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2017CITY OF BANGOR, MAINE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR JUNE 30, 2017 Community Developement Block Grant Programs AfterBefore Façade Grant Neighborhood Public Improvements Neighborhood Stabilization AfterBefore Business Development Before After Residential Property Rehabilitation CITY OF BANGOR, MAINE Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 Prepared by: Debbie Cyr, Finance Director David Little, Tax Collector/Deputy Treasurer CITY OF BANGOR, MAINE Comprehensive Annual Financial Report Table of Contents For the Fiscal Year Ended June 30, 2017 INTRODUCTORY SECTION Page Letter of Transmittal I - 1 GFOA Certificate of Achievement I - 7 Organizational Chart I - 8 Elected Officials and Principal Administrative Officers I - 9 FINANCIAL SECTION Report of Independent Auditors II - 1 Management’s Discussion and Analysis II - 4 Basic Financial Statements: Exhibit Government-wide Financial Statements: Statement of Net Position 1 II - 19 Statement of Activities 2 II - 20 Fund Financial Statements: Balance Sheet - Governmental Funds 3 II - 21 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 4 II - 22 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 5 II - 23 Statement of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual - General Fund 6 II - 24 Statement of Net Position – Proprietary Funds 7 II - 25 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 8 II - 27 Statement of Cash Flows – Proprietary Funds 9 II - 28 Statement of Fiduciary Net Position – Fiduciary Funds 10 II - 30 Notes to the Financial Statements II - 31 Required Supplementary Information Schedule of Funding Progress – Retiree Healthcare Plan II – 60 Schedule of City’s Proportionate Share of Net Pension Liability II – 61 Schedule of City’s Contributions II – 62 Notes to Required Supplementary Information II – 63 CITY OF BANGOR, MAINE Table of Contents, Continued Schedule Page Combining and Individual Fund Financial Statements and Schedules: Balance Sheet – General Fund A – 1 II - 64 Schedule of Revenues, Expenditures and Changes in Unassigned Fund Balance – Budget and Actual – Budgetary Basis – General Fund A – 2 II - 65 Combining Balance Sheet – Nonmajor Governmental Funds B – 1 II - 69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds B – 2 II - 70 Combining Balance Sheet – Nonmajor Special Revenue Funds B – 3 II - 71 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds B – 4 II - 72 Combining Balance Sheet – Nonmajor Permanent Funds B – 5 II - 73 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Permanent Funds B – 6 II - 74 Combining Statement of Net Position – Nonmajor Proprietary Funds C – 1 II - 75 Combining Statement of Revenues, Expenses and Changes in Net Position – Nonmajor Proprietary Funds C – 2 II - 77 Combining Statement of Cash Flows - Nonmajor Proprietary Funds C – 3 II - 78 Fiduciary Funds: Statement of Changes in Assets and Liabilities – Agency Funds D – 1 II - 80 Capital Assets Used in the Operation of Governmental Funds: Schedule of Changes by Function and Activity E – 1 II - 81 Other Information: Assessed Valuation, Commitment and Collections F – 1 II - 82 General Fund Unassigned Fund Balance Sufficiency Calculation F – 2 II - 83 CITY OF BANGOR, MAINE Table of Contents, Continued STATISTICAL SECTION Table Page Financial Trends: Net Position by Component 1 III – 1 Changes in Net Position 2 III – 2 Governmental Activities Tax Revenues by Source 3 III – 5 Fund Balances of Governmental Funds 4 III – 6 Changes in Fund Balances of Governmental Funds 5 III – 7 Revenue Capacity: Assessed Value and Estimated Actual Value of Taxable Property 6 III – 8 Property Tax Rate – Direct and Overlapping Governments 7 III – 9 Principal Property Taxpayers 8 III – 10 Property Tax Levies and Collections 9 III – 11 Debt Capacity: Ratios of Outstanding Debt by Type 10 III – 12 Ratio of Net General Obligation Debt to Assessed Value and Net Obligation Debt Per Capita 11 III – 13 Computation of Direct and Overlapping Debt 12 III – 14 Legal Debt Margin Information 13 III – 15 Demographic and Economic Information: Demographic and Economic Statistics 14 III – 16 Principal Employers 15 III – 17 Operating Information: Full-time Equivalent City Government Employees by Function 16 III – 18 Operating Indicators by Function 17 III – 19 Capital Asset Statistics by Function 18 III – 20 INTRODUCTORY SECTION I - 1 FINANCE DEPARTMENT Deborah A. Cyr, Finance Director (207)992-4253 fax (207)945-4446 debbie.cyr@bangormaine.gov 73 Harlow Street • Bangor, Maine 04401 January 30, 2017 To the Honorable Chair, Members of the Bangor City Council, and Citizens of Bangor In accordance with the City Charter and state statutes, the City of Bangor’s comprehensive annual financial report for the fiscal year ended June 30, 2017 is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City of Bangor. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the City of Bangor on a government wide and fund basis. The City is responsible for establishing and maintaining an internal control framework designed to ensure that the assets of the City are protected from loss, theft, and misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the costs of control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgments by management. The City’s financial statements have been audited by Runyon Kersteen Ouellette. The goal of the independent audit is to provide reasonable assurance that the financial statements are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor’s unmodified opinion is presented as the first component of the financial section of this report. Further, the City is required to undergo an annual single audit in conformity with the provisions of the U.S. Office of Management and Budget’s Uniform Guidance. Information related to this single audit, including a schedule of expenditures of federal awards, findings, questioned costs, recommendations, and the independent I - 2 auditor’s reports on the internal control structure and compliance with applicable laws and regulations, is included in a separately issued single audit report. Governmental Accounting Standards Board (GASB) requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditor’s report. Profile of the Government The City of Bangor, which occupies approximately 35 square miles on the western shore of the Penobscot River, was first settled in 1656, incorporated as a town on February 25, 1791 and as a city on February 12, 1834. The City of Bangor is the third largest City in Maine and serves as the County Seat for Penobscot County. As a result, Bangor serves as the major trade, distribution, service, and commercial center for the central, eastern, and northern portions of the State. Bangor has operated under a Council-Manager Charter, since 1931. The City Council is composed of nine members, elected at large, for three-year staggered terms. The Charter grants to the Council all powers to enact, amend, or repeal rules, ordinances, and resolutions relating to the City’s property, affairs, and government; to preserve the public peace, health, and safety; to establish personnel policies; to give effect to any vote of the City; and to authorize the issuance of debt. The Council adopts an annual budget and provides for an annual audit. The City Manager is the chief administrative officer of the City and is appointed by the Council, as are the Assessor, Solicitor, and Clerk. The School Department is governed by a seven-member School Committee with the Superintendent is responsible for the day to day operations of the schools. Members of the school committee are elected at large to staggered three-year terms. By Charter, the School Committee has all the powers and responsibility for the care and management of the public schools of the City. By Charter, The Committee annually furnishes to the City Council an estimate of sums required for school purposes for the ensuing municipal year. The City Council makes a single gross appropriation for this purpose, which must be ratified by the voters of Bangor at a referendum held prior to the start of the City’s fiscal year. Once approved, the expenditure of this appropriation is under the direction and control of the School Committee. The School Committee employs the Superintendent of Schools as its chief operating officer. I - 3 The City provides a full range of municipal services including police and fire, highways, sanitation, health and welfare, parks and recreation, education, public transportation, planning, business and economic development, code enforcement, and general administrative services which are accounted for in the City’s General Fund. Additionally, the City of Bangor owns and operates the Bangor International Airport, sanitary sewer services, storm water utility, the Bass Park Complex (Cross Insurance Center), parking facilities, golf course, and economic development (properties), which are accounted for in the City’s enterprise funds. The City’s fiscal year begins on July 1 and the annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, function, and department and the City Manager may transfer resources within a department; however, transfers between departments require Council action. The City Charter requires that the City Manager submit a recommended budget to the Council by the second Monday in April, which includes the general fund, school budget, and seven enterprise funds. The budget, which must be in balance, contains estimates of all non-tax revenues and receipts expected to be received during the next fiscal year, the expenditures necessary to support City operations, debt service requirements, and the tax levy required to achieve balance between revenues and expenditures. The Council may modify recommended expenditures and as well as the recommended tax levy. In accordance with the City Charter, if the Council fails to adopt a budget by June 30, the City Manager’s proposed budget is enacted. The appropriate property tax levy is established and filed with the City Assessor, who then sets the necessary property tax rate. Special revenue funds do not have adopted budgets but have program budgets. Budgetary controls are maintained on other governmental funds through formal authorizations by the City Council and through grant agreements. All budgets are legally adopted by the City Council through the passage of appropriation resolves. Factors Affecting Financial Condition Local Economy. The City of Bangor serves as the major service center in northern and eastern Maine for a variety of services including communications, banking, retail, industrial, transportation, and healthcare. Additionally, the City serves as the center for federal, state and county governments. Bangor also serves as northern New England's economic link to the Canadian Maritimes and eastern Quebec. Bangor has a stable and varied economic base. Major employers include a diversified mix of health care, educational, professional, retail, manufacturing, and governmental entities. Bangor’s 2017 unemployment rate of 3.7% was lower than both the national and state rates of 4.4% and 3.8%, respectively. I - 4 Bangor serves as one of the largest retail markets in Maine. The Bangor Mall, Airport Mall, Broadway commercial center, Union Street commercial corridor, and the Bangor Center Development District (downtown) have long established Bangor as the hub of the six county eastern Maine retail market. Bangor's retail sector serves an extensive geographic area ranging from eastern Maine to the Canadian Maritimes, with a population exceeding 3.1 million. With less than three percent of the State’s population, Bangor’s share of the State’s retail sales is proportionally higher. In FY 2017, Bangor’s retail taxable sales were $1.37 billion and represent 6.32% of total State retail taxable sales. However, shifts in the retail market have created challenges in some of our large retail centers. Specifically, the Bangor Mall is facing the same challenges that are being faced by retail centers around the country. The implications of this challenge are being monitored closely and the city will be working proactively with mall owners to seek new uses for important retail properties. The City is committed to preserving its viable economic base while creating new opportunities for future residential and commercial growth. To achieve these objectives, the City is proactive in supporting economic activity through planned capital improvements, innovative financing, and aggressive marketing as well as enhancing our citizens’ quality of life. Similar to other areas of the country, Bangor is experiencing significant growth in the downtown area including retail, dining, residential, and office space. New mixed-use redevelopment projects completed over the past 5 years has led to low vacancy rates and the development of high-end residential apartment units. Public and private developments along Main Street including development of the Casino, Cross Insurance Center, Marriot Residence Inn and relocation of corporate headquarters for Cross Insurance have played a significant role in that growth. In 2017, Bangor Savings Bank broke ground on a new headquarters campus facility in the downtown, which bridges the areas of lower Main Street, downtown, and the waterfront. The project will consolidate corporate offices along with back office functions onto one campus. Further evidence of continuing sustained growth is the change that can be measured by the City’s assessed value of real and personal property. The annual increase in assessed value is a combination of three factors: 1) market adjustments to existing property, 2) new construction/additions, and 3) personal property depreciation. Assessed valuations have remained relatively flat since the FY 2011 economic downturn. However, personal property enrolled in the Business Equipment Tax Exempt program (BETE) continue to increase annually, an indication of continued commercial investment within the City. As the City’s assessed valuation has remained flat, the City also realized significant reductions in State- funded revenue sharing, aid to education and absorbed additional tax shifts related to general assistance and Medicare/Medicaid. The City continues to implement cost control measures wherever identified, including work force reductions. Despite the cost control measures, the reductions in revenues and cost shifts are the major I - 5 contributing factor in the overall increase of 19.68% in the tax rate from 2008 to 2017. Long-term financial planning and major initiatives. The City’s capital improvement plan is an integral part of the annual budget process. A complete list of near-term improvements is submitted as part of the City Manager’s budget submission for all City functions. The plan includes projects anticipated within the coming one to two-year period with an indication of how the City anticipates funding the improvements. Certain improvements are longer term in nature and are updated and reviewed via the City Council’s committee structure on an as-needed basis. The City has made significant investments in its operating and capital infrastructure to support its economic base. Major areas of investment include: $4.2 million invested in streets, sidewalks, traffic control, and other infrastructure; Completion of the $14 million reconstruction of Bangor International Airport’s domestic air service terminal; $878 thousand invested in leased facilities in support of the growth and development of C&L Aerospace and Wayfair; $4.4 million invested in the upgrade and separation of the City’s combined sewer systems; Continued investment in the City’s core downtown to encourage mixed use development, including residential, commercial and cultural opportunities, including $748 thousand improvement to the Cross Insurance Center parking lot. The City is proactively addressing quality of life issues and housing opportunities. Key initiatives to date include: Participation in the AARP age-friendly community initiative; Proactive approaches to disruptive and foreclosed properties across operational areas; Provided assistance to homeowners and designated neighborhoods through CDBG funding; Leadership in the Community Health Leadership Board to address community drug and alcohol issues; Sustained commitment to academic excellence for all; Energy efficiency rebate program; Continued support of arts and culture. I - 6 Finally, the City continues to implement significant technology and process improvements to increase the overall organizational efficiency and enhance citizen communication and engagement. Relevant Financial Policies. City policy prescribes uses for unassigned fund balances. In general, unassigned fund balance is not to be used to fund any portion of the on-going and routine year-to-year operating expenditures of the City. It is to be used primarily to ensure adequate fund balances, to respond to unforeseen emergencies, and to provide overall financial stability. By Charter, the City is to maintain an unassigned fund balance of no more than 16.66% and no less than 8.33% of prior year expenditures and the Council has determined that a reasonable target is 8.33%. Unassigned fund balance in the General Fund as of June 30, 2017 was 12.75% of expenditures, net of debt service. Awards and Acknowledgements. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bangor for its comprehensive annual financial report for the fiscal year ended June 30, 2016. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA for consideration for another certificate. The preparation of this document would not have been possible without the hard work of all of the City’s employees. Each one contributes on a daily basis, simply by carrying out the responsibilities of their positions. Our sincerest thanks are once again extended to our citizens and the Bangor City Council for their continued support for our efforts to further develop the City’s financial management and reporting capabilities. We are confident that we have once again met their expectations. Respectfully submitted, Debbie Cyr Finance Director CITYMANAGER CITIZENSOFBANGOR CITIZENCOMMISSIONS CITIZENBOARDS CITYCLERK CITYCOUNCIL ASSESSINGCITYSOLICITOR VOTER REGISTRATION ANIMALCONTROL ELECTIONS CITY OF BANGOR ORGANIZATIONAL CHART Revised (10-15) FINANCE AUDITING TREASURY RISK &ENVIRONMENTALMANAGEMENT INFORMATIONSERVICES PURCHASING PUBLIC WORKS WASTERWATER TREATMENT WATER QUALITY MANAGEMENT HARBOR ENGINEERING PLANNING CODEENFORCEMENT INFRASTRUCTURE POLICE DETECTIVE PATROL ADMINISTRATION SERVICES COMMUNITY &ECONOMIC DEVELOPMENT COMMUNITYDEVELOPMENT ECONOMICDEVELOPMENT DOWNTOWNPROGRAMS PARKINGMANAGEMENT BANGORINTERNATIONALAIRPORT CROSS INSURANCE CENTER STATEFAIR BASS PARK ADMINISTRATION FIREPREVENTIONBUREAU FIREFIGHTING FIRE LABORRELATIONS ADMINISTRATIVESERVICES HUMANRESOURCESSTORMWATER MANAGEMENT COMMUNITYCONNECTOR CENTRALSERVICES HEALTH ANDCOMMUNITYSERVICES GOVERNMENT OPERATIONS PARKSMAINTENANCE RECREATION PARKS ANDRECREATION GOLFCOURSE RECORDS BANGOR REGION PUBLIC HEALTH & WELLNESS DIVISION HOUSING & COMMUNITY SERVICES DIVISION FLEETMAINTENANCE I - 9 City of Bangor, Maine Elected Officials and Principal Administrative Officers June 30, 2017 City Council Joseph Baldacci, Chair Sean Faircloth Gibran Graham David Nealley Sarah Nichols Joseph Perry Benjamin Sprague Daniel Tremble Cary Weston City Staff Catherine M. Conlow, City Manager Philip Drew, City Assessor Lisa Goodwin, City Clerk Norman Heitmann, City Solicitor School Committee Warren Caruso, Chair Jennifer Degroff Brian Doore Susan Hawes, Vice Chair Susan Sorg Marlene Susi Carin Sychterz School Staff Betsy Webb, Superintendent of Schools FINANCIAL SECTION II-1 Certified Public Accountants and Business Consultants Independent Auditor’s Report City Council City of Bangor, Maine: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Bangor, Maine, as of and for the year ended June 30, 2017,and the related notes to the financial statements,which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. II-2 City Council City of Bangor, Maine 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 discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Bangor, Maine, as of June 30, 2017, and the respective changes in financial position and,where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of funding progress for the retiree’s health care plan, the schedule of the City’s proportionate share of the net pension liability, and the schedule of City contributions, as listed in the table of contents,be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Bangor, Maine’s basic financial statements. The introductory section, combining and individual fund financial statements, other schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. II-3 City Council City of Bangor, Maine The combining and individual fund financial statements and the other 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 other schedules are fairly stated,in all material respects,in relation to the basic financial statements as a whole. The introductory and statistical sections 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 our report dated January 30, 2018, on our consideration of the City of Bangor, Maine’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 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 Auditing Standards in considering the City of Bangor, Maine’s internal control over financial reporting and compliance. January 30, 2018 South Portland, Maine II - 4 MANAGEMENT’S DISCUSSION AND ANALYSIS Management of the City of Bangor offers this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2017. In addition to comparative information from the government-wide statements, comparative data is also presented on key information from the fund financial statements. We encourage readers to consider the information presented here in conjunction with additional information that is furnished in our letter of transmittal, which can be found on pages I-1 to I-6 of this report. Financial Highlights The assets and deferred outflows of the City of Bangor exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $205.9 million (net position). At the close of fiscal year 2017, the City of Bangor’s governmental funds reported combined ending fund balances of $29.7 million, a decrease of $2.3 million over the prior year balance of $32.0 million. The Capital Projects Fund fund balance decreased by $3.5 million, due to the expenditure of bond proceeds issued in a prior year related to the refunding of debt and investment in infrastructure. The General Fund fund balance increased by $1.0 million. General Fund revenues exceeded estimates by $3.8 million as follows; excise taxes $1.2 million, property taxes $353 thousand, intergovernmental revenues $663 thousand, and charges for service $1.5 million. During fiscal year 2017, $2.3 million of the General Fund balance was transferred to the Capital Fund to pay for capital improvements in accordance with the City’s Fund Balance policy. All other governmental fund fund balances remained relatively unchanged from prior year amounts. Approximately 74.3% of the total amount, or $22.1 million, is either committed, assigned or unassigned and is available for spending at the City Council’s discretion, if needed. The City of Bangor has a fund balance policy. By Charter, the City is to maintain an unassigned fund balance of no more than 16.66% and no less than 8.33% of prior year expenditures, net of debt service. At the end of the current fiscal year, unassigned fund balance for the General Fund was $12.2 million, or 12.75% of the general fund expenditure base. The annual calculation is included within the financial statements as Schedule F-2. The total liabilities and deferred inflows of resources of the City’s governmental and business-type activities decreased $3.3 million and $133 thousand, respectively. For governmental activities, the decrease is a result of principal payments on general obligation bonds in the amount of $7.1 million net of the increase in net pension liability and related deferred inflows of resources of $3.1 million. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Bangor’s basic financial statements. These statements consist of three components: government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements present the financial picture of the City from the point of view of economic resources measurement and using the accrual basis of accounting, which is similar to that used by II - 5 private-sector companies. These statements present governmental activities and business-type activities separately. The statement of net position includes all of the City’s assets, liabilities and deferred inflows and outflows, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 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 event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that are accrued but not yet paid or collected but will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused employee vacation leave). These statements are divided into two categories: governmental activities and business-type activities. Governmental activities – Most of the City’s basic services are included here, such as the general government, public safety, public works, health and welfare, education, and parks and recreation. These activities are principally supported by taxes and intergovernmental revenues. Business-type activities – Currently, the City operates the following business-type activities: Bangor International Airport, Sewer Utility, the Bass Park Complex, Stormwater Utility, Parking, Golf Course, and Economic Development. The government-wide financial statements can be found on pages II-19 to II-20 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Bangor, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for mostly the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements are reported using an accounting method called modified accrual accounting that measures cash and all other financial assets that can readily be converted to cash. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate a comparison between governmental funds and governmental activities. The City of Bangor maintains ten individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Community Development Block Grant, Arena fund, and Capital Projects Fund, all of which are considered to be major funds. Data from the other six governmental funds are combined into a single aggregated presentation. Individual fund data for each of these non-major II - 6 2017 2016 2017 2016 2017 2016 Current & other assets 43,365,544$ 45,360,502$ 32,500,253$ 27,577,992$ 75,865,797$ 72,938,494$ Capital assets, net of accumulated depreciation 75,889,101 75,420,521 225,010,237 230,444,082 300,899,338 305,864,603 Total assets 119,254,645 120,781,023 257,510,490 258,022,074 376,765,135 378,803,097 Deferred outflows of resources 3,936,229 3,633,929 874,285 802,922 4,810,514 4,436,851 Total deferred outflows 3,936,229 3,633,929 874,285 802,922 4,810,514 4,436,851 Long-term debt outstanding 72,291,657 76,604,213 85,462,083 84,529,953 157,753,740 161,134,166 Other liabilities 7,233,422 6,689,682 4,448,512 5,737,793 11,681,934 12,427,475 Total liabilities 79,525,079 83,293,895 89,910,595 90,267,746 169,435,674 173,561,641 Deferred inflows of resources 5,795,923 5,331,398 477,061 253,185 6,272,984 5,584,583 Total deferred inflows 5,795,923 5,331,398 477,061 253,185 6,272,984 5,584,583 Net position: Net investment in capital assets 49,367,869 47,792,253 153,328,264 159,537,793 202,696,133 207,330,046 Restricted 3,547,716 4,045,808 - - 3,547,716 4,045,808 Unrestricted (15,045,713) (16,048,402) 14,668,855 8,766,272 (376,858) (7,282,130) Total net position 37,869,872$ 35,789,659$ 167,997,119$ 168,304,065$ 205,866,991$ 204,093,724$ Governmental Activities Business-type Activities Total governmental funds is provided in the form of combining statements (Schedule B) elsewhere in this report. The City of Bangor adopts an annual budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget (Schedule A-2). Proprietary funds are used to account for essentially the same functions reported as business-type activities in the government-wide financial statements. Enterprise funds are the only type of proprietary funds maintained by the City. The proprietary fund statements provide the same type of information as the government-wide statements, only in more detail. The City maintains seven individual proprietary funds, of which the Sewer Utility, Airport, and Bass Park Funds are considered to be major. Data from four other proprietary funds is combined into a single aggregated presentation. Individual fund data for each of these non-major proprietary funds is provided in the form of combining statements (Schedule C) elsewhere in this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Fiduciary Statement of Net Position is included in this report as Exhibit 10. Government-wide Financial Analysis The following is a condensed version of the Statement of Net Position. II - 7 By far the largest portion of the City’s net position reflects its net investment in capital assets (i.e., land, buildings, machinery and equipment) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported 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 satisfy these liabilities. Restricted net position refers to those resources that are subject to external restrictions on how they may be used; such as donor, legal or granting agency restrictions. While the remaining balance of unrestricted net position has a deficit of $377 thousand, the governmental activities deficit of $15.0 million is offset by the business type activities balance of $14.7 million. The governmental activities deficit is primarily due to $19.8 million in outstanding pension obligation bonds. Governmental activities net position increased $2.1 million. The major components associated with the increase in governmental activities net position is excise tax revenues exceeding estimates by $1.2 million and public safety expenses below estimates due to savings realized related to turnover and vacancies. Business-type net position is virtually unchanged with a decrease of $307 thousand. Due to the capital intensive requirements of the Airport and Sewer Funds, the net position within business- type activities can vary significantly from year to year depending upon grant fund cycles and levels of infrastructure investments. II - 8 2017 2016 2017 2016 2017 2016 Revenues Program Revenues Charges for services 18,795,482$ 18,157,571$ 31,102,229$ 28,366,080$ 49,897,711$ 46,523,651$ Operating grants & contributions 33,872,652 34,838,496 - - 33,872,652 34,838,496 Capital grants & contributions 2,391,680 3,064,312 3,776,705 8,776,331 6,168,385 11,840,643 General Revenues Property and other taxes 63,471,807 62,865,431 1,100,000 1,000,000 64,571,807 63,865,431 Grants and contributions not restricted to specific programs 4,464,142 4,173,167 - - 4,464,142 4,173,167 Other 380,580 668,099 555,259 420,951 935,839 1,089,050 Total Revenues 123,376,343 123,767,076 36,534,193 38,563,362 159,910,536 162,330,438 Expenses General government 6,953,399 6,588,238 - - 6,953,399 6,588,238 Public safety 18,841,238 18,107,357 - - 18,841,238 18,107,357 Health, community and recreation 9,497,729 10,112,526 - - 9,497,729 10,112,526 Public services 15,997,665 15,409,518 - - 15,997,665 15,409,518 Other agencies 5,049,394 4,528,591 - - 5,049,394 4,528,591 Education 55,079,037 51,901,230 - - 55,079,037 51,901,230 Arena development 801,439 136 - - 801,439 136 Community development 1,335,282 1,592,047 - - 1,335,282 1,592,047 Waterfront - 331,622 - - - 331,622 Public transportation 3,273,876 3,166,692 - - 3,273,876 3,166,692 Interest on debt 2,142,976 2,362,899 - - 2,142,976 2,362,899 Economic development (tif)711,220 929,322 - - 711,220 929,322 Sewer Utility - - 7,725,453 7,210,861 7,725,453 7,210,861 Airport - - 21,217,373 20,266,935 21,217,373 20,266,935 Stormwater Utility - - 509,884 400,924 509,884 400,924 Parking - - 1,037,558 931,676 1,037,558 931,676 Bass Park - - 7,886,589 7,735,775 7,886,589 7,735,775 Municipal Golf Course - - 604,127 613,930 604,127 613,930 Economic Development - - 466,485 508,234 466,485 508,234 Total Expenses 119,683,255 115,030,178 39,447,469 37,668,335 159,130,724 152,698,513 Excess (deficiency) before transfers 3,693,088 8,736,898 (2,913,276) 895,027 779,812 9,631,925 Gain on disposition of asset 62,180 - 931,275 422,984 993,455 422,984 Transfers (1,675,055) (2,012,149) 1,675,055 2,012,149 - - Change in net position 2,080,213 6,724,749 (306,946) 3,330,160 1,773,267 10,054,909 Beginning net position 35,789,659 29,064,910 168,304,065 164,973,905 204,093,724 194,038,815 Ending net position 37,869,872$ 35,789,659$ 167,997,119$ 168,304,065$ 205,866,991$ 204,093,724$ TotalActivities Business-type Activities Governmental Changes in Net Position The following is a condensed version of the Statement of Activities. II - 9 Governmental Activities The cost of all governmental activities was $119.7 million. As shown on the Statement of Activities, the total amount financed by the property tax was $56.7 million, or 47% of expenses. Those who directly benefit from an activity provided $18.8 million in payments. Other governments and organizations subsidized certain activities with operating grants and contributions in the amount of $33.9 million. Capital grants and contributions accounted for $2.4 million. The City also received $11.7 million in other general revenues such as state revenue sharing, motor vehicle and boat excise taxes, homestead exemptions, and interest earnings. Total governmental activities expenses increased $4.7 million over the prior year, $2.8 million of the increase was due to the increase in the net pension liability and associated changes within the net pension related deferred inflows and outflows of resources. The net pension liability is the City’s proportionate share of the cost sharing multiple-employer defined benefit pension plans, administered by the Maine Public Employers Retirement System (additional information on retirement plans can be found in Note D on pages II-53 to II-57 of this report). The balance of the remaining increase is related to an increase in education costs associated with additional students. $0 $10 $20 $30 $40 $50 $60 (in millions) General Government Public Safety Public Services Health, Community & Recreation Other Agencies Education Arena Development Comm Development Public Transportation Econonmic Development Interest on Debt Expenses and Program Revenues - Governmental Activities Revenues Expenses II - 10 Total governmental activities’ revenues were flat, with a decrease of $390 thousand. The largest single source of revenue continues to be the property tax, which increased $658 thousand. Capital grants and contributions decreased $672 thousand due to decreased project specific federal funding of streets/sidewalks. Operating grants and contributions decreased $966 thousand due to a reduction in the level and number of grants being funded by the State of Maine Department of Health and Human Services. Charges for services increased $638 thousand due to higher levels of charges for educational activities related to the number of tuition and state agency students. Business-type Activities Total business-type activities expenses increased $1.8 million, $758 thousand of the increase was due to the increase in the net pension liability and associated changes within the net pension related deferred inflows and outflows of resources. The remaining $364 thousand of increased expenses within the Airport Fund are personnel costs associated with increased levels of fuel sales and domestic airline services. The remaining $312 thousand of increased expenses with the Sewer Utility Fund reflect the increased level of repairs and maintenance within the existing sewer infrastructure systems. Revenues by Source - Governmental Activities 27%2%46% 6%4%15% Charges for Services Operating Grants & Contributions Capital Grants & Contributions Property Taxes Other Unrestricted Grants & Contributions II - 11 In total, business-type activities revenue decreased $2 million or 5.3%, this decrease is due to the significant reduction in grant contributions received for capital assets of $5 million mostly associated with the domestic terminal renovation project. Due to the significant cost associated with infrastructure improvements funded through the Federal Airport Improvement Plan grant program, it is not unusual that revenues realized from year to year vary significantly. Airport Fund charges for services increased $2.3 million due to an increase in the number of gallons of jet fuel sold, as well as an increase in the number of domestic flights. Revenues by Source - Business-type Activities Other 4% Transfers 4% Capital Grants and Contributions 10% TIF 3% Charges for Services 79% Charges for Services Capital Grants andContributions Transfers TIF Other $0 $5 $10 $15 $20 $25 (in millions) Sewer Utility Airport Stormwater Parking Bass Park Golf Course Econ Develop Expenses and Program Revenues - Business-type Activities Revenues Expenses II - 12 Financial Analysis of the Government’s Funds Governmental funds. The focus of the City’s governmental funds reporting is to provide information on near-term inflows, outflows, and balances of spendable resources. Fund balance is the measure of a governmental fund’s spendable resources. Governmental funds report fund balances in one of five possible classifications. The nonspendable portion of fund balance cannot be spent. Restricted fund balances are subject to externally enforceable legal restrictions. Committed fund balances are subject to limitations the City Council has imposed, that are binding unless removed in the same manner. Assigned fund balances reflect the intended use of resources. Unassigned fund balances are resources which have not been classified in any other category. Only the General Fund can report a positive unassigned fund balance amount. At fiscal year end, the City of Bangor’s governmental funds reported combined ending fund balances of $29.7 million, a decrease of $2.3 million over the prior year balance. The decrease is primarily due to the expenditure of $3.5 million of bond proceeds issued in a prior year within the Capital Fund exceeding the $1.0 million increase in the General Fund fund balance. Increases in the General Fund fund balance are due to revenues exceeding estimates by $3.8 million net of $2.3 million of transfers to the Capital Fund for capital related improvements. All other governmental fund fund balances remained relatively unchanged from prior year amounts. Of the ending balance of $29.7 million, approximately 74.3% of this total ($22.1 million) is either committed, assigned or unassigned and is available for spending by formal action of the City Council and $3 million, or 10.2%, is restricted. The remainder is nonspendable, indicating that it is in the form of nonspendable assets such as inventory, prepaid expenditures, nonexpendable trust principal balances and allowance for advances made to other funds. The General Fund is the chief operating fund of the City and is comprised of two major functions; education and municipal services. At the end of the fiscal year, the General Fund’s total fund balance was $22.6 million, a $1.0 million increase from the prior year’s balance of $21.6 million. The General Fund realized an increased in property tax and educational tuition revenues, and increased expenses related to education for the cost of services to state agency clients and public services due to significant winter conditions. The overall increase is due to excise tax receipts exceeding budget estimates by $1.2 million. The Community Development Block Grant Fund accounts for the annual entitlement grant funds received under the Housing and Community Development Act of 1974. Total expenditures for FY 2017 decreased $151 thousand over the prior year amount. This is reflective of a decline in program income, in that fewer residential loans are prepaying and the winding down of the west-side neighborhood revitalization efforts, to which significant funds had been dedicated to over the last few fiscal years. While the FY 2017 federal funding allocation remained relatively flat, it does represent a nearly 35% reduction since FY 2012. The Arena Fund accounts for the allocation of slot and table game revenues received by the City from the operation of the casino. The fund was established to finance the cost to replace the aging Bangor Auditorium and Civic Center. During the year, the Arena provided $1.8 million towards the annual debt service costs of the Cross Insurance Center. II - 13 The Capital Projects Fund varies significantly from year to year depending upon City Council priorities and available funding opportunities. Total expenditures increased $2.7 million over the prior year, $1.6 million of which is related to the refunding of outstanding general obligations bonds. Significant project costs incurred in FY 2017 included $4.2 million investment in streets/sidewalks and other infrastructure, $1.1 in facility improvements and $1.4 million in equipment replacements. Proprietary funds. Information on the City of Bangor’s proprietary funds is similar to that found in the government-wide financial statements, but in more detail. The net position of the seven enterprise funds decreased by $307 thousand to $168 million. The Sewer Utility fund net position increased $1.3 million due to annual rate increases to keep pace with inflation and in advance of significant capital investments. The Airport Fund net position decreased $1.6 million and Bass Park Fund net position decreased $1.5 million, due to the capital-intensive nature of these operations, operating income is not sufficient to offset depreciation expense and other operating costs. General Fund Budgetary Highlights For budgetary financial statement purposes, all balances carried from the prior year are added to the subsequent year’s total appropriation. This resulted in an overall budgetary increase of $2.5 million. There were minimal additional amendments to the originally adopted budget. The City’s commitment to budgetary integrity continues, actual operating revenues ended the year over budget estimates 3.74%, or $3.8 million, municipal expenditures were under budget by 1.4%, or $711 thousand. Education expenditures were under budget by $2.3 million or 4.3% and by statute, education balances must be segregated from municipal balances. Capital Asset and Debt Administration Capital assets. As of June 30, 2017, the City of Bangor’s investment in capital assets for its governmental and business-type activities amounted to $300.9 million (net of accumulated depreciation), a decrease of $5.0 million over the prior year. This investment includes land, buildings, machinery and equipment, roads, runways, and sewer lines. Depreciation expense of $17.5 million exceeded the City’s investment in capital assets for the current fiscal year of $12.9 million. Governmental activities invested $4.6 million, and business-type activities invested $8.3 million and depreciation expense was $4.0 million and $13.4 million, respectively. Major capital asset events during the current fiscal year included the following: The City continues to invest in its core functions of infrastructure, vehicle and equipment replacements. This year the City expanded its surface infrastructure with traffic enhancements and open space infrastructure upgrades, which amounted to $877 thousand and spent $1.1 million and $311 thousand to replace vehicles and equipment, respectively. The Airport Fund invested $3.7 million in operational assets at Bangor International Airport. During FY 2017, the renovation of the domestic terminal building was completed. The project involved the reconfiguration of the entire first floor to better serve passengers such as: new airline and rental car counters, a behind the wall in-line baggage screening, restrooms and overall aesthetic improvements. The project included federal and passenger facility charge funds and a $1.6 million local share. During FY 2017, $652 thousand was invested in this project. In addition to the terminal project, the Airport invested nearly $2.1 II - 14 million in runway system upgrades which are funded through the Federal Department of Transportation’s Airport Improvement Plan and $878 thousand in leasehold improvements. The Sewer Fund invested $3.4 million in sewer replacement and separation projects. During FY 2017, the Economic Development Fund sold a property to the current tenant for $875 thousand. During FY 2017, the Parking Fund sold a property for redevelopment for $250,000. Capital Assets (net of depreciation) Governmental Business-type Activities Activities Land and improvements $13,156,795 $4,466,350 Buildings and improvements 40,823,517 62,192,263 Machinery and equipment 1,486,742 2,684,102 Vehicles 6,556,083 - Infrastructure 11,457,682 49,527,034 Parking structures - 1,946,180 Aircraft operational assets - 100,246,092 Construction in process 2,408,282 3,948,216 Total $75,889,101 $225,010,237 Additional information on the City’s capital assets can be found in Note C, Detailed Notes on all funds, of this report. Debt Administration At fiscal year end, the City had a total outstanding bonded debt of $134.0 million, a decrease of $6.7 million during the year. The City’s general obligation debt obtained a “AA-” rating from Standard & Poor’s and a “Aa2” rating from Moody’s. State statutes limit the amount of general obligation debt a governmental entity may issue to 15% of its total State assessed valuation. The current debt limit for the City is $381.6 million, an amount which is significantly in excess of existing general obligation debt. Bonded Debt Outstanding (in millions) $79.1 $55.0 Governmental Activities Business-type Activities II - 15 Additional information on the City’s long-term debt can be found in Note I on pages II-46 to II- 49 of this report. Quality of Life The City serves as the urban, commercial, healthcare, governmental service and cultural center of a large geographic area. Although this activity is beneficial to our citizens and the region, it presents some additional social challenges for Bangor. Unfortunately, significant reductions in State general assistance funding, housing assistance, mental health treatments, and medical reimbursements as well as Federal reductions in programs such as Community Development Block Grants have deepened the imbalance between the local cost for providing regional services and broad based revenue sources to offset them. Growth in the downtown, waterfront, and Main Street corridor continues to generate new activity and renewed interest in the core of Bangor. After several years of vacancies, two significant blocks of properties in the downtown have sold and are being redeveloped and repurposed into mixed use developments that include residential, commercial, office and cultural. The development of upscale residential apartments in the downtown has been increasing steadily over the past few years. In 2017, Bangor Savings Bank acquired several parcels of land, bordering the downtown, waterfront, and lower Main Street. They have broken ground on a new headquarters campus. The City continues to focus planning and capital efforts on the bus services including maintenance, replacement and facilities. A growing community interest in improving and even expanding bus operations along with direct federal oversight has led to a more focused planning process. To date, the City has invested in new building facilities, midlife and end of life bus overhauls, and acquisition of new busses. In future years, the City will focus on evaluating bus hub facilities, as well as continuing replacement of busses. The City continues to struggle with vacant and abandoned properties throughout the city. To address these issues, the City has implemented a number of programs including a vacant property registration program. This program has required banks to register foreclosed properties and ensures that financial institutions are taking the steps necessary to ensure safety and security of the property. The City has become more aggressive in identifying blighted housing and removing them or getting them restored and sold. The City actively works to identify neighborhoods that would benefit from strategic investment to encourage and foster single occupancy ownership and provides investment opportunities to match; such as through a Community Development Block Grant program to assist in rehabilitation or acquisition of property or rebates for residential energy efficiency improvements. Despite being the youngest city in Maine, Bangor has a substantial population of elderly in the community. In 2015, a City supported senior center closed down leading the City to take a more active role in livability for seniors. In 2016, the City joined the AARP livable community program, which outlines a process by which the City will identify specific action steps needed to position the City to better serve the senior population. The program focuses on walkable streets, housing and transportation options, access to key services and opportunities for residents to participate in community activities. II - 16 In 2014 the City initiated a public planning process to identify best practices for dealing with substance abuse issues that had emerged in our community. Around the same time, the Community Health Leadership Board (CHLB), a group representing major health and social services agencies was established to deal with public health issues facing the community. One of the first projects undertaken by the CHLB was to use the community report on substance abuse to form action steps for combatting the crisis. Since their formation a great deal of work has been done including a standardization of opioid prescribing protocols to be used in all major medical practices, and supporting and promoting the use of Narcan among local law enforcement agencies, promoting legislative changes on these issues of substance abuse including obtaining legislative support for drug court and social detox. Although there are limited resources for opioid treatment and recovery services, local partnerships within our community have realized substantive changes in the dealing with the opioid crisis. Progress has been made, notably; the number of opioid prescriptions written are down as are deaths because of opioid overdoses. Communication and Technology The City actively manages and updates its own website, which integrates with our service request and notification subscription system, posts to social media, and manages its own television channel, which broadcasts all City meetings and provides information on City programs and services and offers live streaming of all meetings. We continually work to ensure that we are providing the information citizens want in the form that best fits their need. The first public portal elements of the City’s recent project to implement an electronic content management (ECM) system went live. Anyone with internet access is now able to access council and committee related documents. This effort will continue in the coming years to convert paper records and expand upon the types of documents that are readily available. Tax Shift One of the largest challenges faced by the City of Bangor is the incremental nature of Federal and State budget decisions. While individual changes implemented over a number of sessions seem tolerable, the totality of these actions has resulted in a significant tax shift to municipalities. These actions include State legislative mandates to municipalities with no State funding such as; General Assistance, transfer of normal costs of teacher retirement and MaineCare changes and caps, and Statutory funding not upheld by the Legislature such as; funding of revenue sharing and aid to education. In a previous session, the Legislature took action to shift jail costs to County government, which in turn is shifted to municipalities via the county tax mechanism. The latest example of tax shifting is the 2018-2019 State of Maine Biennial budget. Due to an impasse within the Legislature, the State of Maine did shut down for a few days in July. While the Legislature and Governor were able to develop a budget to enact, that provided additional funding for Education, 41.6% of that funding for Bangor was redirected from a State reimbursement for the State Homestead Exemption Program. II - 17 Economic Factors and Next Year’s Budget and Rates The unemployment rate for the City of Bangor in 2017 was 3.7%, which continues to be on par with or below both the national and State rates of 4.4% and 3.8%, respectively. While Bangor represents less than 3% of the State’s population, businesses within the City generate 6.32% of the State’s retail sales tax. Residential valuations continue to increase slightly in the coming year. Value of commercial properties also continues to increase slightly after realizing significant downward adjustments in FY 2010. Bangor businesses continue to reinvest in personal property. While not subject to local taxation, the value of BETE property (net of depreciation) in FY 2018 increased $19.8 million, or 18.8%, for a total of $125.1 million. The fiscal year 2018 budget reflects the City’s historical results for these revenue sources, and actual results to date appear to be on track with budgetary estimates. User fees for governmental and business-type activities are reviewed on an annual basis to ensure that fee structures are sufficient to cover service costs. Many fees are adjusted annually for inflation. For fiscal year 2018, the City’s taxable assessed value increased approximately 1%, the impact of the increase in taxable value was significantly reduced due to the increase in the State Homestead Exemption; the associated tax revenue was not reimbursed to the City as required by State Statue. However, even with the failure of the State of Maine to reimburse municipalities for the increase in the Homestead Exemption, the slight net increase of .3% in taxable value, when coupled with increased State education funding resulted in a .2% increase in the tax rate for 2018. The budget allowed the City Council to provide a 1.50% increase to employees, maintain increased levels of investment in infrastructure, as well as fund assigned fund balances for future capital purchases on a current basis. Both residential and commercial construction and permitting remain generally flat. We continue to monitor key revenue areas such as: raising interest rates, automobile excise taxes, and property tax collection rates. Bangor serves as one of the largest retail markets in Maine. The Bangor Mall, Airport Mall, Broadway commercial center, Union Street commercial corridor, and the Bangor Center Development District (downtown) have long established Bangor as the hub of the six county eastern Maine retail market. Unfortunately, properties at the Bangor Mall are facing the same challenges that are facing retail centers around the country. Changes in retail markets due to the effects of on-line retail and the growth of experiential shopping trends has resulted in several stores, such as Macy’s and Sears closing their doors. The City is committed to working with owners of retail properties to identify opportunities for redevelopment. They may include investment of infrastructure as well as a review of zoning requirements that would enhance the ability to redevelop these properties in ways that reflect new trends. Developers have recently acquired the former Macy’s property, the Bangor Mall, and Kmart (adjacent to the Bangor Mall) properties. Additionally, The Airport Mall and Broadway Mall have recently changed ownership at above assessed value. The rest of the City’s commercial real estate vacancy rates are in-line and industrial properties are quite low. The City continues to focus on value-added sectors such as manufacturing and aviation, as well as the workforce challenges faced by our region, as we are facing extremely low unemployment II - 18 rates, but there is a mismatch between workforce skills and available employment opportunities. Beginning in the fall of 2018, the City will undertake a significant multi-million dollar sewer infrastructure project, the Davis Brook tank installation. This project is expected to span twenty-four months and involves the installation of a large 3.8 million gallon holding tank along the Penobscot River. This additional capacity is required to further reduce the number of discharges to the river of combined sewer overflows that occur within the City’s system during high flow events (i.e. rain, snow melt). This investment is being made to ensure continued compliance with the City’s consent decree with the Federal Environmental Protection Agency (a copy of which is available at the Wastewater Treatment Plant page of the City’s website www.bangormaine.gov). While the State of Maine’s 2018-2019 Biennial budget has been adopted, it is fairly common for the Legislature to enact supplemental budget provisions to the second year. The 2019 budget includes additional education funding beyond the 2018 level. With recent reductions in state income tax rates, the budget is predicated on other revenues stream keeping pace. If a supplemental budget is required at the State level, it is anticipated that any Legislative actions could negatively impact municipalities. Accordingly, city and school staff and elected officials will closely monitor legislative actions and continue to work collaboratively with other municipalities and professional organizations and actively participate in any upcoming legislative hearings. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City of Bangor’s finances. Questions concerning any of this information should be addressed to the Finance Director, City of Bangor, 73 Harlow Street, Bangor, ME 04401 or via email to finance@bangormaine.gov. BASIC FINANCIAL STATEMENTS II - 19 Exhibit 1 Component Unit Governmental Business-type Bangor Activities Activities Total Public Library ASSETS Cash and cash equivalents 23,369,593$ 8,629,474$ 31,999,067$ 236,370$ Investments 530,292 14,184,298 14,714,590 12,420,981 Receivables: Accounts (net of allowance of $535,075 and $705,000, respectively)934,966 6,601,378 7,536,344 63,317 Intergovernmental 5,451,728 907,182 6,358,910 - Taxes and liens - prior years 1,490,502 - 1,490,502 - Taxes receivable - current year 1,151,283 - 1,151,283 - Special assessments 30,130 - 30,130 - Loans and notes 6,427,274 1,678,142 8,105,416 - Internal balances 1,797,574 (1,797,574) - - Inventories 554,843 194,674 749,517 - Prepaid items 1,627,359 608,671 2,236,030 2,850 Other assets - 1,494,008 1,494,008 - Non-depreciable capital assets 7,500,650 7,343,354 14,844,004 - Depreciable capital assets, net 68,388,451 217,666,883 286,055,334 13,007,152 Total assets 119,254,645 257,510,490 376,765,135 25,730,670 DEFERRED OUTFLOWS OF RESOURCES Net pension 3,936,229 874,285 4,810,514 - Total deferred outflows of resources 3,936,229 874,285 4,810,514 - LIABILITIES Accounts payable and other current liabilities 2,606,083 3,491,555 6,097,638 142,544 Accrued wages and benefits payable 4,499,755 267,461 4,767,216 - Unearned revenues 127,584 689,496 817,080 - Noncurrent liabilities: Due within one year 7,688,843 4,668,919 12,357,762 108,235 Due in more than one year 64,602,814 80,793,164 145,395,978 59,936 Total liabilities 79,525,079 89,910,595 169,435,674 310,715 DEFERRED INFLOWS OF RESOURCES Deferred revenues - loans and assessments 4,518,751 - 4,518,751 - Net pension 1,277,172 477,061 1,754,233 - Total deferred inflows of resources 5,795,923 477,061 6,272,984 - NET POSITION Net investment in capital assets 49,367,869 153,328,264 202,696,133 12,898,917 Restricted for: Nonexpendable trust principal 525,249 - 525,249 4,425,016 Expendable income 514,652 - 514,652 7,537,149 Grants and other balances 2,507,815 - 2,507,815 - Unrestricted (15,045,713) 14,668,855 (376,858) 558,873 Total net position 37,869,872$ 167,997,119$ 205,866,991$ 25,419,955$ See accompanying notes to financial statements. CITY OF BANGOR, MAINE Statement of Net Position June 30, 2017 Primary Government II - 20 Exhibit 2 Operating Capital Component UnitCharges for grants and grants and Governmental Business-type BangorFunctions/programs Expenses services contributions contributions activities activities Total Public Library Primary government Governmental activities: General government 6,953,399$ 2,117,874$ 2,535$ -$ (4,832,990)$ -$ (4,832,990)$ -$ Public safety 18,841,238 3,013,577 392,233 248,744 (15,186,684) - (15,186,684) - Health, community services and recreation 9,497,729 1,266,221 5,859,952 - (2,371,556) - (2,371,556) - Public services 15,997,665 3,637,836 2,839 - (12,356,990) - (12,356,990) - Other agencies 5,049,394 - - 2,080,390 (2,969,004) - (2,969,004) - Education 55,079,037 5,705,049 24,452,216 - (24,921,772) - (24,921,772) - Arena development 801,439 1,838,285 - - 1,036,846 - 1,036,846 - Community development 1,335,282 442,445 859,126 62,546 28,835 - 28,835 - Public transportation 3,273,876 774,195 2,303,751 - (195,930) - (195,930) - Economic development (tif)711,220 - - - (711,220) - (711,220) - Interest on debt 2,142,976 - - - (2,142,976) - (2,142,976) - Total governmental activities 119,683,255 18,795,482 33,872,652 2,391,680 (64,623,441) - (64,623,441) - Business-type activities: Sewer Utility 7,725,453 8,634,449 - 183,717 - 1,092,713 1,092,713 - Airport 21,217,373 15,870,081 - 3,492,988 - (1,854,304) (1,854,304) - Stormwater Utility 509,884 1,053,892 - - - 544,008 544,008 - Parking 1,037,558 1,008,494 - - - (29,064) (29,064) - Bass Park 7,886,589 3,387,105 - 100,000 - (4,399,484) (4,399,484) - Municipal Golf Course 604,127 644,303 - - - 40,176 40,176 - Economic Development 466,485 503,905 - - - 37,420 37,420 - Total business-type activities 39,447,469 31,102,229 - 3,776,705 - (4,568,535) (4,568,535) - Total primary government 159,130,724$ 49,897,711$ 33,872,652$ 6,168,385$ (64,623,441) (4,568,535) (69,191,976) - Component unitBangor Public Library 2,795,795$ 34,610$ 2,182,454$ 69,584$ - - - (509,147)$ General revenues: Property taxes, levied for general purposes 56,721,029 1,100,000 57,821,029 - Payment in lieu of taxes 233,683 - 233,683 - Excise taxes 6,170,792 - 6,170,792 - Franchise taxes 346,303 - 346,303 - Grants and contributions not restricted to specific programs: Homestead/BETE exemption 2,214,078 - 2,214,078 - Other State aid 24,600 - 24,600 - State Revenue Sharing 2,225,464 - 2,225,464 - Unrestricted investment earnings 380,580 555,259 935,839 1,053,090 Gain on sale of assets 62,180 931,275 993,455 - Transfers (1,675,055) 1,675,055 - - Total general revenues and transfers 66,703,654 4,261,589 70,965,243 1,053,090 Change in net position 2,080,213 (306,946) 1,773,267 543,943 Net position, beginning of year 35,789,659 168,304,065 204,093,724 24,876,012 Net position, end of year 37,869,872$ 167,997,119$ 205,866,991$ 25,419,955$ See accompanying notes to financial statements. Program Revenues in net positionPrimary Government Net (expense) revenue and changes CITY OF BANGOR, MAINEStatement of ActivitiesFor the Fiscal Year Ended June 30, 2017 II - 2\1 Exhibit 3CITY OF BANGOR, MAINE Balance SheetGovernmental Funds June 30, 2017 Community Capital Other Total Development Arena Projects Governmental GovernmentalGeneralBlock Grant Fund Fund Funds Funds ASSETS Cash and cash equivalents 18,878,973$ 120,579$ 501,915$ 2,665,269$ 1,202,857$ 23,369,593$ Investments 50,000 - - 349,299 130,993 530,292 Receivables:Taxes 2,641,785 - - - - 2,641,785 Accounts (net of allowance of $535,075)578,077 55,000 115,276 62,546 124,067 934,966 Interfund 1,935,404 - - - - 1,935,404 Intergovernmental 5,003,018 22,037 - 323,769 102,904 5,451,728 Loans and notes 535,372 4,328,621 - - 1,563,281 6,427,274 Unearned special assessments - - - 30,130 - 30,130 Inventory, at cost 554,843 - - - - 554,843 Prepaid items 507,130 - - 1,120,229 - 1,627,359 Total assets 30,684,602 4,526,237 617,191 4,551,242 3,124,102 43,503,374 LIABILITIES Accounts payable 1,345,499 49,290 3,900 741,404 94,289 2,234,382 Accrued wages and benefits payable 4,495,658 4,097 - - - 4,499,755 Interfund loans payable - - - - 137,830 137,830 Unearned revenues - 49,286 - 78,298 - 127,584 Due to rehabilitation recipients - 44,132 - - - 44,132 Total liabilities 5,841,157 146,805 3,900 819,702 232,119 7,043,683 DEFERRED INFLOWS OF RESOURCESUnavailable revenues - property taxes 2,215,800 - - - - 2,215,800 Unavailable revenues - loans - 4,328,621 - - 160,000 4,488,621 Unavailable revenues - special assessments - - - 30,130 - 30,130 Total deferred inflows of resources 2,215,800 4,328,621 - 30,130 160,000 6,734,551 FUND BALANCES (Note J) Nonspendable 2,962,473 - - 1,120,229 525,249 4,607,951 Restricted 764,922 50,811 - - 2,206,734 3,022,467 Committed 288,743 - 613,291 - - 902,034 Assigned 6,439,941 - - 2,581,181 - 9,021,122 Unassigned 12,171,566 - - - - 12,171,566 Total fund balances 22,627,645 50,811 613,291 3,701,410 2,731,983 29,725,140 Total liabilities, deferred inflows of resources and fund balances 30,684,602$ 4,526,237$ 617,191$ 4,551,242$ 3,124,102$ 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, therefore, are not reported in the funds.75,889,101 Unavailable revenues - property taxes are not available to pay for current-period expenditures and, therefore, are deferred in the funds.2,215,800 Long-term liabilities, including bonds payable $54,988,615, accrued interest $327,569, accrued compensated absences $2,098,318, self insurance liability $2,572,145, net OPEB obligation $3,123,960, bond premium $513,554, capital leases $181,526 and net pension liability, including deferred outflows and inflows of resources $6,154,482 are not due and payable in the current period and, therefore, are not reported in the funds.(69,960,169) Net position of governmental funds 37,869,872$ See accompanying notes to financial statements. II - 22 Exhibit 4 CITY OF BANGOR, MAINE Statement of Revenues, Expenditures and Changes in Fund Balances Governmental FundsFor the Fiscal Year Ended June 30, 2017 Community Capital Other Total Development Arena Projects Governmental Governmental General Block Grant Fund Fund Funds Funds RevenuesTaxes 61,629,388$ -$ -$ 1,920,385$ -$ 63,549,773$ Intergovernmental 30,662,625 779,410 - 2,276,585 6,787,748 40,506,368 Licenses and permits 644,795 - - - - 644,795 Charges for services 14,751,088 - - - 774,195 15,525,283 Program income - 407,403 - - - 407,403 Revenue from use of money and property 761,454 - 1,838,285 12,029 82,179 2,693,947 Other 18,623 35,042 - 115,095 107,011 275,771 Total revenues 108,467,973 1,221,855 1,838,285 4,324,094 7,751,133 123,603,340 ExpendituresCurrent:General government 5,133,047 - - - - 5,133,047 Public safety 17,330,311 - - - - 17,330,311 Health, community services and recreation 4,972,166 - - - - 4,972,166 Public services 10,907,018 - - - - 10,907,018 Other agencies 4,886,577 - - - - 4,886,577 Education 54,722,897 - - - - 54,722,897 Tax increment financing 711,220 - - - - 711,220 Unclassified 31,213 - 13,355 - - 44,568 Restricted grants - 1,167,891 - - 7,631,139 8,799,030 Capital outlay 906,169 - - 8,513,227 - 9,419,396 Debt service 5,687,035 - - 1,747,435 - 7,434,470 Total expenditures 105,287,653 1,167,891 13,355 10,260,662 7,631,139 124,360,700 Excess (deficiency) of revenues over (under) expenditures 3,180,320 53,964 1,824,930 (5,936,568) 119,994 (757,360) Other financing sources (uses)Sale of assets 122,683 - - 21,686 - 144,369 Transfers to other funds (2,319,912) - (1,798,780) (58,891) (60,732) (4,238,315) Transfers from other funds 56,331 - - 2,505,919 1,010 2,563,260 Total other financing sources (uses)(2,140,898) - (1,798,780) 2,468,714 (59,722) (1,530,686) Changes in fund balances 1,039,422 53,964 26,150 (3,467,854) 60,272 (2,288,046) Fund balances, beginning of year 21,588,223 (3,153) 587,141 7,169,264 2,671,711 32,013,186 Fund balances, end of year 22,627,645$ 50,811$ 613,291$ 3,701,410$ 2,731,983$ 29,725,140$ See accompanying notes to financial statements. II - 23 Exhibit 5 CITY OF BANGOR, MAINEReconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2017 Net change in fund balances - total governmental funds (from Exhibit 4)(2,288,046)$ Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays of $4,600,669 exceeds loss on disposal of assets of $82,189 and depreciation expense of $4,049,900.468,580 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. This represents the change (226,997) in unavailable revenues. Financing proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Governmental funds report the effects of premiums and discounts when debt is issued, but these amounts are deferred and amortized in the statement of activities. The City amortized bond premiums of $53,728. Repayment of bond and capital lease principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the state of net position. For the year, the amount of the repayments was $7,307,021.7,360,749 Some items reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in governmental fund statements. The differences are as follows: increase in net OPEB obligation ($196,464), self insurance liability ($312,196), net pension liability including deferred outflows and inflows of ($2,816,018) and decreases in accrued compensated absences ($36,696) and interest ($53,909).(3,234,073) Change in net position of governmental activities (see Exhibit 2)2,080,213$ See accompanying notes to financial statements. II - 24 Exhibit 6 CITY OF BANGOR, MAINE Statement of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual General FundFor the Fiscal Year Ended June 30, 2017 Variance with Final Budget Positive Original Final Actual (Negative) Revenues Taxes 60,123,256$ 60,123,256$ 61,629,388$ 1,506,132$ Intergovernmental 26,935,261 26,942,331 27,605,530 663,199 Licenses and permits 620,243 620,243 644,795 24,552 Charges for services: municipal 8,486,790 8,486,790 8,944,785 457,995 school 4,635,338 4,635,338 5,705,049 1,069,711 Fines, forfeits and penalties 23,000 23,000 18,623 (4,377) Revenue from use of money and property municipal 650,150 650,150 727,792 77,642 Total revenues 101,474,038 101,481,108 105,275,962 3,794,854 Expenditures Current: General government 5,339,462 5,339,462 5,292,146 47,316 Public safety 17,906,407 17,920,837 17,380,180 540,657 Health, community services and recreation 5,119,606 5,119,606 4,972,166 147,440 Public buildings and services 10,835,284 10,835,284 10,929,752 (94,468) Other agencies 4,889,336 4,889,336 4,880,069 9,267 Education 51,484,510 54,029,216 51,709,777 2,319,439 Unclassified 809,378 809,378 748,941 60,437 Debt service 5,687,035 5,687,035 5,687,035 - Total expenditures 102,071,018 104,630,154 101,600,066 3,030,088 Excess (deficiency) of revenues over (under) expenditures (596,980) (3,149,046) 3,675,896 6,824,942 Other financing sources (uses) Appropriation from restricted, committed and assigned fund balances 1,257,480 1,257,480 7,480 (1,250,000) Appropriation to assigned fund balance - - (1,220,686) (1,220,686) Sale of assets 74,000 74,000 31,694 (42,306) Contributions - 7,360 7,391 31 Insurance settlements 52,500 52,500 75,634 23,134 Transfers to other funds (814,000) (814,000) (1,350,614) (536,614) Transfers from other funds 27,000 27,000 21,600 (5,400) Total other financing sources (uses)596,980 604,340 (2,427,501) (3,031,841) Net change in fund balance -$ (2,544,706)$ 1,248,395 3,793,101$ Unassigned fund balance, beginning of year 11,315,235 Changes in fund balance classification in accordance with GAAP Changes in balances carried (568,230) Inventory and prepaids (GASB 54)176,166 Unassigned fund balance, end of year 12,171,566$ See accompanying notes to financial statements. Budgeted amounts Continued on next page II - 25 Exhibit 7 CITY OF BANGOR, MAINE Statement of Net Position Proprietary Funds June 30, 2017 Business-type Activities - Enterprise Funds Sewer Nonmajor Total Utility Airport Bass Park Proprietary Proprietary Fund Fund Fund Funds Funds ASSETS Current assets Cash and cash equivalents 2,778,998$ 1,426,396$ 1,003,050$ 3,421,030$ 8,629,474$ Investments 8,961 11,892,915 - - 11,901,876 Accounts receivable 3,187,696 3,457,434 275,858 385,390 7,306,378 Less allowance for uncollectible accounts (45,000) (660,000) - - (705,000) Net accounts receivable 3,142,696 2,797,434 275,858 385,390 6,601,378 Due from other governments - 907,182 - - 907,182 Inventories, at cost - 166,658 28,016 - 194,674 Prepaid items 40,220 369,637 69,031 129,783 608,671 Total current assets 5,970,875 17,560,222 1,375,955 3,936,203 28,843,255 Noncurrent assets Capital Assets: Land and improvements 683,865 - 579,157 5,008,359 6,271,381 Buildings and improvements 29,026,578 - 68,958,075 4,587,329 102,571,982 Machinery and equipment 6,611,064 - 2,020,234 553,257 9,184,555 Infrastructure 63,603,710 - - 683,189 64,286,899 Aircraft operational assets - 294,013,860 - - 294,013,860 Parking structures - - - 11,372,837 11,372,837 Construction in process 3,702,321 180,869 - 65,026 3,948,216 Total capital assets 103,627,538 294,194,729 71,557,466 22,269,997 491,649,730 Less accumulated depreciation (47,438,201) (193,767,768) (11,882,040) (13,551,484) (266,639,493) Net capital assets 56,189,337 100,426,961 59,675,426 8,718,513 225,010,237 Investments - 2,282,422 - - 2,282,422 Loans receivable - 281,846 - 1,396,296 1,678,142 Due from bond trustee 1,494,008 - - - 1,494,008 Total noncurrent assets 57,683,345 102,991,229 59,675,426 10,114,809 230,464,809 Total assets 63,654,220 120,551,451 61,051,381 14,051,012 259,308,064 DEFERRED OUTFLOWS OF RESOURCES Net pension 220,357 634,999 - 18,929 874,285 Total deferred outflows of resources 220,357 634,999 - 18,929 874,285 See accompanying notes to financial statements. Continued from previous page II - 26 Exhibit 7 (con't) CITY OF BANGOR, MAINE Statement of Net Position Proprietary Funds June 30, 2017 Business-type Activities - Enterprise Funds Sewer Nonmajor Total Utility Airport Bass Park Proprietary Proprietary Fund Fund Fund Funds Funds LIABILITIES Current liabilities Accounts payable 793,073 1,118,810 304,186 166,407 2,382,476 Accrued wages and benefits payable 39,062 150,566 58,850 18,983 267,461 Accrued interest 57,450 52,391 946,402 52,836 1,109,079 Workers' compensation 20,000 138,266 - 1,953 160,219 Interfund loans payable - - 1,797,574 - 1,797,574 General obligation debt payable 1,631,986 606,758 1,202,234 608,951 4,049,929 Capital lease obligation payable - - 9,478 - 9,478 Accrued compensated absences 70,564 268,903 - 19,115 358,582 Unearned revenue - - 689,496 - 689,496 Other liabilities - - 90,711 - 90,711 Total current liabilities 2,612,135 2,335,694 5,098,931 868,245 10,915,005 Long-term liabilities Workers' compensation - 142,949 - 8,047 150,996 General obligation debt payable 13,160,080 8,045,255 49,892,322 3,909,412 75,007,069 Capital lease obligation payable - - 10,548 - 10,548 Accrued compensated absences 55,279 143,118 - 14,871 213,268 Net OPEB obligation 196,089 683,098 - 43,594 922,781 Net pension liability 541,226 1,559,643 - 46,493 2,147,362 Other long-term liabilities 156,498 - 2,184,642 - 2,341,140 Total long-term liabilities 14,109,172 10,574,063 52,087,512 4,022,417 80,793,164 Total liabilities 16,721,307 12,909,757 57,186,443 4,890,662 91,708,169 DEFERRED INFLOWS OF RESOURCES Net pension 120,240 346,492 - 10,329 477,061 Total deferred inflows of resources 120,240 346,492 - 10,329 477,061 NET POSITION Net investment in capital assets 43,627,040 94,571,999 9,820,801 5,308,424 153,328,264 Unrestricted 3,405,990 13,358,202 (5,955,863) 3,860,526 14,668,855 Total net position 47,033,030$ 107,930,201$ 3,864,938$ 9,168,950$ 167,997,119$ See accompanying notes to financial statements. II - 27 Exhibit 8 CITY OF BANGOR, MAINE Statement of Revenues, Expenses and Changes in Net Position Proprietary FundsFor the Fiscal Year Ended June 30, 2017 Business-type Activities - Enterprise Funds Sewer Nonmajor Total Utility Airport Bass Park Proprietary Proprietary Fund Fund Fund Funds Funds Operating revenues Charges for services 8,634,449$ 15,870,081$ 3,387,105$ 3,210,594$ 31,102,229$ Total operating revenues 8,634,449 15,870,081 3,387,105 3,210,594 31,102,229 Operating expenses Operating expenses other than depreciation and amortization 5,581,982 12,760,491 3,110,424 1,947,355 23,400,252 Depreciation and amortization 1,859,038 8,090,205 2,954,733 512,846 13,416,822 Total operating expenses 7,441,020 20,850,696 6,065,157 2,460,201 36,817,074 Operating income (loss)1,193,429 (4,980,615) (2,678,052) 750,393 (5,714,845) Nonoperating revenue (expenses) Interest income 194,764 221,981 - 138,514 555,259 Interest expense (284,433) (366,677) (1,821,432) (157,853) (2,630,395) Taxes (Downtown TIF)- - 1,100,000 - 1,100,000 Gain on sale of assets 7,411 - - 923,864 931,275 Total nonoperating revenue (expenses)(82,258) (144,696) (721,432) 904,525 (43,861) Net income (loss) before grants/contributions and transfers 1,111,171 (5,125,311) (3,399,484) 1,654,918 (5,758,706) Grants/contributions received for capital assets 183,717 3,492,988 100,000 - 3,776,705 Transfers to other funds (25,000) - - (121,875) (146,875) Transfers from other funds 23,150 - 1,798,780 - 1,821,930 Change in net position 1,293,038 (1,632,323) (1,500,704) 1,533,043 (306,946) Net position, beginning of year 45,739,992 109,562,524 5,365,642 7,635,907 168,304,065 Net position, end of year 47,033,030$ 107,930,201$ 3,864,938$ 9,168,950$ 167,997,119$ See accompanying notes to financial statements. Continued on next page II - 28 Exhibit 9 CITY OF BANGOR, MAINE Statement of Cash Flows - Proprietary Funds For the Fiscal Year Ended June 30, 2017 Business-type Activities - Enterprise Funds Sewer Nonmajor Total Utility Airport Bass Park Proprietary Proprietary Fund Fund Fund Funds Funds Cash flows from operating activities Cash received from customers 8,943,837$ 18,521,284$ 3,065,050$ 3,333,560$ 33,863,731$ Cash paid to suppliers for goods and services (3,593,136) (5,550,366) (3,300,901) (1,032,075) (13,476,478) Cash paid to employees for services (1,850,920) (6,703,692) - (822,558) (9,377,170) Net cash provided by (used in) operating activities 3,499,781 6,267,226 (235,851) 1,478,927 11,010,083 Cash flows from noncapital financing activities Interfund loans (repayments)- (6,225,775) - - (6,225,775) Taxes (Downtown TIF)- - 1,100,000 - 1,100,000 Transfers in 23,150 - 1,798,780 - 1,821,930 Transfers out (25,000) - - (121,875) (146,875) Net cash provided by (used in) noncapital financing activities (1,850) (6,225,775) 2,898,780 (121,875) (3,450,720) Cash flows from capital and related financing activities Proceeds from general obligation bonds 4,280,000 - - - 4,280,000 Acquisition and construction of capital assets (4,429,957) (4,135,140) - (197,507) (8,762,604) Principal paid on general obligation bonds/capital leases (1,579,986) (584,818) (1,152,375) (590,769) (3,907,948) Interest paid on general obligation bonds (278,822) (365,218) (1,939,590) (168,574) (2,752,204) Proceeds from sale of property 7,411 - - 1,125,000 1,132,411 Grant/contribution monies received for capital assets 183,717 5,454,730 100,000 - 5,738,447 Net cash provided by (used in) capital and related financing activities (1,817,637) 369,554 (2,991,965) 168,150 (4,271,898) Cash flows from investing activities Net sales (purchases) of investments 271,056 700,743 - - 971,799 Investment of unexpended bond proceeds (812,062) - - - (812,062) Interest on investments 194,764 221,981 - 171,033 587,778 Loan repayments - 86,407 - - 86,407 Net cash provided by (used in) investing activities (346,242) 1,009,131 - 171,033 833,922 Net increase (decrease) in cash 1,334,052 1,420,136 (329,036) 1,696,235 4,121,387 Cash, beginning of year 1,444,946 6,260 1,332,086 1,724,795 4,508,087 Cash, end of year 2,778,998$ 1,426,396$ 1,003,050$ 3,421,030$ 8,629,474$ Schedule of noncash investing, capital and financing activities: During the year, the Airport Fund had an unrealized gain on investments in the amount of $403,750 and expended $284,718 in capital asset acquisition costs to be reimbursed by Federal and State grants in a subsequent year. See accompanying notes to financial statements. Continued from previous page II - 29 Exhibit 9 (con't) CITY OF BANGOR, MAINE Statement of Cash Flows - Proprietary FundsFor the Fiscal Year Ended June 30, 2017 Business-type Activities - Enterprise Funds Sewer Nonmajor Total Utility Airport Bass Park Proprietary Proprietary Fund Fund Fund Funds Funds Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss)1,193,429$ (4,980,615)$ (2,678,052)$ 750,393$ (5,714,845)$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 1,859,038 8,090,205 2,954,733 512,846 13,416,822 Changes in assets and liabilities: (Increase) decrease in accounts receivable 309,388 2,651,203 37,152 106,517 3,104,260 (Increase) decrease in inventories - 40,279 3,991 - 44,270 (Increase) decrease in prepaid items 9,807 (10,255) 25,051 11,364 35,967 Increase (decrease) in accounts payable (92,314) (103,596) (167,935) 69,168 (294,677) Increase (decrease) in unearned revenue - - (359,207) - (359,207) Increase (decrease) in other liabilities 220,433 580,005 (51,584) 28,639 777,493 Total adjustments 2,306,352 11,247,841 2,442,201 728,534 16,724,928 Net cash provided by (used in) operating activities 3,499,781$ 6,267,226$ (235,851)$ 1,478,927$ 11,010,083$ See accompanying notes to financial statements. II - 30 Exhibit 10 CITY OF BANGOR, MAINE Statement of Fiduciary Net Position Fiduciary Funds June 30, 2017 Agency Fund ASSETS Cash and cash equivalents $136,926 Total assets 136,926 LIABILITIES Amounts held for others 136,926 Total liabilities $136,926 See accompanying notes to financial statements. INDEX OF NOTES TO THE FINANCIAL STATEMENTS Note Page Summary of Significant Accounting Policies A Reporting Entity II – 31 B Government-wide and Fund Financial Statements II – 31 C Measurement Focus, Basis of Accounting and Basis of Presentation II – 32 D Assets, Liabilities, Deferred Inflows/Outflows and Equity II – 34 Stewardship, Compliance and Accountability A Budgetary Information II – 38 B Reconciliation of Budgetary Basis Statements II – 39 C Excess of Expenditures Over Appropriations II – 39 D Restricted Assets II – 39 Detailed Notes on All Funds A Deposits and Investments II – 40 B Property Tax II – 41 C Capital Assets II – 42 D Interfund Transactions II – 43 E Due From Other Governments II – 44 F Leases II – 44 G Other Assets II – 46 H Unearned Revenue II – 46 I Long-Term Debt II – 46 J Fund Balances II – 50 K Net Position II – 51 Other Information A Risk Management II – 51 B Tax Increment Financing Districts II – 52 C Contingent Liabilities II – 53 D Retirement II – 53 E Other Postemployment Benefits II – 58 F Subsequent Events II – 59 II - 31 CITY OF BANGOR, MAINE Notes to the Financial Statements June 30, 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Bangor was incorporated under the laws of the State of Maine in 1834 and operates under a council/manager form of government. In evaluating how to define the reporting entity, for financial reporting purposes, management has considered all potential component units. The criteria used to determine which entities, agencies, commissions, boards and authorities are part of the City’s operations include how the budget is adopted, whether debt is secured by general obligation of the City, the City’s duty to cover any deficits that may occur, and supervision over the accounting functions. The Bangor Public Library is a nonprofit organization, which operates under the control of a nine- member Board of Trustees. The Bangor City Council appoints four members and the City of Bangor Charter appoints a fifth member. The Board has the power to hire officers, approve the budget and direct the operations of the Library. However, the Library is financially dependent upon the City in that the City provides approximately 60% of the operating financial support received by the Library during the year ended June 30, 2017. The City believes that the financial statements would be incomplete without the inclusion of the Library as a discretely presented component unit. Complete financial statements may be obtained from the Bangor Public Library, 145 Harlow Street, Bangor, ME 04401. The City of Bangor is a member of the Joint Venture of the Equity Charter Municipalities of Municipal Review Committee, Inc (Joint Venture). The Joint Venture is an organization that resulted from a contractual arrangement between certain member municipalities, Penobscot Energy Recovery Company (PERC) and Bangor Hydro Electric Company. It was formed to pool resources of the Equity Charter Municipalities for the long-term goal of handling the disposal of their present and projected volumes of non-hazardous municipal solid waste. As of December 31, 2016 (most recent data available) the City of Bangor’s share of the Joint Venture’s net position was $5,385,036. Complete financial statements may be obtained from Municipal Review Committee, 395 State Street, Ellsworth, ME 04605. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support, as well as from legally separate component units for which the City is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City has elected not to allocate indirect costs among the programs, functions and segments. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 32 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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 funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as certain compensated absences and claims and judgments, are recorded only when the payment is due. Those revenues susceptible to accrual are property taxes, interest, and charges for services. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Community Development Block Grant Fund accounts for federal grants obtained and expended under the Housing and Community Development Act of 1974, as amended, for the development of viable urban communities. The Arena Fund accounts for the percentage of slot revenues received by the City from the operation of the casino. Said funds will be used to fund a portion of the debt service related to the construction of the Cross Insurance Center. The Capital Projects Fund accounts for the acquisition of capital assets or construction of major capital projects not being financed by proprietary or fiduciary funds. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 33 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED The City reports the following major proprietary funds: The Sewer Utility fund accounts for the costs of construction and operation of the sewage treatment plant, the City sewer system, and sewer operation activities, and is self-supported through sewer user fees. The Airport Fund accounts for the operation of Bangor International Airport. The principal sources of revenues are landing fees and the sale of aviation fuel. Other revenue sources include lease payments for the use of terminal space and non-aviation industrial buildings. The Bass Park Fund accounts for the operation of the Cross Insurance Center, a harness racing track and the Bangor State Fair. Principal sources of revenue are admissions, concession sales and rentals. The fund is named after the Bass family, which bequeathed the property to the City for recreational purposes. Additionally, the City reports the following fund type: Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. The City’s fiduciary funds include the following fund type: Agency funds account for assets the City holds for others in an agency capacity. They are custodial in nature and do not present results of operations of the City or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. The City serves as an agent for various School Activity funds. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s public services function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s proprietary fund are charges to customers for sales and services. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 34 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED D. Assets, Liabilities, Deferred Inflows/Outflows and Equity 1. Deposits and Investments Cash includes amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the City. State statutes authorize the City to invest in obligations of the U. S. Treasury, commercial paper, corporate bonds and repurchase agreements. City policy prohibits the investment in so-called “derivative instruments”. Investments are reported at fair value. Fair value is measured using a hierarchy established by generally accepted accounting principles. Level 1 investments are based on quoted prices in active markets for identical assets, Level 2 investments are based on significant other observable inputs and Level 3 investments are based on significant unobservable inputs. Income earned from the investment of pooled cash is allocated to various funds based upon the average cash balance allocated to the fund. 2. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “interfund loans” (i.e., current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Advances between funds are offset by nonspendable fund balance accounts in applicable governmental funds to indicate that they are not available for appropriation and are not expendable, available financial resources. 3. Inventories and Prepaid Items Inventories consist of expendable supplies held for consumption and are valued at cost using the weighted average method. 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. The cost of inventories and prepaid items are recognized as expenditures/expenses when consumed or used rather than when purchased. 4. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, sewer mains and similar items), 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 with an initial, individual cost of more than $10,000 for machinery/equipment/vehicles, $25,000 for land/buildings and improvements and $100,000 for infrastructure and an estimated useful life in excess of CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 35 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. The costs of normal repairs and maintenance 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. If material, interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, and equipment of the primary government is depreciated using the straight-line method over the assets' estimated useful lives. The range of useful lives used to compute depreciation are as follows: Buildings 25 – 50 years Equipment 5 – 20 years Infrastructure 10 – 50 years Airport Operational 5 – 40 years Parking Structures 10 – 20 years 5. Deferred Inflows/Outflows of Resources In addition to assets and liabilities, the statement of net position will sometimes report separate sections for deferred outflows and inflows of resources. These separate financial statement elements represent a consumption or acquisition of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) or inflow of resources (revenue) until that time. The governmental funds only report a deferred inflow of resources, unavailable revenue from property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The governmental activities have deferred outflows and inflows that relate to the net pension liability, which include the City’s contribution subsequent to the measurement date, which is recognized as a reduction of the net pension liability in the subsequent year. They also include changes in assumptions, differences between expected and actual experience, changes in proportion and differences between the City’s contributions and proportionate share of contributions, which are deferred and amortized over the average expected remaining service lives of active and inactive members in the plan. They also include the net difference between projected and actual earnings on pension plan investments, which is deferred and amortized over a five-year period. In addition, the governmental activities and governmental funds have deferred outflows that related to community development loans and special assessments. These amounts are considered unavailable and recognized as an inflow of resources (revenue) in the period that the amounts become available. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 36 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 6. Compensated Absences Accumulated vacation or compensatory time or vested sick leave of governmental funds that is expected to be liquidated with expendable available resources is reported as an expenditure in respective fund financial statements only if the liability has matured, for example, as a result of employee resignations and retirements. All accumulated leave, including that which is not expected to be liquidated with expendable available financial resources, is reported in the government-wide financial statements. Accumulated leave of Enterprise Funds is recorded as an expense and liability of the respective fund as the benefits accrue to employees. No liability is recorded for non-accumulating rights to receive sick pay benefits. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight- line method. Bonds payable are reported net of the applicable bond premium or discount, if material. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Fund Equity In the fund financial statements, governmental funds report fund balances in one of five possible classifications. Classification is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which the funds can be spent. The categories are as follows: Nonspendable fund balance cannot be spent. Restricted fund balances are subject to externally enforceable legal restrictions. Committed fund balances are subject to limitations the City Council has imposed, that are binding unless removed or modified by the passage of a Council Order. Assigned fund balances reflect the intended use of the resources. The City Council adopted a comprehensive fund balance policy which authorized itself and the Finance Director and City Manager, within defined limits, with the authority to assign fund balances. Unassigned fund balances are resources which have not been classified in any other category. Only the General Fund can report a positive unassigned fund balance amount. Should there be multiple sources of funding available for a particular purpose, it is the City’s policy to expend currently budgeted resources first, then use other sources in the order of restricted, then committed, then assigned, then unassigned amounts. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 37 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 9. Allowance for Uncollectible Accounts and Loans Allowances for uncollectible accounts are maintained for all types of receivables, which historically experience uncollectible accounts. Allowances for uncollectible loans are established when the City determines its ability to collect the outstanding loan balance has been impaired. 10. Pensions For purposes of measuring the net pension liability (MePers liability), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Maine Public Employees Retirement System Consolidated Plan for Participating Local Districts (PLD Plan) and Maine Public Employees Retirement System State Employee and Teacher Plan (SET Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 11. Use of Estimates Preparation of the City’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent items at the date of the financial statements and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 38 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Budgets are prepared on a modified accrual basis of accounting, with the exception of depreciation within the enterprise funds. Budgets for the General Fund and enterprise funds are formally adopted each year through the passage of an appropriation resolve. Budgets for special revenue and capital projects funds have adopted project-length budgets. Unencumbered appropriations lapse at fiscal year end. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting is employed in governmental funds. Encumbrances (i.e., purchase orders, contracts, and other commitments) outstanding at year end are reported in assigned fund balance and do not constitute expenditures or liabilities because the commitments have not been honored in the current year. For budgetary purposes, encumbrances are treated as expenditures within both governmental and proprietary fund types. On or before the second Monday in April, the City Manager submits to the City Council a proposed operating budget for the ensuing fiscal year. The Council holds public meetings and a final budget must be prepared and adopted no later than June 30th. Should the Council fail to adopt an operating budget on or before June 30th, by Charter, the budget proposed by the City Manager becomes effective. The budget is adopted at the department level through the passage of appropriation resolves. The City Manager may make transfers of appropriations within a department. Transfers between departments or additional appropriations require the approval of the City Council. The City Council made several supplementary budgetary appropriations throughout the year, none of which were material. Maine Public Employees Retirement contributions are made by the State of Maine on behalf of the School Department. These amounts have not been budgeted in the General Fund and result in a difference in reporting on a budgetary basis of accounting vs. reporting under accounting principles generally accepted in the United States of America of $3,057,095. These amounts have been included as intergovernmental revenue and education expenditures in the general fund on the Statement of Revenues, Expenditures and Changes in Fund Balances (Exhibit 4) and in the entity-wide Statement of Activities (Exhibit 2). There is no effect on fund balance or net position at the end of the year. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 39 Excess of revenues and other financing sources over expenditures and other financing uses (Budget)1,248,395$ Activity in assigned fund balance 293,032 2017 encumbrances 1,428,752 2016 encumbrances paid (1,928,009) 2016 encumbrances lapsed (2,748) Excess of revenues and other financing sources over expenditures and other uses (GAAP)1,039,422$ STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY, CONTINUED B. Reconciliation of Budgetary Basis Statements The following schedule reconciles the General Fund amounts on the Statement of Revenues, Expenditures, and Changes in Unassigned Fund Balance—Budget and Actual—Budgetary Basis to the amounts on the Statement of Revenues, Expenditures, and Changes in Fund Balances, Governmental Funds: C. Excess of Expenditures Over Appropriations The following General Fund departments were over-expended by the indicated dollar amounts; Executive $45,627, Public Transportation $109,255, Planning, econ dev., code enforcement $11,188 and Public buildings and services $94,468. These over-expenditures were funded by receipt of revenues in excess of appropriations and under-expenditures within other General Fund departments. D. Restricted Assets Donations received by the City whose use is limited are placed in the appropriate Special Revenue fund, depending upon whether or not the principal can be expended. All changes in market value are added to the earnings, which is allowable by State Statute. As these amounts are invested in a note receivable, there was no change in market value for fiscal year 2017. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 40 Investment types Rating Fair Value Not Applicable <1 1-5 6-10 Mutual Funds 11,665,043$ 11,665,043$ -$ -$ -$ Repurchase Agreements 11,186 11,186 - - - US Treasuries AA 2,532,085 - 249,663 2,027,384 255,038 Common Stock 456,276 456,276 - - - Certificate of Deposit 50,000 - 50,000 - - Totals 14,714,590$ 12,132,505$ 299,663$ 2,027,384$ 255,038$ Maturity (years) Level 1 Level 2 Level 3 Investment types Fair Value Inputs Inputs Inputs Mutual Funds 11,665,043$ 11,665,043$ -$ -$ US Treasuries 2,532,085 2,532,085 - - Common Stock 456,276 456,276 - - Totals 14,653,404$ 14,653,404$ -$ -$ DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City maintains a cash pool that is available for use by all funds. In addition, cash and investments are separately held by several of the funds. Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned. The City does not have a policy with respect to custodial credit risk for deposit accounts. The City maintained certain accounts whose balances were fully covered, for other accounts in which the balance exceeded the $250,000 provided by the Federal Deposit Insurance Corporation (FDIC), pledged collateral securities were held in the City’s name. As of June 30, 2017, none of the City’s bank balance of $33,610,056 was exposed to custodial credit. Fair Value – Investments The City of Bangor 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 value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. At June 30, 2017, the City had the following investments and maturities: Interest Rate Risk The City’s investment policy requires that, to the extent possible, the City will attempt to match investments with anticipated cash requirements. Unless matched to a specific cash flow, the City is not allowed to directly invest in securities maturing more than three years from the date of purchase. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 41 DETAILED NOTES ON ALL FUNDS, CONTINUED Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Maine statutes authorize the City to invest in obligations of the U.S. Treasury and U.S agencies, repurchase agreements and certain corporate stocks and bonds. In accordance with City policy, investments in certificates of deposits must be F.D.I.C. insured and any excess of the amounts covered by insurance must be collateralized in accordance with Title 30-A, Section 5706 of the Maine Revised Statutes; investments in mutual funds must be “no load” (which means no commission or fee shall be charged on the purchase or sale), have a constant daily net asset value of $1.00 per share and limit assets of the fund to U.S. Treasury Obligations or Federal Instrumentality or Agency Securities; the total investments in stock cannot exceed 10% of the portfolio value and no more than 5% can be invested in any one company. Custodial Credit Risk - Investments For investments, custodial credit risk is the risk that, in the event of failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of the outside party. As of June 30, 2017, the City had no investments that were subject to custodial risk. The City’s investment policy states that all security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a “delivery vs. payment” basis. Securities will be held by a third party custodian, or trust department, designated by the Treasurer and evidenced by safekeeping receipts. Concentration of Credit Risk The City’s investment policy states that the City will diversify its investments by security type and institution. No more than 40% of the City’s total investment portfolio will be invested in any combination of commercial paper and time certificates of deposit. B. Property Tax Property taxes for the current year were levied July 8, 2016, on the assessed value listed as of the prior April 1 for all real and personal property located in the City. Assessed values are periodically established by the City's Assessor at 100% of assumed market value. Taxes were due in two installments: September 15, 2016 and March 15, 2017. Interest was charged at 7.00% on all taxes unpaid as of the due date. Property taxes levied during the year were recorded as receivables at the time the levy was made. The receivables collected during the year and in the first sixty days following the end of the fiscal year have been recorded as revenues. The remaining receivables have been recorded as deferred inflows. Tax liens are placed on real property within twelve months following the tax commitment date if taxes are delinquent. The City has the authority to foreclose on property eighteen months after the filing of the lien if the tax liens and associated costs remain unpaid. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 42 Balance Balance June 30, 2016 Increases Decreases June 30, 2017Governmental activities: Capital assets, not being depreciated: Land 5,092,368$ -$ -$ 5,092,368$ Construction in process 1,811,356 2,007,952 1,411,026 2,408,282 Total capital assets not being depreciated 6,903,724 2,007,952 1,411,026 7,500,650 Capital assets, being depreciated: Land improvements 11,936,342 1,989,288 - 13,925,630 Buildings and improvements 71,280,379 624,399 30,905 71,873,873 Machinery and equipment 12,209,056 311,249 - 12,520,305 Vehicles 17,930,929 1,078,807 749,980 18,259,756 Infrastructure 24,066,358 - - 24,066,358 Total capital assets being depreciated 137,423,064 4,003,743 780,885 140,645,922 Less accumulated depreciation for: Land improvements (5,286,544) (574,659) - (5,861,203) Buildings and improvements (29,555,671) (1,497,466) (2,781) (31,050,356) Machinery and equipment (10,619,428) (414,135) - (11,033,563) Vehicles (11,202,158) (1,197,430) (695,915) (11,703,673) Infrastructure (12,242,466) (366,210) - (12,608,676) Total accumulated depreciation (68,906,267) (4,049,900) (698,696) (72,257,471) Total capital assets being depreciated, net 68,516,797 (46,157) 82,189 68,388,451 Governmental activities capital assets, net 75,420,521$ 1,961,795$ 1,493,215$ 75,889,101$ Balance Balance June 30, 2016 Increases Decreases June 30, 2017Business-type activities: Capital assets, not being depreciated: Land 3,596,274$ -$ 201,136$ 3,395,138$ Construction in process 22,355,436 7,579,781 25,987,001 3,948,216 Total capital assets not being depreciated 25,951,710 7,579,781 26,188,137 7,343,354 Capital assets, being depreciated: Land improvements 2,876,243 - - 2,876,243 Buildings and improvements 102,419,888 152,094 - 102,571,982 Machinery and equipment 9,123,253 83,793 22,491 9,184,555 Infrastructure 60,985,513 3,368,679 67,293 64,286,899 Airport operational assets 271,001,326 23,012,534 - 294,013,860 Parking structures 11,331,311 41,526 - 11,372,837 Total capital assets being depreciated 457,737,534 26,658,626 89,784 484,306,376 Less accumulated depreciation for: Land improvements (1,748,756) (56,275) - (1,805,031) Buildings and improvements (36,516,344) (3,863,375) - (40,379,719) Machinery and equipment (6,021,871) (501,073) (22,491) (6,500,453) Infrastructure (14,127,007) (632,858) - (14,759,865) Airport operational assets (185,677,563) (8,090,205) - (193,767,768) Parking structures (9,153,621) (273,036) - (9,426,657) Total accumulated depreciation (253,245,162) (13,416,822) (22,491) (266,639,493) Total capital assets being depreciated, net 204,492,372 13,241,804 67,293 217,666,883 Business-type activities capital assets, net 230,444,082$ 20,821,585$ 26,255,430$ 225,010,237$ DETAILED NOTES ON ALL FUNDS, CONTINUED C. Capital Assets Capital asset activity for the year ended June 30, 2017 was as follows: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 43 Receivable Payable General Fund 1,935,404$ -$ Nonmajor Governmental Funds - 137,830 Bass Park Fund - 1,797,574 1,935,404$ 1,935,404$ Governmental Activities: General government 1,353,376$ Public safety 780,928 Health, community services and recreation 132,478 Public services 551,335 Education 1,231,783 Total depreciation expense - governmental activities 4,049,900$ Business-type activities: Sewer Utility Fund 1,859,038$ Airport Fund 8,090,205 Bass Park Fund 2,954,733 Stormwater 16,494 Economic Development Fund 155,705 Parking Fund 273,036 Municipal Golf Course 67,611 Total depreciation expense - business-type activities 13,416,822$ Contract Paid Balance Amount To Date Remaining Building Improvements 777,935$ 397,528$ 380,407$ Infrastructure 1,564,150 468,462 1,095,688 Sewer Upgrades 3,908,651 3,635,088 273,563 DETAILED NOTES ON ALL FUNDS, CONTINUED Depreciation expense was charged to functions/programs of the primary government as follows: Construction commitments: At June 30, 2017 the City had entered into contracts or otherwise committed to various construction projects: D. Interfund Transactions Individual fund interfund receivable and payable transactions are described in the Summary of Significant Accounting Policies Note D. 2. As of June 30, 2017 the balances were as follows: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 44 Federal State of Government Maine Other Total General Fund 1,060,711$ 2,893,775$ 1,048,532$ 5,003,018$ Community Development 22,037 - - 22,037 Nonmajor Special Revenue Funds 102,904 - - 102,904 Capital Projects Fund - 323,769 - 323,769 Airport Fund 339,479 567,703 - 907,182 Transfers to Transfers from General Fund 2,319,912$ 56,331$ Arena Fund 1,798,780 - Capital Projects Fund 58,891 2,505,919 Nonmajor Governmental Funds 60,732 1,010 Bass Park Fund - 1,798,780 Sewer Fund 25,000 23,150 Nonmajor Enterprise Funds 121,875 - 4,385,190$ 4,385,190$ DETAILED NOTES ON ALL FUNDS, CONTINUED Individual fund transfers to and from other funds for the fiscal year ended June 30, 2017 are comprised primarily of transfers from fund balances to fund capital projects and to provide operating subsidies to certain proprietary funds. E. Due From Other Governments Due from other governments is comprised of the following amounts at June 30, 2017: Amounts due from Federal Government are comprised of operating and capital grants for all fund types. Of the General Fund’s $2,893,775 due from State of Maine, $1,973,340 represents school grant and State agency billings, and $400,323 represents general assistance claims. Amounts owed to the Capital Projects and the Airport Funds by the State of Maine are for capital grant purposes. Amounts due from other communities for tuition reimbursement to Bangor account for $378,484 of the Due from Other in the General Fund. F. Leases Operating Leases The Airport and Economic Development Proprietary Funds are the lessors of various buildings and land parcels under operating leases expiring in various years through 2048 and 2041, respectively. Minimum future rentals to be received on noncancelable leases as of June 30, 2017 are: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 45 Fiscal year ending Economic June 30,Airport Development 2018 1,739,645$ 466,318$ 2019 883,375 466,388 2020 762,784 392,089 2021 644,181 380,767 2022 537,877 343,647 Subsequent to 2023 3,197,984 3,039,088 7,765,846$ 5,088,297$ Economic Airport Development Land 565,532$ 2,515,911$ Buildings 22,886,327 3,674,723 Less accumulated depreciation (20,121,429) (1,562,160) Total 3,330,430$ 4,628,474$ Governmental Business-type Fiscal Year ending June 30,Activities Activities 2018 142,005$ 10,074$ 2019 47,130 7,929 2020 - 2,938 Total minimum lease payments 189,135 20,941 Less: amount representing interest (7,609) (915) Present value of future minimum lease payments 181,526$ 20,026$ Governmental Business-type Activities Activities Machinery and equipment 630,581$ 52,837$ Less accumulated depreciation (521,123) (28,564) Carrying value 109,458$ 24,273$ DETAILED NOTES ON ALL FUNDS, CONTINUED Minimum future rentals do not include contingent rentals, which may be received as stipulated in the lease contracts. The Airport received $1,934,439 in contingent rentals in fiscal year 2017. The carrying amounts of the leased assets are as follows: Capital Leases The City entered into several leases for financing the acquisition of heavy equipment and office equipment. These lease agreements qualify as capital leases for accounting purposes whereas they contain a bargain purchase option. Leased equipment below the City’s capitalization policy has not been capitalized. The following is an analysis of the carrying value of the leased capitalized equipment as of June 30, 2017: The following is a schedule of the future minimum lease payments under these capital leases, and the present value of the net minimum lease payments at June 30, 2017: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 46 Sewer Utility Fund Due from bond trustee 1,494,008$ Total 1,494,008$ Bonds and notes payable at June 30, 2016 140,744,237$ Add: principal additions 4,280,000 Less: principal repayments 10,978,624 Bonds and notes payable at June 30, 2017 134,045,613$ DETAILED NOTES ON ALL FUNDS, CONTINUED G. Other Assets Other assets are comprised of the following: H. Unearned Revenue Community Development Block Grant and Capital Projects Fund unearned revenues consist of $49,286 and $78,298 in advance deposits, respectively. Bass Park Fund unearned revenues consist of $689,496 in advance sales. I. Long-term Debt General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital additions. General obligation bonds have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general obligation bonds have been issued to refund general obligation bonds and extinguish an existing retirement liability. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds generally are issued as 20-year serial bonds. The original amount of general obligation bonds issued is $195,536,948. The following is a summary of general obligation bond and note transactions of the City for the fiscal year ended June 30, 2017: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 47 Fiscal year Interest Business-type Total Long-term debt of maturity rate City School Activities June 30, 2017 Combined sewer overflow 2018 3.03%- - 152,798 152,798 Tax increment financing note*2018 4.50%12,333 - - 12,333 Maine Business Enterprise Park 2018 5.00%- - 19,857 19,857 Public improvements note*2020 4.50%249,476 - - 249,476 Pension obligation bonds 2026 3.06% - 6.45%18,573,047 1,193,325 4,001,913 23,768,285 Combined sewer overflow 2023 1.94%- - 994,082 994,082 Briggs building note 2023 4.50%- - 535,372 535,372 Combined sewer overflow 2025 1.41%- - 1,183,401 1,183,401 Chancellor's property note 2026 5.00%- - 1,283,287 1,283,287 Combined sewer overflow 2027 1.64%- - 1,081,156 1,081,156 Combined sewer overflow 2028 1.81%- - 1,188,030 1,188,030 Public improvements - 2009 2029 2.00% - 4.375%1,860,000 - - 1,860,000 ARRA - CWSRF 2029 0.00%- - 581,345 581,345 ARRA - CWSRF 2030 0.00%- - 333,944 333,944 Public improvements/refunding 2020 2.00% - 3.25%1,096,637 2,222,732 225,635 3,545,004 Public improvements/refunding 2021 2.00% - 3.25%785,876 - 1,844,124 2,630,000 Qualified school construction bond 2028 4.65%- 5,605,000 - 5,605,000 Refunding/public improvements 2022 2.00% - 2.25%1,217,465 1,096,039 721,496 3,035,000 Arena 2043 3.25% - 5.00%- - 50,715,000 50,715,000 Qualified school construction bond 2035 4.05%- 2,800,000 - 2,800,000 Refunding/public improvements 2032 2.00% - 4.00%5,747,685 - 1,232,315 6,980,000 Refunding/airport improvements 2033 .50% - 4.25%- - 3,635,000 3,635,000 Public improvements 2034 2.00% - 4.00%5,925,000 1,020,000 255,000 7,200,000 Combined sewer overflow 2034 0.10%- - 2,252,243 2,252,243 Public improvements 2030 2.00% - 2.75%2,350,000 320,000 - 2,670,000 Airport improvements 2035 3.00% - 3.65%- - 1,440,000 1,440,000 Refunding/public improvements 2030 2.00% - 3.00%2,914,000 - 261,000 3,175,000 Airport improvements 2027 0.95% - 3.25%- - 840,000 840,000 Combined sewer overflow 2036 1.00%- - 4,280,000 4,280,000 Total bonds and notes payable 40,731,519$ 14,257,096$ 79,056,998$ 134,045,613$ * Notes aggregating $261,809 are held by the City's Airport Fund at fixed, taxable market rates of interest. Governmental Activities Fiscal year ending June 30,Principal Interest Principal Interest 2018 5,469,808$ 2,005,662$ 4,049,929$ 2,633,883$ 2019 5,044,052 1,811,043 3,841,012 2,503,221 2020 5,116,641 1,614,642 3,949,504 2,372,793 2021 4,287,500 1,421,326 3,955,525 2,566,109 2022 4,356,677 1,281,556 3,689,252 2,372,229 2023-2027 18,670,937 3,019,403 17,161,873 8,405,887 2028-2032 8,748,000 343,079 13,166,710 5,931,108 2033-2037 3,295,000 66,263 13,213,193 3,967,634 2038-2042 - - 13,095,000 1,877,288 2043 - - 2,935,000 58,700 Total 54,988,615$ 11,562,974$ 79,056,998$ 32,688,852$ Governmental Activities Business-type Activities DETAILED NOTES ON ALL FUNDS, CONTINUED Bonds and notes payable at June 30, 2017 are comprised of the following: Annual debt service requirements to maturity for general obligation bonds and notes payable are as follows: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 48 DETAILED NOTES ON ALL FUNDS, CONTINUED Legal Debt Margin The City is subject to the laws of the State of Maine, which limits the amount of long-term debt to 15% of the state’s assessed valuation of the City. At June 30, 2017, the statutory limit for the City was $381,555,000. The City’s outstanding long-term debt of $134,045,613 at June 30, 2017 was within the statutory limit. Authorized and Unissued On November 26, 2007, the City Council authorized the issuance of up to $600,000 in general obligation bonds for the purpose of renovating and rehabilitating property located at 103 Texas Avenue. As of June 30, 2017, $155,000 remains authorized and unissued. The City will not be issuing bonds for this purpose and will expunge the authorizing and unissued amounts. On August 8, 2011, the City Council authorized the issuance of up to $2,000,000 in general obligation bonds to provide funding for remediation of the Penobscot River. As of June 30, 2017, $1,590,000 remains authorized and unissued. The City will continue to monitor when and if the debt will be issued. On February 24, 2016, the City Council authorized the issuance of up to $2,145,000 in general obligation bonds through the Maine Municipal Bond Bank State Revolving Fund to finance sewer infrastructure improvements. As of June 30, 2017, $1,735,000 remains authorized and unissued. The City expects to issue the debt within the next twenty-four months. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 49 Balance Balance Due within June 30, 2016 Additions Reductions June 30, 2017 one year Governmental activities: General obligation debt 62,068,475$ -$ 7,079,860$ 54,988,615$ 5,469,808$ Accrued compensated absences*2,135,014 1,515,559 1,552,255 2,098,318 1,323,182 Capital leases 408,687 - 227,161 181,526 136,235 Bond premium 567,282 - 53,728 513,554 74,661 Net OPEB obligation*2,927,496 393,037 196,573 3,123,960 - Net pension liability*6,237,310 2,576,229 - 8,813,539 - Self insurance liability 2,259,949 616,336 304,140 2,572,145 684,957 Governmental activities long-term liabilities 76,604,213$ 5,101,161$ 9,413,717$ 72,291,657$ 7,688,843$ Business-type activities: General obligation debt 78,675,762$ 4,280,000$ 3,898,764$ 79,056,998$ 4,049,929$ Accrued compensated absences*583,716 432,662 444,528 571,850 358,582 Capital leases 29,210 - 9,184 20,026 9,478 Bond premium 2,366,065 - 90,712 2,275,353 90,711 Net OPEB obligation*865,711 114,171 57,101 922,781 - Net pension liability*1,541,776 605,586 - 2,147,362 - Self insurance liability 311,215 38,974 38,974 311,215 160,219 Other 156,498 - - 156,498 - Business-type activities long-term liabilities 84,529,953$ 5,471,393$ 4,539,263$ 85,462,083$ 4,668,919$ DETAILED NOTES ON ALL FUNDS, CONTINUED Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2017, was as follows: * - The liquidation of compensated absences, net OPEB obligation and net pension liability is fully covered within the General Fund and individual proprietary funds. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 50 As of June 30, 2017, fund balances components consisted of the following: Nonspendable Restricted Committed Assigned General Fund: Advances to other funds 1,900,500$ -$ -$ -$ Inventory and prepaid items 1,061,973 - - - PEG capital support - 19,883 - - School capital - 131,039 - - Education - 614,000 - - Cultural Commission/Public Safety - - 288,743 - Subsequent year expenditures - - - 72,264 Pooled equipment reserve - - - 351,707 Bus equipment reserve - - - 828,388 Fire equipment reserve - - - 355,567 Self insurance reserve - - - 2,525,908 Improvement reserve - - - 1,232,815 Demolition reserve - - - 52,772 Benefit reserve - - - 990,757 Parks & Recreation reserve - - - 29,763 Subtotal 2,962,473 764,922 288,743 6,439,941 Community Development Block Grant - 50,811 - - Arena Fund - - 613,291 - Capital Projects Fund 1,120,229 - - 2,581,181 Other Governmental Funds: Nonexpendable trust principal 525,249 - - - Nonmajor Special Revenue Funds Infrastructure - 458,999 - - Public Safety - 223,284 - - Transportation - 94,458 - - Economic Develop - 274,538 - - Parks - 539,958 - - Health - 21,755 - - Other Municipal - 79,090 - - Nonmajor Permanent FundsCemetery - 100,152 - - Missionary - 92,833 - - Education - 116,483 - - Other Municipal - 205,184 - - Subtotal 525,249 2,206,734 - - Total 4,607,951$ 3,022,467$ 902,034$ 9,021,122$ DETAILED NOTES ON ALL FUNDS, CONTINUED J. Fund Balances CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 51 Governmental Business-type Capital assets 148,146,572$ 491,649,730$ Accumulated depreciation (72,257,471) (266,639,493) Bonds payable (54,988,615) (79,056,998) Capital leases (181,526) (20,026) Non capital related bonds payable 28,679,092 8,116,358 Non capital related capital leases 134,072 - Premium on long term debt (513,554) (2,275,353) Unspent bond proceeds 349,299 1,554,046 Net investment in capital assets 49,367,869$ 153,328,264$ DETAILED NOTES ON ALL FUNDS, CONTINUED Encumbrances at year end were $1,428,752 for General Fund, $1,512,148 for Capital Projects Fund, $510,589 for Airport Fund, $591,489 for Sewer Utility Fund and $50,864 for the Stormwater Fund. K. Net Position Net position represents the difference between assets and deferred inflows and liabilities and deferred outflows. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of bonds and capital leases payable and adding back any unspent proceeds. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City of through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The City’s net investment in capital assets was calculated as follows at June 30, 2017: OTHER INFORMATION A. Risk Management The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees, and natural disasters for which the City either carries commercial insurance or is self–insured. The City currently reports all of its risk management activities in the General and Proprietary Funds. Claims expenditure, liabilities and reserves are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. The City purchases coverage under a number of commercially available insurance policies such as; commercial general liability, auto, property damage and crime and dishonesty, each with limits and deductibles deemed prudent given the risks, cost of coverage and the City’s ability to fund certain types of losses. For those claims covered by commercial insurance, the amount of settlements has not exceeded the coverage for the years ended June 30, 2017, 2016 and 2015. The City is self-insured for its workers’ compensation liability. Reserves are actuarially determined each year to assure funding adequacy. In addition, the City purchases excess workers’ compensation insurance to limit its financial risk. At June 30, 2017, the amount of self-insurance liabilities was $2,883,360. This liability is the City’s best estimate based on available information. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 52 Workers'All other self- Compensation insured risks Total Unpaid claims as of July 1, 2015 1,933,590$ 312,863$ 2,246,453$ Incurred claims 239,912 - 239,912 Payments (533,741) (46) (533,787) Changes in estimates and other adjustments 618,167 419 618,586 Unpaid claims as of July 1, 2016 2,257,928 313,236 2,571,164 Incurred claims 198,197 - 198,197 Payments (322,546) (20,568) (343,114) Changes in estimates and other adjustments 456,319 794 457,113 Unpaid claims as of July 1, 2017 2,589,898$ 293,462$ 2,883,360$ OTHER INFORMATION, CONTINUED Changes in the reported liabilities since July 1, 2015 resulted from the following: B. Tax Increment Financing Districts The City may provide financial assistance to local economic development projects by using the new property taxes that result from the commercial investment and corresponding increase in taxable property valuation. This is accomplished by utilizing municipal tax increment financing districts (TIF) in accordance with Chapter 260 of MRSA Title 30-A or via a City Council vote, which may result in the execution of a Credit Enhancement Agreement (CEA). The CEA is a mechanism to assist the development project by returning all or a portion of the incremental property tax revenues generated by the new investment directly to the developer. Incremental taxes within a TIF that are not returned to the developer may be retained by the City to fund eligible local expenses. For FY 2017, the City captured $3,619,219 in incremental property taxes and dispersed $317,268 in CEA payments to fifteen (15) developers. The remaining $3,301,951 was applied to eligible local expenses. The following are the CEA payments that exceed ten (10) percent of the total CEA payments. The City dispersed $92,189 to Volunteers of America Northern New England to reimburse for investments for affordable elderly housing funded through the HUD 202 Program, which represents a 100% TIF. The City dispersed $47,232 to Peoples United Bank to reimburse for investments for the rehabilitation and conversion of a historic building into office space, which represents a 100% CEA. The City dispersed $34,194 to Seminary Housing Partners to reimburse for investments for affordable elderly housing, which is a 70% TIF. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 53 OTHER INFORMATION, CONTINUED C. Contingent Liabilities In 2002, the City filed suit against Citizens Communication Company (Citizens), a potentially responsible party to force cleanup of contamination of the Penobscot River bottom due to the inability to reach settlement. In July 2007, the City reached a settlement agreement with Citizens, whereby the City received $7.625 million to be held in escrow and applied to the cost of remediation. A Consent Decree has been negotiated with the Maine Department of Environmental Protection (DEP). The remediation of the primary active zone has been completed. The City continues to work with State and Federal agencies. The City plans to complete the remediation of the majority of the secondary active zone in the fall of 2017. In November 2015, the City entered into a consent decree with the Federal Environmental Protection Agency (EPA) pursuant to which the City is required to (1) implement a capacity management operations and maintenance program for the sewer collection system, (2) implement a municipal separate storm sewer system illicit discharge detection and elimination program, (3) develop and implement a Phase II long-term control plan for the combined sewer overflow program, and (4) otherwise take such measures as are necessary to achieve and maintain compliance with the Clean Water Act and permits required of the City thereunder. A complete copy of the Consent Decree is available at the Wastewater Treatment Plant page of the City’s website www.bangormaine.gov. The City is a party to various other lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City’s counsel that resolution of these matters will not have a materially adverse effect on the financial condition of the City. D. Retirement The City of Bangor provides retirement pensions for its employees through a number of vehicles, including a defined contribution plan, defined benefit pension plan and social security. Defined Contribution Plan Description of the Plan - The City provides pension benefits for certain employees through a 401(a) defined contribution plan administered by ICMA/RC. In addition, certain full-time employees are covered through both a 401 (a) and 457 Deferred Compensation Plans (DCP) also administered by ICMA/RC. In a DCP, benefits depend solely on amounts contributed to the plan plus investment earnings. Covered employees are eligible to participate and are fully vested from the date of employment. The authority to establish and amend plan provisions or requirements rests with the City. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 54 OTHER INFORMATION, CONTINUED Funding Policy – Plan members not covered by employment contracts are required to contribute 6.5% of their annual covered salary and the City is required to contribute either 8% or 10% depending upon the employee’s classification. For fiscal year 2017, covered payroll was $19,507,107 and City contributions were $1,674,585. For those plan members that have employment contracts, the City contributes at various rates from 10% - 15% of annual earnings. The covered payroll and City contributions for those employees with employment contracts were $306,178 and $32,718 respectively, in fiscal year 2017. Defined Benefit Pension Plan Description of the Plan – For certain employees the City contributes to the Maine Public Employees Retirement System Consolidated Plan for Local Participating Districts (PLD Plan) and Maine Public Employees Retirement System State Employee and Teacher Plan (SET Plan), cost sharing multiple- employer defined benefit pension plans, administered by the Maine Public Employers Retirement System (MPERS). Benefit terms are established in Maine statute. MPERS issues a publicly available financial report that can be obtained at www.mainepers.org. Benefits Provided – The PLD and SET Plans provide defined retirement benefits based on members’ average final compensation and service credit earned as of retirement. Vesting (i.e. eligibility for benefits upon reaching qualification) occurs upon the earning of five years of credit service. In some cases, vesting occurs on the earning of one year of service credit immediately preceding retirement at or after normal retirement age. For PLD members, normal retirement age is 60 or 20 or 25 years of service for certain public safety employees. For SET members, normal retirement age is 60, 62 or 65. The normal retirement age is determined by whether a member had certain creditable service requirements on specific dates, as established by statute. The monthly benefit of members who retire before normal retirement age by virtue of having at least 25 years of service credit is reduced by a statutorily prescribed factor for each year of age that a member is below his/her normal age at retirement. MPERS also provides disability and death benefits, which are established by contract under applicable statutory provisions (PLD Plan) or by statute (SET Plan). Contributions – Employee contribution rates are defined by law of Board rule and depend on the terms of the plan under which an employee is covered. Employer contributions are determined by actuarial valuations. The contractually required contribution rates actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. PLD Plan – Employees are required to contribute 8.0% of their annual pay. The City’s contractually requirement contribution rate for the year June 30, 2017 ranged from 9.1% - 14.2% depending on the applicable benefit structure. The City’s contributions to the pension plan were $745,366 for the year ended June 30, 2017. SET Plan – Maine statute requires the State to contribute a portion of the City’s contractually required contributions. Employees are required to contribute 7.65% of their annual pay. The City’s contractually required contribution rate for the year ended June 30, 2017 was 13.38% of annual payroll of which 3.36% of payroll was required from the City and 10.02% was required from the State. Contributions to the pension plan from the City were $865,039 for the year ended June 30, 2017. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 55 Deferred Deferred Outflow of Inflow of Resources Resources Differences between expected and actual experience -$ 424,422$ Changes of assumptions 893,233 - Net Difference between projected and actual earnings on pension plan investments 2,306,876 - Changes in proportion and differences between City contributions and proportionate share of contributions - 1,329,811 City contributions subsequent to the measurement date 1,610,405 - 4,810,514$ 1,754,233$ OTHER INFORMATION, CONTINUED Pension Liabilities, Expense and Deferred Outflows and Inflows of Resources – The net pension liabilities were measured as of June 30, 2016, and the total pension liabilities used to calculate the net pension liabilities were determined by actuarial valuations as of that date, The City’s proportion of the net pension liabilities were based on projections of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating local districts (PLD Plan) and of all participating School Administrative Units and the State (SET Plan), actuarially determined. PLD Plan – At June 30, 2017, the City’s reported liability of its proportionate share of the net pension liability was $8,840,254. At June 30, 2016, the City’s proportion of the PLD plan was 1.6638%. SET Plan – At June 30, 2017, the City’s reported liability of its proportionate share of the net pension liability was reduced to reflect the State support provided to the City. The amount recognized by the City as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability associated with the City were as follows: City’s proportionate share of the net pension liability $2,120,647 State’s proportionate share of the net pension liability 35,661,692 Total $37,782,339 At June 30, 2016, the City’s proportion of the SET Plan was .1200%. For the year ended June 30, 2016, the City recognized pension expense of $7,949,337 for the PLD Plan and $4,144,026 and revenue of $2,578,338 for support provided by the State for the SET Plan. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 56 OTHER INFORMATION, CONTINUED $1,610,405 is reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liabilities in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended June 30: 2018 ($137,646) 2019 (45,242) 2020 1,014,265 2021 614,499 Actuarial assumptions - The total pension liability in the June 30, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: PLD Plan SET Plan Inflation 2.75% 2.75% Salary Increases, per year 2.75% to 9.0% 2.75% to 14.5% Investment return, per annum, compounded annually 6.875% 6.875% Cost of living benefit increases, per annum 2.20% 2.20% Mortality rates were based on the RP2014 Total Data Set for Healthy Annuitant Mortality Tables projected forward to 2016. The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major 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 target asset allocation percentage and by adding expected inflation. 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, 2016 are summarized in the following table: Long-Term Expected Asset Class Target Allocation Real Rate of Return US equities 20% 5.7% Non-US equities 20% 5.5% Private equity 10% 7.6% Real estate 10% 5.2% Infrastructure 10% 5.3% Hard assets 5% 5.0% Fixed income 25% 2.9% Total 100% CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 57 OTHER INFORMATION, CONTINUED Discount rate - The discount rate used to measure the total pension liability was 6.875% for both the PLD and SET Plans. The projection of cash flows used to determine the discount rates assumed that employee contributions will be made at the current contribution rate and that contributions from participating local districts will be made at contractually required rates, actuarially determined. Based on these assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long- term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liabilities. Sensitivity of the City’s proportionate share of the net pension liabilities to changes in the discount rate - The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 6.875%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.875% for PLD and SET Plans) or 1 percentage-point higher (7.875% for PLD and SET Plans) than the current rate: 1% Current 1% Decrease Discount Rate Increase (5.875%) (6.875%) (7.875%) PLD Plan $ 14,673,229 $ 8,840,254 $3,348,716 1% Current 1% Decrease Discount Rate Increase (5.875%) (6.875%) (7.875%) SET Plan $ 3,395,696 $ 2,120,647 $ 1,057,905 Pension plan fiduciary net position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued MPERS financial report. Payables to the pension plan - None as of June 30, 2017. Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue (IRC) Section 457. The plan permits participating employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Social Security The City does not have a section 218 agreement to provide full social security coverage to its employees. The City does provide full social security coverage to part-time, seasonal and temporary employees under the Omnibus Budget Reconciliation Act of 1990, and Internal Revenue Service regulations, which became effective July 1, 1991. CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 58 Annual required contribution (ARC)574,842$ Amortization adjustment to ARC (219,362) Interest on net OPEB obligation 151,728 Annual OPEB cost 507,208$ June 30, 2015 June 30, 2016 June 30, 2017 Annual OPEB cost 547,590$ 542,336$ 507,208$ City contributions (253,004) (253,004) (253,674) Increase in net OPEB obligation 294,586 289,332 253,534 Net OPEB obligation, beginning of year 3,209,289 3,503,875 3,793,207 Net OPEB obligation, end of year 3,503,875$ 3,793,207$ 4,046,741$ Percentage contributed 46.20%46.65%50.01% Governmental Business-type Total Activities Activities June 30, 2017 Actuarial accrued liability (AAL)4,817,833$ 1,399,492$ 6,217,325$ Actuarial value of plan assets - - - Unfunded actuarial accrued liability (UAAL)4,817,833$ 1,399,492$ 6,217,325$ Covered payroll 17,387,158$ 5,050,651$ 22,437,809$ UAAL as a percentage of covered payroll 27.71% OTHER INFORMATION, CONTINUED E. Other Postemployment Benefits Description of the Plan - The City sponsors a single-employer post-retirement benefit plan providing health insurance to retiring employees through CIGNA. CIGNA issues a publicly available financial report that may be obtained through their website www.cigna.com. Full- time City employees age 50 or older and covered under the active medical plan are eligible to participate. Retirees that are designated in a plan pay 100% of the coverage premium. A Medicare Supplement plan is available for eligible retirees. For retirees without Medicare, coverage is available without a Medicare offset. Funding Policy and Annual OPEB Cost - GASB Statement 45 does not mandate the prefunding of postemployment benefits liability. The City currently plans to fund these benefits on a pay-as-you-go basis. No assets have been segregated and restricted to provide postemployment benefits. The annual required contribution (ARC), an actuarial determined rate, represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize unfunded actuarial liabilities over a period not to exceed thirty years. The following table represents the OPEB costs for the year and the annual required contribution: Funding Status and Funding Progress – The City’s annual OPEB cost, the net OPEB obligation and the percentage of annual OPEB cost contributed to the plan for the years ending June 30, 2015, 2016 and 2017 are as follows: The unfunded actuarial accrued liability as a percentage of covered payroll for June 30, 2017 is as follows: CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued II - 59 OTHER INFORMATION, CONTINUED Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multiyear trend information (only nine years available) that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial methods and assumptions – Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of plan assets. Significant methods and assumptions were as follows: Actuarial valuation date 07/30/17 – rolled back to 07/1/16 on a “no loss/no gain” basis Actuarial cost method Projected unit credit cost with linear proration to decrement Amortization method Level dollar Amortization period 30 years - open Actuarial assumptions: Inflation rate 3.0% Investment rate of return 4.0% Payroll growth 3.0% Healthcare cost trend rate 9.0% - 5.0% Post retirement benefit increases 0.0% - retirees pay 100% of premium F. Subsequent Events On August 28, 2017 the City Council authorized the issuance of up to $3,068,000 in general obligation bonds for the purpose of funding street and sidewalk work, the City’s annual fleet/equipment replacement, and WWTP infrastructure. In addition, the City Council authorized the issuance of up to $5,030,000 in general obligation bonds through the Maine Municipal Bond Bank State Revolving Fund to finance sewer infrastructure improvements. II - 60 2009 2010 2011 2012 2013*2014 2015 2016 2017 Actuarial Valuation Date 7/1/2008 7/1/2008 1/1/2011 1/1/2011 6/30/2013 6/30/2014 7/30/2015**7/30/2015**7/30/2017**Governmental activities:Actuarial value of assets -$ -$ -$ -$ -$ -$ -$ -$ -$ Actuarial accrued liability (AAL)8,488,427 8,488,427 3,407,638 3,430,307 5,284,045 5,213,644 5,310,515 5,299,817 4,817,833 Unfunded actuarial accrued liability (UAAL)8,488,427$ 8,488,427$ 3,407,638$ 3,430,307$ 5,284,045$ 5,213,644$ 5,310,515$ 5,299,817$ 4,817,833$ Funded ratio 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%Covered payroll 16,257,319$ 17,224,485$ 17,369,969$ 17,175,024$ 16,901,784$ 16,098,456$ 16,550,206$ 17,142,698$ 17,387,158$ Business-type activities:Actuarial value of assets -$ -$ -$ -$ -$ -$ -$ -$ -$ Actuarial accrued liability (AAL)2,710,336 2,710,336 1,095,160 1,072,491 1,671,709 1,657,448 1,525,576 1,536,274 1,399,492 Unfunded actuarial accrued liability (UAAL)2,710,336$ 2,710,336$ 1,095,160$ 1,072,491$ 1,671,709$ 1,657,448$ 1,525,576$ 1,536,274$ 1,399,492$ Funded ratio 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00% Covered payroll 5,190,927$ 5,439,647$ 5,582,428$ 5,369,798$ 5,347,204$ 5,117,794$ 4,754,453$ 4,969,206$ 5,050,651$ Primary government:Actuarial value of assets -$ -$ -$ -$ -$ -$ -$ -$ -$ Actuarial accrued liability (AAL)11,198,763 11,198,763 4,502,798 4,502,798 6,955,754 6,871,092 6,836,091 6,836,091 6,217,325 Unfunded actuarial accrued liability (UAAL)11,198,763$ 11,198,763$ 4,502,798$ 4,502,798$ 6,955,754$ 6,871,092$ 6,836,091$ 6,836,091$ 6,217,325$ Funded ratio 0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%Covered payroll 21,448,246$ 22,664,132$ 22,952,397$ 22,544,822$ 22,248,988$ 21,216,250$ 21,304,659$ 22,111,904$ 22,437,809$ UAAL as a percentage of covered payroll 52.21%49.41%19.62%19.97%31.26%32.39%32.09%30.92%27.71% Only nine years have been presented because 2009 was the year GASB Statement 45 was implemented.* - restated to reflect the reduction in liability resulting from the City discontinuing employment of all employees in the Bass Park Fund. ** - valuation dates are rolled back to the prior July 1st on a "no loss/no gain" basis. CITY OF BANGOR, MAINE Required Supplemental Information Schedule of Funding Progress - Retiree Healthcare Plan For the Fiscal Year Ended June 30, 2017 Fiscal Year II - 61 CITY OF BANGOR, MAINE Required Supplementary Information Schedule of City's Proportionate Share of the Net Pension Liability Maine Public Employees Retirement System Consolidated Plan (PLD) and State Employee and Teacher Plan (SET)Last 10 Fiscal Years* 2015 2016 2017 PLD Plan Proportion of the net pension liability 2.2584%1.9745%1.6638% Proportionate share of the net pension liability 3,475,288 6,299,478 8,840,254 Covered payroll 10,645,005 9,799,964 8,662,976 Proportion share of the net pension liability as a percentage of its covered payroll 32.65%64.28%102.05% Plan fidicuiary net position as a percentage of the total pension liability 94.10%88.27%81.61% SET Plan Proportion of the net pension liability 0.0936%0.1096%0.1200% City's proportionate share of the net pension liability 1,011,232$ 1,479,608$ 2,120,647$ State's proportionate share of the net pension liability 22,516,392 28,378,344 35,661,692 Total 23,527,624 29,857,952 37,782,339 Covered payroll 24,415,639 25,212,217 25,111,931 Proportion share of the net pension liability as a percentage of its covered payroll 4.14%5.87%8.44% Plan fidicuiary net position as a percentage of the total pension liability 83.91%81.18%76.21% * The amounts presented for each fiscal year were determined as of the prior fiscal year. As 2015 is the first year of implementation, prior years data is not available. II - 62 CITY OF BANGOR, MAINE Required Supplementary Information Schedule of City's Contributions Maine Public Employees Retirement System Consolidated Plan (PLD) and State Employee and Teacher Plan (SET)Last 10 Fiscal Years 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PLD Plan Contractually required contributions 492,537 468,553 474,008 584,306 724,134 769,519 782,913 807,117 779,134 745,366 Contributions in relation to the contractually required contribution 492,537 468,553 474,008 584,306 724,134 769,519 782,913 807,117 779,134 745,366 Contribution deficiency (excess)- - - - - - - - - - Covered payroll 15,210,573 14,618,061 14,731,041 14,777,273 13,201,233 11,867,248 10,645,005 9,799,964 8,662,976 7,963,681 Contributions as a percentage of covered payroll 3.24%3.21%3.22%3.95%5.49%6.48%7.35%8.24%8.99%9.36% SET Plan* Contractually required contributions - - - - - - 647,014 668,126 843,679 865,039 Contributions in relation to the contractually required contribution - - - - - - 647,014 668,126 843,679 865,039 Contribution deficiency (excess)- - - - - - - - - - Covered payroll - - - - - - 24,415,639 25,212,217 25,111,931 25,731,918 Contributions as a percentage of covered payroll - - - - - - 2.65%2.65%3.36%3.36% * - Until FY 2014, all employer contributions for the SET Plan were paid by the State of Maine. II - 63 Change of benefit terms -None Changes of assumptions -The following are changes in the actuarial assumptions used in the most recent valuation: 2016 2017 Discount rate 7.125%6.875% Inflation rate 3.50%2.75% Salary increases - PLD 3.50% to 9.50%2.75% to 9.00% Salary increases - SET 3.50% to 13.50%2.75% to 14.50% Cost of living increase 2.55%2.20% Long-term expected real rate of return on assets: U.S. equites 5.20%5.70% Real estate 3.70%5.20% Infrastructure 4.00%5.30% Hard assets 4.80%5.00% Fixed income 0.70%2.90% CITY OF BANGOR, MAINE Notes to Required Supplementary Information June 30, 2017 In addition,in prior valuations,mortality rates were based on the RP2000 Combined Mortality Table projected forward to 2015 using Scale AA; which changed to mortality rates based on the RP2014 Total Data Set Healthy Annuitant Mortality Tables projected forward to 2016. GENERAL FUND The General Fund is used to account for resources traditionally associated with the government, which are not required legally or by sound financial management, to be accounted for in another fund. II - 64 Schedule A-1 CITY OF BANGOR, MAINE Balance Sheet General Fund June 30, 2017 ASSETS Cash and cash equivalents 18,878,973$ Investments 50,000 Receivables: Taxes 2,641,785 Accounts (net of allowance of $535,075)578,077 Interfund 1,935,404 Intergovernmental 5,003,018 Loans 535,372 Inventory, at cost 554,843 Prepaid items 507,130 Total assets 30,684,602 LIABILITIES Accounts payable 1,345,499 Accrued wages and benefits payable 4,495,658 Total liabilities 5,841,157 DEFERRED INFLOWS OF RESOURCES Unavailable revenues - property taxes 2,215,800 Total deferred inflows of resources 2,215,800 FUND BALANCES Nonspendable 2,962,473 Restricted 764,922 Committed 288,743 Assigned 6,439,941 Unassigned 12,171,566 Total fund balance 22,627,645 Total liabilities, deferred inflows ofresources and fund balances 30,684,602$ II - 65 Schedule A-2 CITY OF BANGOR, MAINE Schedule of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual - Budgetary Basis General FundFor the Fiscal Year Ended June 30, 2017 Balances Variance Carried 7/1/2016 Budget Actual Surplus Carried Revenues Taxes Real and personal property $- 57,471,235$ 57,532,711$ 61,476$ -$ Change in unavailable property tax - - 226,997 226,997 - Tax increment financing district - (2,732,067) (2,732,067) - - Payment in lieu of taxes - 169,088 233,683 64,595 - Excise - 5,015,000 6,170,792 1,155,792 - Interest on delinquent taxes - 200,000 197,272 (2,728) - Total taxes - 60,123,256 61,629,388 1,506,132 - Intergovernmental State revenue sharing - 2,150,000 2,225,464 75,464 - School subsidy - 16,554,117 16,554,117 - - Other - municipal - 4,082,253 3,984,945 (97,308) - school - 4,155,961 4,841,004 - 685,043 Total intergovernmental - 26,942,331 27,605,530 (21,844) 685,043 Other revenue Licenses and permits - 620,243 644,795 24,552 - Charges for service - municipal - 8,486,790 8,944,785 457,995 - school - 4,635,338 5,705,049 - 1,069,711 Fines, forfeits and penalties - 23,000 18,623 (4,377) - Revenue from use of money and property municipal - 650,150 727,792 77,642 - Total other - 14,415,521 16,041,044 555,812 1,069,711 Total revenues - 101,481,108 105,275,962 2,040,100 1,754,754 II - 66 Schedule A-2 (con't) CITY OF BANGOR, MAINE Schedule of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual - Budgetary Basis General FundFor the Fiscal Year Ended June 30, 2017 Balances Variance Carried 7/1/2016 Budget Actual Surplus Carried Expenditures General government Council - 29,263 26,250 3,013 - Executive - 428,142 461,954 (45,627) 11,815 Public Transportation - 457,136 491,391 (109,255) 75,000 Human resources - 183,484 180,748 2,736 - City clerk - 394,581 361,439 33,142 - Assessing - 357,303 346,724 10,579 - Legal - 286,100 282,040 4,060 - Finance - 1,781,291 1,731,716 49,575 - Insurance - 191,000 167,534 23,466 - Planning, econ dev, code enforcement - 1,231,162 1,242,350 (11,188) - Total general government - 5,339,462 5,292,146 (39,499) 86,815 Public safety Police - 8,917,155 8,540,221 289,942 86,992 Fire 3,425 9,000,257 8,839,959 57,276 106,447 Total public safety 3,425 17,917,412 17,380,180 347,218 193,439 Health, community services and recreation Health and community services - 3,130,702 3,095,785 34,917 - Parks and recreation - 1,988,904 1,876,381 112,523 - Total health, commun. serv and rec.- 5,119,606 4,972,166 147,440 - Public buildings and services - 10,835,284 10,929,752 (94,468) - II - 67 Schedule A-2 (con't) CITY OF BANGOR, MAINE Schedule of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual - Budgetary Basis General FundFor the Fiscal Year Ended June 30, 2017 Balances Variance Carried 7/1/2016 Budget Actual Surplus Carried Expenditures, continued Other agencies County tax - 3,266,411 3,266,411 - - Downtown Development District - 60,690 60,690 - - Public library - 1,445,334 1,445,334 - - Other agencies 1,981 114,920 107,634 778 8,489 Total other agencies 1,981 4,887,355 4,880,069 778 8,489 Education Regular instruction - 19,239,514 19,066,457 - 173,057 Special education - 6,969,533 6,967,006 - 2,527 Instructional support - 507,152 505,108 - 2,044 System administration - 1,365,870 1,279,283 - 86,587 CTE instruction - 3,924,071 3,817,909 - 106,162 School administration - 1,103,790 1,050,776 - 53,014 Facilities maintenance - 2,449,198 2,360,146 - 89,052 Transportation - 5,142,883 5,133,647 - 9,236 Other instruction - 1,941,400 1,939,084 - 2,316 Debt service - 1,521,075 1,520,120 - 955 Contingency & other - 117,131 112,485 - 4,646 Regular 2,050,914 44,281,617 43,752,021 - 2,580,510 Adult education 130,451 232,250 584,067 - (221,366) School lunch 8,424 1,515,571 1,435,443 - 88,552 Special revenue 82,718 3,040,390 3,349,504 - (226,396) Trust and agency 266,793 2,420,088 2,588,742 - 98,139 Total education 2,539,300 51,489,916 51,709,777 - 2,319,439 Other appropriations Pensions and other fringe benefits - 2,313,666 2,303,287 10,379 - Debt service - 3,245,565 3,245,537 28 - Tax increment financing payments - 937,182 887,152 50,030 - Total other appropriations - 6,496,413 6,435,976 60,437 - Total expenditures 2,544,706 102,085,448 101,600,066 421,906 2,608,182 Excess (deficiency) of revenues over/under expenditures (2,544,706) (604,340) 3,675,896 2,462,006 4,362,936 II - 68 Schedule A-2 (con't) CITY OF BANGOR, MAINE Schedule of Revenues, Expenditures and Changes in Unassigned Fund Balance - Budget and Actual - Budgetary Basis General FundFor the Fiscal Year Ended June 30, 2017 Balances Variance Carried 7/1/2016 Budget Actual Surplus Carried Other financing sources (uses) Appropriation from restricted, committed and assigned fund balances - 1,257,480 7,480 - (1,250,000) Appropriation to assigned fund balances - - (1,220,686) (1,220,686) - Sale of assets - 74,000 31,694 (42,306) - Contributions - 7,360 7,391 31 - Insurance Settlements - 52,500 75,634 23,134 - Transfers to other funds - (814,000) (1,350,614) (536,614) - Transfers from other funds - 27,000 21,600 (5,400) - Total other financing sources (uses)- 604,340 (2,427,501) (1,781,841) (1,250,000) Net change in unassigned fund balance (2,544,706)$ -$ 1,248,395$ 680,165$ 3,112,936$ Unassigned fund balance, beginning of year 11,315,235 Changes in amounts required to be shown as nonspendable fund balance Inventory and prepaids 176,166 Unassigned fund balance, end of year 12,171,566$ NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Other HUD Funds – This is used to account for 1) federal grants obtained and expended under the Housing and Community Development Act of 1974, as amended, for the redevelopment of the downtown commercial core of the City and 2) low interest loans to businesses within the City of Bangor for establishment, expansion or redevelopment purposes. Grant Fund – Accounts for federal and state grants that are legally restricted to expenditures allowable by the grantor agency. Dedicated Revenue Funds - Accounts for amounts raised or donated to benefit various governmental programs such as; the Dental Clinic, local parks, City forest and Park Woods complex. Other Funds – Accounts for funds held to be used in future periods such as tax financing district repayments and other community funds for capital expenditures relating to the operation of the area transportation system. Permanent Fund Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. II - 69 Schedule B-1 CITY OF BANGOR, MAINE Combining Balance Sheet Nonmajor Governmental Funds June 30, 2017 Nonmajor Special Nonmajor Total Other Revenue Permanent Governmental Funds Funds Funds ASSETS Cash and cash equivalents 1,202,857$ -$ 1,202,857$ Investments - 130,993 130,993 Receivables: Accounts 124,067 - 124,067 Loans and notes 654,373 908,908 1,563,281 Intergovernmental 102,904 - 102,904 Total assets 2,084,201 1,039,901 3,124,102 LIABILITIES Accounts payable 94,289 - 94,289 Interfund loans payable 137,830 - 137,830 Total liabilities 232,119 - 232,119 DEFERRED INFLOWS OF RESOURCES Unavailable resources - loans 160,000 - 160,000 Total deferred inflows of resources 160,000 - 160,000 FUND BALANCES Nonspendable - 525,249 525,249 Restricted 1,692,082 514,652 2,206,734 Total fund balances 1,692,082 1,039,901 2,731,983 Total liabilities, deferred inflows ofresources and fund balances 2,084,201$ 1,039,901$ 3,124,102$ II - 70 Schedule B-2 CITY OF BANGOR, MAINE Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental FundsFor the Fiscal Year Ended June 30, 2017 Nonmajor Special Nonmajor Total Other Revenue Permanent Governmental Funds Funds Funds Revenues Intergovernmental $6,787,748 -$ 6,787,748 Charges for services 774,195 - 774,195 Revenue from use of money and property 42,499 - 42,499 Other revenue 105,511 1,500 107,011 Interest revenue - 39,680 39,680 Total revenues 7,709,953 41,180 7,751,133 Expenditures Current: Personnel 1,397,144 - 1,397,144 Payments to beneficiaries 36,433 4,624 41,057 Other 3,120,892 - 3,120,892 Bus operations 3,072,046 - 3,072,046 Total expenditures 7,626,515 4,624 7,631,139 Excess of revenues over expenditures 83,438 36,556 119,994 Other financing sources (uses) Transfers to other funds (25,732) (35,000) (60,732) Transfers from other funds 1,010 - 1,010 Total other financing uses (24,722) (35,000) (59,722) Net change in fund balances 58,716 1,556 60,272 Fund balances, beginning of year 1,633,366 1,038,345 2,671,711 Fund balances, end of year $1,692,082 1,039,901$ 2,731,983$ II - 71 Schedule B-3 CITY OF BANGOR, MAINE Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2017 Dedicated Other Grant Revenue HUD Funds Fund Funds Other Totals ASSETS Cash and cash equivalents 274,538$ 6,147$ 408,860 513,312$ 1,202,857$ Receivables: Accounts - 124,067 - - 124,067 Loans and notes 160,000 - 374,379 119,994 654,373 Intergovernmental - 102,904 - - 102,904 Total assets 434,538 233,118 783,239 633,306 2,084,201 LIABILITIES Accounts payable - 75,254 - 19,035 94,289 Interfund loans payable - 137,830 - - 137,830 Total liabilities - 213,084 - 19,035 232,119 DEFERRED INFLOWS OF RESOURCES Unavailable resources - loans 160,000 - - - 160,000 Total deferred inflows of resources 160,000 - - - 160,000 FUND BALANCES Restricted 274,538 20,034 783,239 614,271 1,692,082 Total fund balances 274,538 20,034 783,239 614,271 1,692,082 Total liabilities, deferred inflows of resources and fund balances 434,538$ 233,118$ 783,239$ 633,306$ 2,084,201$ II - 72 Schedule B-4 CITY OF BANGOR, MAINE Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue FundsFor the Fiscal Year Ended June 30, 2017 Dedicated Other Grant Revenue HUD Funds Fund Funds Other Totals Revenues Intergovernmental -$ 6,787,748$ -$ -$ 6,787,748 Charges for services - 774,195 - - 774,195 Revenue from use of money and property - - 23,981 18,518 42,499 Contributions - 3,880 600 101,031 105,511 Total revenues - 7,565,823 24,581 119,549 7,709,953 Expenditures Current: Personnel - 1,397,144 - - 1,397,144 Payments to beneficiaries - - 5,390 31,043 36,433 Other - 3,120,892 - - 3,120,892 Bus operations - 3,072,046 - - 3,072,046 Total expenditures - 7,590,082 5,390 31,043 7,626,515 Excess (deficiency) of revenues over (under) expenditures - (24,259) 19,191 88,506 83,438 Other financing sources (uses) Transfers to other funds - - (1,600) (24,132) (25,732) Transfers from other funds - - - 1,010 1,010 Total other financing uses - - (1,600) (23,122) (24,722) Net change in fund balances - (24,259) 17,591 65,384 58,716 Fund balances, beginning of year 274,538 44,293 765,648 548,887 1,633,366 Fund balances, end of year 274,538$ 20,034$ 783,239$ 614,271$ 1,692,082$ II - 73 Schedule B-5 CITY OF BANGOR, MAINE Combining Balance Sheet Nonmajor Permanent Funds June 30, 2017 Revolving Other Loan Funds Funds Totals ASSETS Investments -$ 130,993$ 130,993$ Loans receivable 908,908 - 908,908 Total assets 908,908 130,993 1,039,901 LIABILITIES AND FUND BALANCES Liabilities - - - Total liabilities - - - Fund balances Nonspendable 394,256 130,993 525,249 Restricted 514,652 - 514,652 Total fund balances 908,908 130,993 1,039,901 Total liabilities and and fund balances 908,908$ 130,993$ 1,039,901$ II - 74 Schedule B-6 CITY OF BANGOR, MAINE Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Fiscal Year Ended June 30, 2017 Revolving Other Loan Funds Funds Totals Revenues Investment income $28,750 10,930$ 39,680$ Lot sales 1,500 - 1,500 Total revenues 30,250 10,930 41,180 Expenditures Current: Payments to beneficiaries 115 4,509 4,624 Total expenditures 115 4,509 4,624 Excess of revenues over expenditures 30,135 6,421 36,556 Other financing uses Transfer to other funds (35,000) - (35,000) Total other financing uses (35,000) - (35,000) Net change in fund balances (4,865) 6,421 1,556 Fund balances, beginning of year 913,773 124,572 1,038,345 Fund balances, end of year $908,908 130,993$ 1,039,901$ ENTERPRISE FUNDS Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the government is to have the costs of providing goods or services to the general public financed or recovered primarily through user charges. The government has decided that periodic determination of net income is appropriate for accountability purposes. In addition to the major funds reported in Summary of Significant Accounting Policies, Note C the City has the following nonmajor enterprise funds: Stormwater Utility – This fund assesses property owners a fee based on the amount of impervious surface to fund the costs associated with stormwater management. Economic Development Fund – This fund accounts for the operation and development of properties acquired by the City. Its purpose is to promote economic growth within the City. The principal source of revenue is rental income. Parking Fund – This fund accounts for the operation of the City-owned parking lots and the Pickering Square garage. Revenue sources include monthly lease payments for parking spaces, hourly/daily parking fees, and fines and waiver fees for parking violations. Certain of these facilities are operated under a private management contract. Municipal Golf Course – This fund accounts for the operation of a 27 hole municipal golf course. Principal revenue sources are season memberships and daily green fees. Continued on next page II - 75 Schedule C-1 CITY OF BANGOR, MAINE Combining Statement of Net Position Nonmajor Proprietary Funds June 30, 2017 Business-type Activities - Enterprise Funds Economic Municipal Total Stormwater Development Parking Golf Nonmajor Utility Fund Fund Course Proprietary Funds ASSETS Current assets Cash and cash equivalents 1,111,936$ 995,261$ 852,720$ 461,113$ 3,421,030$ Accounts receivable 357,774 27,616 - - 385,390 Net accounts receivable 357,774 27,616 - - 385,390 Prepaid items 3,073 53,459 65,733 7,518 129,783 Total current assets 1,472,783 1,076,336 918,453 468,631 3,936,203 Noncurrent assets Capital Assets: Land and improvements - 3,413,627 - 1,594,732 5,008,359 Buildings and improvements - 3,674,722 - 912,607 4,587,329 Machinery and equipment 247,398 - - 305,859 553,257 Infrastructure - 683,189 - - 683,189 Parking structures - - 11,372,837 - 11,372,837 Construction in process 65,026 - - - 65,026 Total capital assets 312,424 7,771,538 11,372,837 2,813,198 22,269,997 Less accumulated depreciation (24,740) (2,056,991) (9,426,657) (2,043,096) (13,551,484) Net capital assets 287,684 5,714,547 1,946,180 770,102 8,718,513 Loans receivable - 1,396,296 - - 1,396,296 Total noncurrent assets 287,684 7,110,843 1,946,180 770,102 10,114,809 Total assets 1,760,467 8,187,179 2,864,633 1,238,733 14,051,012 DEFERRED OUTFLOWS OF RESOURCES Net pension - - 18,929 - 18,929 Total deferred outflows of resources - - 18,929 - 18,929 Continued from previous page II - 76 Schedule C-1 (con't) CITY OF BANGOR, MAINE Combining Statement of Net Position Nonmajor Proprietary Funds June 30, 2017 Business-type Activities - Enterprise Funds Economic Municipal Total Stormwater Development Parking Golf Nonmajor Utility Fund Fund Course Proprietary Funds LIABILITIES Current liabilities Accounts payable 77,726 41,337 39,818 7,526 166,407 Accrued wages and benefits payable 4,495 - 3,492 10,996 18,983 Accrued interest - 43,351 7,697 1,788 52,836 Workers' compensation - - 1,953 - 1,953 General obligation debt payable 74,133 264,175 233,241 37,402 608,951 Accrued compensated absences - - 8,168 10,947 19,115 Total current liabilities 156,354 348,863 294,369 68,659 868,245 Long-term liabilities Workers' compensation - - 8,047 - 8,047 General obligation debt payable 841,156 1,954,343 822,064 291,849 3,909,412 Accrued compensated absences - - 6,920 7,951 14,871 Net OPEB obligation 2,761 - 13,345 27,488 43,594 Net pension liability - - 46,493 - 46,493 Total long-term liabilities 843,917 1,954,343 896,869 327,288 4,022,417 Total liabilities 1,000,271 2,303,206 1,191,238 395,947 4,890,662 DEFERRED INFLOWS OF RESOURCES Net pension - - 10,329 - 10,329 Total deferred inflows of resources - - 10,329 - 10,329 NET POSITION Net investment in capital assets 287,684 3,496,029 1,016,924 507,787 5,308,424 Unrestricted 472,512 2,387,944 665,071 334,999 3,860,526 Total net position 760,196$ 5,883,973$ 1,681,995$ 842,786$ 9,168,950$ II - 77 Schedule C-2 Economic Municipal Total Stormwater Development Parking Golf Nonmajor Utility Fund Fund Course Proprietary Funds Operating revenues Charges for services 1,053,892$ 503,905$ 1,008,494$ 644,303$ 3,210,594$ Operating expenses Operating expenses other than depreciation and amortization 493,390 206,515 723,878 523,572 1,947,355 Depreciation and amortization 16,494 155,705 273,036 67,611 512,846 Total operating expenses 509,884 362,220 996,914 591,183 2,460,201 Operating income 544,008 141,685 11,580 53,120 750,393 Nonoperating revenue (expenses) Interest income 69,131 67,261 1,589 533 138,514 Interest expense - (104,265) (40,644) (12,944) (157,853) Gain on sale of assets - 673,864 250,000 - 923,864 Total nonoperating revenue (expenses)69,131 636,860 210,945 (12,411) 904,525 Net income before transfers 613,139 778,545 222,525 40,709 1,654,918 Transfers to other funds (121,875) - - - (121,875) Change in net position 491,264 778,545 222,525 40,709 1,533,043 Net position, beginning of year 268,932 5,105,428 1,459,470 802,077 7,635,907 Net position, end of year 760,196$ 5,883,973$ 1,681,995$ 842,786$ 9,168,950$ Business-type Activities - Enterprise Funds Nonmajor Proprietary FundsFor the Fiscal Year Ended June 30, 2017 CITY OF BANGOR, MAINE Combining Statement of Revenues, Expenses and Changes in Net Position Continued on next page II - 78 Schedule C-3 Economic Municipal Total Stormwater Development Parking Golf Nonmajor Utility Fund Fund Course Proprietary Funds Cash flows from operating activities Cash received from customers 1,113,193$ 567,270$ 1,008,794$ 644,303$ 3,333,560$ Cash paid to suppliers for goods and services (287,463) (174,342) (343,745) (226,525) (1,032,075) Cash paid to employees for services (198,871) - (327,436) (296,251) (822,558) Net cash provided by operating activities 626,859 392,928 337,613 121,527 1,478,927 Cash flows from noncapital financing activities Transfers out (121,875) - - - (121,875) Net cash (used in) noncapital financing activities (121,875) - - - (121,875) Cash flows from capital and related financing activities Acquisition and construction of capital assets (3,886) (152,095) (41,526) - (197,507) Principal paid on general obligation bonds (74,133) (255,891) (225,508) (35,237) (590,769) Interest paid on general obligation bonds - (112,906) (42,292) (13,376) (168,574) Proceeds from sale of property - 875,000 250,000 - 1,125,000 Net cash provided by (used in) capital and related financing activities (78,019) 354,108 (59,326) (48,613) 168,150 Cash flows from investing activities Interest on investments 69,131 99,780 1,589 533 171,033 Net cash provided by investing activities 69,131 99,780 1,589 533 171,033 Net increase in cash 496,096 846,816 279,876 73,447 1,696,235 Cash, beginning of year 615,840 148,445 572,844 387,666 1,724,795 Cash, end of year 1,111,936$ 995,261$ 852,720$ 461,113$ 3,421,030$ For the Fiscal Year Ended June 30, 2017 Business-type Activities - Enterprise Funds CITY OF BANGOR, MAINECombining Statement of Cash Flows - Nonmajor Proprietary Funds Continued from previous page II - 79 Schedule C-3 (con't) Economic Municipal Total Stormwater Development Parking Golf Nonmajor Utility Fund Fund Course Proprietary Funds Reconciliation of operating income to net cash provided by operating activities Operating income 544,008$ 141,685$ 11,580$ 53,120$ 750,393$ Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 16,494 155,705 273,036 67,611 512,846 Changes in assets and liabilities: (Increase) decrease in accounts receivable 59,301 46,916 300 - 106,517 (Increase) decrease in prepaid items (458) 16,449 (4,505) (122) 11,364 Increase (decrease) in accounts payable 4,663 32,173 38,582 (6,250) 69,168 Increase (decrease) in other liabilities 2,851 - 18,620 7,168 28,639 Total adjustments 82,851 251,243 326,033 68,407 728,534 Net cash provided by operating activities 626,859$ 392,928$ 337,613$ 121,527$ 1,478,927$ Business-type Activities - Enterprise Funds CITY OF BANGOR, MAINE Combining Statement of Cash Flows - Nonmajor Proprietary FundsFor the Fiscal Year Ended June 30, 2017 FIDUCIARY FUNDS Fiduciary Funds are used to report assets held in a trustee or agency capacity for others. Agency Funds – Agency Funds are used to account for situations where the City’s role is purely custodial, such as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. II - 80 Schedule D-1 CITY OF BANGOR, MAINE Statement of Changes in Assets and Liabilities Agency FundsFor the Fiscal Year Ended June 30, 2017 Balance Balance July 1, 2016 Additions Deletions June 30, 2017 ASSETS Cash: School Activity Funds 129,456$ 170,252$ 162,782$ 136,926$ Total assets 129,456 170,252 162,782 136,926 LIABILITIES Funds held for others: School Activity Funds 129,456 170,252 162,782 136,926 Total liabilities 129,456$ 170,252$ 162,782$ 136,926$ CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS II - 81 Schedule E-1 CITY OF BANGOR, MAINE Capital Assets Used in the Operation of Governmental Funds (net of accumulated depreciation) Schedule of Changes by Function and ActivityFor the Fiscal Year Ended June 30, 2017 Balance Balance Function and Activity 2016 Additions Deletions 2017 General government BAT community connector 1,489,962$ 254,828$ 337,761$ 1,407,029$ Central service 17,333 - 2,421 14,912 City hall 640,926 5,543 24,446 622,023 Community and economic development 9,020,866 494,845 453,859 9,061,852 Engineering 4,278 - 2,384 1,894 Information services 120,883 49,974 31,970 138,887 Motor pool 3,413,162 748,861 694,928 3,467,095 Other - unclassified 8,780 - 8,780 - Total general government 14,716,190 1,554,051 1,556,549 14,713,692 Public safety Fire 4,617,705 1,223,451 436,630 5,404,526 Police 8,474,358 278,826 353,368 8,399,816 Total public safety 13,092,063 1,502,277 789,998 13,804,342 Health, community services and recreation Parks and recreation 3,221,844 1,420,563 1,345,761 3,296,646 Total health, community services and recreation 3,221,844 1,420,563 1,345,761 3,296,646 Public building and services Public works 14,656,364 288,936 619,023 14,326,277 Total public buildings and services 14,656,364 288,936 619,023 14,326,277 Education 29,734,060 1,245,868 1,231,784 29,748,144 Total governmental fund capital assets 75,420,521$ 6,011,695$ 5,543,115$ 75,889,101$ OTHER INFORMATION II - 82 Schedule F-1 CITY OF BANGOR, MAINE Assessed Valuation, Commitment and Collections For the Fiscal Year Ended June 30, 2017 VALUATION Land and buildings 2,344,351,100$ Land and buildings - Homestead exemption 74,491,300 Personal property 221,870,900 Personal property - BETE exemption 105,332,700 Total valuation 2,746,046,000$ COMMITMENT Real estate, personal property (excludes Homestead and BETE exemptions)2,566,222,000$ Tax rate 0.02250 Total commitment 57,739,995 ADD Supplemental taxes committed 41,722 57,781,717 LESS Collections 2017 56,513,791 Abatements 116,643 2017 taxes receivable at June 30, 2017 1,151,283$ II - 83 Schedule F-2 General Fund expenditures/uses ( Schedule A-2) General government 5,292,146$ Public safety 17,380,180 Health, community services and recreation 4,972,166 Public buildings and services 10,929,752 Other agencies 4,880,069 Education 51,709,777 Other appropriations 6,435,976 Other uses, gross*1,350,614 Gross expenditures and uses 102,950,680 General Fund debt service 7,520,573 Net expenditures and uses 95,430,107$ Indicated unassigned fund balance @ 8.33%7,949,328$ Actual unassigned fund balance (Schedule A-2)12,171,566$ Actual unassigned fund balance as a percentage of net expenditures and uses 12.75% * excludes amounts appropriated from unassigned and assigned fund balance of the last year's General Fund operating expenditures. The following table sets forth the calculation as of June 30, 2017. The City Charter states that the City Council shall target an a General Fund unassigned fund balance General Fund Unassigned Fund Balance Sufficiency Calculation For the Fiscal Year Ended June 30, 2017 CITY OF BANGOR, MAINE of no more than 16.66% of operating expenditures. The target balance is established at 8.33% STATISTICAL SECTION This part of the City of Bangor’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the government’s overall financial health. Page Financial Trends III - 1 The schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity III - 8 These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax. Debt Capacity III - 12 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the ability to issue additional debt in the future. Demographic and Economic Information III - 16 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information III - 18 These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. III - 1 Table 1 2011 2012 2013 2014 2015 2016 2017 Governmental activities: Net investment in capital assets 40,176,260$ 67,253,588$ 54,540,288$ 49,674,874$ 50,030,025$ 47,792,253$ 49,367,869$ Restricted*5,033,496 5,054,449 3,966,494 4,745,034 4,494,021 4,045,808 3,547,716 Unrestricted (3,751,473) (28,635,920) (24,261,524) (29,701,463) (25,459,136) (16,048,402) (15,045,713) Total governmental activities net position 41,458,283 43,672,117 34,245,258 24,718,445 29,064,910 35,789,659 37,869,872 Business-type activities:Net investment in capital assets 155,344,528 152,749,709 165,548,784 159,116,820 156,544,970 159,537,793 153,328,264 Unrestricted 15,549,352 12,823,198 4,879,657 6,860,485 8,428,935 8,766,272 14,668,855 Total business-type activities net position 170,893,880 165,572,907 170,428,441 165,977,305 164,973,905 168,304,065 167,997,119 Primary government: Net investment in capital assets 195,520,788 220,003,297 220,089,072 208,791,694 206,574,995 207,330,046 202,696,133 Restricted*5,033,496 5,054,449 3,966,494 4,745,034 4,494,021 4,045,808 3,547,716 Unrestricted 11,797,879 (15,812,722) (19,381,867) (22,840,978) (17,030,201) (7,282,130) (376,858) Total primary government net position 212,352,163$ 209,245,024$ 204,673,699$ 190,695,750$ 194,038,815$ 204,093,724$ 205,866,991$ Only seven years have been presented because 2011 was the year GASB Statement No. 54 was implemented. * Certain amounts within net position have been reclassified to conform with 2016 presentation. (accrual basis of accounting)Last Ten Fiscal YearsNet Position by ComponentCITY OF BANGOR, MAINE Fiscal Year Continued on next page III - 2 Table 2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ExpensesGovernmental activities: General government 8,744,549$ 7,868,247$ 8,279,943$ 9,223,718$ 4,490,599$ 4,733,021$ 7,110,075$ 6,871,396$ 6,588,238$ 6,953,399$ Public safety 14,945,855 15,671,645 16,898,374 17,018,427 18,016,430 17,864,294 18,050,107 17,933,525 18,107,357 18,841,238 Health, community services and recreation 8,413,205 9,168,870 9,331,784 9,523,225 8,455,977 9,298,196 9,586,571 9,692,379 10,112,526 9,497,729 Public services*10,501,253 11,812,548 16,380,337 12,413,601 15,399,933 14,408,500 14,249,015 12,956,599 15,409,518 15,997,665 Other agencies 4,829,547 4,580,661 4,658,904 4,479,888 4,209,428 4,630,915 6,799,934 4,638,805 4,528,591 5,049,394 Education 47,537,197 54,294,824 52,763,860 50,986,350 51,223,806 50,145,937 50,594,050 52,297,774 51,901,230 55,079,037 Arena development 41,091 51,332 39,075 61,334 536,251 2,201,200 500,566 - 136 801,439 Community development 2,156,241 912,992 1,506,038 1,542,975 1,152,289 1,356,184 2,178,972 1,316,591 1,592,047 1,335,282 Waterfront 1,754,281 9,252,263 79,911 1,439,065 606,249 381,437 272,857 360,004 331,622 - Public transportation 2,118,374 3,042,434 2,792,904 1,701,112 3,276,780 3,250,752 2,782,968 2,784,081 3,166,692 3,273,876 Economic development (tif)1,066,192 1,114,112 1,630,081 1,383,662 1,502,503 1,334,470 1,440,452 1,568,811 929,322 711,220 Interest on debt 3,206,764 2,651,599 2,555,839 2,151,172 2,710,135 3,343,590 2,464,804 2,604,030 2,362,899 2,142,976 Total governmental activities expenses 105,314,549 120,421,527 116,917,050 111,924,529 111,580,380 112,948,496 116,030,371 113,023,995 115,030,178 119,683,255 Business-type activities: Sewer Utility 6,052,419 6,197,277 6,253,436 6,202,202 6,758,495 6,827,790 6,843,975 6,603,195 7,210,861 7,725,453 Airport 19,641,953 19,934,243 20,532,553 20,458,552 20,752,350 20,722,960 20,855,066 20,893,894 20,266,935 21,217,373 Park Woods 678,867 590,250 529,610 496,478 533,671 473,289 497,833 507,210 - - Stormwater Utility - - - - - - 149,590 241,082 400,924 509,884 Parking 1,438,125 1,374,909 1,402,922 1,206,989 995,631 972,327 925,595 978,658 931,676 1,037,558 Bass Park 1,993,205 1,851,914 1,923,073 2,075,644 1,919,301 3,314,865 6,317,039 7,855,957 7,735,775 7,886,589 Municipal Golf Course 695,969 745,339 733,380 664,311 671,113 687,317 643,323 849,164 613,930 604,127 Economic Development 695,851 712,195 634,764 618,980 615,816 586,140 628,252 698,294 508,234 466,485 Total business-type activities expenses 31,196,389 31,406,127 32,009,738 31,723,156 32,246,377 33,584,688 36,860,673 38,627,454 37,668,335 39,447,469 Total primary government expenses 136,510,938$ 151,827,654$ 148,926,788$ 143,647,685$ 143,826,757$ 146,533,184$ 152,891,044$ 151,651,449$ 152,698,513$ 159,130,724$ * - Amounts previously reported as infrastructure have been reclassified as public services to conform with current year presentation. (accrual basis of accounting)Last Ten Fiscal YearsChanges in Net Position CITY OF BANGOR, MAINE Continued on next page III - 3 Table 2 (con't) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Program Revenues Governmental activities:Charges for services General government 2,282,374$ 1,869,711$ 2,386,637$ 2,070,189$ 2,501,326$ 2,214,675$ 2,764,659$ 2,493,428$ 2,196,463$ 2,117,874$ Public safety 2,439,831 3,010,167 2,401,930 3,289,153 2,681,152 3,418,686 2,682,248 3,193,528 3,383,956 3,013,577 Health, community services and recreation 771,254 768,450 836,689 928,307 1,048,707 1,139,382 1,164,090 1,118,582 1,193,185 1,266,221 Public services 4,127,341 3,807,886 3,954,116 3,922,847 4,002,973 3,520,517 3,758,666 3,904,548 3,618,373 3,637,836 Other agencies 22,243 22,068 - 20,248 103,560 - 46,882 - - - Education 4,539,787 4,386,457 4,533,041 5,165,261 3,806,614 3,835,409 3,446,006 4,699,101 4,506,591 5,705,049 Arena development 1,689,657 2,205,771 2,380,158 2,331,584 2,434,915 2,079,869 1,960,876 1,952,929 1,896,633 1,838,285 Community development 297,394 301,019 332,295 323,494 588,587 474,013 994,546 273,269 313,396 442,445 Public transportation 809,531 944,804 923,433 1,025,080 1,023,717 1,045,793 816,819 857,013 1,048,974 774,195 Tax increment financing - 1,711 - - - - - - - - Operating grants and contributions 41,370,518 34,155,649 35,683,710 35,604,940 33,137,275 31,901,386 34,600,320 33,541,085 34,838,496 33,872,652 Capital grants and contributions 2,119,150 2,068,478 6,578,917 4,935,614 3,725,432 2,345,794 1,720,879 1,540,614 3,064,312 2,391,680 Total governmental activities program revenues 60,469,080 53,542,171 60,010,926 59,616,717 55,054,258 51,975,524 53,955,991 53,574,097 56,060,379 55,059,814 Business-type activities: Charges for services Sewer Utility 6,745,112 7,537,879 7,288,499 7,340,935 7,320,469 7,708,101 8,426,054 8,189,623 7,975,639 8,634,449 Airport 14,475,879 13,953,287 13,767,394 13,080,217 12,540,347 12,069,935 12,220,328 12,036,215 13,576,325 15,870,081 Park Woods 340,494 369,478 371,832 372,715 397,426 417,407 440,295 459,905 - - Stormwater Utility - - - - - - 359,029 1,088,119 1,000,864 1,053,892 Parking 1,001,697 997,111 1,050,579 1,057,710 1,012,109 960,947 1,002,164 1,022,305 1,030,872 1,008,494 Bass Park 1,426,599 1,253,236 1,382,947 1,276,869 1,304,384 1,249,595 2,683,094 3,239,457 3,346,951 3,387,105 Municipal Golf Course 655,834 608,930 658,053 643,501 628,869 592,825 575,020 611,132 732,016 644,303 Economic Development 422,716 569,549 507,867 585,785 409,486 462,033 515,339 589,383 674,066 503,905 Operating grants and contributions - - - - - - - 193,061 - - Capital grants and contributions 3,426,732 4,113,557 8,684,860 3,717,755 2,351,779 6,121,523 4,039,968 6,947,799 8,776,331 3,776,705 Total business-type activities program revenues 28,495,063 29,403,027 33,712,031 28,075,487 25,964,869 29,582,366 30,261,291 34,376,999 37,113,064 34,878,934 Total primary government program revenues 88,964,143$ 82,945,198$ 93,722,957$ 87,692,204$ 81,019,127$ 81,557,890$ 84,217,282$ 87,951,096$ 93,173,443$ 89,938,748$ (accrual basis of accounting)Last Ten Fiscal Years Changes in Net Position CITY OF BANGOR, MAINE Continued from previous page III - 4 Table 2 (con't) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net (expense)/revenueGovernmental activities (44,845,469)$ (66,879,356)$ (56,906,124)$ (52,307,812)$ (56,526,122)$ (60,972,972)$ (62,074,380)$ (59,449,898)$ (58,969,799)$ (64,623,441)$ Business-type activities (2,701,326) (2,003,100) 1,702,293 (3,647,669) (6,281,508) (4,002,322) (6,599,382) (4,250,455) (555,271) (4,568,535) Total primary government expense (47,546,795) (68,882,456) (55,203,831) (55,955,481) (62,807,630) (64,975,294) (68,673,762) (63,700,353) (59,525,070) (69,191,976) General revenues and other changes in net positionGovernmental activities:Property taxes 43,775,938 46,977,792 48,182,455 48,027,330 48,520,390 49,930,989 52,243,583 55,303,613 56,062,583 56,721,029 Payment in lieu of taxes 122,510 141,595 117,770 161,879 156,629 95,620 161,438 156,417 193,599 233,683 Excise taxes 4,641,320 4,752,005 4,694,936 4,515,752 4,596,947 4,594,821 5,400,100 5,844,800 6,272,270 6,170,792 Franchise taxes 300,768 322,526 348,163 367,672 372,542 362,088 350,014 341,605 336,979 346,303 Unrestricted grants and contributions 5,520,774 5,260,439 4,999,567 4,859,811 4,963,161 4,857,030 3,787,128 3,794,664 4,173,167 4,464,142 Unrestricted investment earnings 1,274,939 874,824 673,295 565,326 530,631 57,620 510,429 413,923 488,936 380,580 Gain on sale of asset - - - - - - - - - 62,180 Miscellaneous 161,439 93,967 135,849 92,379 16,698 112,060 1,863 410,991 179,163 - Transfers (539,088) (739,179) 761,103 (637,898) (417,042) (8,772,781) (3,170,717) (2,469,650) (2,012,149) (1,675,055) Total governmental activities 55,258,600 57,683,969 59,913,138 57,952,251 58,739,956 51,237,447 59,283,838 63,796,363 65,694,548 66,703,654 Business-type activities:Property taxes - - - - - - 750,000 800,000 1,000,000 1,100,000 Unrestricted investment earnings 1,326,787 1,025,098 1,035,753 752,891 543,493 345,932 504,584 462,069 420,951 555,259 Gain (loss) on sale of asset - - - - - (260,857) - - 452,331 931,275 Special Item - - - - - - - (484,664) - - Transfers 539,088 739,179 (761,103) 637,898 417,042 8,772,781 3,170,717 2,469,650 2,012,149 1,675,055 Total business-type activities 1,865,875 1,764,277 274,650 1,390,789 960,535 8,857,856 4,425,301 3,247,055 3,885,431 4,261,589 Total primary government 57,124,475 59,448,246 60,187,788 59,343,040 59,700,491 60,095,303 63,709,139 67,043,418 69,579,979 70,965,243 Change in net positionGovernmental activities 10,413,131 (9,195,387) 3,007,014 5,644,439 2,213,834 (9,735,525) (2,790,542) 4,346,465 6,724,749 2,080,213 Business-type activities (835,451) (238,823) 1,976,943 (2,256,880) (5,320,973) 4,855,534 (2,174,081) (1,003,400) 3,330,160 (306,946) Total primary government 9,577,680$ (9,434,210)$ 4,983,957$ 3,387,559$ (3,107,139)$ (4,879,991)$ (4,964,623)$ 3,343,065$ 10,054,909$ 1,773,267$ Changes in Net PositionCITY OF BANGOR, MAINE (accrual basis of accounting)Last Ten Fiscal Years III - 5 Table 3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Tax Revenues Property taxes 43,775,938$ 46,977,792$ 48,182,455$ 48,027,330$ 48,520,390$ 49,930,989$ 52,243,583$ 55,303,613$ 56,062,583$ 56,721,029$ Excise taxes 4,641,320 4,752,005 4,694,936 4,515,752 4,596,947 4,594,821 5,400,100 5,844,800 6,272,270 6,170,792 Franchise taxes 300,768 322,526 348,163 367,672 372,542 362,088 350,014 341,605 336,979 346,303 Total tax revenues 48,718,026$ 52,052,323$ 53,225,554$ 52,910,754$ 53,489,879$ 54,887,898$ 57,993,697$ 61,490,018$ 62,671,832$ 63,238,124$ CITY OF BANGOR, MAINEGovernmental Activities Tax Revenues By SourceLast Ten Fiscal Years(accrual basis of accounting) III - 6 Table 4 Fiscal Year 2011 2012 2013 2014 2015 2016 2017 General Fund: NonspendableAdvances to other funds 1,900,500$ 1,900,500$ 1,900,500$ 1,900,500$ 1,900,500$ 1,900,500$ 1,900,500$ Inventory and prepaid items 963,770 860,187 873,714 853,265 672,248 1,238,139 1,061,973 RestrictedEducation purposes 1,213,508 936,158 186,871 974,012 889,481 1,354,267 745,039 Municipal purposes 405,119 349,362 288,519 288,857 19,803 19,830 19,883 Committed - municipal purposes 19,033 373,753 10,583 2,623 110,933 5,406 288,743 AssignedEncumbrances 1,389,501 1,548,268 777,788 31,347 15,987 244,899 72,264 Municipal purposes 3,115,199 3,240,838 3,415,627 3,386,444 4,626,740 5,509,947 6,367,677 Unassigned 8,017,940 7,563,658 7,727,014 9,598,472 9,995,105 11,315,235 12,171,566 Total general fund 17,024,570$ 16,772,724$ 15,180,616$ 17,035,520$ 18,230,797$ 21,588,223$ 22,627,645$ All other governmental funds:Nonspendable Permanent Fund Principal 608,710$ 588,515$ 574,492$ 544,200$ 532,758$ 532,338$ 525,249$ Capital Project Fund - - - - - - 1,120,229 Restricted Community Development Block Grant 346,605 415,956 252,479 - - - 50,811 Penobscot River 759 759 - - - - - Nonmajor Special Revenue Funds 1,637,362 1,862,992 1,730,231 1,971,397 2,060,733 1,633,366 1,692,082 Nonmajor Permanent Funds 410,337 449,974 466,951 483,284 495,623 506,007 514,652 Committed Arena Fund 6,690,287 - 2,761,541 1,051,134 871,271 587,141 613,291 Assigned Capital Project Fund 826,179 - 4,426,655 4,868,248 4,657,905 7,169,264 2,581,181 Capital Project Fund Encumbrances - 1,853,043 127,712 - - - - Unassigned Community Development Block Grant - - - (3,275) (10,679) (3,153) - Arena Fund - (4,603,950) - - - - - Capital Project Fund (537) - - - - - - Nonmajor Special Revenue Funds (12,257) (4,584) (5,736) - - - - Total all other governmental funds 10,507,445$ 562,705$ 10,334,325$ 8,914,988$ 8,607,611$ 10,424,963$ 7,097,495$ Only seven years have been reported because 2011 was the year GASB 54 was implemented. (modified accrual basis of accounting)Last Ten Fiscal YearsFund Balances of Governmental Funds CITY OF BANGOR, MAINE III - 7 Table 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Revenues: Taxes: Property taxes 43,767,914$ 47,113,576$ 48,284,733$ 48,371,202$ 48,688,270$ 50,004,619$ 52,748,153$ 55,650,209$ 56,626,711$ 57,378,981$ Excise taxes 4,641,320 4,752,005 4,694,936 4,515,752 4,596,947 4,594,821 5,400,100 5,844,800 6,272,270 6,170,792 Total tax revenues 48,409,234 51,865,581 52,979,669 52,886,954 53,285,217 54,599,440 58,148,253 61,495,009 62,898,981 63,549,773 Intergovernmental 41,345,956 41,123,520 46,211,718 45,304,160 40,536,525 39,029,824 40,025,974 38,563,450 41,912,419 40,506,368 Licenses and permits 956,965 644,621 633,339 601,202 948,267 576,559 1,389,717 831,968 755,273 644,795 Charges for services 13,283,275 13,449,587 13,655,764 15,226,575 13,594,482 14,079,514 12,782,036 14,889,219 14,802,549 15,525,283 Program income 296,325 288,677 329,800 314,203 575,460 462,380 765,142 247,549 284,619 407,403 Revenue from use of money and property 3,812,356 3,836,654 3,864,984 3,473,975 4,042,881 3,067,949 3,114,817 2,883,535 2,823,151 2,693,947 Other 7,691,463 428,220 1,108,213 279,426 561,118 165,686 156,659 516,714 227,243 275,771 Total revenues 115,795,574 111,636,860 118,783,487 118,086,495 113,543,950 111,981,352 116,382,598 119,427,444 123,704,235 123,603,340 Expenditures: General government**5,122,152 5,103,378 5,422,805 4,858,721 5,390,049 5,612,408 5,172,972 5,391,279 5,172,435 5,133,047 Public safety 14,162,638 14,400,420 15,287,575 15,800,938 16,028,180 16,209,402 16,409,651 16,994,567 17,146,674 17,330,311 Health, community services and recreation 4,305,709 4,414,673 4,720,477 5,584,184 5,383,295 4,945,994 4,826,149 5,041,486 5,117,412 4,972,166 Public services 9,906,759 10,048,539 10,055,161 10,196,576 9,842,829 9,835,549 10,052,683 10,704,017 10,387,416 10,907,018 Other agencies 4,227,552 4,294,283 4,291,329 4,747,617 4,409,545 4,382,776 4,566,380 4,684,697 4,723,022 4,886,577 Education 48,293,846 50,380,309 51,590,324 51,391,657 50,159,407 49,880,770 50,771,925 53,037,177 52,655,986 54,722,897 Tax increment financing - 215,483 432,033 165,133 524,013 550,308 632,364 724,347 717,260 711,220 Unclassified 166,994 63,115 54,451 118,216 260,685 2,323,972 590,627 74,128 104,422 44,568 Restricted grants 9,098,706 8,360,660 8,479,740 8,232,148 7,414,001 9,202,815 10,729,492 9,691,489 9,852,311 8,799,030 Capital outlay*8,038,242 16,118,777 20,818,168 12,799,978 45,478,235 10,213,552 12,534,783 8,158,063 7,940,743 9,419,396 Debt service Principal 2,044,428 2,136,415 12,423,331 3,862,188 6,996,892 22,907,595 3,222,253 3,685,728 3,970,474 5,563,414 Interest 2,436,120 2,373,922 2,472,643 2,375,397 2,180,013 2,923,060 1,957,347 2,050,633 1,983,468 1,871,056 Other charges 299 6,000 61,952 45,988 - - - - - - Total expenditures 107,803,445 117,915,974 136,109,989 120,178,741 154,067,144 138,988,201 121,466,626 120,237,611 119,771,623 124,360,700 Excess (deficiency) of revenues over (under) expenditures 7,992,129 (6,279,114) (17,326,502) (2,092,246) (40,523,194) (27,006,849) (5,084,028) (810,167) 3,932,612 (757,360) Other financing sources/(uses)Issuance of debt - 3,100,000 3,100,000 2,086,100 30,659,143 10,378,985 8,369,000 3,602,000 3,014,000 - Capital leases - - - - - 456,581 - - 61,152 - Payment to escrow agent - - - - - (4,233,486) - - - - Premium on debt issuance - - - - - 748,121 133,552 - - - Financing proceeds - 7,091,928 9,596,640 - - - - - - - Sale of assets 161,439 104,620 135,849 117,558 84,507 186,709 187,760 565,717 179,163 144,369 Transfers to other funds (2,690,305) (2,865,418) (1,789,024) (2,015,003) (1,861,301) (9,783,007) (4,406,771) (3,698,558) (4,015,412) (4,238,315) Transfers from other funds 2,151,217 2,126,239 2,550,127 1,377,105 1,444,259 1,010,226 1,236,054 1,228,908 2,003,263 2,563,260 Total other financing sources (377,649) 9,557,369 13,593,592 1,565,760 30,326,608 (1,235,871) 5,519,595 1,698,067 1,242,166 (1,530,686) Net change in fund balances 7,614,480$ 3,278,255$ (3,732,910)$ (526,486)$ (10,196,586)$ (28,242,720)$ 435,567$ 887,900$ 5,174,778$ (2,288,046)$ Debt service as a percentage of noncapital expenditures 4.70%4.64%14.84%6.17%9.23%25.09%4.99%5.39%5.62%6.92% * - Capital outlays under the modified accrual basis differ from capital outlays on the statement of activities due to capitalization thresholds andbudgetary requirements.** - Beginning with 2014, certain departmental costs are reflected in General government expenditures instead of other functional areas. CITY OF BANGOR, MAINE Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years(modified accrual basis of accounting) III - 8 Table 6 Business Total Taxable Total Equipment Fiscal Real Personal Assessed Direct Homestead Tax Other Year Property Property Value Tax Rate Exemption¹Exemption²Exemptions³ 2008 $2,082,355,000 254,991,600 2,337,346,600 17.74 68,742,200$ - 754,362,000 2009 $2,230,645,100 244,740,100 2,475,385,200 17.99 70,408,200$ 8,523,800 793,480,900 2010 $2,299,385,800 257,018,100 2,556,403,900 17.98 70,357,600$ 24,801,200 780,391,900 2011 $2,261,383,800 256,321,000 2,517,704,800 18.09 53,990,200$ 41,980,400 788,121,900 2012 $2,274,528,200 248,183,200 2,522,711,400 18.00 54,283,600$ 57,635,300 795,735,300 2013 $2,282,480,900 245,768,300 2,528,249,200 18.47 53,981,600$ 66,043,600 801,351,000 2014 $2,306,517,400 244,302,800 2,550,820,200 19.56 52,765,500$ 72,600,700 894,525,200 2015 $2,322,253,300 239,021,300 2,561,274,600 20.54 51,753,000$ 86,984,900 914,815,400 2016 $2,370,220,600 229,981,900 2,600,202,500 20.69 50,758,900$ 101,258,300 918,968,900 2017 $2,344,351,100 221,870,900 2,566,222,000 21.16 74,491,300$ 105,332,700 1,017,482,300 *Source - City of Bangor Commitment Report. It is City policy to assess at 100% of estimated actual value. ¹The City receives reimbursement from the State of Maine for 50% of the tax loss related to the Homestead Exemption. ²The Business Equipment Tax Exemption began in 2009. Upon implementation, the City received reimbursement from the State of Maine for 100% of the tax loss; that reimbursement has declined to 58.0% for 2017. ³Other exemptions consists of property owned by federal, state and local governments, various fully exempt organizations and non-reimbursable personal exemptions. CITY OF BANGOR, MAINEAssessed Value and Estimated Actual Value of Taxable Property*Last Ten Fiscal Years III - 9 Table 7 CITY OF BANGOR, MAINE Property Tax Rate - Direct and Overlapping GovernmentsLast Ten Fiscal Years General General Total Fiscal City Fund Debt Direct Penobscot Total Tax/ Year Government Service Education Tax Rate County (Mill) Rate 2008 7.69 1.18 8.87 17.74 1.06 18.80 2009 8.12 1.16 8.71 17.99 1.06 19.05 2010 8.01 1.27 8.70 17.98 1.07 19.05 2011 7.94 1.40 8.75 18.09 1.11 19.20 2012 7.75 1.42 8.83 18.00 1.20 19.20 2013 8.08 1.41 8.98 18.47 1.18 19.65 2014 8.67 1.48 9.41 19.56 1.24 20.80 2015 8.89 1.65 10.00 20.54 1.26 21.80 2016 8.20 2.61 9.88 20.69 1.26 21.95 2017 8.33 2.64 10.19 21.16 1.34 22.50 III - 10 Table 8 CITY OF BANGOR, MAINE Principal Property Taxpayers *Current Year and Nine Years Ago 2017 2008 Assessed % of Total Assessed % of Total Taxpayer Business Value Rank Tax Base Value Rank Tax Base GLP Capital L.P.Gaming 75,565,400$ 1 2.94%- - Bangor Mall LLC Shopping mall 62,230,900 2 2.43%- - Emera Maine Utility 40,761,500 3 1.59%- - General Electric Manufacturer 26,957,400 4 1.05%81,913,200$ 1 3.40% Walmart Stores Retailer 21,864,000 5 0.85%- - QV Realty Trust Real estate interests 21,737,300 6 0.85%15,602,200 5 0.65% Bangor Gas Company LLC Utility 20,722,100 7 0.81%14,327,700 7 0.60% Banres, LLC Hotel 17,642,500 8 0.69%- - HC Bangor LLC Gaming 17,575,000 9 0.68%- - Bangor Savings Bank Commercial bank 17,388,100 10 0.68%15,094,000 6 0.63% BANMAK Associates Shopping mall - - 56,985,700 2 2.37% Paradigm Development LLC Utility - - 31,251,400 3 1.30% Inland Western Parkade Shopping mall - - 26,206,600 4 1.09% Eastern Maine Healthcare Medical institution - - 13,464,500 8 0.56% May Department Stores Retailer - - 12,845,000 9 0.53% Cabrel Company Real estate interests - - 12,636,400 10 0.53% Totals 322,444,200$ 12.57%280,326,700$ 11.66% *Source - City of Bangor Tax Commitment. III - 11 Table 9 % of Subsequent Total Total Tax Fiscal Gross Tax Abate-Net Tax % of Year Tax Collection Year Levy ments Levy Amount Net Levy Collections Collections to Net Levy 2008 $44,082,476 341,521 43,740,955 42,847,656 97.96%$841,791 43,689,447 99.88% 2009 $47,235,370 275,489 46,959,881 45,688,356 97.29%$1,200,000 46,888,356 99.85% 2010 $48,719,847 588,817 48,131,030 46,205,428 96.00%$1,790,348 47,995,776 99.72% 2011 $48,362,646 168,932 48,193,714 46,857,606 97.23%$1,208,158 48,065,764 99.73% 2012 $48,529,834 175,844 48,353,990 47,025,587 97.25%$1,200,139 48,225,726 99.73% 2013 $49,713,855 134,598 49,579,257 48,276,445 97.37%$1,170,154 49,446,599 99.73% 2014 $53,077,993 43,339 53,034,654 51,692,178 97.47%$1,171,531 52,863,709 99.68% 2015 $55,903,061 282,782 55,620,279 53,708,753 96.56%$1,717,204 55,425,957 99.65% 2016 $57,090,091 445,799 56,644,292 55,557,652 98.08%$582,806 56,140,458 99.11% 2017 $57,781,717 116,643 57,665,074 56,513,791 98.00%$- 56,513,791 98.00% Collected within the Fiscal Year of the Levy CITY OF BANGOR, MAINE Property Tax Levies and Collections Last Ten Fiscal Years III - 12 Table 10 CITY OF BANGOR, MAINE Ratios of Outstanding Debt by Type Last Ten Fiscal Years Business-type ActivitiesGeneral General Total Fiscal Obligation Capital Obligation Capital Primary Per Assessed Per Personal Year Bonds/Notes Leases Bonds Leases Government Capita*Value Income* 2008 $56,998,022 - 41,722,545 - 98,720,567 3,157.85 4.22%10.62% 2009 $56,687,684 7,091,928 37,623,522 - 101,403,134 3,236.72 4.10%10.88% 2010 $61,689,447 - 34,956,548 - 96,645,995 3,073.00 3.78%10.33% 2011 $58,455,666 - 31,985,337 - 90,441,003 2,737.40 3.59%7.06% 2012 $80,674,158 - 28,707,990 - 109,382,148 3,314.61 4.34%9.47% 2013 $62,727,567 361,009 82,492,223 - 145,580,799 4,416.49 5.76%11.71% 2014 $67,154,638 277,728 82,983,011 41,699 150,457,076 4,604.94 5.90%13.12% 2015 $65,147,398 549,636 83,619,820 33,082 149,349,936 4,585.79 5.83%12.64% 2016 $62,635,756 408,687 81,041,828 29,210 144,115,481 4,449.24 5.54%12.27% 2017 $55,502,169 181,526 81,332,351 20,026 137,036,072 4,284.39 5.34%12.01% *Source: U.S. Census Bureau. Governmental Activities Ratio of Net Bonded Debt III - 13 Table 11 CITY OF BANGOR, MAINE Ratio of Net General Obligation Debt to Assessed Value and Net General Obligation Debt Per Capita Last Ten Fiscal Years Fiscal Assessed Net Bonded Assessed Per Year Population*Value GO Debt Value Capita 2008 31,262 $2,337,346,600 98,720,567 4.22%3,157.85 2009 31,329 $2,475,385,200 94,311,206 3.81%3,010.35 2010 31,450 $2,556,403,900 96,645,995 3.78%3,073.00 2011 33,039 $2,517,704,800 90,441,003 3.59%2,737.40 2012 33,000 $2,522,711,400 109,382,148 4.34%3,314.61 2013 32,963 $2,528,249,200 145,219,790 5.74%4,405.54 2014 32,673 $2,550,820,200 150,137,649 5.89%4,595.16 2015 32,568 $2,561,274,600 148,767,218 5.81%4,567.90 2016 32,391 $2,600,202,500 143,677,584 5.53%4,435.73 2017 31,985 $2,566,222,000 136,834,520 5.33%4,278.08 *Source: U.S. Census Bureau. Ratio of Net Bonded Debt III - 14 Table 12 CITY OF BANGOR, MAINE Computation of Direct and Overlapping Debt June 30, 2017 Percentage Amount Total Debt Applicable Applicable Outstanding to Bangor to Bangor Direct Debt City of Bangor General Obligation Bonds 55,502,169$ 100.00%55,502,169$ Capital Leases 181,526 100.00%181,526 Total Debt 55,683,695$ 55,683,695$ * - For year end June 30, 2017 the City had no overlapping debt obligations. III - 15 Table 13 Total Net Debt Legal Percentage of Fiscal Debt Applicable to Debt Net Debt to Year Limit Limit Margin Debt Limit 2008 $353,737,500 98,720,567 255,016,933 27.91% 2009 $356,670,000 94,311,206 262,358,794 26.44% 2010 $365,400,000 96,645,995 268,754,005 26.45% 2011 $369,997,500 90,441,003 279,556,497 24.44% 2012 $368,467,500 109,382,148 259,085,352 29.69% 2013 $369,300,000 145,219,790 224,080,210 39.32% 2014 $369,637,500 146,954,498 222,683,002 39.76% 2015 $381,555,000 145,681,059 235,873,941 38.18% 2016 $383,182,500 140,744,237 242,438,263 36.73% 2017 $381,555,000 134,045,613 247,509,387 35.13% Total State Valuation 2,543,700,000$ Debt Limitation: 15 % of State Valuation 381,555,000 Debt Applicable to Debt Limitation: General Obligation Bonds: Municipal 104,996,451 School 14,257,096 Sewer 14,792,066 Total debt applicable to limit 134,045,613 Legal Debt margin 247,509,387$ CITY OF BANGOR, MAINE Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2017 III - 16 Table 14 CITY OF BANGOR, MAINE Demographic and Economic Statistics Last Ten Fiscal Years Median Per Public Unemploy- Fiscal Household Capita Median School ment Year Population *Income*Income*Age*Enrollment**Rate *** 2008 31,262 29,740 19,295 36.1 3,886 5.10% 2009 31,329 29,740 19,295 36.1 3,878 7.80% 2010 31,450 29,740 19,295 36.1 3,821 8.10% 2011 33,039 38,775 25,344 36.7 3,830 7.50% 2012 33,000 34,993 25,344 37.5 3,819 7.10% 2013 32,963 37,707 24,945 36.8 3,875 6.70% 2014 32,673 35,107 23,791 36.5 3,810 5.40% 2015 32,568 36,272 23,977 35.9 3,765 4.60% 2016 32,391 36,272 23,977 35.9 3,780 3.80% 2017 31,985 35,674 23,928 35.4 3,759 3.70% *Source: U.S. Census. **Source: Bangor School Department. ***Source: Maine Bureau of Labor Statistics. III - 17 Table 15 CITY OF BANGOR, MAINE Principal EmployersCalendar Year and Nine Years Ago Employees Employer Location Employees Employer Location 1000-4000 Eastern Maine Medical Center Bangor 1000-4999 Eastern Maine Medical Center Bangor St. Joseph Hospital Bangor Bangor Mall Bangor City of Bangor Bangor 500-999 Acadia Hospital Bangor Hannaford Supermarkets Throughout Bangor Savings Bank Bangor Cianbro Corporation Throughout Bank of America Bangor City of Bangor Bangor 500-999 Acadia Hospital Bangor Hannaford Supermarkets Throughout L.L. Bean Bangor Husson University Bangor Bangor Savings Bank Bangor Penobscot Community Health Care Throughout Hollywood Slots Bangor Walmart Throughout Walmart Throughout St. Joseph Hospital Bangor * Source - State of Maine, Department of Labor. ¹Source - Bangor, Maine Community & Economic Profile Report, Published by City of Bangor Community & Economic Development. 2017*2008¹ III - 18 Table 16 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Function General government 100 100 100 100 99 97 92 103 74 77 Public safety Police 93 93 97 97 96 96 96 93 91 94 Fire 91 91 95 95 95 95 91 87 90 89 Health, community services and recreation 49 49 49 47 49 48 46 41 34 36 Public building and services 81 82 82 81 78 78 76 63 62 61 Education 618 618 621 610 580 580 568 578 570 580 Sewer utility 21 21 21 21 24 24 24 24 27 27 Airport 89 90 86 87 88 93 77 85 69 79 Park woods 2 2 2 2 2 2 1 - - - Parking 3 3 3 3 3 3 3 3 2 2 Bass park 7 8 8 7 6 5 - - - - Municipal golf course 9 3 3 3 3 3 3 3 3 3 Totals 1,163 1,160 1,167 1,153 1,123 1,124 1,077 1,080 1,022 1,048 * Source - City of Bangor Human Resource Department, excludes temporary, seasonal and on-call employees. CITY OF BANGOR, MAINE Full-time Equivalent City Government Employees by Function* Last Ten Fiscal Years III - 19 Table 17 CITY OF BANGOR, MAINEOperating Indicators by Function* Last Ten Calendar Years 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Function Code enforcementBuilding permits 485 501 427 518 405 453 433 454 517 571 Certificates of occupancy 430 440 341 448 350 361 395 452 630 609 Sign permits 118 103 90 96 70 69 82 83 86 89 Police Calls for service 32,392 34,329 32,351 30,167 31,640 33,740 36,153 36,967 38,347 38,505 Fire Calls for service 7,477 7,990 7,357 8,000 9,020 9,044 9,031 9,292 10,048 10,110 Sewer Treated flow (billions of gallons)3.21 3.89 3.55 2.81 3.10 2.68 2.69 3.20 2.57 2.44 Biosolids (tons)7,236 7,609 7,572 6,518 6,789 5,832 6,309 5,821 6,230 6,101 * Source - City of Bangor Departmental records. III - 20 Table 18 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Function Public safety Police: Stations 1 1 1 1 1 1 1 1 1 1Vehicles47505454504843505757 Fire: Stations 3 3 3 3 3 3 3 3 3 3 Vehicles 28 27 25 25 26 26 26 26 24 25 Public works Streets (miles)427 429 429 429 431 431 431 431 432 432 Sidewalks (miles)99.6 99.6 99.6 101.4 101.4 101.4 101.4 101.4 101.4 101.4 Parks and recreationParks 29 29 29 29 29 29 29 29 29 29 Parks acreage 950 950 950 950 950 950 950 950 950 950 Public swimming pools 2 2 2 2 2 2 2 2 2 2 Public golf courses 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 Indoor ice arena 1 1 1 1 1 1 1 1 1 1Semi-pro baseball stadium 1 1 1 1 1 1 1 1 1 1 Sewer Treatment plants 1 1 1 1 1 1 1 1 1 1 Pump stations 5 5 5 5 5 5 5 5 5 5Miles of sanitary sewers 103 103 103 103 103 103 103 103 103 103 Miles of combined sewers 44 44 44 44 44 47 49 49 49 49 * Source - City of Bangor Departmental records. CITY OF BANGOR, MAINE Capital Asset Statistics by Function* Last Ten Fiscal Years Fiscal Year