Comprehensive Annual Financial Report For Fiscal Years Ended December 31, 2018 and 2017 SM U T A H T R A N S I T A U T H O R I T Y Our Mission Provide integrated mobility solutions to service life’s connections, improve public health and enhance quality of life. Comprehensive Annual Financial Report For Fiscal Years Ended December 31, 2018 and 2017 Finance Department Robert K. Biles Chief Financial Officer Troy Bingham Comptroller UTAH TRANSIT AUTHORITY UTAH TRANSIT AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT Years Ended December 31, 2018 and 2017 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ……………………………………………………………………………………………………………………………………………. 7 Certificate of Achievement for Excellence in Financial Reporting ………………………………………………………………………. 21 Organizational Chart ……………………………………………………………………………………………………………………………………………. 22 Board of Trustees and Administration …………………………………………………………………………………………………………………. 24 System Map ………………………………………………………………………………………………………………………………………………………… 26 FINANCIAL SECTION Independent Auditor’s Report …………………………………………………………………………………………………………………………… 28 Management's Discussion and Analysis ……………………………………………………………………………………………………………… 31 Financial Statements Comparative Statements of Net Position ………………………………………………………………………… 40 Comparative Statements of Revenues, Expenses, and Changes in Net Position ………………………………... 42 Comparative Statements of Cash Flows …………………………………………………………………………………………………………… 43 Comparative Statements of Fiduciary Net Position…………………………………………………………………………………………… 45 Comparative Statements of Changes in Fiduciary Net Position ……………………………………………………………………….. 46 Notes to the Financial Statements …………………………………………………………………………………………………………………… 47 REQUIRED SUPPLEMENTARY INFORMATION SECTION Schedule of Changes in Net Pension Liability and Related Ratios ………………………………………………… 97 Statement of Required Employer Contributions …………………………………………………………………… 98 SUPPLEMENTARY SCHEDULES Schedules of Revenues, Expenses and Changes in Net Position Budget and Actual……………………………………………. 101 STATISTICAL SECTION Financial Trends These schedules contain trend information to help the reader understand how the Authority's financial performance and well-being have changed over time. Net Position ……………………………………………………………………………………………………………………………………………………. 103 Change in Net Position …………………………………………………………………………………………………………………………………… 103 Revenue History by Source …………………………………………………………………………………………………………………………… 104 Expense History by Function …………………………………………………………………………………………………………………………. 104 Revenue Capacity These schedules contain information to help the reader assess the Authority's most significant local revenue sources. Local Contributions from Other Governments ……………………………………………………………………………………………… 105 Local Transit Sales Tax Rates by County ……………………………………………………………………………………………………… 105 Principal Contributors of Sales Tax ………………………………………………………………………………………………………………. 106 Fares …………………………………………………………………………………………………………………………………………………………….. 106 Debt Capacity These schedules present information to help the reader assess the affordability of the Authority's current level of outstanding debt and the Authority's ability to issue additional debt in the future. Debt Service Coverage …………………………………………………………………………………………………………………………………… 107 UTAH TRANSIT AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT Years Ended December 31, 2018 and 2017 TABLE OF CONTENTS (continued) STATISTICAL SECTION (continued) Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Authority's financial activities take place. Demographic and Economic Statistics ……………………………………………………………………………………………………………… 107 Principal Employers ………………………………………………………………………………………………………………………………………… 108 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Authority's financial report relates to the services the Authority provides and the activities it performs. Full Time Equivalent Employees ……………………………………………………………………………………………………………………… 108 Trend Statistics ………………………………………………………………………………………………………………………………………………… 109 Operating Indicators and Capital Assets …………………………………………………………………………………………………………… 110 Performance Measures – Bus Service ………………………………………………………………………………………………………………. 111 Performance Measures – Commuter Rail ………………………………………………………………………………………………………… 114 Performance Measures – Demand Response ……………………………………………………………………………………………………. 117 Performance Measures – Light Rail………... …………………………………………………………………………………………………… 120 COMPLIANCE SECTION Schedule of Expenditures of Federal Awards …………………………………………………………………….. 129 Notes to SEFA…………………………………………………………………………………………………………………………………………………… 132 Schedule of Findings and Questioned Costs………………………………………………………………………………………………………. 134 Introductory For Fiscal Years Ended December 31, 2018 and 2017 SM U T A H T R A N S I T A U T H O R I T Y 669 West 200 South Salt Lake City, Utah 84101 1-888-RIDE-UTA www.rideuta.com June 10, 2019 To the Board of Trustees Utah Transit Authority and Citizens within the UTA Service Area We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the Utah Transit Authority (the Authority) for the fiscal years ended December 31, 2018 and 2017. This document has been prepared by the Authority’s Finance Department using the guidelines recommended by the Government Finance Officers Association of the United States and Canada and conforms to accounting principles generally accepted in the United States of America and promulgated by the Governmental Accounting Standards Board. This report contains financial statements and statistical data which provide full disclosure of all the material financial operations of the Authority. The financial statement and statistical information are the representation of the Authority’s management which bears the responsibility for their accuracy, completeness and fairness. The financial statements have been prepared on the accrual basis of accounting in conformance with generally accepted accounting principles. The Authority is accounted for as a single enterprise fund. This CAFR is indicative of the Authority’s commitment to provide accurate, concise and high-quality financial information to the residents of its service area and to all other interested parties. 7|Page UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2018 and 2017 The Authority The Utah Transit Authority was incorporated on March 3, 1970 under authority of the Utah Public Transit District Act of 1969 for the purpose of providing a public mass transportation system for Utah communities. The Authority is governed by a three-member full-time board of trustees. The Governor appoints nominees from the three appointing districts within the UTA service territory to serve as trustees. The names of the nominees are then forwarded to the Senate for confirmation. Once confirmed, an appointee is sworn in as a trustee. Utah Transit Authority also has a nine-member local advisory council. The local advisory council representation includes: three members appointed by the Salt Lake County council of governments; one member appointed by the Mayor of Salt Lake City; two members appointed by the Utah County council of governments; one member appointed by the Davis County council of governments; one member appointed by the Weber County council of governments; and one member appointed by the councils of governments of Tooele and Box Elder counties. Terms for local advisory council members are indefinite. The responsibility for the operation of the Authority is held by the board of trustees that hires, sets the salaries, and develops performance targets and evaluations for the Executive Director, Internal Auditor, and any chief level officer. The Executive Director is charged with certain responsibilities, some of which require coordination with, or providing advice to, the board of trustees. Legal counsel is provided by the Utah Attorney General’s Office. An organizational chart which illustrates the reporting relationships follows in the introductory section. The executive staff meets weekly to coordinate management of the affairs of the organization. The executive staff and various other department officials meet as needed in a policy forum to review management policies and strategic direction and objectives for the organization. The Authority serves the largest segment of population in the State of Utah known as the Wasatch Front. Its service area includes Salt Lake, Davis, Utah, and Weber Counties, the cities of Tooele and Grantsville in Tooele County and that part of Tooele County comprising the unincorporated areas of Erda, Lakepoint, Stansbury Park and Lincoln, and the cities of Brigham City, Perry and Willard in Box Elder County. According to the U.S. Census Bureau population estimates of July 1, 2017, the population of the Authority’s service area is approximately 2,463,000 and represents 79.4% of the state’s total population. 8|Page UTAH TRANSIT AUTHORITY INTRODUCTORY SECTION Year Ended December 31, 2018 and 2017 Current Year Review Besides building upon its strong legacy of providing service, continuous achievement, and transit leadership, the year also brought about significant changes to UTA’s governance. The information below reviews the governance changes as well as providing a glimpse of the year’s accomplishments. Governance. In November 2018, following statutory changes, oversight of UTA