a security. These may include quoted prices equivalents or investments captions in the basic financial statements, based upon criteria disclosed in Note A. for similar securities, interest rates, prepayment speeds, credit risk, and others. The following summarizes the categorization of these amounts as of December 31, 2018: Level 3: Prices determined using significant unobservable inputs. Unobservable inputs may be used in situations where quoted prices or observable inputs are unavailable or deemed less Primary Component Fiduciary Reporting relevant (for example, when there is little or no market activity for an investment at the end of Government Units Funds Entity the period). Unobservable inputs reflect the organization’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best Cash and cash equivalents $ 3,093,740 $ 479,712 $ 1,501,676 $ 5,075,128 information available. Cash and cash equivalents - restricted 56,455 - - 56,455 Investments 306,216 - - 306,216 Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying financial statements, as well as the general classification of $ 3,456,411 $ 479,712 $ 1,501,676 $ 5,437,799 such instruments pursuant to the valuation hierarchy.
I-18 The Township had the following fair value measurements as of December 31, 2018: The cash and cash equivalents captions in the basic financial statements include $325 in petty cash.
Fair Value Measurements Quoted Prices Significant NOTE C: INTERFUND RECEIVABLES AND PAYABLES in Active Other Significant Markets for Observable Unobservable Weighted The following schedule details interfund receivables and payables related to the primary government at Identical Assets Inputs Inputs Average S&P December 31, 2018: (Level 1) (Level 2) (Level 3) Total Maturity Rating
PRIMARY GOVERNMENT Amounts appearing as interfund payables and receivables arise from two types of transactions. One type of Uncategorized pooled investment funds transaction is where a fund will pay for a good or service that at least a portion of the benefit belongs to another Mutual fund $ 49,709 $ - $ - $ 49,709 N/A N/A fund. The second type of transaction is where one fund provides a good or service to another fund. Balances Michigan CLASS - 7,721 - 7,721 33 days AAAm at the end of the year are for transfers that have not cleared as of the balance sheet date. $ 49,709 $ 7,721 $ -0- $ 57,430 Due to General Fund from: The Township participates in the Michigan Cooperative Liquid Asset Securities System (Michigan CLASS). West Side Water Fund $ 35,360 Portfolio investments are assigned a level based upon the observability of the inputs which are significant to the overall valuation. The inputs or methodology used for valuing securities are not necessarily an indication of the Due to nonmajor governmental funds from: risk associated with investing in those securities. Because the value of the Michigan CLASS investments is not General Fund $ 7,882 obtained from a quoted price in an active market, these investments are classified as Level 2. Fair value is Nonmajor governmental funds 29,500 determined based on the fair value of the pool’s underlying investments. Michigan CLASS’s annual financial statements may be obtained at www.michiganclass.org. $ 37,382
Interest Rate Risk
The Township will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by designating its investment portfolio with the objective of obtaining a rate of return through the economic cycles considering risk constraints and cash flow characteristics.
- 22 - - 23 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE D: INTERFUND TRANSFERS NOTE E: CAPITAL ASSETS - CONTINUED
Permanent reallocation of resources between funds of the reporting entity is classified as interfund transfers. Depreciation expense was charged to the following governmental activities: For the purpose of the statement of activities, all interfund transfers between individual governmental funds and component unit funds have been eliminated. General government $ 25,196 Public safety 169,764 Transfers to nonmajor governmental funds from: Public works 18,239 General Fund $ 10,000 Health and welfare 37,318 Recreation and culture 10,443 Transfers to nonmajor governmental funds from: Nonmajor governmental funds $ 29,500 $ 260,960
The transfers were to finance debt service payments and operational costs. The current period depreciation expense of $251,012 has been adjusted by $9,948 for the loss on disposal of capital assets during the period, in accordance with GASB Statement No. 34 implementation guide which states that immaterial losses may be handled as an adjustment to the current period’s depreciation expense. NOTE E: CAPITAL ASSETS Balance Balance Capital asset activity for the year ended December 31, 2018, is as follows: Jan. 1, 2018 Additions Deletions Dec. 31, 2018
Business-type activities Balance Balance Capital assets not being depreciated Jan. 1, 2018 Additions Deletions Dec. 31, 2018 Land $ 27,701 $ - $ - $ 27,701 Governmental activities
I-19 Construction in progress - 439,567 - 439,567 Capital assets not being depreciated Land $ 26,245 $ - $ - $ 26,245 Subtotal 27,701 439,567 -0- 467,268 Capital asset being depreciated Capital assets being depreciated Land improvements 932,221 53,900 - 986,121 Water system 7,667,946 896,072 (376,906) 8,187,112 Building and improvements 1,182,327 8,550 - 1,190,877 Buildings and improvements 107,225 - (12,731) 94,494 Machinery and equipment 845,807 93,438 (56,907) 882,338 Office equipment and furniture 71,125 - (20,915) 50,210 Vehicles 2,206,231 433,197 (521,109) 2,118,319 Equipment 460,093 16,318 (9,154) 467,257 Office equipment and furniture 167,300 - - 167,300 Subtotal 8,306,389 912,390 (419,706) 8,799,073 Subtotal 5,333,886 589,085 (578,016) 5,344,955 Less accumulated depreciation for: Less accumulated depreciation for: Water system (3,661,708) (205,587) 357,223 (3,510,072) Land improvements (569,307) (27,032) - (596,339) Buildings and improvements (79,370) (4,849) 12,730 (71,489) Building and improvements (997,990) (24,682) - (1,022,672) Office equipment and furniture (62,200) (4,925) 20,915 (46,210) Machinery and equipment (605,988) (46,465) 46,959 (605,494) Equipment (177,464) (23,515) 9,154 (191,825) Vehicles (1,226,340) (140,660) 521,109 (845,891) Office equipment and furniture (126,066) (12,173) - (138,239) Subtotal (3,980,742) (238,876) 400,022 (3,819,596)
Subtotal (3,525,691) (251,012) 568,068 (3,208,635) Net capital assets being depreciated 4,325,647 673,514 (19,684) 4,979,477
Net capital assets being depreciated 1,808,195 338,073 (9,948) 2,136,320 Capital assets, net $ 4,353,348 $ 1,113,081 $ (19,684) $ 5,446,745
Capital assets, net $ 1,834,440 $ 338,073 $ (9,948) $ 2,162,565
- 24 - - 25 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE E: CAPITAL ASSETS - CONTINUED NOTE F: LONG-TERM DEBT - CONTINUED
Balance Balance Amount Jan. 1, 2018 Additions Deletions Dec. 31, 2018 Balance Balance Due Within Jan. 1, 2018 Additions Deletions Dec. 31, 2018 One Year Component Unit (DDA) Primary Government - continued Capital assets being depreciated Business-type activities Equipment and furniture $ 23,162 $ - $ - $ 23,162 1998 Michigan Municipal Bonds $ 25,000 $ - $ (25,000) $ -0- $ - Infrastructure 5,680,424 - - 5,680,424 1999 Michigan Municipal Bonds 90,000 - (45,000) 45,000 45,000 Vehicles 25,923 - (15,923) 10,000 2008 Michigan Municipal Bonds 250,755 - (20,000) 230,755 20,000 Land improvements 510,124 - - 510,124 2009 Michigan Municipal Bonds 394,766 - (25,000) 369,766 25,000 2017 USDA Bonds 989,000 467,000 (28,000) 1,428,000 29,000 Compensated absences 36,249 28,139 (24,120) 40,268 14,094 Subtotal 6,239,633 -0- (15,923) 6,223,710 1,785,770 495,139 (167,120) 2,113,789 133,094 Less accumulated depreciation for: Equipment and furniture (8,298) (2,160) - (10,458) TOTAL PRIMARY GOVERNMENT$ 30,034,883 $ 1,031,759 $ (1,529,992) $ 29,536,650 $ 1,588,232 Infrastructure (1,329,948) (190,355) - (1,520,303) Component Unit (DDA) Vehicles (17,605) (3,990) 14,596 (6,999) 2013 Eastwood Phase II Project Bonds $ 7,195,000 $ - $ (95,000) $ 7,100,000 $ 100,000 Land improvements (150,941) (17,005) - (167,946) Towneast, LLC Loans 4,326,156 1,182,015 - 5,508,171 -
Subtotal (1,506,792) (213,510) 14,596 (1,705,706) $ 11,521,156 $ 1,182,015 $ (95,000) $ 12,608,171 $ 100,000
I-20 Capital assets, net $ 4,732,841 $ (213,510) $ (1,327) $ 4,518,004 Significant details regarding outstanding long-term debt (including current portion) are presented below:
The current period depreciation expense of $213,510 has been adjusted by $1,327 for the loss on disposal of Primary Government capital assets during the period, in accordance with GASB Statement No. 34 implementation guide which states that immaterial losses may be handled as an adjustment to the current period’s depreciation expense. Direct Township Obligations
Governmental Activities Obligations NOTE F: LONG-TERM DEBT $465,000 Special Assessment Sewer System Improvement Bonds Series 2002, dated The following is a summary of changes in long-term debt (including current portion) of the Township for the year October 1, 2002, due in annual installments ranging from $5,000 to $25,000 through ended December 31, 2018: October 1, 2022, with interest ranging from 4.60 percent to 5.00 percent, payable semi- annually. $ 80,000 Amount Balance Balance Due Within $146,043 MTT Tax Appeal dated January 27, 2011, due in an annual installment of Jan. 1, 2018 Additions Deletions Dec. 31, 2018 One Year $14,606 on February 1, 2019, with no interest. 14,606 Primary Government Governmental activities $9,000,000 2010 Downtown Development Bonds Series A dated November 12, 2010, 1996 City of Lansing Sewer Bonds - Tollgate #2 $ 52,052 $ - $ (52,052) $ -0- $ - due in an annual installments ranging from $165,000 to $1,250,000 through July 1, 2002 Special Assessment - 2040, with interest of 6.75 percent, payable semi-annually. 9,000,000 Sewer System Bonds 105,000 - (25,000) 80,000 25,000 MTT Tax Appeal 29,210 - (14,604) 14,606 14,606 $7,315,000 2010 Downtown Development Bonds Series B dated November 12, 2010, Downtown Development due in an annual installments ranging from $335,000 to $895,000 through July 1, 2032, 2010 Downtown Development Bonds with interest ranging from 5.75 percent to 6.50 percent, payable semi-annually. 7,315,000 Series A 9,000,000 - - 9,000,000 - Series B 7,315,000 - - 7,315,000 - $4,590,000 2010 Downtown Development Bonds Series C dated November 12, 2010, Series C 3,210,000 - (540,000) 2,670,000 555,000 due in an annual installments ranging from $315,000 to $625,000 through July 1, 2023, 2012 Downtown Development Refunding Bonds 7,400,000 - (445,000) 6,955,000 460,000 with interest ranging from 3.25 percent to 4.10 percent, payable semi-annually. 2,670,000 Installment purchase agreements 717,226 419,000 (153,973) 982,253 258,431 Compensated absences 420,625 117,620 (132,243) 406,002 142,101
28,249,113 536,620 (1,362,872) 27,422,861 1,455,138
- 26 - - 27 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE F: LONG-TERM DEBT - CONTINUED NOTE F: LONG-TERM DEBT - CONTINUED
Primary Government - continued Primary Government - continued
Direct Township Obligations - continued Compensated Absences - Business-Type Activities
Governmental Activities Obligations - continued Individual employees have vested rights upon termination of employment to receive payments for unused sick and vacation time. The dollar amount of these vested rights including related payroll taxes, which have been $8,870,000 2012 Downtown Development Refunding Bonds dated December 4, 2012, accrued on the financial statements in the government-wide financial statements, amounted to approximately due in annual installments ranging from $460,000 to $610,000 through May 1, 2031, $40,268 at December 31, 2018. The amounts of $14,094 and $26,174 have been reported as current and with interest ranging from 2.00 percent to 3.00 percent, payable semi-annually. $ 6,955,000 noncurrent liabilities, respectively.
Component Unit (DDA) $1,205,856 Capital leases, due in annual installments ranging from $77,974 to $163,918
through February 16, 2023, with interest ranging from 2.84 percent to 3.644 percent, $7,500,000 Eastwood Phase II Project Bonds Series 2013, dated February 26, 2013, payable annually. 982,253 due in annual installments ranging from $100,000 to $895,000 through February 1, 2042, with an interest rate ranging from 5.95 to 8.00 percent, payable semi-annually. $ 7,100,000 Total Governmental Activities Obligations 27,016,859 $5,508,171 Towneast, LLC Loans, repayment arrangements to be determined. 5,508,171 Business-type Activities Obligations
Total DDA Obligations $ 12,608,171 $704,392 Michigan Municipal Bond Authority Series 1999, dated June 24, 1999, due in an annual installment of $45,000 on October 1, 2019, with an interest rate of 2.50 I-21 percent, payable semi-annually. 45,000 The annual requirements to pay the debt principal and interest outstanding are as follows:
Primary Government $410,755 Michigan Municipal Bond Authority Series 2008, dated June 23, 2008, due in
annual installments ranging from $20,000 to $25,755 through October 1, 2028, with an Governmental Activities interest rate of 2.50 percent, payable semi-annually. 230,755 2002 Special $585,766 Michigan Municipal Bond Authority Series 2009, dated June 29, 2009, due in Assessment Sewer annual installments ranging from $25,000 to $35,000 through October 1, 2029, with an Improvement Bonds MTT Tax Appeal interest rate of 2.50 percent, payable semi-annually. 369,766 Year Ending Dec. 31, Principal Interest Principal Interest $1,456,000 USDA Bonds, dated August 11, 2017, due in semi-annual installments ranging from $29,000 to $47,000 through January 2047, with an interest rate of 1.875%, 2019 $ 25,000 $ 3,837 $ 14,606 $ - payable semi-annually. 1,428,000 2020 25,000 2,688 - - 2021 25,000 1,500 - - Total Business-Type Activities Obligations 2,073,521 2022 5,000 250 - - TOTAL DIRECT TOWNSHIP OBLIGATIONS $ 29,090,380 $ 80,000 $ 8,275 $ 14,606 $ -0-
Compensated Absences - Governmental Activities
Individual employees have vested rights upon termination of employment to receive payments for unused sick and vacation time. The dollar amount of these vested rights including related payroll taxes, which have been accrued on the financial statements in the government-wide financial statements, amounted to approximately $406,002 at December 31, 2018. The amounts of $142,101 and $263,901 have been reported as current and noncurrent liabilities, respectively.
- 28 - - 29 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE F: LONG-TERM DEBT - CONTINUED NOTE F: LONG-TERM DEBT - CONTINUED
Primary Government - continued Primary Government - continued
Governmental Activities - continued Business-type Activities
2010 Downtown 2012 Downtown Development Installment Purchase 2017 USDA Development Bonds Refunding Bonds Agreements Bonds* Year Ending Year Ending Dec. 31, Principal Interest Principal Interest Principal Interest Dec. 31, Principal Interest
2019 $ 555,000 $ 1,173,053 $ 460,000 $ 168,925 $ 258,431 $ 31,674 2019 $ 29,000 $ 20,476 2020 575,000 1,153,628 465,000 159,675 266,728 23,380 2020 29,000 19,932 2021 600,000 1,132,065 480,000 149,925 184,530 14,815 2022 625,000 1,108,065 490,000 139,619 190,651 8,694 2021 30,000 19,388 2023 650,000 1,083,065 505,000 128,731 81,913 2,368 2022 30,000 18,826 2024-2028 3,645,000 4,835,113 2,740,000 451,556 - - 2023 31,000 18,262 2029-2033 4,470,000 3,564,238 1,815,000 81,450 - - 2024-2028 163,000 85,426 2034-2038 5,410,000 1,951,088 - - - - 2029-2033 180,000 69,806 2039-2040 2,455,000 250,088 - - - - 2034-2038 197,000 52,614 2039-2043 216,000 33,808 $ 18,985,000 $ 16,250,403 $ 6,955,000 $ 1,279,881 $ 982,253 $ 80,931 2044-2047 523,000 13,144
I-22 Business-type Activities $ 1,428,000 $ 351,682
1999 Michigan 2008 Michigan 2009 Michigan *The total borrowing for the 2017 USDA bonds has yet to be determined, so this schedule is subject to change. Municipal Bonds Municipal Bonds Municipal Bonds Year Ending Component Unit (DDA) Dec. 31, Principal Interest Principal Interest Principal Interest 2013 Eastwood Phase II 2019 $ 45,000 $ 1,125 $ 20,000 $ 5,769 $ 25,000 $ 9,244 Project Bonds 2020 - - 20,000 5,269 30,000 8,619 2021 - - 20,000 4,769 35,000 7,869 Year Ending 2022 - - 20,000 4,269 35,000 6,994 Dec. 31, Principal Interest 2023 - - 20,000 3,769 35,000 6,119 2024-2028 - - 130,755 9,469 175,000 17,471 2019 $ 100,000 $ 498,400 2029 - - - - 34,766 869 2020 110,000 490,000 2021 115,000 481,000 $ 45,000 $ 1,125 $ 230,755 $ 33,314 $ 369,766 $ 57,185 2022 125,000 471,400 2023 135,000 461,000 2024-2028 880,000 2,113,200 2029-2033 1,305,000 1,681,800 2034-2038 1,935,000 1,054,734 2039-2042 2,395,000 323,892
$ 7,100,000 $ 7,575,426
The repayment schedule for the Towneast, LLC loans has not yet been determined.
- 30 - - 31 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE G: RETIREMENT PLANS NOTE G: RETIREMENT PLANS - CONTINUED
Defined Benefit Plan Defined Benefit Plan - continued
Plan Description Contributions
The Township participates in the Michigan Municipal Employees Retirement System (MERS), an agent multiple Article 9, Section 24 of the State of Michigan constitution requires that financial benefits arising on account of employer defined benefit pension plan that covers police employees, Teamsters Local 580 employees, full-time employee service rendered in each year be funded during that year. Accordingly, MERS retains an independent firefighters and non-union employees of the Township. The system provides retirement, disability, and death actuary to determine the annual contribution. The employer is required to contribute amounts at least equal to benefits to plan members and their beneficiaries. The Michigan Municipal Employees Retirement System issues a the actuarially determined rate, as established by the MERS retirement board. The actuarially determined rate publicly available financial report that includes financial statements and required supplementary information for the is the estimated amount necessary to finance the costs of benefits earned by plan members during the year, system. That report may be obtained by writing to the System at 1134 Municipal Way, Lansing, Michigan 48917. with an additional amount to finance any unfunded accrued liability. The employer may establish contribution rates to be paid by its covered employees. Summary of Significant Accounting Policies For the year ended December 31, 2018, the Township’s contribution rate for active employees was 9.50% For the purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of based on annual payroll for open divisions. The active employee contribution rates ranged from 1.78% to resources related to pensions, and pension expense, information about the fiduciary net position of the 5.87% of annual payroll. Municipal Employees Retirement System (MERS) of Michigan and additions to/deductions from MERS’ fiduciary net position have been determined on the same basis as they are reported by MERS. For these purposes, Net Pension Liability benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The Township’s net pension liability was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability was determined by an annual actuarial valuation as of that date. Changes in Benefits Provided the net pension liability during the measurement year were as follows: I-23
The plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. Public Increase (Decrease) Act 427 of 1984, as amended, established and amends the benefit provisions of the participants in MERS. The Total Pension Plan Fiduciary Net Pension MERS plan covers all eligible police employees at the Township. Liability Net Position Liability (a) (b) (a)-(b) Retirement benefits are calculated at 2.25 percent of the employee’s five-year final average compensation times the employee’s years of service with a maximum of 80 percent of final average compensation. Normal Balances at December 31, 2016 $ 8,890,928 $ 7,408,770 $ 1,482,158 retirement age is 60 with an unreduced benefit at age 55 with 25 years of service or a reduced benefit at age 50 with 25 years of service or age 55 with 15 years of services. Deferred retirement benefits vest after 6 years of Changes for the Year credited service for the fire division and 10 years of credited service for all other divisions but are not paid until the date retirement would have occurred had the member remained an employee. Employees are eligible for Service cost 265,734 - 265,734 non-duty disability benefits after 6 years of service and for duty related disability benefits upon hire. Disability Interest on total pension liability 705,604 - 705,604 benefits are determined in the same manner as retirement benefits but are payable immediately and if duty- Changes in benefits (15,195) - (15,195) related without an actuarial reduction for retirement before age 60 is not applied. An employee who leaves Difference between expected and actual experience 35,889 - 35,889 service may withdraw his or her contributions, plus any accrued interest. Employer contributions - 248,140 (248,140) Employee contributions - 62,195 (62,195) Benefit terms, within the parameters established by MERS, are generally established and amended by authority Net investment income - 979,637 (979,637) of the Township Board, generally after negotiations of the terms with the affected unions. Benefit payments, including employee refunds (407,473) (407,473) - Administrative expense - (15,502) 15,502 At the December 31, 2017, valuation date, the following employees were covered by the benefit terms: Net changes 584,559 866,997 (282,438) Inactive employees or beneficiaries receiving benefits 12 Inactive employees entitled to but not yet receiving benefits 6 Balances as of December 31, 2017 $ 9,475,487 $ 8,275,767 $ 1,199,720 Active employees 45
Total employees covered by MERS 63
- 32 - - 33 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE G: RETIREMENT PLANS - CONTINUED NOTE G: RETIREMENT PLANS - CONTINUED
Defined Benefit Plan - continued Defined Benefit Plan - continued
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Actuarial Assumptions - continued
For the year ended December 31, 2018, the employer recognized pension expense of $397,893. The employer Investment rate of return: 7.75%, net of investment expenses, including inflation. reported deferred outflows and inflows of resources related to pensions from the following sources: Although no specific price inflation assumptions are needed for the valuation, the 3.75% long-term wage Deferred Deferred inflation assumption would be consistent with a price inflation of 2.50%. Outflows of Inflows of Resources Resources The mortality table used to project the mortality experience of non-disabled plan members is a 50% Male - 50% Female blend of the following tables: 1. The RP-2014 Healthy Annuitant Mortality Tables, Differences between expected and actual experience $ 66,167 $ 118,009 with rates multiplied by 105%, 2. the RP-2014 Employee Mortality Tables, and 3. the RP-2014 Juvenile Mortality Tables. The mortality table used to project the mortality experience of disabled plan members is a 50% Male - 50% Female blend of the RP-2014 Disabled Retiree Mortality Tables. Changes in assumptions 274,356 -
The actuarial assumptions used in valuation were based on the results of the 2009-2013 Five-year Experience Net difference between projected and actual Study. earnings on pension plan investments - 165,500 Discount Rate Contributions subsequent to the measurement date* 263,396 - The discount rate used to measure the total pension liability is 8.00%. The projection of cash flows used to I-24 Total $ 603,919 $ 283,509 determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers.
* The amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending Projected Cash Flows December 31, 2019. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to pay all Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension projected future benefit payments of current active and inactive employees. Therefore, the long-term expected expense as follow: rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Year Ending Pension The long-term expected rate of return on pension plan investments was determined using a model method in December 31, Expense which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to 2019 $ 76,638 produce the long-term expected rate of return by weighting the expected future real rates of return by the target 2020 55,627 asset allocation percentage and by adding expected inflation. The target allocation and best estimates of 2021 (77,244) arithmetic real rates of return for each major asset class are summarized in the following table: 2022 (30,877) 2023 47,412 Long-Term Expected Thereafter (14,542) Asset Class Target Allocation Real Rate of Return
Actuarial Assumptions Global Equity 55.50% 8.65% Global Fixed Income 18.50% 3.76% The total pension liability in the December 31, 2017, annual actuarial valuation was determined using the Real Assets 13.50% 9.72% following actuarial assumptions, applied to all periods included in the measurement: Diversifying Strategies 12.50% 7.50%
Inflation: 2.50%
Salary increases: 3.75% in the long-term plus a percentage based on age related scale to reflect merit, longevity, and promotional pay increases.
- 34 - - 35 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE G: RETIREMENT PLANS - CONTINUED NOTE H: OTHER POST-EMPLOYMENT BENEFITS - CONTINUED
Defined Benefit Plan - continued Summary of Plan Participants
Sensitivity of the Net Position Liability to Changes in the Discount Rate At the December 31, 2017 valuation date, the following employees were covered by the benefit terms:
The following presents the net pension liability of the employer, calculated using the discount rate of 8.00%, as well as what the employer’s net position liability would be using a discount rate that is 1% lower (7.00%) or 1% Retirees and survivors 18 higher (9.00%) than the current rate. Covered Spouse/ Dependents 11 Active plan members 43 Current 1% Decrease Discount Rate 1% Increase 72
Net pension liability $ 2,382,262 $ 1,199,720 $ 204,317 Investment Policy
Defined Contribution Pension Plan The Township may invest and reinvest the assets of the Plan subject to the terms, conditions, limitations, and restrictions imposed by Michigan law and, to the extent applicable to a government plan, the Internal Revenue The Township also has a defined contribution pension plan covering full-time employees who opted not to Code of 1986, as amended, and the Employee Retirement Security Act of 1974, as amended. It is the policy of participate in the MERS plan. This benefit is an insurance-type plan administered under the provisions of the Plan to invest funds in a manner which will ensure the preservation of principal while providing the highest Section 401(a) of the Internal Revenue Code. The plan is administered by Massachusetts Mutual Life investment return with maximum security. The target allocation and best estimates of arithmetic real rates of Insurance Company. return for each major asset class are summarized in the following table:
I-25 A defined contribution pension plan provides pension benefits in return for services rendered, provides an Long-Term Expected individual account for each participant, and specifies how contributions to the individual’s account are to be Asset Class Target Allocation Real Rate of Return determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant’s Cash 100.00% 3.00% account and the returns earned on the investments of those contributions. The plan requires the employer to
contribute fifteen percent of the participating employee’s gross wages up to $32,500, with complete vesting The Township’s Board of Directors is the governing body that can make changes in the fund choices or allocations. within four years. Summary of Significant Accounting Policies During the year, the Township’s required and actual contributions amounted to $3,479. For purposes of measuring the net other post-employment benefits (OPEB) liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expenses, information about the NOTE H: OTHER POST-EMPLOYMENT BENEFITS fiduciary net position of the Plan and additions to/deductions from the Township’s fiduciary net position have been determined on the same basis as they are reported for the Township. For this purpose, benefit payments Plan Description (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The Township provides certain retiree health care benefits as other post-employment benefits (OPEB) to all eligible retired employees and elected officials in accordance with union agreements and/or personnel policies. For part-time elected officials the Township will pay 50% of medical insurance premiums for single or two-party coverage, whichever they qualify for, after 20 years of service and age 55. For full-time elected officials the Township will pay for 50% of medical benefits after 16 years of service and age 55 and 100% of medical benefits after 20 years of service and age 55. The Township records the cost of providing these benefits as expenses when paid.
The plan does not issue a separate stand-alone financial statement.
- 36 - - 37 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE H: OTHER POST-EMPLOYMENT BENEFITS - CONTINUED NOTE H: OTHER POST-EMPLOYMENT BENEFITS - CONTINUED
Change in Net OPEB Liability Actuarial Assumptions
The Township’s net OPEB liability was measured as of December 31, 2017, and the total OPEB liability use to The total OPEB liability in the December 31, 2017 actuarial valuation was determined using the following calculate the net OPEB liability was determined by an actuarial valuation as of that date. The change in the net actuarial assumptions, applied to all periods included in the measurement: OPEB liability of the Township at December 31, 2017, is as follows: Inflation Included in investment rate of return Calculating the Net OPEB Liability Salary Increases 2.00% Increase (Decrease) Investment rate of return 3.00% Total OPEB Plan Fiduciary Net OPEB 20-year Aa Municipal bond rate 3.00% Liability Net Position Liability Medical Trend (a) (b) (a)-(b) Pre-Medicare 8.50% graded down to 4.50% by 0.25% per year Post-Medicare 4.50% Balances at December 31, 2016 $ 4,988,041 $ 83,065 $ 4,904,976 Mortality: Public Safety: PUB Safety 2010 Employee and Healthy Retiree; Non-Public Safety: Public General 2010 Employee and Healthy Retiree Changes for the year Service cost 227,195 - 227,195 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate Interest on total OPEB liability 153,182 - 153,182 Contributions/benefit paid from general operating funds - 109,150 (109,150) The following presents the net OPEB liability of the Township, as well as what the Township’s net OPEB liability Net investment income - 2,522 (2,522) would be if it were calculated using a discount rate that is 1-percentage-point lower (2.00 percent) or 1- Benefit payments (109,150) (109,150) -0- percentage-point higher (4.0 percent) than the current discount rate: I-26 Net changes 271,227 2,522 268,705 1% Decrease Current Rate 1% Increase
Balances as of December 31, 2017 $ 5,259,268 $ 85,587 $ 5,173,681 Net OPEB liability (Discount)$ 6,607,105 $ 5,173,681 $ 4,750,677
OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
For the year ended December 31, 2018, the employer recognized OPEB expense of $377,879. At December The following presents the net OPEB liability of the Township, as well as what the Township’s net OPEB liability 31, 2018, the Township reported deferred outflows and inflows of resources related to pensions from the would be if it were calculated using healthcare cost trends rates that are 1-percentage-point lower (2.00 percent) following sources: or 1-percentage-point higher (4.00 percent) than the current healthcare cost trend rate:
Deferred Deferred 1% Decrease Current Rate 1% Increase Outflows of Inflows of Resources Resources Net OPEB liability (Trend)$ 4,615,517 $ 5,173,681 $ 6,825,005
Net difference between projected and actual earnings on plan investments $ -0- $ 24 NOTE I: RISK MANAGEMENT
The Township participates in the Michigan Township Participating Plan for auto, property, wrongful acts, EDP, Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be crime, inland marine, electronic equipment, public official bond, employee dishonesty, and liability losses. recognized in OPEB expense as follows: Settled claims have not exceeded the amount of insurance coverage in any of the past three (3) fiscal years.
Year Ending OPEB The Township also participates in a pool, the Michigan Municipal League Workers’ Compensation Fund, with December 31, Expense other municipalities for workers’ compensation losses. The pool is organized under Public Act 317 of 1969, as amended. In the event the pool’s claims and expenses for a policy period exceed the total normal annual 2019 $ (6) premiums for said years, all members of the specific pool’s policy year may be subject to special assessments 2020 (6) to make up the deficiency. The Township has not been informed of any special assessments being required. 2021 (6) 2022 (6)
- 38 - - 39 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE J: WHOLESALE WATER SERVICE AGREEMENT NOTE N: DETAILS OF FUND BALANCE CLASSIFICATIONS
The Township entered into an agreement with the Board of Water and Light on June 28, 1995, to purchase GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, established fund conditioned potable water and to provide raw water to the Board. For the year ended December 31, 2018, the balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound Township incurred water charges of $107,187. to observe constraints imposed upon the use of the resources reported in governmental funds. The following are the five (5) fund balance classifications under this standard:
NOTE K: BUILDING AND ZONING FINANCIAL INFORMATION Nonspendable - assets that are not available in a spendable form such as inventory, prepaid expenditures, and long-term receivables not expected to be converted to cash in the near term. It also includes funds that are The Township elected to report the financial activities of the building and zoning department in the General Fund. legally or contractually required to be maintained intact such as the corpus of a permanent fund or foundation. The following is the required information as it relates to this department for the year ended December 31, 2018: Restricted - amounts that are required by external parties to be used for a specific purpose. Constraints are REVENUES externally imposed by creditors, grantors, contributors or laws, regulations or enabling legislation. Building permits $ 115,873 Committed - amounts constrained on use imposed by formal action of the government’s highest level of decision-making authority (i.e., Board, Council, etc.). EXPENDITURES Salaries and fringes 91,077 Assigned - amounts intended to be used for specific purposes. This is determined by the governing body, the Supplies and other 69,356 budget or finance committee or a delegated municipality official.
TOTAL EXPENDITURES 160,433 Unassigned - all other resources; the remaining fund balance after nonspendable, restrictions, commitments, and assignments. This class only occurs in the General Fund, except for cases of negative fund balances. EXCESS OF REVENUES (UNDER) EXPENDITURES (44,560) Negative fund balances are always reported as unassigned, no matter which fund the deficit occurs in.
I-27 Fund Balance Classification Policies and Procedures PRIOR CUMULATIVE EXCESS OF REVENUES OVER EXPENDITURES 324,002
The formal action required to be taken to establish a fund balance commitment is the adoption of a Township CUMULATIVE EXCESS OF REVENUES OVER EXPENDITURES $ 279,442 Resolution.
For assigned fund balance, the Charter Township of Lansing has not approved a policy indicating who is NOTE L: CONTINGENT LIABILITIES authorized to assign amounts to a specific purpose. In the absence of such a policy, authorization is deemed to rest with the Township Board of Trustees. There are various legal actions pending against the Charter Township of Lansing. The likelihood of an unfavorable outcome with respect to the pending litigation is neither probable nor remote. Due to the The Charter Township of Lansing has not formally adopted a policy that determines when both restricted and inconclusive nature of the actions, it is not possible for legal counsel to determine a reasonable estimate of the unrestricted fund balances are available which should be used first. In the absence of such a policy, resources Township’s liability, if any. For these reasons, no additional liability has been recorded in the financial with the highest level of restriction will be used first. statements related to these actions. 2010 & 2012 Under the terms of various Federal and State grants, periodic compliance audits are required, and certain costs Downtown Public Nonmajor Total Development Safety Governmental Governmental may be questioned, allowed, or disallowed, which could result in funds being returned and/or received from General Debt Service Assessment Funds Funds grantor agencies. FUND BALANCES Nonspendable Prepaids $ 66,020 $ - $ - $ - $ 66,020 NOTE M: DDA CONTRACTUAL AND BOND COMMITMENTS Restricted Public works - - - 33,160 33,160 The DDA has entered into an agreement to provide financial assistance to the Township with projects which are Community and economic development - - - 65,611 65,611 related to the DDA’s overall mission. This agreement includes a commitment to the Township to assist with Public safety 279,442 - 213,174 113,306 605,922 payment of debt issues for the parking structure and other improvements at the Eastwood Towne Center Debt service - 524,157 - 36,059 560,216 development. Capital projects - - - 187,788 187,788 Committed The DDA has pledged tax increment revenue payments to the Township for the repayment of certain bonded Budget stabilization 100,000 - - - 100,000 debt issued by the Township. The approximate amount of the pledge is equal to the remaining principal and Assigned interest requirements of the secured debt as of December 31, 2018, which was $43,470,284. The commitment Future capital purchases - - - 137,931 137,931 Subsequent year's expenditures 49,466 - - - 49,466 will expire when the final debt payment is made on July 1, 2040. Unassigned 695,665 - - - 695,665
$ 1,190,593 $ 524,157 $ 213,174 $ 573,855 $ 2,501,779
- 40 - - 41 - Charter Township of Lansing Charter Township of Lansing
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
December 31, 2018 December 31, 2018
NOTE O: RESTATEMENT OF BEGINNING NET POSITION NOTE R: RELATED PARTY TRANSACTIONS
Beginning net position has been restated to reflect the implementation of GASB Statement No. 75. As stated in Note A, the DDA has majority interest in a joint venture called Towneast, LLC. During 2018, Towneast, LLC made a series of loans totaling approximately $1.18 million to the DDA, bringing the total DDA amount of loans to $5,508,171. These loans are still outstanding as of December 31, 2018. Future repayment Governmental Business-type Component terms have yet to be determined. Activities Activities Unit
Beginning net position $ (28,672,741) $ 2,461,912 $ 16,270,166 NOTE S: CHANGE IN ACCOUNTING PRINCIPLES Net OPEB obligation (GASB 45) 4,276,636 422,032 348,442 GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Net OPEB liability (GASB 75) (4,169,230) (392,398) (343,348) Pensions, was implemented during the year. This Statement replaces the requirements of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This Restated beginning net position$ (28,565,335) $ 2,491,546 $ 16,275,260 Statement requires governments providing other postemployment benefits (OPEB) to recognize their unfunded OPEB obligations as a liability for the first time, and to more comprehensibly and comparably measure the annual costs of OPEB benefits. This Statement also enhances accountability and transparency through revised NOTE P: BUDGET STABILIZATION ARRANGEMENT note disclosures and required supplementary information (RSI).
The Township has established a budget stabilization arrangement pursuant to the provisions of Public Act 30 of 1978. Additions to the stabilization amount require a resolution adopted by a 2/3 vote of the Township Board of Trustees. The stabilization amounts may only be appropriated by a resolution adopted by a 2/3 vote of the Township Board of Trustees for specific purposes as outlined in Public Act 30 of 1978.
I-28 NOTE Q: UPCOMING ACCOUNTING PRONOUNCEMENTS
In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. The Statement establishes criteria for identifying fiduciary activities for all state and local governments, focusing on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries for whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The Township is currently evaluating the impact this standard will have on the financial statements when adopted during the 2019 fiscal year.
In June 2017, the GASB issued Statement No. 87, Leases. The Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows or resources or outflows of resources based on the payment provisions of the contract. The Township is currently evaluating the impact this standard will have on the financial statements when adopted during the 2020 fiscal year.
In June 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. This Statement will improve financial reporting by providing users of financial statements with essential information that currently is not consistently provided. In addition, information about resources to liquidate debt and the risks associated with changes in terms associated with debt will be disclosed. As a result, users will have better information to understand the effects of debt on a government’s future resource flows. The Township is currently evaluating the impact this standard will have on the financial statements when adopted during the 2019 fiscal year.
In August 2018, the GASB issued Statement No. 90, Majority Equity Interests - An Amendment of GASB Statement No. 14 and No. 61. This Statement improves the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and improves the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. The Township is currently evaluating the impact this standard will have on the financial statements when adopted during the 2019 fiscal year.
- 42 - - 43 -
Charter Township of Lansing
General Fund
BUDGETARY COMPARISON SCHEDULE
Year Ended December 31, 2018
Variances with Budgeted Amounts Final Budget Positive Original Final Actual (Negative) REVENUES Taxes $ 2,099,007 $ 2,122,998 $ 2,125,283 $ 2,285 Licenses and permits 334,275 275,355 282,476 7,121 Intergovernmental 715,231 721,829 1,050,251 328,422 Charges for services 774,730 789,030 753,039 (35,991) Fines and forfeits 3,000 11,000 11,918 918 Interest and rents 55,000 55,000 48,146 (6,854) Other 103,800 96,300 116,542 20,242
TOTAL REVENUES 4,085,043 4,071,512 4,387,655 316,143
REQUIRED SUPPLEMENTARY INFORMATION EXPENDITURES Current General government Legislative 59,671 66,877 59,903 6,974 Executive 172,284 175,369 174,114 1,255
I-29 Clerk 228,525 230,012 230,706 (694) Treasurer 139,497 137,082 136,181 901 Assessor 45,826 46,986 43,918 3,068 Elections 21,735 25,685 24,369 1,316 Hall and grounds 115,347 121,448 120,889 559 Attorney 150,000 491,500 458,608 32,892 Other 219,936 216,606 206,087 10,519
Total general government 1,152,821 1,511,565 1,454,775 56,790
Public safety Police department 1,557,192 1,480,207 1,447,051 33,156 Fire department 372,728 363,846 357,192 6,654 Building inspection 175,767 177,267 141,303 35,964
Total public safety 2,105,687 2,021,320 1,945,546 75,774
Health and welfare 1,321,492 1,290,003 1,266,410 23,593
Community and economic development 58,231 22,881 18,912 3,969
Recreation and culture 23,839 13,452 6,545 6,907
- 44 - Charter Township of Lansing Charter Township of Lansing
General Fund Retirement System
BUDGETARY COMPARISON SCHEDULE - CONTINUED SCHEDULE OF CHANGES IN TOWNSHIP’S NET PENSION LIABILITY AND RELATED RATIOS
Year Ended December 31, 2018 Last Four Measurement Years (ultimately ten years will be displayed)
Variances with 2014 2015 2016 2017 Budgeted Amounts Final Budget Positive Total Pension Liability Original Final Actual (Negative) Service cost $ 213,111 $ 240,277 $ 250,324 $ 265,734 EXPENDITURES - CONTINUED Interest 548,174 608,750 672,778 705,604 Capital outlay $ 29,500 $ 42,400 $ 32,875 $ 9,525 Changes of benefit terms - (34,337) (9,345) (15,195) Difference between expected and actual experience - 56,648 (157,345) 35,889 Changes of assumptions - 438,969 - - TOTAL EXPENDITURES 4,691,570 4,901,621 4,725,063 176,558 Benefit payments, including employee refunds (262,035) (268,729) (300,083) (407,473) Other 17,130 (1) (1) - EXCESS OF REVENUES (UNDER) EXPENDITURES (606,527) (830,109) (337,408) 492,701 Net Change in Total Pension Liability 516,380 1,041,577 456,328 584,559
OTHER FINANCING SOURCES (USES) Total Pension Liability, beginning 6,876,643 7,393,023 8,434,600 8,890,928 Transfers in 350,000 300,000 - (300,000) Transfers out - (10,000) (10,000) -0- Total Pension Liability, ending $ 7,393,023 $ 8,434,600 $ 8,890,928 $ 9,475,487
TOTAL OTHER FINANCING Plan Fiduciary Net Position SOURCES (USES) 350,000 290,000 (10,000) (300,000) Contributions - employer $ 182,496 $ 240,540 $ 239,021 $ 248,140 Contributions - employee 20,656 24,695 34,274 62,195 NET CHANGE IN FUND BALANCE (256,527) (540,109) (347,408) 192,701 Net investment income 409,728 (103,488) 765,011 979,637
I-30 Benefit payments, including employee refunds (262,035) (268,729) (300,083) (407,473) Fund balance, beginning of year 1,538,001 1,538,001 1,538,001 -0- Administrative expense (15,069) (15,018) (15,091) (15,502) Net Change in Plan Fiduciary Net Position 335,776 (122,000) 723,132 866,997 Fund balance, end of year $ 1,281,474 $ 997,892 $ 1,190,593 $ 192,701 Plan Fiduciary Net Position, beginning 6,471,862 6,807,638 6,685,638 7,408,770
Plan Fiduciary Net Position, ending $ 6,807,638 $ 6,685,638 $ 7,408,770 $ 8,275,767
Employer Net Pension Liability $ 585,385 $ 1,748,962 $ 1,482,158 $ 1,199,720
Plan Fiduciary Net Position as a percentage of the Total Pension Liability 92% 79% 83% 87%
Covered Employee Payroll $ 2,276,833 $ 2,565,558 $ 2,501,656 $ 2,569,834
Employer's Net Pension Liability as a percentage of covered employee payroll 25.71% 68.17% 59.25% 46.68%
- 45 - - 46 - Charter Township of Lansing Charter Township of Lansing
Retirement System SCHEDULE OF CHANGES IN EMPLOYER’S NET OPEB LIABILITY AND RELATED RATIOS
SCHEDULE OF EMPLOYER CONTRIBUTIONS Last Measurement Date (ultimately ten fiscal years will be displayed) (Amounts were determined as of 12/31 of each fiscal year) Last Four Fiscal Years (ultimately ten years will be displayed)
2017 2015 2016 2017 2018 Total OPEB liability Service cost $ 227,195 Actuarially determined contributions $ 240,540 $ 239,021 $ 248,140 $ 263,396 Interest 153,182 Benefit payments (109,150) Contributions in relation to the actuarially determined contribution 240,540 239,021 248,140 263,396 Net change in total OPEB liability 271,227
Contribution deficiency (excess) $ -0- $ -0- $ -0- $ -0- Total OPEB liability, beginning 4,988,041
Covered Employee Payroll $ 2,542,394 $ 2,562,786 $ 2,612,004 $ 2,692,388 Total OPEB liability, ending $ 5,259,268
Contributions as a percentage of covered Plan fiduciary net position employee payroll 9.46% 9.33% 9.50% 9.78% Contributions/benefit payments made from general operating funds$ 109,150 Net investment income 2,522 Benefit payments (109,150)
Net change in plan fiduciary net position 2,522
Plan fiduciary net position, beginning 83,065 I-31 Plan fiduciary net position, ending $ 85,587
Township's net OPEB liability $ 5,173,681
Plan fiduciary net position as a percentage of the total OPEB liability 1.63%
Covered employee payroll $ 2,583,292
Township's net OPEB liability as a percentage of covered employee payroll 200.3%
- 47 - - 48 - Charter Township of Lansing Charter Township of Lansing
SCHEDULE OF EMPLOYER CONTRIBUTIONS SCHEDULE OF INVESTMENT RETURNS
Last Fiscal Year (ultimately ten years will be displayed) Last Fiscal Year (ultimately ten fiscal years will be displayed) (Amounts were determined as of 12/31 of each fiscal year) (Amounts were determined as of 12/31 of each fiscal year)
2018 2018
Actuarially determined employer contribution $ 427,316 Annual money-weighted rate of return, net of investment expenses 3.04% Employer contribution (benefit payment) 109,150
Contribution deficiency/(excess) $ 318,166
Covered employee payroll $ 2,583,292
Contribution as a percentage of payroll 16.54%
I-32
- 49 - - 50 - Charter Township of Lansing
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2018
NOTE A: EXCESS OF EXPENDITURES OVER APPROPRIATIONS
PRIMARY GOVERNMENT
In the budgetary comparison schedule the Township’s budgeted expenditures in the General Fund have been shown at the functional classification level. The approved budgets of the Township have been adopted at the department level for the General Fund and the fund level for the Special Revenue Funds. The General Fund budget shown as required supplementary information was prepared on the same modified accrual basis used to reflect actual results.
During the year ended December 31, 2018, the Township incurred expenditures in the General Fund in excess of the amounts appropriated as follows:
Amounts Amounts Appropriated Expended Variance General Fund Current General government Clerk $ 230,012 $ 230,706 $ 694
NOTE B: EMPLOYEE RETIREMENT SYSTEM I-33 Changes of benefits terms: The required employee contributions percentages for the various bargaining units [THIS PAGE INTENTIONALLY LEFT BLANK] changed from 2.05%-5.59% in the previous year to 1.78%-5.87% in the current year.
Changes in assumptions: There were no changes of assumptions during fiscal year 2018.
NOTE C: OTHER POST-EMPLOYMENT BENEFITS PLAN
Changes in benefit terms: There were no changes in benefit terms during fiscal year 2018.
Changes in assumptions: There were no changes of assumptions during fiscal year 2018.
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APPENDIX J FORM OF LEGAL OPINION
[THIS PAGE INTENTIONALLY LEFT BLANK] 200 O TTAWA A VENUE NW, S UITE 1000 G RAND R APIDS, M ICHIGAN 49503-2427 T ELEPHONE: (616) 458-1300 F ACSIMILE: (844) 670-6009 http://www.dickinsonwright.com
______, 2020
Drainage Board for the Montgomery Drain Maintenance and Improvement Project Ingham County, Michigan
Ladies and Gentlemen:
We have acted as bond counsel to the Montgomery Drain Drainage District in the County of Ingham, State of Michigan (the “Drainage District”), in connection with the issuance by the Drainage District of its Drain Bonds, Series 2020A (General Obligation Limited Tax), dated as of ______, 2020, in the principal amount of $______(the “Bonds”). In such capacity, we have examined the law and such certified proceedings, certifications, and other documents we have deemed necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon certain proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.
The Bonds have been issued under and pursuant to Act 40, Public Acts of Michigan, 1956, as amended, for the purpose of defraying the cost of constructing improvements to the Montgomery Drain. The Bonds have been issued in anticipation of, and are payable from, collections of special assessments assessed against public corporations in the Drainage District.
Based upon the foregoing, we are of the opinion, under existing law as follows:
1. The Bonds are valid and legally binding obligations of the Drainage District payable from collections of the special assessments against public corporations in the Drainage District but with the full faith and credit of the Drainage District pledged to the prompt payment of the principal of and interest on the Bonds. In addition, the full faith and credit of the County of Ingham have been pledged as additional security for the payment of the principal of and interest on the Bonds when due. Taxes imposed by the County for the payment of such principal and interest are subject to statutory and constitutional tax limitations.
2. The Bonds and the interest thereon are exempt from all taxation by the State of Michigan or a political subdivision thereof, except estate taxes and taxes on gains realized from the sale, payment or other disposition thereof.
ARIZONA CALIFORNIA FLORIDA KENTUCKY MICHIGAN
NEVADA OHIO TENNESSEE TEXAS TORONTO WASHINGTON DC J-1 D ICKINSON W RIGHT PLLC Montgomery Drain Drainage District ______, 2020 Page 2
3. The interest on the Bonds is excluded from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax. The opinion set forth in this paragraph is subject to the condition that the Drainage District comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements could cause the interest on the Bonds to be so included in gross income retroactive to the date of issuance of the Bonds. The Drainage District has covenanted to comply with all such requirements. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.
We express no opinion herein regarding the accuracy, adequacy, or completeness of the official statement relating to the Bonds.
It is understood that the rights of the holders of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement also may be subject to the exercise of judicial discretion in appropriate cases.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.
Respectfully, DICKINSON WRIGHT PLLC
ARIZONA CALIFORNIA FLORIDA KENTUCKY MICHIGAN
NEVADA OHIO TENNESSEE TEXAS TORONTO WASHINGTON DC J-2
APPENDIX K FORMS OF CONTINUING DISCLOSURE CERTIFICATES
[THIS PAGE INTENTIONALLY LEFT BLANK] FORM OF CONTINUING DISCLOSURE CERTIFICATE
COUNTY OF INGHAM $______MONTGOMERY DRAIN DRAINAGE DISTRICT DRAIN BONDS, SERIES 2020A (General Obligation Limited Tax)
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the County of Ingham (the “County”) in connection with the issuance by the Montgomery Drain Drainage District, Ingham County, Michigan (the “Issuer”) of its Drain Bonds, Series 2020A (General Obligation Limited Tax) (the “Bonds”). The County covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. (a) This Disclosure Certificate is being executed and delivered by the County for the benefit of the Bondholders and the Beneficial Owners and in order to assist the Participating Underwriter in complying with subsection (b)(5) of the Rule.
(b) In consideration of the purchase and acceptance of any and all of the Bonds by those who shall hold the same or shall own beneficial ownership interests therein from time to time, this Disclosure Certificate shall be deemed to be and shall constitute a contract between the County and the Bondholders and Beneficial Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the County shall be for the benefit of the Bondholders and Beneficial Owners of any and all of the Bonds.
Section 2. Definitions. The following capitalized terms shall have the following meanings: “1934 Act” shall mean the Securities Exchange Act of 1934, as amended.
“Annual Report” shall mean any Annual Report of the County provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person who has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries).
“Bondholder” shall mean the registered owner of any Bonds.
“Dissemination Agent” shall mean the County or any successor Dissemination Agent appointed in writing by the County and which has filed with the County a written acceptance of such appointment.
“EMMA” shall mean the Electronic Municipal Market Access system of the MSRB. As of the date of this Disclosure Certificate, the EMMA Internet Web site address is http://www.emma.msrb.org.
K-1 “Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“GAAP” shall mean generally accepted accounting principles, as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Governmental Accounting Standards Board and in effect from time to time.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the 1934 Act. As of the date of this Disclosure Certificate, the address and telephone and telecopy numbers of the MSRB are as follows:
Municipal Securities Rulemaking Board 1300 I Street NW, Suite 1000 Washington, DC 20005 Tel: 202-838-1500 Fax: 202-898-1500
“Official Statement” shall mean the final Official Statement for the Bonds dated ______, 2020.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the primary offering of the Bonds.
“Rule” shall mean Rule 15c2-12 (17 CFR Part 240, § 240.15c2-12) promulgated by the SEC pursuant to the 1934 Act, as the same may be amended from time to time, together with all interpretive guidances or other official interpretations or explanations thereof that are promulgated by the SEC.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities Counsel” shall mean legal counsel expert in federal securities law.
“State” shall mean the State of Michigan.
Section 3. Provision of Annual Reports. (a) Each year, the County shall provide, or shall cause the Dissemination Agent to provide, not later than the date seven months after the end of the County’s fiscal year, commencing with the County’s Annual Report for its fiscal year ending December 31, 2020, to the MSRB an Annual Report for the preceding fiscal year which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 business days (or such
K-2 lesser number of days as is acceptable to the Dissemination Agent) prior to said date, the County shall provide the Annual Report to the Dissemination Agent (if other than the County). Currently, the County’s fiscal year commences on January 1. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by specific reference other information as provided in Section 4 of this Disclosure Certificate; provided, however, that if the audited financial statements of the County are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements in a format similar to the audited financial statements then most recently prepared for the County shall be included in the Annual Report.
(b) If the County is unable to provide to the MSRB an Annual Report of the County by the date required in subsection (a), the County shall file a notice, in a timely fashion, with the MSRB, in substantially the form attached as Exhibit A.
(c) If the County’s fiscal year changes, the County shall file written notice of such change with the MSRB, in substantially the form attached as Exhibit B.
(d) Whenever any Annual Report or portion thereof is filed as described above, it shall be attached to a cover sheet in substantially the form attached as Exhibit C.
(e) If the Dissemination Agent is other than the County, the Dissemination Agent shall file a report with the County certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided.
(f) In connection with providing the Annual Report, the Dissemination Agent (if other than the County) is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the Annual Report for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order.
Section 4. Content of Annual Reports. The County’s Annual Report shall contain or include by reference the following: (a) The audited financial statements of the County for its fiscal year immediately preceding the due date of the Annual Report.
(b) An update of the financial information and operating data relating to the County of the same nature as that contained in the following tables in Appendix A of the Official Statement: (1) POPULATION; (2) PROPERTY VALUATIONS – History of Valuations; (3) MAJOR TAXPAYERS; (4) TAX RATE LIMITATION; (5) TAX RATES (per $1,000 of Valuation); (6) TAX LEVIES AND COLLECTIONS; (7) PENSION FUND;
K-3 (8) OTHER POST EMPLOYMENT BENEFITS; (9) LABOR FORCE (10) DEBT STATEMENT; and (11) LEGAL DEBT MARGIN.
The County’s financial statements shall be audited and prepared in accordance with GAAP with such changes as may be required from time to time in accordance with State law.
Any or all of the items listed above may be included by specific reference to other documents available to the public on the MSRB’s Internet Web site or filed with the SEC. The County shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events. (a) The County covenants to provide, or cause to be provided, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of ten (10) business days after the occurrence of the event and in accordance with the Rule:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(7) Modifications to rights of security holders, if material;
(8) Bond calls, if material;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the securities, if material;
(11) Rating changes;
(12) Tender offers;
K-4 (13) Bankruptcy, insolvency, receivership or similar event of the obligated person;
(14) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
(15) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(16) Incurrence of a Financial Obligation of the Issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Issuer or obligated person, any of which affect security holders, if material; and
(17) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the Financial Obligation of the Issuer or obligated person, any of which reflect financial difficulties.
(b) Whenever the County obtains knowledge of the occurrence of a Listed Event described in subsection (a)(2), (7), (8), (10), (14), (15), or (16), the County shall as soon as possible determine if such Listed Event would be material under applicable federal securities laws. The County covenants that its determination of materiality will be made in conformance with federal securities laws.
(c) If the County determines that (i) a Listed Event described in subsection (a)(1), (3), (4), (5), (6), (9), (11), (12), (13), or (17) has occurred or (ii) the occurrence of a Listed Event described in subsection (a)(2), (7), (8), (10), (14), (15), or (16) would be material under applicable federal securities laws, the County shall cause a notice of such occurrence to be filed with the MSRB within ten (10) business days of the occurrence of the Listed Event, together with a cover sheet in substantially the form attached as Exhibit D. In connection with providing a notice of the occurrence of a Listed Event described in subsection (a)(9), the County shall include in the notice explicit disclosure as to whether the Bonds have been escrowed to maturity or escrowed to call, as well as appropriate disclosure of the timing of maturity or call.
(d) In connection with providing a notice of the occurrence of a Listed Event, the Dissemination Agent (if other than the County), solely in its capacity as such, is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the notice for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order.
(e) The County acknowledges that the “rating changes” referred to in subsection (a)(11) above may include, without limitation, any change in any rating on the Bonds or other indebtedness for which the County is liable.
K-5 (f) The County acknowledges that it is not required to provide a notice of a Listed Event with respect to credit enhancement when the credit enhancement is added after the primary offering of the Bonds, the County does not apply for or participate in obtaining such credit enhancement, and such credit enhancement is not described in the Official Statement.
Section 6. Mandatory Electronic Filing with EMMA. All filings with the MSRB under this Disclosure Certificate shall be made by electronically transmitting such filings through the EMMA Dataport at http://www.emma.msrb.org as provided by the amendments to the Rule adopted by the SEC in Securities Exchange Act Release No. 59062 on December 5, 2008.
Section 7. Termination of Reporting Obligation. (a) The County’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance or the prior redemption or payment in full of all of the Bonds. If the County’s obligation to pay a portion of the principal of and interest on the Bonds is assumed in full by some other entity, such entity shall be responsible for compliance with this Disclosure Certificate in the same manner as if it were the County, and the County shall have no further responsibility hereunder.
(b) This Disclosure Certificate, or any provision hereof, shall be null and void in the event that the County (i) receives an opinion of Securities Counsel, addressed to the County, to the effect that those portions of the Rule, which require such provisions of this Disclosure Certificate, do not or no longer apply to the Bonds, whether because such portions of the Rule are invalid, have been repealed, amended or modified, or are otherwise deemed to be inapplicable to the Bonds, as shall be specified in such opinion, and (ii) files notice to such effect with the MSRB.
Section 8. Dissemination Agent. The County, from time to time, may appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Except as otherwise provided in this Disclosure Certificate, the Dissemination Agent (if other than the County) shall not be responsible in any manner for the content of any notice or report prepared by the County pursuant to this Disclosure Certificate.
Section 9. Amendment; Waiver. (a) Notwithstanding any other provision of this Disclosure Certificate, this Disclosure Certificate may be amended, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(i) if the amendment or waiver relates to the provisions of Section 3(a), (b), (c), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, a change in law or a change in the identity, nature or status of the County, or type of business conducted by the County;
(ii) this Disclosure Certificate, as so amended or taking into account such waiver, would, in the opinion of Securities Counsel, have complied with the requirements of the
K-6 Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(iii) the amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders.
(b) In the event of any amendment to, or waiver of a provision of, this Disclosure Certificate, the County shall describe such amendment or waiver in the next Annual Report and shall include an explanation of the reason for such amendment or waiver. In particular, if the amendment results in a change to the annual financial information required to be included in the Annual Report pursuant to Section 4 of this Disclosure Certificate, the first Annual Report that contains the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of such change in the type of operating data or financial information being provided. Further, if the annual financial information required to be provided in the Annual Report can no longer be generated because the operations to which it related have been materially changed or discontinued, a statement to that effect shall be included in the first Annual Report that does not include such information.
(c) If the amendment results in a change to the accounting principles to be followed in preparing financial statements as set forth in Section 4 of this Disclosure Certificate, the Annual Report for the year in which the change is made shall include a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of such differences and the impact of the changes on the presentation of the financial information. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in accounting principles shall be filed by the County or the Dissemination Agent (if other than the County) at the written direction of the County with the MSRB.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the County chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the County shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Failure to Comply. In the event of a failure of the County or the Dissemination Agent (if other than the County) to comply with any provision of this Disclosure Certificate, any Bondholder or Beneficial Owner may bring an action to obtain specific performance of the obligations of the County or the Dissemination Agent (if other than the County) under this Disclosure Certificate, but no person or entity shall be entitled to recover monetary damages hereunder under any circumstances, and any failure to comply with the obligations under this Disclosure Certificate shall not constitute a default with respect to the Bonds. Notwithstanding the foregoing, if the alleged failure of the County to comply with this
K-7 Disclosure Certificate is the inadequacy of the information disclosed pursuant hereto, then the Bondholders and the Beneficial Owners (on whose behalf a Bondholder has not acted with respect to this alleged failure) of not less than a majority of the aggregate principal amount of the then outstanding Bonds must take the actions described above before the County shall be compelled to perform with respect to the adequacy of such information disclosed pursuant to this Disclosure Certificate.
Section 12. Duties of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the County, the Dissemination Agent, the Participating Underwriter, the Bondholders and the Beneficial Owners, and shall create no rights in any other person or entity.
Section 14. Transmission of Information and Notices. Unless otherwise required by law or this Disclosure Certificate, and, in the sole determination of the County or the Dissemination Agent, as applicable, subject to technical and economic feasibility, the County or the Dissemination Agent, as applicable, shall employ such methods of information and notice transmission as shall be requested or recommended by the herein-designated recipients of such information and notices.
Section 15. Additional Disclosure Obligations. The County acknowledges and understands that other State and federal laws, including, without limitation, the Securities Act of 1933, as amended, and Rule 10b-5 promulgated by the SEC pursuant to the 1934 Act, may apply to the County, and that under some circumstances, compliance with this Disclosure Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the County under such laws.
Section 16. Governing Law. This Disclosure Certificate shall be construed and interpreted in accordance with the laws of the State, and any suits and actions arising out of this Disclosure Certificate shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the foregoing, to the extent this Disclosure Certificate addresses matters of federal securities laws, including the Rule, this Disclosure Certificate shall be construed and interpreted in accordance with such federal securities laws and official interpretations thereof.
COUNTY OF INGHAM, MICHIGAN
By:
Dated: ______, 2020 Its:
K-8 EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Person: County of Ingham, Michigan
Name of Bond Issue: Montgomery Drain Drainage District’s $______Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of Bonds ______, 2020
NOTICE IS HEREBY GIVEN that the County of Ingham has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of its Continuing Disclosure Certificate with respect to the Bonds. The County of Ingham anticipates that the Annual Report will be filed by ______, ____.
COUNTY OF INGHAM, MICHIGAN
By:
Dated: ______Its:
Exhibit A K-9 EXHIBIT B
NOTICE OF CHANGE IN COUNTY’S FISCAL YEAR
Name of Obligated Person: County of Ingham, Michigan
Name of Bond Issue: Montgomery Drain Drainage District’s $______Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of Bonds ______, 2020
NOTICE IS HEREBY GIVEN that the County of Ingham’s fiscal year has changed. Previously, the County of Ingham’s fiscal year ended on ______. It now ends on ______.
COUNTY OF INGHAM, MICHIGAN
By:
Dated: ______Its:
Exhibit B K-10 EXHIBIT C
ANNUAL REPORT COVER SHEET
This cover sheet and the attached Annual Report or portion thereof should be filed electronically with the Municipal Securities Rulemaking Board through the EMMA Dataport at http://www.emma.msrb.org pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(A) and (B).
Issuer’s /Other Obligated Person’s Name: County of Ingham, Michigan
Issuer’s Six-Digit CUSIP Number(s): or Nine-Digit CUSIP Number(s) to which the attached Annual Report relates:
Number of pages of the attached Annual Report or portion thereof:
Name of Bond Issue to which the attached Annual Report relates: $______Montgomery Drain Drainage District’s Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of such Bonds: ______, 2020
I hereby represent that I am authorized by the Issuer/Other Obligated Person or its agent to distribute this information publicly:
Signature: Name: Title: Employer: Address: County, State, Zip Code: Voice Telephone Number:
Exhibit C K-11
EXHIBIT D
EVENT NOTICE COVER SHEET
This cover sheet and the attached Event Notice should be filed electronically with the Municipal Securities Rulemaking Board through the EMMA Dataport at http://www.emma.msrb.org pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).
Issuer’s and/or Other Obligated Person’s Name: County of Ingham, Michigan Issuer’s Six-Digit CUSIP Number(s): or Nine-Digit CUSIP Number(s) to which the attached Event Notice relates:
Number of pages of the attached Event Notice: Description of the attached Event Notice (Check One):
1. Principal and interest payment delinquencies 2. Non-Payment related defaults 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to rights of securities holders 8. Bond calls 9. Defeasances 10. Release, substitution, or sale of property securing repayment of the securities 11. Rating changes 12. Tender offers 13. Bankruptcy, insolvency, receivership or similar event of an obligated person 14. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of an obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms 15. Appointment of a successor or additional trustee, or the change of name of a trustee 16. Incurrence of a financial obligation of an obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of an obligated person, any of which affect security holders, if material 17. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of an obligated person, any of which reflect financial difficulties 18. Failure to provide annual financial information as required 19. Other material event notice (specify)
I hereby represent that I am authorized by the Issuer/Other Obligated Person or its agent to distribute this information publicly:
Signature: Name: Title: Employer: Address: County, State, Zip Code: Voice Telephone Number:
Please format the Event Notice attached to this cover sheet in 10 point type or larger. Contact the MSRB at (202) 223- 9503 with questions regarding this form or the dissemination of this notice.
Exhibit D K-12
FORM OF CONTINUING DISCLOSURE UNDERTAKING
This Continuing Disclosure Undertaking (the “Undertaking”) is executed and delivered by the City of Lansing, counties of Ingham and Eaton, State of Michigan (the “City”) in connection with the issuance by the Montgomery Drain Drainage District, Ingham County, Michigan (the “Issuer”) of its Drain Bonds, Series 2020A (General Obligation Limited Tax) (the “Bonds”). The City covenants and agrees for the benefit of the Bondholders, as hereinafter defined, as follows:
(a) Purpose of the Disclosure Undertaking. This Undertaking is being executed and delivered by the City for the benefit of the Bondholders and in order to assist the Participating Underwriter in complying with section (b)(5) of the Rule. In consideration of the purchase and acceptance of any and all of the Bonds by those who shall hold the same or shall own beneficial ownership interests therein from time to time, this Undertaking shall be deemed to be and shall constitute a contract between the City and the Bondholders from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the City shall be for the benefit of the Bondholders of any and all of the Bonds.
(b) Definitions. The following terms used herein shall have the following meanings:
“Audited Financial Statements” means the City’s audited financial statements prepared by an individual or firm of independent certified public accountants as required by Act 2, Public Acts of Michigan, 1968, as amended, which presently requires preparation in accordance with generally accepted accounting principles.
“Bondholders” mean the registered owner of any Bond or any person (i) with the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including any person holding a Bond through a nominee, depository or other intermediary) or (ii) treated as the owner of any Bond for federal income tax purposes.
“Disclosure Representative” means the Finance Director of the City or such director’s designee, or such other officer, employee, or agent as the City shall designate from time to time in writing.
“EMMA” means the MSRB’s Electronic Municipal Market Access System.
“MSRB” means the Municipal Securities Rulemaking Board.
“Official Statement” means the final Official Statement for the Bonds dated August , 2020.
“Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with the primary offering of the Bonds.
“Rule” means Rule 15c2-12 promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended.
“SEC” means the United States Securities and Exchange Commission.
“Unaudited Financial Statements” means the same as Audited Financial Statements, except that they shall not have been audited by an individual or firm of independent certified public accountants.
K-13
(c) Continuing Disclosure. The City hereby agrees, in accordance with the provisions of the Rule, to provide or cause to be provided to the MSRB through EMMA, on or before the last day of the sixth (6th) month following the end of the fiscal year of the City, commencing with the fiscal year ended June 30, 2020, in an electronic format as prescribed by the MSRB:
(1) Certain annual financial information and operating data reasonably available to the City in form and substance similar to the information appearing in the tables under the headings in the Official Statement as described below:
(a) APPENDIX D: GENERAL FINANCIAL INFORMATION – Historical Valuation;
(b) APPENDIX D: GENERAL FINANCIAL INFORMATION – Major Taxpayers;
(c) APPENDIX D: GENERAL FINANCIAL INFORMATION – Tax Rates (Per $1,000 of Valuation);
(d) APPENDIX D: GENERAL FINANCIAL INFORMATION – Tax Levies and Collections;
(e) APPENDIX D: GENERAL FINANCIAL INFORMATION – City Income Tax;
(f) APPENDIX D: GENERAL FINANCIAL INFORMATION – Revenues from the State of Michigan;
(g) APPENDIX D: GENERAL FINANCIAL INFORMATION – Labor Force;
(h) APPENDIX D: GENERAL FINANCIAL INFORMATION – Employees Retirement System;
(i) APPENDIX D: GENERAL FINANCIAL INFORMATION –Police and Fire Retirement System;
(j) APPENDIX D: GENERAL FINANCIAL INFORMATION – Debt Statement - Direct Debt; and
(k) APPENDIX E: GENERAL FINANCIAL INFORMATION – General Fund Budget Summary.
(2) The Audited Financial Statements. Provided, however, that if the Audited Financial Statements are not available by the date specified above, they shall be provided when available and Unaudited financial statements will be filed by such date and the Audited Financial Statements will be filed as soon as available.
(3) Such additional financial information or operating data as may be determined by the City and its advisors as desirable or necessary to comply with the Rule.
Such annual financial information and operating data described above are expected to be provided by the City or by specific reference to other documents available to the public through EMMA or filed with the SEC, including official statements of debt issues of the City or related public entities.
If the fiscal year of the City is changed, the City shall send notice of such change to the MSRB through EMMA prior to the earlier of the ending date of the fiscal year prior to such change or the ending date of the fiscal year as changed.
K-14
(d) Notice of Failure to Disclose. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB through EMMA, notice of a failure by the City to provide the annual financial information with respect to the City described in section (c) above on or prior to the dates set forth in section (c) above.
(e) Occurrence of Events. The City agrees to provide or cause to be provided notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of ten (10) business days after the occurrence of the event and in accordance with the Rule:
(1) Rating changes, with respect to ratings of the City’s general obligation bonds;
(2) Bankruptcy, insolvency, receivership or similar event of the City, which is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City;
(3) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
(4) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of City, any of which affect security holders, if material; and
(5) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City, any of which reflect financial difficulties.
(f) Materiality Determined Under Federal Securities Laws. The City agrees that its determination of whether any event listed in section (e) is material shall be made in accordance with federal securities laws.
(g) Termination of Reporting Obligation. The obligation of the City to provide annual financial information and notices of material events, as set forth above, shall be terminated if and when the City no longer remains an obligated person with respect to the Bonds within the meaning of the Rule, including upon legal defeasance of all Bonds.
K-15
(h) Benefit of Bondholders. The City agrees that its undertaking pursuant to the Rule set forth in this Undertaking is intended to be for the benefit of the Bondholders and shall be enforceable by any Bondholder; provided that, the right to enforce the provisions of this Undertaking shall be limited to a right to obtain specific enforcement of the City’s obligations hereunder and any failure by the City to comply with the provisions of this Undertaking shall not constitute a default or an event of default with respect to the Bonds.
(i) Amendments to the Undertaking. Amendments may be made in the specific types of information provided or the format of the presentation of such information to the extent deemed necessary or appropriate in the judgment of the Disclosure Representative on behalf of the City, provided that the City agrees that any such amendment will be adopted procedurally and substantively in a manner consistent with the Rule, including, any interpretations thereof by the SEC, which, to the extent applicable, are incorporated herein by reference. Such interpretations currently include the requirements that (a) the amendment may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the City or the type of activities conducted thereby, (b) the undertaking, as amended, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (c) the amendment does not materially impair the interests of Bondholders, as determined by parties unaffiliated with the City (such as independent legal counsel), but such interpretations may be changed in the future. If the accounting principles to be followed by the City in preparing the Audited Financial Statements are modified, the annual financial information for the year in which the change is made shall present a comparison between the financial statements as prepared on the prior basis and the statements as prepared on the new basis, and otherwise shall comply with the requirements of the Rule, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. A notice of the change in accounting principles shall be sent to the MSRB through EMMA.
(j) Additional Information. Nothing in this Undertaking shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Undertaking or any other means of communication, or including any other information in any annual financial information or notice of occurrence of a material event, in addition to that which is required by this Undertaking.
(k) Governing Law. This Undertaking shall be construed and interpreted in accordance with the laws of the State of Michigan, and any suits and actions arising out of this Undertaking shall be instituted in a court of competent jurisdiction in the State of Michigan; provided, that to the extent this Undertaking addresses matters of federal securities laws, including the Rule, this Undertaking shall be construed in accordance with such federal securities laws and official interpretations thereof.
IN WITNESS WHEREOF, the City has caused this Undertaking to be executed by its authorized officer.
CITY OF LANSING Counties of Ingham and Eaton State of Michigan
By
Its:
Dated:
K-16 CONTINUING DISCLOSURE CERTIFICATE
CHARTER TOWNSHIP OF LANSING $______MONTGOMERY DRAIN DRAINAGE DISTRICT DRAIN BONDS, SERIES 2020A (General Obligation Limited Tax)
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Charter Township of Lansing (the “Township”) in connection with the issuance by the Montgomery Drain Drainage District, Ingham County, Michigan (the “Issuer”) of its Drain Bonds, Series 2020A (General Obligation Limited Tax) (the “Bonds”). The Township covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. (a) This Disclosure Certificate is being executed and delivered by the Township for the benefit of the Bondholders and the Beneficial Owners and in order to assist the Participating Underwriter in complying with subsection (b)(5) of the Rule.
(b) In consideration of the purchase and acceptance of any and all of the Bonds by those who shall hold the same or shall own beneficial ownership interests therein from time to time, this Disclosure Certificate shall be deemed to be and shall constitute a contract between the Township and the Bondholders and Beneficial Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Township shall be for the benefit of the Bondholders and Beneficial Owners of any and all of the Bonds.
Section 2. Definitions. The following capitalized terms shall have the following meanings:
“1934 Act” shall mean the Securities Exchange Act of 1934, as amended.
“Annual Report” shall mean any Annual Report of the Township provided by the Township pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person who has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including any person holding Bonds through nominees, depositories or other intermediaries).
“Bondholder” shall mean the registered owner of any Bonds.
“Dissemination Agent” shall mean the Township or any successor Dissemination Agent appointed in writing by the Township and which has filed with the Township a written acceptance of such appointment.
K-17 “EMMA” shall mean the Electronic Municipal Market Access system of the MSRB. As of the date of this Disclosure Certificate, the EMMA Internet Web site address is http://www.emma.msrb.org.
“Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, and existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“GAAP” shall mean generally accepted accounting principles, as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Governmental Accounting Standards Board and in effect from time to time.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the 1934 Act. As of the date of this Disclosure Certificate, the address and telephone and telecopy numbers of the MSRB are as follows:
Municipal Securities Rulemaking Board 1300 I Street NW, Suite 1000 Washington, DC 20005 Tel: 202-838-1500 Fax: 202-898-1500
“Official Statement” shall mean the final Official Statement for the Bonds dated ______, 2020.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the primary offering of the Bonds.
“Rule” shall mean Rule 15c2-12 (17 CFR Part 240, § 240.15c2-12) promulgated by the SEC pursuant to the 1934 Act, as the same may be amended from time to time, together with all interpretive guidances or other official interpretations or explanations thereof that are promulgated by the SEC.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities Counsel” shall mean legal counsel expert in federal securities law.
“State” shall mean the State of Michigan.
Section 3. Provision of Annual Reports. (a) Each year, the Township shall provide, or shall cause the Dissemination Agent to provide, not later than the date seven months after the end of the Township’s fiscal year,
K-18 commencing with the Township’s Annual Report for its fiscal year ending December 31, 2020, to the MSRB an Annual Report for the preceding fiscal year which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 business days (or such lesser number of days as is acceptable to the Dissemination Agent) prior to said date, the Township shall provide the Annual Report to the Dissemination Agent (if other than the Township). Currently, the Township’s fiscal year commences on January 1. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by specific reference other information as provided in Section 4 of this Disclosure Certificate; provided, however, that if the audited financial statements of the Township are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements in a format similar to the audited financial statements then most recently prepared for the Township shall be included in the Annual Report.
(b) If the Township is unable to provide to the MSRB an Annual Report of the Township by the date required in subsection (a), the Township shall file a notice, in a timely fashion, with the MSRB, in substantially the form attached as Exhibit A.
(c) If the Township’s fiscal year changes, the Township shall file written notice of such change with the MSRB, in substantially the form attached as Exhibit B.
(d) Whenever any Annual Report or portion thereof is filed as described above, it shall be attached to a cover sheet in substantially the form attached as Exhibit C.
(e) If the Dissemination Agent is other than the Township, the Dissemination Agent shall file a report with the Township certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided.
(f) In connection with providing the Annual Report, the Dissemination Agent (if other than the Township) is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the Annual Report for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order.
Section 4. Content of Annual Reports. The Township’s Annual Report shall contain or include by reference the following:
(a) The audited financial statements of the Township for its fiscal year immediately preceding the due date of the Annual Report.
(b) An update of the financial information and operating data relating to the Township of the same nature as that contained in the following tables in Appendix D of the Official Statement: Property Valuations – History of Valuations and Valuation Composition; Major Taxpayers; Tax Rates (Per $1,000 of Valuation); Tax Levies and Collections; and Debt Statement – Direct Debt and Legal Debt Margin.
The Township’s financial statements shall be audited and prepared in accordance with GAAP with such changes as may be required from time to time in accordance with State law.
K-19 Any or all of the items listed above may be included by specific reference to other documents available to the public on the MSRB’s Internet Web site or filed with the SEC. The Township shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events. (a) The Township covenants to provide, or cause to be provided, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of ten (10) business days after the occurrence of the event and in accordance with the Rule:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(7) Modifications to rights of security holders, if material;
(8) Bond calls, if material;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the securities, if material;
(11) Rating changes;
(12) Tender offers;
(13) Bankruptcy, insolvency, receivership or similar event of the obligated person;
(14) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
K-20 (15) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(16) Incurrence of a financial obligation of the Issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Issuer or obligated person, any of which affect security holders, if material; and
(17) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the Financial Obligation of the Issuer or obligated person, any of which reflect financial difficulties.
(b) Whenever the Township obtains knowledge of the occurrence of a Listed Event described in subsection (a)(2), (7), (8), (10), (14), (15), or (16), the Township shall as soon as possible determine if such Listed Event would be material under applicable federal securities laws. The Township covenants that its determination of materiality will be made in conformance with federal securities laws.
(c) If the Township determines that (i) a Listed Event described in subsection (a)(1), (3), (4), (5), (6), (9), (11), (12), (13), or (17) has occurred or (ii) the occurrence of a Listed Event described in subsection (a)(2), (7), (8), (10), (14), (15), or (16) would be material under applicable federal securities laws, the Township shall cause a notice of such occurrence to be filed with the MSRB within ten (10) business days of the occurrence of the Listed Event, together with a cover sheet in substantially the form attached as Exhibit D. In connection with providing a notice of the occurrence of a Listed Event described in subsection (a)(9), the Township shall include in the notice explicit disclosure as to whether the Bonds have been escrowed to maturity or escrowed to call, as well as appropriate disclosure of the timing of maturity or call.
(d) In connection with providing a notice of the occurrence of a Listed Event, the Dissemination Agent (if other than the Township), solely in its capacity as such, is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the notice for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order.
(e) The Township acknowledges that the “rating changes” referred to in subsection (a)(11) above may include, without limitation, any change in any rating on the Bonds or other indebtedness for which the Township is liable.
(f) The Township acknowledges that it is not required to provide a notice of a Listed Event with respect to credit enhancement when the credit enhancement is added after the primary offering of the Bonds, the Township does not apply for or participate in obtaining such credit enhancement, and such credit enhancement is not described in the Official Statement.
Section 6. Mandatory Electronic Filing with EMMA. All filings with the MSRB under this Disclosure Certificate shall be made by electronically transmitting such filings through the EMMA Dataport at
K-21 http://www.emma.msrb.org as provided by the amendments to the Rule adopted by the SEC in Securities Exchange Act Release No. 59062 on December 5, 2008.
Section 7. Termination of Reporting Obligation. (a) The Township’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance or the prior redemption or payment in full of all of the Bonds. If the Township’s obligation to pay a portion of the principal of and interest on the Bonds is assumed in full by some other entity, such entity shall be responsible for compliance with this Disclosure Certificate in the same manner as if it were the Township, and the Township shall have no further responsibility hereunder.
(b) This Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Township (i) receives an opinion of Securities Counsel, addressed to the Township, to the effect that those portions of the Rule, which require such provisions of this Disclosure Certificate, do not or no longer apply to the Bonds, whether because such portions of the Rule are invalid, have been repealed, amended or modified, or are otherwise deemed to be inapplicable to the Bonds, as shall be specified in such opinion, and (ii) files notice to such effect with the MSRB.
Section 8. Dissemination Agent. The Township, from time to time, may appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Except as otherwise provided in this Disclosure Certificate, the Dissemination Agent (if other than the Township) shall not be responsible in any manner for the content of any notice or report prepared by the Township pursuant to this Disclosure Certificate.
Section 9. Amendment; Waiver. (a) Notwithstanding any other provision of this Disclosure Certificate, this Disclosure Certificate may be amended, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(i) if the amendment or waiver relates to the provisions of Section 3(a), (b), (c), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, a change in law or a change in the identity, nature or status of the Township, or type of business conducted by the Township;
(ii) this Disclosure Certificate, as so amended or taking into account such waiver, would, in the opinion of Securities Counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(iii) the amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders.
(b) In the event of any amendment to, or waiver of a provision of, this Disclosure Certificate, the Township shall describe such amendment or waiver in the next Annual Report and shall include an explanation of the reason for such amendment or waiver. In particular, if
K-22 the amendment results in a change to the annual financial information required to be included in the Annual Report pursuant to Section 4 of this Disclosure Certificate, the first Annual Report that contains the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of such change in the type of operating data or financial information being provided. Further, if the annual financial information required to be provided in the Annual Report can no longer be generated because the operations to which it related have been materially changed or discontinued, a statement to that effect shall be included in the first Annual Report that does not include such information.
(c) If the amendment results in a change to the accounting principles to be followed in preparing financial statements as set forth in Section 4 of this Disclosure Certificate, the Annual Report for the year in which the change is made shall include a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of such differences and the impact of the changes on the presentation of the financial information. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in accounting principles shall be filed by the Township or the Dissemination Agent (if other than the Township) at the written direction of the Township with the MSRB.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Township from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Township chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Township shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Failure to Comply. In the event of a failure of the Township or the Dissemination Agent (if other than the Township) to comply with any provision of this Disclosure Certificate, any Bondholder or Beneficial Owner may bring an action to obtain specific performance of the obligations of the Township or the Dissemination Agent (if other than the Township) under this Disclosure Certificate, but no person or entity shall be entitled to recover monetary damages hereunder under any circumstances, and any failure to comply with the obligations under this Disclosure Certificate shall not constitute a default with respect to the Bonds. Notwithstanding the foregoing, if the alleged failure of the Township to comply with this Disclosure Certificate is the inadequacy of the information disclosed pursuant hereto, then the Bondholders and the Beneficial Owners (on whose behalf a Bondholder has not acted with respect to this alleged failure) of not less than a majority of the aggregate principal amount of the then outstanding Bonds must take the actions described above before the Township shall be compelled to perform with respect to the adequacy of such information disclosed pursuant to this Disclosure Certificate.
Section 12. Duties of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate.
K-23 Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Township, the Dissemination Agent, the Participating Underwriter, the Bondholders and the Beneficial Owners, and shall create no rights in any other person or entity.
Section 14. Transmission of Information and Notices. Unless otherwise required by law or this Disclosure Certificate, and, in the sole determination of the Township or the Dissemination Agent, as applicable, subject to technical and economic feasibility, the Township or the Dissemination Agent, as applicable, shall employ such methods of information and notice transmission as shall be requested or recommended by the herein-designated recipients of such information and notices.
Section 15. Additional Disclosure Obligations. The Township acknowledges and understands that other State and federal laws, including, without limitation, the Securities Act of 1933, as amended, and Rule 10b-5 promulgated by the SEC pursuant to the 1934 Act, may apply to the Township, and that under some circumstances, compliance with this Disclosure Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Township under such laws.
Section 16. Governing Law. This Disclosure Certificate shall be construed and interpreted in accordance with the laws of the State, and any suits and actions arising out of this Disclosure Certificate shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the foregoing, to the extent this Disclosure Certificate addresses matters of federal securities laws, including the Rule, this Disclosure Certificate shall be construed and interpreted in accordance with such federal securities laws and official interpretations thereof.
CHARTER TOWNSHIP OF LANSING
By:
Dated: ______, 2020 Its: ______
K-24 EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Person: Charter Township of Lansing, Michigan
Name of Bond Issue: Montgomery Drain Drainage District’s $______Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of Bonds ______, 2020
NOTICE IS HEREBY GIVEN that the Charter Township of Lansing has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of its Continuing Disclosure Certificate with respect to the Bonds. The Charter Township of Lansing anticipates that the Annual Report will be filed by ______, ____.
CHARTER TOWNSHIP OF LANSING
By:
Dated: ______Its:
Exhibit A K-25 EXHIBIT B
NOTICE OF CHANGE IN TOWNSHIP’S FISCAL YEAR
Name of Obligated Person: Charter Township of Lansing, Michigan
Name of Bond Issue: Montgomery Drain Drainage District’s $______Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of Bonds ______, 2020
NOTICE IS HEREBY GIVEN that the Charter Township of Lansing’s fiscal year has changed. Previously, the Charter Township of Lansing’s fiscal year ended on ______. It now ends on ______.
CHARTER TOWNSHIP OF LANSING
By:
Dated: ______Its:
Exhibit B K-26 EXHIBIT C
ANNUAL REPORT COVER SHEET
This cover sheet and the attached Annual Report or portion thereof should be filed electronically with the Municipal Securities Rulemaking Board through the EMMA Dataport at http://www.emma.msrb.org pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(A) and (B).
Issuer’s /Other Obligated Person’s Name: Charter Township of Lansing
Issuer’s Six-Digit CUSIP Number(s): or Nine-Digit CUSIP Number(s) to which the attached Annual Report relates:
Number of pages of the attached Annual Report or portion thereof:
Name of Bond Issue to which the attached Annual Report relates: Montgomery Drain Drainage District’s Drain Bonds, Series 2020A (General Obligation Limited Tax)
Date of such Bonds: ______, 2020
I hereby represent that I am authorized by the Issuer/Other Obligated Person or its agent to distribute this information publicly:
Signature: Name: Title: Employer: Address: Township, State, Zip Code: Voice Telephone Number:
Exhibit C K-27
EXHIBIT D
EVENT NOTICE COVER SHEET
This cover sheet and the attached Event Notice should be filed electronically with the Municipal Securities Rulemaking Board through the EMMA Dataport at http://www.emma.msrb.org pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).
Issuer’s and/or Other Obligated Person’s Name: Charter Township of Lansing Issuer’s Six-Digit CUSIP Number(s): or Nine-Digit CUSIP Number(s) to which the attached Event Notice relates:
Number of pages of the attached Event Notice: Description of the attached Event Notice (Check One):
1. Principal and interest payment delinquencies 2. Non-Payment related defaults 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to rights of securities holders 8. Bond calls 9. Defeasances 10. Release, substitution, or sale of property securing repayment of the securities 11. Rating changes 12. Tender offers 13. Bankruptcy, insolvency, receivership or similar event of an obligated person 14. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of an obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms 15. Appointment of a successor or additional trustee, or the change of name of a trustee 16. Incurrence of a financial obligation of an obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of an obligated person, any of which affect security holders, if material 17. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of an obligated person, any of which reflect financial difficulties 18. Failure to provide annual financial information as required 19. Other material event notice (specify)
I hereby represent that I am authorized by the Issuer/Other Obligated Person or its agent to distribute this information publicly:
Signature: Name: Title: Employer: Address: Township, State, Zip Code: Voice Telephone Number:
Please format the Event Notice attached to this cover sheet in 10 point type or larger. Contact the MSRB at (202) 223- 9503 with questions regarding this form or the dissemination of this notice.
Exhibit D K-28
APPENDIX L DRAFT NOTICE OF SALE
[THIS PAGE INTENTIONALLY LEFT BLANK] OFFICIAL NOTICE OF SALE $29,395,000 *(Subject to adjustment as described below) MONTGOMERY DRAIN DRAINAGE DISTRICT (County of Ingham, State of Michigan) DRAIN BONDS, SERIES 2020A (General Obligation Limited Tax) SEALED BIDS for the purchase of the above bonds (the “Bonds”) will be received by an agent of the undersigned on the 25th day of August, 2020, until 1:30 p.m., Eastern Time, at the offices of the Ingham County Drain Commissioner, 707 Buhl Avenue, Mason, Michigan 48854, at which time they will be publicly opened and read. Bids also will be received on the same date and until the same time by an agent of the undersigned by the Municipal Advisory Council of Michigan (the "MAC"). Signed bids may be submitted to the MAC by email only at [email protected], but no bid will be received after the time for receiving bids specified above and the bidder bears all risks of transmission failure. Signed bids may be submitted by fax to the Ingham County Drain Commissioner at fax number (517) 676-8364, but no bid will be received after the time for receiving bids specified above and the bidder bears all risks of transmission failure. IN THE ALTERNATIVE: Bids may be submitted electronically via PARITY pursuant to this Notice on the same date and until the same time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Notice, the terms of this Notice shall control. For further information about PARITY, potential bidders may contact PFM Financial Advisors LLC (the “Municipal Advisor”) at (734) 994-9700 or PARITY at (212) 849-5021. BOND DETAILS: The Bonds will be fully registered bonds of the denomination of $5,000 each or any integral multiple thereof not exceeding the aggregate principal amount for each maturity at the option of the purchaser thereof, dated the date of delivery thereof, and will bear interest from their date payable on February 1, 2021, and semiannually thereafter. The Bonds will mature on the first day of August as follows (provided, however, that the amounts set forth below may be adjusted as described under “ADJUSTMENT IN PRINCIPAL AMOUNT” herein): Year Principal Amount Year Principal Amount 2021 $645,000 2036 $ 950,000 2022 605,000 2037 980,000 2023 625,000 2038 1,010,000 2024 645,000 2039 1,050,000 2025 660,000 2040 1,085,000 2026 690,000 2041 1,115,000 2027 715,000 2042 1,160,000 2028 735,000 2043 1,200,000 2029 755,000 2044 1,245,000 2030 785,000 2045 1,285,000 2031 810,000 2046 1,335,000 2032 835,000 2047 1,380,000 2033 865,000 2048 1,425,000 2034 890,000 2049 1,475,000 2035 915,000 2050 1,525,000
L-1 ADJUSTMENT IN PRINCIPAL AMOUNT: Following receipt of bids and prior to final award, the Drainage District reserves the right to increase or decrease the principal amount of the Bonds. Such adjustment, if necessary, will be made in increments of $5,000, and may be made in one or more maturities. The purchase price will be adjusted proportionately to the increase or decrease in the principal amount of the Bonds, but the interest rates specified by the successful bidder will not change. The successful bidder may not withdraw its bid as a result of any changes made as provided in this paragraph.
TERM BOND OPTION: Bidders shall have the option of designating Bonds as serial bonds or term bonds, or both. The bid must designate whether each of the principal amounts shown above for the years 2021 through final maturity represents a serial maturity or a mandatory redemption requirement for a term bond maturity. There may be more than one term bond designated. In any event, the above principal amount scheduled for the years 2021 through final maturity shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination of both. Any such designation must be made within twenty-four (24) hours of the sale. PRIOR REDEMPTION: A. Mandatory Redemption. Bonds designated as term bonds shall be subject to mandatory redemption at par and accrued interest on the dates and in the amounts corresponding to the annual principal maturities hereinbefore set forth. The Bonds or portions of Bonds to be redeemed shall be selected by lot. B. Optional Redemption. Bonds maturing on or prior to August 1, 2027, are not subject to redemption prior to maturity. Bonds maturing on and after August 1, 2028, are subject to redemption prior to maturity, at the option of the Montgomery Drain Drainage District (the “Drainage District”), in such order as determined by the Drainage District, in whole or in part, on any date, on and after August 1, 2027, in integral multiples of $5,000 and by lot within a maturity, at the par value of the bond or portion of the bond called to be redeemed, plus accrued interest to the redemption date, but without premium. C. Notice of Redemption. Not less than thirty days' notice of redemption shall be given by first class mail to the registered owner at the registered address. Failure to receive notice of redemption shall not affect the validity of the proceedings for redemption. Bonds or portions of Bonds called for redemption shall not bear interest after the redemption date; provided, funds are on hand with the bond registrar and paying agent to redeem the Bonds called for redemption. INTEREST RATE AND BIDDING DETAILS: The Bonds shall bear interest at a rate or rates not exceeding 5% per annum, to be fixed by the bids therefor, expressed in multiples of 1/8 or 1/100 of l%, or both. The interest on any one bond shall be at one rate only and all Bonds maturing in any one year must carry the same interest rate. The difference between the highest and lowest interest rate on the Bonds shall not exceed 3 percentage points. The interest rate borne by Bonds maturing in any one year shall not be less than the interest rate borne by Bonds maturing in the preceding year. No proposal for the purchase of less than all of the Bonds or at a price less than 99% or more than 102% of their par value will be considered. BOOK-ENTRY ONLY: At the option of the purchaser, the Bonds will be issued in book-entry- only form as one fully registered bond per maturity and will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Purchase of the Bonds will be made in book-entry- only form, in the denomination of $5,000 or any integral multiple thereof. Purchasers will not receive certificates representing their interest in Bonds purchased. The book-entry-only system
L-2 is described further in the preliminary official statement for the Bonds. If requested by the purchaser of the Bonds and determined by an Authorized Officer of the Drainage District, the Bonds may be issued in the form of a single Bond with an exhibit containing the principal maturity amounts and applicable interest rates and due dates. BOND REGISTRAR AND PAYING AGENT: The Bonds shall be payable as to principal in lawful money of the United States upon surrender thereof at the principal office of The Huntington National Bank, Grand Rapids, Michigan, the bond registrar and paying agent. Interest shall be paid to the registered owner of each bond as shown on the registration books at the close of business on the 15th day of the calendar month preceding the month in which the interest payment is due. Interest shall be paid when due by check or draft drawn upon and mailed by the bond registrar and paying agent to the registered owner at the registered address. As long as DTC, or its nominee Cede & Co., is the registered owner of the Bonds, payments will be made directly to such registered owner. Disbursement of such payments to DTC participants is the responsibility of DTC and disbursement of such payments to the beneficial owners of the Bonds is the responsibility of DTC participants and indirect participants as described in the preliminary official statement for the Bonds. The Drainage District may from time to time as required designate a successor bond registrar and paying agent. Alternatively, an authorized officer of the Drainage District may serve as bond registrar and paying agent for the Bonds. PURPOSE AND SECURITY: The Bonds are to be issued pursuant to the provisions of Chapter 20 of Act 40, Public Acts of Michigan, 1956, as amended, to defray part of the cost of constructing improvements to the Montgomery Drain. The Bonds are to be issued in anticipation of, and the principal and interest thereon are primarily payable from, collections of special assessments assessed against public corporations in the Drainage District and the interest thereon. The full faith and credit of the Drainage District have been pledged for the prompt payment of the Bonds and the interest thereon as the same become due. FULL FAITH AND CREDIT OF COUNTY: Pursuant to a resolution adopted by its Board of Commissioners, the County of Ingham (the “County”) has pledged its full faith and credit as additional security for the payment of the principal of and interest on the Bonds. In the event and to the extent that moneys required to pay such principal and interest are not collected from the aforementioned special assessments, the County is obligated to advance from its general fund moneys sufficient to pay such principal and interest. The County’s ability to raise such funds is subject to constitutional and statutory limitations on the taxing power of the County. GOOD FAITH: A certified or cashier’s check drawn upon an incorporated bank or trust company, or wire transfer, in an amount equal to 1% of the principal amount of the Bonds and payable to the order of the Treasurer of the County of Ingham will be required of the successful bidder. The successful bidder is required to submit its good faith deposit to the Treasurer of the County of Ingham as instructed by the Drainage District or its Registered Municipal Advisor referred to below not later than Noon, prevailing Eastern Time, on the next business day following the award. The good faith deposit will be applied to the purchase price of the Bonds, and payment of the balance of the purchase price of the Bonds shall be made at the closing. In the event the successful bidder fails to honor its accepted bid, the good faith deposit will be retained by the Drainage District. AWARD OF BONDS: The Bonds will be awarded to the bidder whose bid produces the lowest true interest cost to the Drainage District. True interest cost shall be computed by determining the annual interest rate (compounded semiannually) necessary to discount the debt service payments on the Bonds from the payment dates thereof to September 8, 2020, and to the price bid, excluding accrued interest.
L-3 LEGAL OPINION: Bids shall be conditioned upon the approving opinion of Dickinson Wright PLLC, attorneys of Grand Rapids, Michigan, the original of which will be furnished without expense to the purchaser of the Bonds at the delivery thereof. The fees of Dickinson Wright PLLC for services rendered in connection with such approving opinion are expected to be paid from bond proceeds. Except to the extent necessary to issue its approving opinion as to the validity of the above Bonds, Dickinson Wright PLLC has made no inquiry as to any financial information, statements or materials contained in any financial documents, statements or materials that have been or may be furnished in connection with the authorization, issuance or marketing of the Bonds, and accordingly will not express any opinion with respect to the accuracy or completeness of any such financial information, statements or materials. By submitting a bid, the bidder consents to the engagement of Dickinson Wright PLLC as bond counsel to the Drainage District notwithstanding any representation of the bidder by such firm in matters unrelated to the issuance of the Bonds. TAX MATTERS: The approving opinion of bond counsel will include an opinion to the effect that under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax. The opinion set forth above will be subject to the condition that the Drainage District comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds. The Drainage District has covenanted to comply with all such requirements. Bond counsel will express no opinion regarding other federal tax consequences arising with respect to the Bonds. The Drainage District HAS NOT designated the Bonds as “qualified tax exempt obligations” for purposes of Section 265(b)(3) of the Code. If the winning bidder will obtain a municipal bond insurance policy or other credit enhancement for the Bonds in connection with their original issuance at its expense, the winning bidder will be required, as a condition of delivery of the Bonds, to certify that the premium therefor will be less than the present value of the interest expected to be saved as a result of such insurance or other credit enhancement. The form of an acceptable certificate will be provided by bond counsel. In addition, the approving opinion of bond counsel will include an opinion to the effect that under existing law, the Bonds and the interest thereon are exempt from all taxation by the State of Michigan or a political subdivision thereof, except estate taxes and taxes on gains realized from the sale, payment or other disposition thereof. ISSUE PRICE: The winning bidder shall assist the Drainage District in establishing the issue price of the Bonds and shall execute and deliver to the Drainage District at Closing an “issue price” or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form provided by Bond Counsel, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the Drainage District and Bond Counsel. All actions to be taken by the Drainage District under this Notice of Sale to establish the issue price of the Bonds may be taken on behalf of the Drainage District by the Drainage District’s Municipal Advisor identified herein and any notice or report to be provided to the Drainage District may be provided to the Drainage District’s Municipal Advisor.
L-4 The Drainage District intends that the provisions of Treasury Regulation Section 1.148- 1(f)(3)(i) (defining “competitive sale” for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the “competitive sale requirements”) because: (1) the Drainage District is disseminating this Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (2) all bidders shall have an equal opportunity to bid; (3) the Drainage District anticipates receiving bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and (4) the Drainage District anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the Bonds at the lowest true interest cost, as set forth in this Notice of Sale. Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in the bid. In the event that competitive sale requirements are satisfied, the winning bidder shall be expected to certify as to the reasonably expected initial offering price of the Bonds to the public. In the event that the competitive sale requirements are not satisfied, the Drainage District shall so advise the winning bidder. The Drainage District shall treat (i) the first price at which 10% of a maturity of the Bonds (the “10% test”) is sold to the public as of the sale date as the issue price of that maturity and (ii) the initial offering price to the public as of the sale date of any maturity of the Bonds not satisfying the 10% test as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”), in each case applied on a maturity-by-maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the Drainage District if any maturity of the Bonds satisfies the 10% test as of the date and time of the award of the Bonds. Any maturity of the Bonds (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity) that does not satisfy the 10% test as of the date and time of the award of the Bonds shall be subject to the hold-the-offering-price rule. Bids will not be subject to cancellation in the event that any maturity of the Bonds is subject to the hold-the-offering- price rule. Bidders should prepare their bids on the assumption that some or all of the maturities of the Bonds will be subject to the hold-the-offering-price rule in order to establish the issue price of the Bonds. By submitting a bid, each bidder confirms that, except as otherwise provided in its bid, it has an established industry reputation for underwriting new issuances of municipal bonds, and, further, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold-the-offering-price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
L-5 The winning bidder shall promptly advise the Drainage District when the underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. The Drainage District acknowledges that, in making the representation set forth above, the winning bidder will rely on (i) the agreement of each underwriter to comply with the hold- the-offering-price rule, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the- offering-price rule, as set forth in the retail distribution agreement and the related pricing wires. The Drainage District further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold-the-offering-price rule and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Bonds. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to comply with the hold-the-offering-price rule if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to comply with the hold-the-offering-price rule if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Bonds to any person that is a related party to an underwriter shall not constitute sales to the public for purposes of this Notice of Sale. Further, for purposes of this Notice of Sale: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Drainage District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least
L-6 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) “sale date” means the date that the Bonds are awarded by the Drainage District to the winning bidder. OFFICIAL STATEMENT: A copy of the Drainage District’s preliminary official statement relating to the Bonds may be obtained by contacting the Municipal Advisor at the address referred to below. The preliminary official statement is in a form deemed final by the Drainage District for purposes of paragraph (b)(1) of SEC Rule 15c2-12 (the “Rule”), but is subject to revision, amendment and completion in a final official statement. After the award of the Bonds, the Drainage District will provide on a timely basis copies of a final official statement, as that term is defined in paragraph (f)(3) of the Rule, at the Drainage District’s expense in sufficient quantity to enable the successful bidder or bidders to comply with paragraphs (b)(3) and (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board. Requests for such additional copies of the final official statement shall be made to the Municipal Advisor at the address set forth below within 24 hours of the award of the Bonds. CONTINUING DISCLOSURE: In order to assist bidders in complying with paragraph (b)(5) of the Rule, the County of Ingham, the City of Lansing, and the Charter Township of Lansing will undertake, pursuant to resolutions adopted by their governing bodies and continuing disclosure certificates, to provide annual reports and notices of certain events. A description of these undertakings is set forth in the preliminary official statement and will also be set forth in the final official statement. CUSIP: It is anticipated that CUSIP numbers will be printed on the Bonds at the option of the Purchaser, but neither the failure to print CUSIP numbers nor any improperly printed CUSIP numbers shall be cause for the Purchaser to refuse to take delivery of and pay the purchase price for the Bonds. Application for CUSIP numbers will be made by the Municipal Advisor to the Issuer. The CUSIP Service Bureau’s charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. BIDDER CERTIFICATION: NOT “IRAN-LINKED BUSINESS”: By submitting a bid, the bidder shall be deemed to have certified that it is not an “Iran-Linked Business” as defined in Act 517, Public Acts of Michigan, 2012; MCL 129.311 et seq. DELIVERY OF BONDS: The Drainage District will furnish Bonds ready for execution at its expense. Bonds will be delivered without expense to the purchaser through DTC, New York, New York. The usual closing documents including a certificate that no litigation is pending affecting the issuance of the Bonds, will be delivered at the time of the delivery of the Bonds. If the Bonds are not tendered for delivery by twelve o’clock noon, prevailing Eastern Time, on the 45th day following the date of sale, or the first business day thereafter if said 45th day is not a business day, the successful bidder may on that day, or any time thereafter until delivery of the Bonds, withdraw his proposal by serving notice of cancellation, in writing, on the undersigned. Payment for the Bonds shall be made in Federal Reserve Funds.
L-7 REGISTERED MUNICIPAL ADVISOR: Further information with respect to the Bonds may be obtained from the Drainage District’s Registered Municipal Advisor, PFM Financial Advisors LLC, 555 Briarwood Circle, Suite 333, Ann Arbor, Michigan 48108, Telephone (734) 994-9700, Fax (734) 994-9710. THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS. ENVELOPES containing the bids should be plainly marked “Proposal for Montgomery Drain Bonds.”
Patrick E. Lindemann, Drain Commissioner County of Ingham
L-8
BID FORM To: Municipal Advisory Council Sale Date: August 25, 2020 [email protected] 11:30 AM, ET Phone: (800) 337-0696
RE: $29,395,000* Montgomery Drain Drainage District, County of Ingham, State of Michigan, Drain Bonds, Series 2020A (General Obligation Limited Tax)
For all or none of the above Bonds, in accordance with the Official Notice of Sale, we will pay you $29,395,000* plus a premium or less a discount (cross out non-applicable) of $______for fully registered bonds bearing interest rates and maturing in the stated years as follows:
2021 ______2031 ______2041 2022 ______2032 ______2042 2023 ______2033 ______2043 2024 ______2034 ______2044 2025 ______2035 ______2045 2026 ______2036 ______2046 2027 ______2037 ______2047 2028 ______2038 ______2048 2029 ______2039 ______2049 2030 ______2040 ______2050
The following maturities have been designated as Term Bonds:
Mandatory Redemption Mandatory Redemption From: to From: to From: to From: to From: to From: to From: to From: to From: to From: to From: to From: to From: ______to ______From: to
In making this offer, we accept all of the terms and conditions of the Official Notice of Sale published in The Bond Buyer.
Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations:
TRUE INTEREST COST: ______% (calculated from September 8, 2020)
Account Manager: By:
Account Members: ______
The foregoing offer is hereby accepted by and on behalf of Montgomery Drain Drainage District, County of Ingham, State of Michigan on the 25th day of August, 2020.
Attest: By
Title: Title ______
*Preliminary, subject to change.
MONTGOMERY DRAIN DRAINAGE DISTRICT, County of Ingham, State of Michigan • Drain Bonds, Series 2020A (General Obligation Limited Tax)