City of Richmond, Virginia FOR THE FISCAL YEAR ENDED JUNE 30, 2018 MAYOR LEVAR M. STONEY CITY OF RICHMOND, VIRGINIA Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2018 MAYOR Levar M. Stoney CHIEF ADMINISTRATIVE OFFICER Selena Cuffee-Glenn CITY COUNCIL Chris A. Hilbert President Cynthia I. Newbille Vice President Andreas D. Addison Parker C. Agelasto Kimberly B. Gray Michael J. Jones Kirsten N. Larson Ellen F. Robertson Reva M. Trammell BLANK PAGE THE CITY OF RICHMOND, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal I Management Report on Responsibility for Financial Reporting XIII Mayoral Form of Government IX Organization Chart X FINANCIAL SECTION Report of Independent Auditor 1 A. MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information) 5 B. BASIC FINANCIAL STATEMENTS 1. Government-Wide Financial Statements Exhibit A: Statement of Net Position 18 Exhibit B: Statement of Activities 20 2. Governmental Funds' Financial Statements Exhibit C: Balance Sheet 22 Reconciliation of the Statement of Net Position to the Balance Sheet of Governmental Funds 23 Exhibit D: Statement of Revenues, Expenditures, and Changes in Fund Balances 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities-Governmental Funds 25 3. Proprietary Funds' Financial Statements Exhibit E-1: Statement of Net Position - Proprietary Funds 26 Exhibit E-2: Reconciliation of the Proprietary Funds' Statement of Net Position to the Government-wide Statement of Net Position 27 Exhibit E-3: Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 28 Exhibit E-4: Reconciliation of the Enterprise Funds' Statement of Revenues, Expenses and Changes in Net Position to the Government-wide Statement of Activities 29 Exhibit E-5: Statement of Cash Flows - Proprietary Funds 30 4. Fiduciary Funds' Financial Statements Exhibit F-1: Statement of Fiduciary Net Position 31 Exhibit F-2: Statement of Changes in Fiduciary Net Position 32 5. Component Units' Financial Statements Exhibit G-1: Statement of Net Position 33 Exhibit G-2: Statement of Activities 34 6. Notes to Financial Statements 35 BLANK PAGE THE CITY OF RICHMOND, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS C. REQUIRED SUPPLEMENTARY INFORMATION Exhibit H-1: Budgetary Comparison Schedule - General Fund 94 Exhibit H-2: Note to Budgetary Comparison Schedule - General Fund 98 Schedule of Changes in Net Pension Liability Richmond Retirement System 99 Schedule of Employer Contributions RRS and VRS 100 Schedule of Changes in Net Pension Liability Virginia Retirement System 101 D. SUPPLEMENTARY INFORMATION - COMBINING FINANCIAL STATEMENTS 1. Non-major Governmental Funds Exhibit I-1: Combining Balance Sheet 107 Exhibit I-2: Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 108 Exhibit I-3: Budgetary Comparison Schedule - Capital Projects Funds 109 Exhibit I-4: Budgetary Comparison Schedule - Debt Service Fund 110 2. Non-major Proprietary Funds Exhibit J-1: Combining Statement of Net Position 112 Exhibit J-2: Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 113 Exhibit J-3: Combining Statement of Cash Flows 114 3. Internal Service Funds Exhibit K-1: Combining Statement of Net Position 116 Exhibit K-2: Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 117 Exhibit K-3: Combining Statement of Cash Flows 118 4. Fiduciary Funds Exhibit L-1: Combining Statement of Fiduciary Net Position 120 Exhibit L-2: Combining Statement of Changes in Fiduciary Net Position 121 Exhibit L-3: Statement of Changes in Assets and Liabilities - Agency Funds 122 STATISTICAL SECTION Date of Incorporation 124 Area of City 124 Population 124 Form of Government 124 Segregation of Taxable Subjects for Local Taxation Only 125 Assessments 125 Tax Rates 125 Taxes Due 127 Delinquent Taxes 127 Overlapping Areas and Debt 127 City Indebtedness 127 Debt Management Policies 128 Fund Balance Policies 128 Net Position by Component for the Last Ten Years 130 Changes in Net Position for the Last Ten Years 131 Governmental Activities Tax Revenue by Source for the Last Ten Years 133 Fund Balances of Governmental Funds for the Last Ten Years 134 BLANK PAGE THE CITY OF RICHMOND, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018 TABLE OF CONTENTS Changes in Fund Balance of Governmental Funds for the Last Ten Years 135 General Governmental Tax Revenues by Source for the Last Ten Years 136 Assessed Value and Estimated Actual Value of Taxable Property for the Last Ten Years 137 Real Estate Assessed Value of Largest Taxpayers 138 Principal Employers 139 Real Estate Tax Levies and Collections for the Last Ten Years 140 Personal Property Tax Levies and Collections for the Last Ten Years 141 Ratios of Outstanding Debt by Type for the Last Ten Years 142 Ratios of General Bonded Debt Outstanding 143 Legal Debt Margin Information for the Last Ten Years 144 Pledged-Revenue Coverage for the Last Ten Years 145 Demographic and Economic Statistics for the Last Ten Years 146 Full-Time Equivalent City Government Employees by Function for the Last Ten Years 147 Operating Indicators by Function for the Last Ten Years 148 Capital Assets Statistics by Function for the Last Ten Years 149 BLANK PAGE INTRODUCTORY SECTION City of Richmond LEVAR M. STONEY MAYOR November 6, 2018 Members of the Governing Council and Citizens of the City of Richmond, Virginia: We are pleased to present the City of Richmond, Virginia’s (City) Comprehensive Annual Financial Report (CAFR) for the fiscal year (FY) ended June 30, 2018. This report is intended to provide informative and relevant financial data to the residents of the City, the City Council, investors, creditors, and any other interested reader. It includes all statements and disclosures necessary for the reader to obtain a thorough understanding of the City’s financial activities. The reader should pay particular attention to the required Management’s Discussion and Analysis – a narrative overview and analysis of the financial statements – included in this document. Any individual with comments or questions concerning this report is encouraged to contact the City of Richmond’s Department of Finance at (804) 646-5700. This report may also be found online at www.RVA.gov/finance. The financial statements included in this report conform to the accounting principles generally accepted in the United States of America (GAAP) established by the Governmental Accounting Standards Board (GASB). The City’s management is responsible for the establishment and maintenance of accounting and other internal controls to accomplish three purposes: ensuring compliance with applicable laws and City policies, safeguarding assets, and properly recording reliable information for the preparation of the City’s financial statements in accordance with GAAP. City management is responsible for the accuracy and fairness of the presentation of the financial statements and other information as presented herein and, to the best of management’s knowledge, the data presented in this report is accurate in all material respects. CliftonLarsonAllen LLP (CLA), a certified public accounting firm, audited the City’s basic financial statements. As an independent auditor, CLA rendered an unmodified opinion stating that the City’s basic financial statements for the fiscal year ended June 30, 2018 are fairly presented in all material respects and in conformity with GAAP. The report of independent auditors is presented as the first component of the Financial Section of this report. Overview of the City of Richmond, Virginia The City, incorporated in 1782, is a municipal corporation of the Commonwealth of Virginia and is the state capital. The City occupies 62.55 square miles and serves a growing population of 227,032 as of the U.S. Census Bureau’s 2017 annual population estimate. In the Commonwealth, cities have sole jurisdiction over the entire area within their boundaries and operate independently of any county government. There are no overlapping jurisdictions and, consequently, citizens of Virginia cities are not subject to overlapping debt or taxation. Richmond, because of its location in the middle of the eastern seaboard, is within 750 miles of two-thirds of the nation’s population and less than 100 miles from the nation’s capital. The City is ideally suited as a commerce hub because of the intersection of Interstates 95, 64, and 295, two major rail freight lines, and Amtrak passenger service. The Port of Richmond and Richmond International Airport provide water and air transportation services to the region’s residents and businesses. The results are a diverse economic base that includes research and development, manufacturing, retail, services, law, distribution, tourism, banking, and state government, which contributes to a stable and positive business environment. Richmond is home to the Fifth District Federal Reserve Bank, one of 12 Federal Reserve Banks, and is also home to the Fourth Circuit U.S. Court of Appeals, one of 13 in the United States. Richmond has ten Fortune 1000 companies headquartered in the region , (DVW%URDG6WUHHW6XLWH5LFKPRQG9LUJLQLD including seven Fortune 500 firms – Altria Group, Performance Food Group, CarMax, Dominion Energy, Owens and Minor, Genworth Financial,