Document Redmond_doc_5efffcbf06

2015 Comprehensive Annual Financial Report For the fiscal year ended December 31, 2015 City of Redmond, Washington Live. Play. Work. Invest ---PAGE BREAK--- VISION Work together to realize Redmond’s future as a city with two vibrant urban centers, improve connections to our neighbors, and provide high quality, responsive services in partnership with an engaged community. 15670 NE 85th Street Redmond, WA 98073 [PHONE REDACTED] ph [PHONE REDACTED] fax www.redmond.gov ---PAGE BREAK--- CITY OF REDMOND, WASHINGTON COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015 PREPARED BY THE FINANCE DEPARTMENT MICHAEL E. BAILEY, CPA DIRECTOR OF FINANCE AND INFORMATION SERVICES MALISA FILES DEPUTY DIRECTOR OF FINANCE AND INFORMATION SERVICES GINI SCHACKER ACCOUNTING SERVICES MANAGER STEPHANIE WOO, ABA SENIOR ACCOUNTANT NIDA HERMOSO ACCOUNTANT RYAN EDWARDSEN ACCOUNTANT KELLEY WOOD TREASURY MANAGER IRENE MOCK DEPARTMENT ADMINISTRATIVE COORDINATOR ---PAGE BREAK--- City of Redmond, Washington Comprehensive Annual Financial Report For the Year Ended December 31, 2015 Table of Contents Page Introductory Section GFOA Certificate of Achievement i City Officials ii Organization Chart iii Letter of Transmittal iv Financial Section Auditor’s Opinion viii Management’s Discussion and Analysis 1 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 13 Statement of Activities 14 Fund Financial Statements Balance Sheet – Governmental Funds 15 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 17 Statement of Net Position - Proprietary Funds 18 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 20 Statement of Cash Flows - Proprietary Funds 21 Statement of Fiduciary Net Position - Fiduciary Funds 23 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 23 Notes to the Financial Statements Note 1: Summary of Significant Accounting Policies 24 Note 2: Reconciliation of Government-wide and Fund Financial Statements 31 Note 3: Cash and Investments 32 Note 4: Governmental Fund Balances 35 Note 5: Receivables 36 Note 6: Capital Assets 37 Note 7: Pension Plans 39 Note 8: Other Postemployment Benefits 52 Note 9: Construction Commitments 54 Note 10: Interfund Transfers 54 Note 11: Long-Term Obligations 54 Note 12: Leases 58 Note 13: Component Units 58 Note 14: Joint Ventures and Operations 59 Note 15: Contingencies and Litigation 63 Note 16: Risk Management 63 Note 17: Accounting and Reporting Changes 65 Note 18: Subsequent Events 65 Note 19: Prior Period Adjustments 66 ---PAGE BREAK--- City of Redmond, Washington Comprehensive Annual Financial Report For the Year Ended December 31, 2015 Table of Contents Page Required Supplementary Information Schedules of Revenues, Expenditures and Changes in Fund Balance, Budget and Actual: General Fund 67 Schedule of Proportionate Share of the Net Pension Liability – PERS 1 68 Schedule of Proportionate Share of the Net Pension Liability – PERS 2, 3 69 Schedule of Proportionate Share of the Net Pension Liability – PSERS 70 Schedule of Proportionate Share of the Net Pension Liability – LEOFF 1 71 Schedule of Proportionate Share of the Net Pension Liability – LEOFF 2 72 Schedule of Employer Contributions – PERS 1 73 Schedule of Employer Contributions – PERS 2, 3 74 Schedule of Employer Contributions – PSERS 75 Schedule of Employer Contributions – LEOFF 1 76 Schedule of Employer Contributions – LEOFF 2 77 Schedule of Changes in Net Pension Liability– Firefighter’s Pension Plan 78 Schedule of Contributions – Firefighter’s Pension Plan 79 Schedule of Investment Returns – Firefighter’s Pension Plan 80 Schedule of Funding Progress – LEOFF 1 Retiree Medical Benefits 81 Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds Descriptions 82 Combining Balance Sheet - Nonmajor Governmental Funds 83 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 87 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Capital Investments Program Capital Projects Fund 91 Recreation Activities Special Revenue Fund 92 Development Review Special Revenue Fund 93 Cable Access Special Revenue Fund 94 Operating Grants Special Revenue Fund 95 Advanced Life Support Special Revenue Fund 96 Aid Car Dispatch Special Revenue Fund 97 Real Estate Excise Tax Special Revenue Fund 98 Felony Seizure Special Revenue Fund 99 Tourism Special Revenue Fund 100 Solid Waste Recycling Special Revenue Fund 101 Regular Levy Debt Service Fund 102 Internal Service Funds Descriptions 103 Combining Statement of Net Position - Internal Service Funds 104 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds 106 Combining Statement of Cash Flows - Internal Service Funds 108 Agency Funds Descriptions 110 Combining Statement of Fiduciary Net Position - Agency Funds 111 Combining Statement of Changes in Assets and Liabilities - All Agency Funds 112 Capital Assets Used in the Operation of Governmental Funds Comparative Schedules by Source 114 Schedule by Function and Activity 115 Schedule of Changes by Function and Activity 117 ---PAGE BREAK--- City of Redmond, Washington Comprehensive Annual Financial Report For the Year Ended December 31, 2015 Table of Contents Page Statistical Section Introduction 118 Financial Trends Net Position by Component 119 Changes in Net Position 120 Fund Balances, Governmental Funds 122 Changes in Fund Balances, Governmental Funds 123 Revenue Capacity Assessed Value and Actual Value of Taxable Property 125 Direct and Overlapping Property Tax Rates 126 Principal Property Taxpayers 127 Property Tax Levies and Collections 128 Summary of Sales Tax Revenues 129 Debt Capacity Ratios of Outstanding Debt by Type 130 Ratios of General Bonded Debt Outstanding 131 Direct and Overlapping Governmental Activities Debt 132 Legal Debt Margin Information 133 Pledged-Revenue Coverage 134 Demographic and Economic Information Demographic and Economic Statistics 137 Principal Employers 138 Operating Information Full-time Equivalent City Government Employees by Function/Program 139 Operating Indicators by Function/Program 140 Capital Asset Statistics by Function/Program 141 ---PAGE BREAK--- 2015 Comprehensive Annual Financial Report i City of Redmond ---PAGE BREAK--- ELECTED OFFICIALS MAYOR JOHN MARCHIONE CITY COUNCIL TOM BYRON SHUTZ KIMBERLY ALLEN HANK MYERS VICE PRESIDENT DAYLE (HANK) MARGESON DAVID CARSON JOHN STILIN PRESIDENT EXECUTIVE STAFF & LEGAL COUNSEL DEPUTY CITY ADMINISTRATOR FINANCE & INFORMATION SERVICES DIRECTOR FIRE CHIEF HUMAN RESOURCES DIRECTOR INTERIM PARKS & RECREATION DIRECTOR PLANNING & COMMUNITY DEVELOPMENT DIRECTOR POLICE CHIEF PUBLIC WORKS DIRECTOR CITY ATTORNEY BOND ATTORNEY PROSECUTOR JANE CHRISTENSON MICHAEL E. BAILEY TOMMY SMITH MELLODY MATTHES KATIE ANDERSON ROB ODLE RON GIBSON LINDA DE BOLDT OGDEN MURPHY WALLACE PACIFICA LAW GROUP LARRY MITCHELL 2015 Comprehensive Annual Financial Report ii City of Redmond ---PAGE BREAK--- THE PUBLIC Arts Commission Board of Appeals Civil Service Commission Design Review Board Disability Board Library Board Park & Trails Commission Planning Commission Salary Commission Wednesday, January 09, 2013 ORGANIZATIONAL STRUCTURE CITY OF REDMOND MAYOR COUNCIL CITIZEN ADVISORY BOARDS & COMMISSIONS Capital Investment Planning City Administration Cross-Departmental Initiatives Eastside Public Safety Communications Agency Legal Services Office of Communications Policy Analysis Regional Initiatives/Partnerships City Legislation Policy Development Redmond Public Corporation HUMAN RESOURCES FINANCE & INFORMATION SERVICES PUBLIC WORKS PLANNING & COMMUNITY DEVELOPMENT FIRE PARKS & RECREATION POLICE Accounting & Financial Reporting Central Purchasing City Clerk Financial Planning Hearing Examiner Information Technology Reprographics Risk Management Treasury & Investments Utility Billing Benefits/Compensation Employment Labor Relations Safety Training Workers’ Compensation Building Permits Business License Code Enforcement Demographics & Data Development Engineering Development Review Economic Development Human Services Inspections Long Range Planning Tourism Transportation Demand Management Transportation Planning & Engineering Construction Engineering Facilities Maintenance Financial & Administrative Services Fleet Maintenance Natural Resources Real Property Solid Waste Recycling Stormwater Management Street & Sidewalk Maintenance Traffic Operations Safety & Engineering Water/Wastewater Management Advanced Life Support Apparatus Maintenance Emergency Medical Services Fire Prevention Fire Suppression Public Education Training Administration/Planning/Development Arts & Cultural Programs Events/Marketing Park Operations/Maintenance Recreation Programs Senior Programs Teen Programs Community Policing Crime Prevention/Police Partners Emergency Dispatch Investigation Patrol Records/Evidence Traffic Training Office of Emergency Management 2015 Comprehensive Annual Financial Report iii City of Redmond ---PAGE BREAK--- June 17, 2016 Mayor Marchione, The Redmond City Council, and Citizens of Redmond, Washington: I am pleased to provide the Comprehensive Annual Financial Report of the City of Redmond for the fiscal year ended December 31, 2015. This report is published annually as the official annual financial report and complies with State law (RCW 43.09.230) requiring annual reports for Washington municipal governments to be certified and filed with the Washington State Auditor’s Office. As management for the City, we are responsible for both the accuracy of the data, and the completeness and fairness of the presentation, including all related disclosures. The City operates under a system of accounting internal controls that are concerned with the safeguarding of assets and the reliability of financial records. The definition of accounting control assumes reasonable, but not absolute, assurance that the objectives expressed in it will be accomplished by the system. The concept of reasonable assurance recognizes that the cost of internal control should not exceed the benefits expected to be derived. Cities and counties of the State of Washington use the Budgeting, Accounting and Reporting System (BARS) developed and prescribed by the Office of the State Auditor. State law provides for an annual independent audit to be conducted by the Office of the State Auditor. This report includes the auditor’s opinion with respect to the city’s financial statements. Generally Accepted Accounting Principles (GAAP) 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 of Redmond’s MD&A can be found immediately following the independent auditor’s report. Profile of the Government Incorporated in 1912, Redmond is the nineteenth largest city in the state of Washington encompassing an area of 17.15 square miles east of downtown Seattle on the east side of Lake Washington. Redmond has grown from a population of 1,453 in 1960 to a 2015 population of 59,180. Redmond is a non-charter code city, operating under Section 35A of the Revised Code of Washington. It has a Mayor/Council form of government. The Mayor and the seven member City Council are elected for staggered four-year terms and are elected at-large. Members of the City Council are responsible for establishing the general direction and policies for the City and for providing the resources necessary to carry out those policies. As the City’s chief administrator, the Mayor is responsible for carrying out the policy and direction set by the City Council. This includes the enforcement of laws and ordinances, the execution of contracts and agreements, and maintenance of peace and order in the City. The City of Redmond provides a full range of municipal services, including police and fire, emergency medical services, planning and zoning, street maintenance and construction, parks and recreation, and general administrative services. The City operates enterprise funds for water and wastewater services and stormwater management. 2015 Comprehensive Annual Financial Report iv City of Redmond ---PAGE BREAK--- This report includes all funds, agencies, and boards and commissions that are controlled by, or dependent on, the City’s executive and legislative departments. Included in agency funds in the fiduciary funds statements is the Redmond Community Facilities District (CFD) which was created for the purpose of financing the construction of a pedestrian / bicycle bridge over State Route 520 at the Overlake Transit Station. Additional information on the reporting entity can be found in the Notes to the Financial Statements. The City prepares a biennial budget on the modified accrual basis in accordance with the Revised Code of Washington (RCW) 35A.34. Biennial budgets must be adopted by the City Council prior to the first of each odd-numbered calendar year. Reviews are conducted at mid-biennium and any changes for the second half of the biennium are adopted by the City Council. The biennial budget serves as the foundation for the City of Redmond’s financial planning and control. The budget is prepared by fund and department. A budget increase or decrease to a fund must be authorized by the City Council. Appropriation changes within a fund may be authorized by the Mayor. Local Economy Redmond has evolved from a small town with logging and farming as its chief industries into a city of very diverse industries. Led by a significant technology industry, the local economy also includes light manufacturing, business parks, a large outdoor mall adjacent to the downtown retail core, and, most recently space exploration companies. The largest employer in Redmond is Microsoft which has its world headquarters and about 35 thousand employees located in the City. Other significant employers in our city include Terex (formerly Genie Industries) (1,814 employees), Eurest Dining Services @ Microsoft (1,007 employees), Nintendo of America (926 employees), AT&T Mobility (914 employees), and Volt Technical Resources (810 employees). Like most cities across the country, Redmond saw a significant decline in economic activity and tax revenues during the 2008/2009 recession. Since that time the recovery has been slow but steady. While we are seeing significant investments in the local economy (in the form of commercial developments) the city's tax revenues continue to be slow to reflect the renewed growth. Sales taxes in 2015 recovered from lackluster performance and have exceeded the high-water mark of 2007 for the first time. This eight year recovery reflects both the sluggishness of the economic recovery as well as a continuing shift to new economic models. Traditional taxes on telecommunications have stagnated or declined for some time for example. Sales taxes collected for "non-store" (or remote sales transactions) increased by 45% during this time! The City's financial planning efforts are adjusting for this slow recovery. Several significant projects continue in the downtown area and have included large multi-use developments and new medical facilities. The city is continuing to make major investments in roadways, utility infrastructure and parks facilities in pursuit of the transformation of its two urban centers (the historic downtown and the “Overlake” area which is the primary location of technology firms). The City’s commitment to investing in its capital assets continued during the economic downturn with an increase in capital assets. Long-term Financial Planning and Relevant Financial Policies In line with the City Council’s financial strategy to maintain a diversified and stable revenue system, the city consistently develops long term financial plans and adjusts revenue strategies accordingly. Three of these revenue sources, utility tax rate, business license fees, and developer fees, were increased by Council vote in 2006. In 2007 voters approved three Levy Lid Lifts to provide additional revenue in 2008. In adopting the 2015-2016 budget the council again increased utility taxes and business license fees. Beginning early in 2008, the Mayor and Council initiated a “Budgeting by Priorities” process. This process helped to align community priorities with efficient delivery of city services through the development of the 2009/2010 biennium budget. It also includes performance indicators to gauge the degree of success in addressing the community priorities with city resources. This process has been used since that time, including the past four biennium budgets. 2015 Comprehensive Annual Financial Report v City of Redmond ---PAGE BREAK--- City financial policies restrict the use of borrowed funds to capital improvements that can’t be financed from current revenues. Debt is not used for current operations. The City issued bonds in 2008 for significant transportation improvements to support development in the downtown and to improve its utility systems. The City again issued bonds to finance acquisition of park land in the downtown in early 2011. In 2013 the city refinanced the capital lease obligation to Redmond Community Properties for the construction of its city hall with the issuance of limited tax general obligation bonds. This resulted in transfer of ownership of City Hall from Redmond Community Properties to the City, and a total savings of more than $1.5 million in debt service payments. In 2014 the City issued $22.95million in bonds to finance significant investment in storm water management systems. During 2015, the City refunded the bonds issued in 2008 and borrowed $7m to complete a priority transportation project in the downtown. The refunding of the 2008 bonds saved more than $240,000 per year for the next ten years. More information about city bonds and debt can be found in the Notes to the Financial Statements in this report. To ensure the City keeps abreast of and incorporates economic conditions into its financial plans, revenues are projected for the next six years and the forecast is updated annually (and available on the city’s website). Operating expenses are supported by ongoing revenues per City policy. Short-term financial planning is inherent in the development of the City’s biennial budget. In addition, the City’s long- term capital needs and potential funding sources are assessed as part of its “Capital Investment Strategy”. In this effort the city forecasts capital needs consistent with its vision and it comprehensive land use plan through the year 2030. Major Initiatives The City continues to invest in the significant capital facilities that are necessary to realize the City’s vision of two urban centers, connected to great neighborhoods. Projects in 2015 included completion of large utility infrastructure projects in the downtown and Overlake (the two urban centers). In addition, transportation projects continue as well. Cleveland Street – a major arterial in the downtown – was rebuilt and preliminary work was done to set the stage for major improvements to Redmond Way (another downtown arterial). Preliminary planning was completed on the downtown park with construction beginning in 2016. Large community events continue to build the sense of community in Redmond. Derby Days, held in mid-July, celebrates Redmond’s bicycling heritage. The festival features the Criterium, which is the City’s oldest event and the nation’s longest running bicycle race, a 5K run/walk, parades, live entertainment, and much more. Redmond Lights, is the City’s annual year-end holiday celebration, running from early December through early January. In 2014 a new, multi-day community event was added. "So-Bazaar" is a market and imaginative platform for local artists, artisans, chefs, and entertainers. National Night Out, “America’s Night Out Against Crime” began in 1984 in an effort to promote involvement in crime prevention activities, police-community partnerships, neighborhood camaraderie and send a message to criminals letting them know that neighborhoods are organized and fighting back. National Night Out takes place annually, on the first Tuesday of August. The event celebrates safety and crime prevention successes and works to expand and strengthen programs to help make neighborhoods a safer place year round. In Redmond, it has continued to grow into a significant point of connection between the city, its neighborhoods and among the neighbors themselves. Awards and Acknowledgments The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Redmond for its Comprehensive Annual Financial Report for the fiscal year ended December 31, 2014. 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. 2015 Comprehensive Annual Financial Report vi City of Redmond ---PAGE BREAK--- 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 to determine its eligibility for another certificate. The preparation of the Comprehensive Annual Financial Report could not have been accomplished without the efforts and dedication of City staff. I am very proud of those who have dedicated numerous hours of service to the community in this effort. I would like to express my appreciation to the staff, including personnel from various departments and agencies who assisted in its preparation. Also, I would like to thank the Mayor and the City Council for their continued interest and support in planning and conducting the financial operations of the City in a dedicated and responsible manner. Respectfully submitted, Michael E. Bailey, CPA Finance Director 2015 Comprehensive Annual Financial Report vii City of Redmond ---PAGE BREAK--- INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS June 17, 2016 Mayor and City Council City of Redmond Redmond, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Redmond, King County, Washington, as of and for the year ended December 31, 2015, 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 City’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 City’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. Washington State Auditor’s Office 2015 Comprehensive Annual Financial Report viii City of Redmond ---PAGE BREAK--- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion 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, each major fund and the aggregate remaining fund information of the City of Redmond, King County, Washington, as of December 31, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis – Correction of Prior Year Misstatement As discussed in Note 19 of the financial statements, the 2015 financial statements have been restated to correct a misstatement. Our opinion is not modified with respect to this matter. Matters of Emphasis – Implementation of New Standards As described in Note 17, during the year ended December 31, 2015, the City has implemented the Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 1 through 12, budgetary comparison information on page 67, pension plan information on pages 68 through 77, pension trust fund information on pages 78 through 80 and information on postemployment benefits other than pensions on page 81 to 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. 2015 Comprehensive Annual Financial Report ix City of Redmond ---PAGE BREAK--- Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 82 through 117 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has 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 it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated June 17, 2016, on our consideration of the City’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. That report will be issued under separate cover in the City’s Single Audit Report. 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’s internal control over financial reporting and compliance. Sincerely, TROY KELLEY STATE AUDITOR OLYMPIA, WA 2015 Comprehensive Annual Financial Report x City of Redmond ---PAGE BREAK--- Management’s Discussion And Analysis The management discussion and analysis section of the City of Redmond’s Comprehensive Annual Financial Report provides an overview of the City’s financial activities for the year ending December 31, 2015, and resulting changes in the financial position as of December 31, 2015. For a better understanding of Redmond’s finances for the previous year, readers should consider this information in conjunction with the preceding letter of transmittal, the financial statements and notes to the financial statements that follow. Financial Highlights In 2015, the City held a steady course focusing on the vision of two vibrant urban centers by continuing work in the downtown corridor, planning for future development in the Overlake area and connecting established neighborhoods. As shown below, the City continues its legacy of prudent financial management.  The assets and deferred outflows of resources of the City of Redmond exceeded its liabilities at fiscal year-end by $783.9 million (net position), an increase of $36.9 million or 4.9% over 2014. Of this amount, unrestricted net position totals $93.0 million and may be used to meet the city’s ongoing obligations to citizens and creditors. Restricted net position totals $51.9 million and is earmarked for debt service, capital projects and special revenue funds.  At December 31, 2015, the City’s governmental activities reported combined ending net position of $405.4 million, an increase of $23.5 million over 2014. Approximately 6.9% of this amount ($27.9 million) is available for spending at the City’s discretion (unrestricted net position).  The City of Redmond’s total outstanding long-term debt increased by $27.4 million during the fiscal year. This is primarily due to the implementation of GASB Statement No. 68 Accounting and Reporting for Pensions ($27.0 million), issuance of public works trust fund bonds of $4.4 million, an increase in compensated absences and other post-employment benefits of $1.0 million, and a reduction of $4.6 million due to principal payments and amortization of premiums. See notes 11 and 17 to the financial statements for more information. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Redmond’s basic financial statements, which are comprised of three components: 1) government wide financial statements, 2) fund financial statements and 3) notes to the financial statements. Other supplementary information, intended to furnish additional detail to support the basic financial statements, is also contained in the report. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Redmond’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents financial information on all of the City of Redmond’s assets, liabilities, and deferred inflows/outflows of resources, with the difference 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 of Redmond is improving or deteriorating. The Statement of Activities presents information designed to show how the City’s net position changed during the year. The statement distinguishes revenue generated by specific functions from revenue provided by taxes and other sources not related to a specific function. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show the degree to which each function supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are 2015 Comprehensive Annual Financial Report 1 City of Redmond ---PAGE BREAK--- incurred, regardless of when cash is received or disbursed. Items such as (but not limited to) uncollected taxes, unpaid vendor invoices for goods or services received during the year, and earned but unused vacation leave are included in the statement of activities as revenue and expenses even though no cash has changed hands. Both the government-wide financial statements distinguish functions of the City of Redmond that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Redmond include general government (finance, executive and human resources), security (police and fire), physical environment, economic environment, transportation, mental/physical health, and culture and recreation. The City’s business-type activities are limited to water/wastewater and stormwater utilities. Governmental activities are primarily supported by taxes, charges for services, and grants. Business-type activities are primarily self-supporting through user fees and charges. Fund Financial Statements The annual financial report includes fund financial statements in addition to the government-wide financial statements. While the government-wide statements present the City’s finances based on the type of activity, general government versus business-type, the fund financial statements are presented by fund type such as the general fund, special revenue funds, and proprietary funds. A fund is a fiscal and accounting entity with a self-balancing set of accounts used to account for specific activities or meet certain objectives. Funds are often set up in accordance with special regulations, restrictions or limitations. The City of Redmond, like other state and local governments, uses fund accounting to ensure and show compliance with finance-related legal requirements. The City’s funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions as are reported as governmental activities in the government-wide financial statements. These reports use a different “basis of accounting” than that used in government-wide financial statements. The governmental fund statements focus on near-term revenues/financial resources and expenditures while the government-wide financial statements include both near-term and long-term revenues/financial resources and expenses. The information in the governmental fund statements can be used to evaluate the City’s near-term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government-wide statements can help the reader better understand the long-term impact of the City’s current year financing decisions. To assist in this comparison, reconciliations between the governmental fund statements and the government-wide financial statements are included with the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances. The City of Redmond maintains fourteen individual governmental funds. The City’s two major governmental funds – the general fund and the capital investments program fund – are presented separately in the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances. The remaining governmental funds are combined in this statement into a single column labeled other governmental funds. Individual fund data for each of the other governmental funds can be found in combining statements later in this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level for all funds in accordance with state law. All budgetary comparison schedules are included following the other governmental funds’ combining statements in this report. Following is a brief analysis of each of the City’s major governmental funds: The General Fund is the primary operating fund of the City through which all receipts and payments of ordinary City operations are processed, unless they are required to be accounted for in another fund. At the end of 2015, the fund balance of the General Fund was $37.2 million, which represents an increase from the prior year of $2.4 million. 2015 Comprehensive Annual Financial Report 2 City of Redmond ---PAGE BREAK--- General Fund revenues increased by $6.1 million in 2015. The key elements of this increase are as follows:  Taxes increased by $3.3 million including growth in property taxes by $0.6 million due to a rise in new construction, refunds and the 1% levy increase allowed by law. Redmond also experienced growth in sales tax including a net increase of $3.0 million due to the economic recovery as well as a one-time research and development tax exemption Department of Revenue audit reimbursement of $1.4 million in December. Utility taxes also experienced positive growth ($0.6 million) due to the imposition of a new cable utility tax ($0.3 million) and a net increase of electrical utility taxes ($0.3 million). These increases were offset by small losses in gas utility and cell phone taxes.  Charges for services increased by $9.5 million due to a change in the State of Washington BARS designation of certain emergency services revenue from the intergovernmental category to charges for services. Fire services to Fire District #34 and basic life support services paid for by King County make up $8.3 million of the net change. Additionally, reimbursements for these two services increased by $0.9 million due to increases in salary and benefits, overtime and emergency medical supply costs.  Licenses and permits grew by $0.8 million due to continuing recovery of the real estate market and increases in construction activity.  These increases were partially offset by decreases in Intergovernmental revenues of $7.5 million, primarily due to a decrease in grant revenue and the change in State of Washington BARS designations for some emergency services revenues from intergovernmental to charges for services as explained above. General Fund expenditures increased $4.9 million over 2014, due to an increase in General Government and Security of persons and property resulting from a residual adjustment to overtime paid per the Fair Labor Standards Act to accommodate the unique schedules used by firefighters ($0.9 million). Additional increases included grant expenditures related to police personnel and crime analysis, jail costs, court fees, movement of contributions for fire vehicle replacement from the City’s capital improvement program to the General Fund and increases in sick leave and retiree payouts due to retirements. The Capital Investments Program Fund (CIP Fund) accounts for financial resources to be used for the acquisition, construction, and preservation of major capital facilities other than those financed by proprietary funds. At the end of 2015, the fund balance of the Capital Investments Program Fund was $25.5 million, which represents a decrease from the prior year of $8.3 million. Capital Investment Program Fund revenues decreased by $3.0 million (32.6%) in 2015, primarily due to grants. Capital Investment Program Fund expenditures increased by $7.0 million (49.0%) in 2015, due to projects such as Cleveland Streetscape improvements, completion of the Redmond Central Connector, the design of Downtown Park, the design of the one-way street conversion for Redmond Way, renovation of the Public Safety Building and construction of a roundabout on 116th Avenue. Capital Investments Program Fund net transfers between other funds increased by $1.3 million primarily due to additional transfers from the General Fund to support capital investment fund projects, some of which are mentioned above. Proprietary funds are used by governments to account for their business-type activities. Business- type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services received. The City of Redmond has two types of proprietary funds, enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens and the community. Internal service funds are used to account for goods and services provided internally to various City departments. The same basis of accounting is used for proprietary funds in both the government-wide statements and the individual fund statements. 2015 Comprehensive Annual Financial Report 3 City of Redmond ---PAGE BREAK--- Enterprise funds of the City are used to report the same functions presented as business-type activities in the government-wide statements with the fund statements providing more detail than is reported in the government-wide statements. The enterprise fund statements provide separate information for the City’s water/wastewater utility, an Urban Planned Development (UPD) water/wastewater utility outside the City limits, and the City’s stormwater utility. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet of vehicles, insurance premiums and claims, medical self-insurance, worker’s compensation self-insurance program, and information technology. Internal service fund activities are predominantly governmental and have been included in the governmental activities columns of the government-wide Statement of Net Position and Statement of Activities. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. Fiduciary funds are not included in the government-wide financial statements because their assets are not available to support the City of Redmond’s activities. The City has two types of fiduciary funds, a pension fund and agency funds. The accounting for the pension fund is on the accrual basis. Agency funds are custodial in nature and do not include revenues and expenses as they do not measure the results of operations. The City has one component unit presented among the agency funds in the fiduciary statements, the Redmond Community Facilities District, which was created in 2014 for the purpose of financing the construction of a pedestrian/bicycle bridge over SR 520 at the Overlake Transit Station. (See Note 13 – Component Units for additional information.) Notes to the financial statements The notes to the financial statements provide additional information that is important for a full understanding of the data in the government-wide and fund financial statements. The notes are located immediately following the basic financial statements. Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension benefits, and lifetime medical benefits to uniformed personnel hired before October 1, 1977. Required supplementary information may be found immediately following the notes to the financial statements. The combining statements for other governmental funds, internal service funds, and agency-type fiduciary funds are presented immediately following the required supplementary information. Government–wide Financial Analysis Statement of Net Position The Statement of Net Position can serve as a useful indicator of the City’s financial position. The City of Redmond’s net position at December 31, 2014 and 2015 total $747.0 million and $783.9 million, respectively. The City’s overall net position increased $36.9 million from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business-type activities. By far, the largest portion of the City’s net position ($639.0 million; 81.5%) reflects investment in capital assets land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although investment in capital assets is reported net of related debt, it should be noted that the resources used to 2015 Comprehensive Annual Financial Report 4 City of Redmond ---PAGE BREAK--- repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position ($51.9 million; 6.6%) represents resources that are subject to external restrictions on how they may be used. The largest portion of these funds is restricted for capital projects ($18.4 million), net pension asset ($11.1 million), and police, fire and advance life support ($8.8 million). The remaining balance of $93.0 million (11.9%) is unrestricted and may be used to meet the City’s ongoing obligations to its citizens and creditors. Following is a condensed version of the government-wide Statement of Net Position for 2015 compared to 2014. City of Redmond’s Net Position (in thousands) Governmental Activities Business-Type Activities Total 2015 2014 2015 2014 2015 2014 Current and other assets $ 104,691 $ 105,562 $ 86,755 $ 83,431 $ 191,446 $ 188,993 Net pension asset 11,084 1,001 - - 11,084 1,001 Capital assets, net of 395,396 357,292 336,859 318,357 732,255 675,649 accumulated depreciation Total assets $ 511,171 $ 463,855 $ 423,614 $ 401,788 $ 934,785 $ 865,643 Deferred outflows: Debt refunding 2,323 1,443 - - 2,323 1,443 Pensions 4,203 - 625 - 4,828 - Total assets and deferred outflows $ 517,697 $ 465,298 $ 424,239 $ 401,788 $ 941,936 $ 867,086 Long-term liabilities $ 71,669 $ 73,621 $ 36,889 $ 34,581 $ 108,558 $ 108,202 Net pension liability 21,885 - 5,122 - 27,007 - Other liabilities 12,268 9,762 2,876 2,082 15,144 11,844 Total liabilities $ 105,822 $ 83,383 $ 44,887 $ 36,663 $ 150,709 $ 120,046 Deferred inflows - Pensions 6,514 - 783 - 7,297 - Total liabilities and deferred inflows $ 112,336 $ 83,383 $ 45,670 $ 36,663 $ 158,006 $ 120,046 Net investment in capital assets $ 334,538 $ 292,662 $ 304,494 $ 287,209 $ 639,032 $ 579,871 Restricted 42,937 33,146 8,917 6,917 51,855 40,063 Unrestricted 27,885 56,106 65,158 70,999 93,043 127,105 Total net position $ 405,361 $ 381,914 $ 378,569 $ 365,125 $ 783,930 $ 747,039 2015 Comprehensive Annual Financial Report 5 City of Redmond ---PAGE BREAK--- Changes in net position The change in net position table illustrates the increases or decreases in net position of the City resulting from its operating activities. Following is a condensed version of the City’s changes in net position. The table shows the revenues, expenses, and related changes in net position in tabular form for the governmental activities separate from the business-type activities for 2015 and 2014. City of Redmond’s Changes in Net Position (in thousands) Governmental Activities Business-Type Activities Total 2015 2014 2015 2014 2015 2014 Revenues: Program revenues: Charges for services $ 39,907 $ 38,181 $ 54,544 $ 51,590 $ 94,451 $ 89,771 Operating grants and contributions 1,898 1,718 2,671 5,678 4,569 7,396 Capital grants and contributions 3,913 4,147 8,433 8,442 12,346 12,589 General revenues: Property taxes 23,564 22,817 - - 23,564 22,817 Sales taxes 25,385 22,131 - - 25,385 22,131 Other taxes 23,171 19,397 - - 23,171 19,397 Investment interest 765 835 434 400 1,199 1,235 Miscellaneous 4,880 2,059 279 197 5,159 2,256 Total revenues $ 123,483 $ 111,285 $ 66,361 $ 66,307 $ 189,844 $ 177,592 Expenses: General government $ 21,021 $ 16,852 $ - $ - $ 21,021 $ 16,852 Security 49,832 46,622 - - 49,832 46,622 Physical environment 286 2,950 - - 286 2,950 Economic environment 5,851 4,984 - - 5,851 4,984 Transportation 13,339 12,645 - - 13,339 12,645 Culture and recreation 12,358 12,754 - - 12,358 12,754 Interest on long term debt 2,731 2,837 917 669 3,648 3,506 Water/Wastewater - - 32,592 31,032 32,592 31,032 UPD Water/Wastewater - - 5,900 5,982 5,900 5,982 Stormwater - - 7,989 7,581 7,989 7,581 Loss on disposal of assets - - 56 478 56 478 Total expenses $ 105,418 $ 99,644 $ 47,454 $ 45,742 $ 152,872 $ 145,386 Increase/(Decrease) in net position 18,065 11,641 18,907 20,565 36,972 32,206 Net position - beginning 381,914 370,273 365,125 344,560 747,039 714,833 Prior period adjustments 22,209 - - - 22,209 - Changes in accounting principles- GASB 68 (16,827) - (5,463) - (22,290) - Net position - ending $ 405,361 $ 381,914 $ 378,569 $ 365,125 $ 783,930 $ 747,039 2015 Comprehensive Annual Financial Report 6 City of Redmond ---PAGE BREAK--- Governmental activities During the 2015 fiscal year, net position for governmental activities increased $23.5 million compared to $11.6 million in 2014. Key elements of the increase are as follows:  Total assets and deferred outflows from Governmental activities increased by $52.4 million - Cash and investments reflect a decrease of $3.1 million from 2014 to 2015 while taxes receivable increased $2.7 million and all other receivables, inventory and prepaid expenses decreased $0.5 million - Investment in capital assets increased by $38.1 million $22.8 million of this increase is due to prior period adjustments for contributed land rights for 2010 – 2014 that were not previously reported. The remaining increase of $15.3 million is consistent with the City’s plans for investments in infrastructure and technology. - Net pension asset increased $10.1 million due to implementation of GASB Statement No. 68 Accounting and Reporting for Pensions. See Note 17 – Accounting and Reporting Changes for additional information.  Total liabilities and deferred inflows from Governmental activities increased by $29.0 million - Debt decreased by $2.0 million as a result of principal payments on debt previously held by the City. See Note 11 to the financial statements for more information. - Net pension liability increased by $21.9 million due to implementation of GASB Statement No. 68 Accounting and Reporting for Pensions. See Note 17 – Accounting and Reporting Changes for additional information. - Other current liabilities increased by $2.5 million, primarily due to accrual of employee wages payable.  Total revenue increased between 2014 and 2015 by $12.2 million or 11.0%. - Total tax revenues increased by $7.8 million (12.1%) compared to 2014 due to larger growth in property taxes, sales taxes and excise taxes in 2015 as compared to 2014. - Program revenues increased by $1.7 million due to increases in King County Emergency Medical Services funding for reimbursements to the City for salary, benefits and overtime reimbursement due to a fair labor standards act analysis as well as an increase in unit allocations for advanced life support services. - Total expenses increased by $5.8 million, primarily due to increases in full-time equivalent employees to respond to the development surge and development agreements with business owners. Additional increases are attributable to capital construction to further the goals of the City’s Capital Investment Strategy. The graph that follows compares program revenues to program expenses from the Statement of Activities and illustrates the impact of various city functions on net position from operations before taxes, for the governmental activities for 2015. 2015 Comprehensive Annual Financial Report 7 City of Redmond ---PAGE BREAK--- General Fund Budgetary Highlights The City of Redmond budgets on a biennial basis and in comparing the original budget to the final budget for 2015, several changes took place including:  Recognizing the difference between budgeted and actual fund beginning fund balances for a total increase of $36 million.  Recognizing additional revenue and staffing to support the Sound Transit East Link Light Rail development agreement ($0.8 million).  Other miscellaneous adjustments for small grants. Total actual revenues came in $1.3 million over budget, including fund balances, due to various factors, including:  Utility tax revenues accounted for most of the net change, coming in at $1.2 million (12.6%) over budget. Utility taxes had been declining in previous years, but in 2015 the City experienced an increase largely attributable to higher electric utility taxes ($1.0 million net increase).  Other smaller increases occurred in state entitlements as well as intergovernmental revenue. Total actual expenditures were $6 million under budget in the General Fund due to:  Of the $6 million under expenditures, $4.5 million occurred in the General government category including $2.7 in the City’s economic contingency used to ease unanticipated swings in the economy. The City also budgets a salary and benefit contingency every biennium to mitigate contract settlement agreements that are higher than anticipated. The savings from this contingency equals $1.1 million. At this point in the biennium neither of the contingencies has been expended.  Salary savings in 2015 equals $2.3 million in the General Fund of which $1.6 million is attributable to the public safety departments. $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 General government Security Physical environment Economic environment Transportation Culture and recreation Expenses and Program Revenues ‐ Governmental Activities Program Revenues Expenses 2015 Comprehensive Annual Financial Report 8 City of Redmond ---PAGE BREAK--- Business-type Activities Business-type activities account for 48.3% of the City’s net position. Business-type activities of the City’s utilities increased the City of Redmond’s net position by $13.4 million Key elements of this increase are as follows:  Investment in capital assets increased $18.5 million or 5.8% between 2014 and 2015.  The Water/Wastewater utility showed operating income of $3.0 million in 2015 compared to $2.0 million in 2014, while the Novelty Hill Water/Wastewater utilities showed an operating income of $1.0 million compared to $0.8 million in 2014. These increases were primarily due to increase water demands caused by above normal temperatures during the summer months and a higher level of development activities than seen in the previous year. When non-operating income and capital contributions are included, the change in net position is $8.3 million for the Water/Wastewater utility and $2.3 million for the UPD Water/Wastewater utility.  The Storm water utility showed operating income of $4.0 million in 2015 compared to $4.2 million in 2014, primarily due to increases in maintenance and operations and depreciation expenses primarily due to delivery of significant capital projects. When non-operating income and capital contributions are included, the change in net position is $8.3 million, compared to $13.7 million in 2014. This is primarily due to decreases in grant revenues and capital contributions. The City completed significant work on the South Overlake Stormwater Vault in the Overlake neighborhood and the Redmond Way Water Quality Facility in the Downtown neighborhood. Both projects are key infrastructure for the City’s regional stormwater system. The graph that follows compares program revenues to program expenses from the Statement of Activities and illustrates the revenues by source separately for the business-type activities for 2015. $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 Water/Wastewater UPD Water/Wastewater Stormwater Expenses and Program Revenues ‐ Business‐type Activities Program Revenues Expenses 2015 Comprehensive Annual Financial Report 9 City of Redmond ---PAGE BREAK--- City of Redmond’s Capital Assets (net of depreciation) The City of Redmond’s investment in capital assets for its governmental and business-type activities (not including investment in joint ventures) as of December 31, 2015, amounts to $732.3 million (net of accumulated depreciation) an increase of $56.6 million from 2014. Investment in capital assets includes land, art and construction in progress, which are not subject to depreciation. The other capital assets, buildings and building improvements, improvements other than buildings, machinery and equipment, and infrastructure are subject to depreciation. Governmental type capital assets (net of depreciation) totaled $395.4 million in 2015, an increase of $38.1 million from 2014. $22.8 million of this increase is due to prior period adjustments to capitalize contributed land rights from 2010 – 2014. Business-type capital assets (net of depreciation) totaled $336.9 million, an increase of $18.5 million from 2014. In addition to the effects of depreciation, these increases are the result of land acquisitions, improvements to buildings and construction in progress. More information on the City’s Capital Assets can be found in Note 6 – Capital Assets, in the Notes to the Financial Statements. 2015 2014 2015 2014 2015 2014 Land & Land Rights 126,464 $ 100,568 $ 25,620 $ 22,148 $ 152,084 $ 122,716 $ Buildings/ Bldg. Improvements 55,021 56,075 30,326 31,086 85,347 87,161 Improvements other than Buildings 19,895 18,554 268,996 225,759 288,891 244,313 Machinery and Equipment 10,436 10,343 921 268 11,357 10,611 Construction in Progress 17,626 20,013 10,996 39,096 28,622 59,109 Infrastructure 165,405 151,190 - - 165,405 151,190 Art 549 549 - - 549 549 Total 395,396 $ 357,292 $ 336,859 $ 318,357 $ 732,255 $ 675,649 $ (in thousands) City of Redmond's Capital Assets (net of depreciation) Governmental Activities Business-Type Activities Total 2015 Comprehensive Annual Financial Report 10 City of Redmond ---PAGE BREAK--- City of Redmond’s Outstanding Debt At the end of 2015, the City of Redmond had total bonded debt outstanding of $87.7 million. Of this amount, $58.5 million is general obligation bonds (City Hall, Bear Creek Parkway and Parks); and $29.2 million is revenue bonded debt for the water/wastewater and stormwater utilities. In September 2013 the City issued $33.1 million in limited tax general obligation refunding bonds to advance refund $32.8 million of outstanding 2004 Limited Tax General Obligation Lease Revenue Bonds for City Hall and the parking garage. The refunding resulted in deferred outflows of $1.5 million. In December, 2015, the City issued $9,280,000 in limited tax general obligation refunding bonds with an interest rate of 3.00% to advance refund $8,940,000 of outstanding 2008 Limited Tax General Obligation Bonds. The refunding resulted in deferred outflows of $1.0 million. The 2015 unamortized balance of $2.3 million is reported as a deferred outflow in the statement of net position. As discussed in Note 17, Net pension assets increased $10.1 million due to implementation of GASB Statement No. 68 Accounting and Reporting for Pensions. As discussed in Note 18 – Subsequent Events, the City issued an additional $17,630,000 in Limited Tax General Obligation and Refunding Bonds in January 2016. For further details related to the outstanding debt please refer to note 11 – Long-term Obligations, in the Notes to the Financial Statements. Economic Factors and Next Year’s Budget and Rates The City of Redmond budget is an important part of Redmond’s Six-Year Financial Plan that is focused on the good of the community and guided by a robust public process. The Six-Year Financial Plan builds upon the City’s sound financial strategy by providing a framework that allows the City to “catch up” with needed maintenance, “keep up” with growth and demands for service and “step up” to some of the needs and opportunities that should be acted upon. Through innovation and efficiencies, Redmond continues to provide quality services that meet or exceed the expectations of our community members. Strong financial stewardship and quality customer service is a hallmark of Redmond city government and is evidenced by the City’s AAA bond rating. In addition, planning and construction continues in the Overlake area to anticipate the neighborhood’s needs when light rail becomes a part of the area. The City has fostered relationships, both private and with other government organizations, to ensure Overlake continues to be a thriving neighborhood. Lastly, the City is investing in connecting neighborhoods and keeping up with infrastructure maintenance through 2015. General Fund revenue ended the year over expectations due to a one-time audit reimbursement in sales tax. Departments successfully managed their expenditures and as a result 2015 2014 2015 2014 2015 2014 General obligation bonds 58,530 $ 61,780 $ - $ - $ 58,530 $ 61,780 $ G.O. bond premiums 3,140 2,615 - - 3,140 2,615 Revenue bonds - - 29,170 30,660 29,170 30,660 Revenue bond issuance premiums - - 3,195 3,381 3,195 3,381 Public Works Trust Fund loans 1,511 1,677 4,412 - 5,923 1,677 Other post-employment benefits 4,032 3,489 - - 4,032 3,489 Compensated absences 4,456 4,060 563 540 5,019 4,600 Net pension liability 21,885 - 5,122 27,007 - Total 93,554 $ 73,621 $ 42,462 $ 34,581 $ 136,016 $ 108,202 $ Governmental Activities Business-Type Activities Total City of Redmond's Long-term Debt (in thousands) 2015 Comprehensive Annual Financial Report 11 City of Redmond ---PAGE BREAK--- General Fund expenditures were approximately 7% below the authorized budget. The City experienced growth in licenses and permits due to a surge in commercial development activity which began in 2014 and is anticipated to last beyond 2015. In future years, Redmond anticipates making progress on its capital improvement goals by continuing the work in downtown Redmond on the new Downtown Park (beginning construction in 2017) and converting the Redmond Way and Cleveland one-way streets into two-way thoroughfares (construction is anticipated starting in 2016). The City will continue to make investments in parks and trails, infrastructure rehabilitation and safety improvements, most notably the renovation of the Public Safety Building which houses the Redmond Police Department. The City’s Six-Year Financial Plan provides adequate funding for all City services while continuing to seek efficiencies in service delivery. In addition, the Capital Investment Program continues to remain strong with projects aligned with the City’s vision of a community with connected neighborhoods and two vibrant urban centers. Requests for Information This financial report is designed to provide a general overview of the City of Redmond’s finances for readers with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional information, may be addressed to the Director of Finance & Information Services, City of Redmond, PO Box 97010, Redmond, WA 98073-9710. 2015 Comprehensive Annual Financial Report 12 City of Redmond ---PAGE BREAK--- Governmental Business-Type Activities Activities Total ASSETS Cash and cash equivalents $ 11,748,027 $ 11,106,485 $ 22,854,512 Cash with outside agencies 10,000 - 10,000 Investments (Note 3) 74,474,540 61,334,770 135,809,310 Receivables: Taxes 8,619,653 - 8,619,653 Accounts 353,121 4,673,480 5,026,601 Interest 176,024 159,226 335,250 Due from other governments 3,589,024 361,841 3,950,865 Inventory 37,012 107,549 144,561 Prepaid insurance 453,171 - 453,171 Net pension asset 11,084,335 - 11,084,335 Restricted assets: Deposit cash 526,856 55,681 582,537 Deposit investments 4,703,262 - 4,703,262 Revenue bond reserve - 2,809,909 2,809,909 Rate stabilization fund - 6,107,077 6,107,077 Advance on service contract - 38,930 38,930 Capital assets (Note Land, artwork, construction in progress 144,638,940 36,616,730 181,255,670 Depreciable capital assets, net 250,757,180 300,241,985 550,999,165 Total assets 511,171,145 423,613,663 934,784,808 Deferred outflow of resources: Debt refunding 2,323,243 - 2,323,243 Pensions 4,202,857 625,002 4,827,859 Total deferred outflows 6,526,100 625,002 7,151,102 Total assets and deferred outflows 517,697,245 424,238,665 941,935,910 LIABILITIES Payables: Accounts/claims 4,152,641 1,912,037 6,064,678 Employee wages 2,640,589 750,995 3,391,584 Interest 199,821 111,587 311,408 Due to other governments 637,187 44,932 682,119 Unearned revenues 558,767 - 558,767 Customer deposits 4,079,232 55,681 4,134,913 Noncurrent liabilities (Note 11): Due within one year 7,378,876 1,540,000 8,918,876 Due in more than one year 64,289,824 35,349,406 99,639,230 Net pension liability 21,885,095 5,121,872 27,006,967 Total liabilities 105,822,032 44,886,510 150,708,542 Deferred inflow of resources: Pensions 6,514,154 783,130 7,297,284 Total deferred inflows 6,514,154 783,130 7,297,284 Total liabilities and deferred inflows 112,336,186 45,669,640 158,005,826 NET POSITION Net investment in capital assets (Note 6) 334,538,419 304,494,008 639,032,427 Restricted for: Net pension asset 11,084,335 11,084,335 Advance life support 1,273,492 - 1,273,492 Cable access 1,014,487 - 1,014,487 Parks 618,017 - 618,017 Police 4,987,920 - 4,987,920 Fire 2,537,981 - 2,537,981 Debt service 1,065,607 2,809,909 3,875,516 Capital projects 18,383,684 - 18,383,684 Tourism 579,883 - 579,883 Planning-Transportation 731,630 - 731,630 Recycling 660,952 - 660,952 Rate stabilization fund - 6,107,077 6,107,077 Unrestricted 27,884,652 65,158,031 93,042,683 Total Net Position $ 405,361,059 $ 378,569,025 $ 783,930,084 The notes to the financial statements are an integral part of this statement CITY OF REDMOND STATEMENT OF NET POSITION DECEMBER 31, 2015 2015 Comprehensive Annual Financial Report 13 City of Redmond ---PAGE BREAK--- Net (Expense) Revenue and Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-Type Function/Program Expenses Services Contributions Contributions Activities Activities Total Governmental activities: General government $ 21,021,158 $ 3,113,517 $ 8,733 $ - $ (17,898,908) $ - $ (17,898,908) Security 49,832,308 17,993,377 1,076,071 - (30,762,860) - (30,762,860) Physical environment 286,281 553,222 211,750 - 478,691 - 478,691 Economic environment 5,850,805 15,142,018 - - 9,291,213 - 9,291,213 Transportation 13,338,510 391,637 500,730 3,913,775 (8,532,368) - (8,532,368) Culture and recreation 12,357,964 2,712,852 100,760 - (9,544,352) - (9,544,352) Interest on long-term debt 2,730,736 - - - (2,730,736) - (2,730,736) Total governmental activities 105,417,762 39,906,623 1,898,044 3,913,775 (59,699,320) - (59,699,320) Business-type activities Water/Wastewater 32,592,451 35,637,004 51,944 4,908,110 - 8,004,607 8,004,607 UPD Water/Wastewater 5,900,042 6,946,516 - 1,074,142 - 2,120,616 2,120,616 Stormwater 7,988,814 11,961,161 2,619,392 2,450,979 - 9,042,718 9,042,718 Total business-type activities 46,481,307 54,544,681 2,671,336 8,433,231 - 19,167,941 19,167,941 Total government $ 151,899,069 $ 94,451,304 $ 4,569,380 $ 12,347,006 (59,699,320) 19,167,941 (40,531,379) General revenues: Taxes Property 23,563,621 - 23,563,621 Sales 25,385,141 - 25,385,141 Business and Occupation 15,575,563 - 15,575,563 Excise 7,594,713 - 7,594,713 Timber Harvest 4 - 4 Investment interest 988,738 641,130 1,629,868 Gain (loss) in change of fair value (223,739) (206,803) (430,542) Miscellaneous 1,682,197 278,719 1,960,916 Investment interest expense - (916,981) (916,981) Contributions/Disposal of capital assets 3,197,734 (56,205) 3,141,529 Total general revenues 77,763,972 (260,140) 77,503,832 Change in net position 18,064,652 18,907,801 36,972,453 Net position-beginning 381,914,505 365,124,610 747,039,115 Prior Period Adjustments 22,209,391 - 22,209,391 Changes in Accounting Principles - GASB 68 (16,827,489) (5,463,386) (22,290,875) Net position-ending $ 405,361,059 $ 378,569,025 $ 783,930,084 The notes to the financial statements are an integral part of this statement CITY OF REDMOND STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Program Revenues 2015 Comprehensive Annual Financial Report 14 City of Redmond ---PAGE BREAK--- Capital Improvements Other Governmental Program Governmental Funds General Fund Funds Total ASSETS Cash and cash equivalents $ 4,259,863 $ 3,551,935 $ 1,331,070 $ 9,142,868 Cash with outside agency - - 10,000 10,000 Investments 26,904,646 22,343,246 8,830,474 58,078,366 Receivables: Taxes 8,008,146 - 611,507 8,619,653 Accounts 203,681 1,632 67,025 272,338 Interest 62,810 51,457 25,055 139,322 Due from other funds 128,482 - - 128,482 Due from other governments 288,543 1,288,254 2,012,227 3,589,024 Restricted assets: Deposit investments 4,691,232 11,695 335 4,703,262 Cash 454,814 - 72,042 526,856 Total Assets $ 45,002,217 $ 27,248,219 $ 12,959,735 $ 85,210,171 LIABILITIES AND FUND BALANCES Liabilities: Accounts/claims payable $ 857,432 $ 1,652,124 $ 113,206 $ 2,622,762 Employee wages payable 2,010,607 37,035 293,282 2,340,924 Due to other funds - - 128,482 128,482 Due to other governments 468,249 8,859 125,266 602,374 Payable from restricted assets: Deposits payable 4,067,202 11,695 335 4,079,232 Unearned revenues 430,199 - 128,568 558,767 Total Liabilities 7,833,689 1,709,713 789,139 10,332,541 Fund balances: Spendable: Restricted 7,106,431 13,429,456 10,733,369 31,269,257 Committed 9,441,772 - 1,437,227 10,878,999 Assigned 11,019,280 12,109,050 - 23,128,330 Unassigned 9,601,044 - - 9,601,044 Total Fund Balances 37,168,527 25,538,506 12,170,596 74,877,629 Total Liabilities and Fund Balances $ 45,002,216 $ 27,248,219 $ 12,959,735 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 not reported in the funds. 389,410,092 Internal service funds are used by management to charge the costs of certain activities, such as insurance, information services, and fleet maintenance, to individual funds. The assets and liabilities of these internal service funds are included in governmental activities in the Statement of Net Position. 21,069,277 Some liabilities, including bonds,loans, and compensated absences payable, are not due and payable in the current period and therefore are not reported in the funds. (Note 2) (69,286,186) The Net Pension Asset, Net Pension Lability, and deferred inflows and deferred outflows are reported in the government-wide statement of net position but not in the governmental balance sheet. (Note 2) (10,709,753) Net position of governmental activities $ 405,361,059 The notes to the financial statements are an integral part of this statement CITY OF REDMOND BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2015 2015 Comprehensive Annual Financial Report 15 City of Redmond ---PAGE BREAK--- Capital Improvements Other Total General Program Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 63,338,221 $ - $ 8,780,820 $ 72,119,041 Licenses and permits 9,720,283 - 1,203,748 10,924,031 Contributions 66,687 68,500 37,820 173,007 Intergovernmental 3,103,642 3,913,775 343,483 7,360,900 Charges for services 14,815,209 1,945,511 9,870,325 26,631,045 Fines and forfeitures 613,556 - 15,901 629,457 Investment income 307,514 255,961 93,962 657,437 Net Change in Fair Value of Investment (99,443) (65,807) (25,996) (191,246) Miscellaneous 304,097 178,602 432,077 914,776 Total Revenues 92,169,766 6,296,542 20,752,140 119,218,448 EXPENDITURES Current: General government 16,414,295 - - 16,414,295 Security of persons and property 44,684,473 - 6,496,134 51,180,607 Physical environment 16,957 - 640,223 657,180 Transportation 8,752,185 - 1,292,403 10,044,588 Economic environment 4,648,988 - 970,796 5,619,784 Social Services 882,947 - 273,505 1,156,452 Culture and recreation 8,841,562 - 2,378,644 11,220,206 Capital outlay 488,709 20,438,118 80,138 21,006,965 Debt service: Principal 94,451 751,886 2,910,000 3,756,337 Interest and debt issue costs 4,014 218,847 2,463,314 2,686,175 Total Expenditures 84,828,581 21,408,851 17,505,157 123,742,589 Excess (deficiency) of revenues Over (under) expenditures 7,341,185 (15,112,309) 3,246,983 (4,524,141) OTHER FINANCING SOURCES (USES) Refunding bonds issued - - 9,280,000 9,280,000 Premium on refunding bonds issued 716,063 716,063 Payment to refunded bond escrow agent - - (9,996,063) (9,996,063) Insurance recoveries 7,460 - - 7,460 Transfers in (Note 12) 3,234,801 10,409,639 5,781,007 19,425,447 Transfers out (Note 12) (8,158,363) (3,046,300) (8,085,146) (19,289,809) Total other financing sources and uses (4,916,102) 7,363,339 (2,304,139) 143,098 Net change in fund balances 2,425,083 (7,748,970) 942,844 (4,381,043) Fund balances-beginning 34,817,144 33,783,942 11,227,752 79,828,838 Prior Period Adjustment (73,700) (496,466) - (570,166) Fund balances-ending $ 37,168,527 $ 25,538,506 $ 12,170,596 $ 74,877,629 The notes to the financial statements are an integral part of this statement CITY OF REDMOND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 2015 Comprehensive Annual Financial Report 16 City of Redmond ---PAGE BREAK--- Amounts reported for governmental funds in the statement of activities are different because: Net change in fund balances-total governmental funds. $ (4,381,043) 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 and reported as depreciation expense. This is the amount by which capital outlays of $21,006,965 and contributions of $1,920,260 exceed depreciation expense of $8,968,997 and disposals of $227,168 in the current period. 13,731,060 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. (Note 2) 1,155,936 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of long-term debt is an expenditure in the governmental funds, yet the repayment reduces long-term liabilities in the statement of net position. Governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the government-wide statement of activities: This is the amount by which repayments exceeded proceeds. (Note 2) 3,771,869 Internal service funds are used by management to charge the costs of certain activities, such as insurance, information services, and fleet maintenance, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 2,023,445 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (Note 2) (867,614) Pension expenses reported in the governmental fund statements are not reported as expenditures in the statement of activities. 2,630,999 Change in net position of governmental activities. $ 18,064,652 The notes to the financial statements are an integral part of this statement CITY OF REDMOND RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2015 2015 Comprehensive Annual Financial Report 17 City of Redmond ---PAGE BREAK--- Page 1 of 2 Governmental Activities Water/ UPD Water/ Stormwater Internal Wastewater Wastewater Management Totals Service Funds ASSETS Current assets: Cash and cash equivalents $ 4,620,052 $ 2,548,024 $ 3,938,409 $ 11,106,485 $ 2,605,159 Investments 23,827,136 14,308,710 23,198,924 61,334,770 16,396,174 Accounts and contracts receivable 3,145,712 510,120 1,017,648 4,673,480 80,783 Interest receivable 66,199 36,739 56,288 159,226 36,702 Due from other Governments 4,625 - 357,216 361,841 - Inventory 107,549 - - 107,549 37,012 Prepaid insurance - - - - 453,171 Restricted assets: Customer deposits: Cash and cash equivalents 16,373 32,000 7,308 55,681 - Revenue Bond Reserve: Investments 1,175,500 - 1,634,409 2,809,909 - Rate stabilization fund: Investments 4,177,811 1,929,266 - 6,107,077 - Total current assets 37,140,957 19,364,859 30,210,202 86,716,018 19,609,001 Noncurrent assets: Advance on service contract 35,445 3,485 - 38,930 - Capital assets: Land and land rights 4,382,731 3,274,106 17,963,437 25,620,274 584,292 Buildings 25,377,864 11,031,564 1,549,496 37,958,924 619,494 Improvements other than buildings 168,268,908 63,753,253 114,722,506 346,744,667 356,198 Equipment 562,618 262,471 632,836 1,457,925 13,739,850 Construction in progress 2,275,787 84,808 8,635,861 10,996,456 91,370 Less accumulated depreciation (53,697,333) (15,773,395) (16,448,803) (85,919,531) (9,405,182) Total capital assets (net of depreciation) 147,170,575 62,632,807 127,055,333 336,858,715 5,986,022 Total noncurrent assets 147,206,020 62,636,292 127,055,333 336,897,645 5,986,022 Total assets $ 184,346,977 $ 82,001,151 $ 157,265,535 $ 423,613,663 $ 25,595,023 Deferred outflow of resources: Pension GASB 68 328,975 158 295,869 625,002 284,365 Total deferred outflows 328,975 158 295,869 625,002 284,365 Total assets and deferred outflows 184,675,952 82,001,309 157,561,404 424,238,665 25,879,388 The notes to the financial statements are an integral part of this statement CITY OF REDMOND STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2015 Business-type Activities Enterprise Funds 2015 Comprehensive Annual Financial Report 18 City of Redmond ---PAGE BREAK--- Page 2 of 2 Governmental Activities Water/ UPD Water/ Stormwater Internal Wastewater Wastewater Management Totals Service Funds LIABILITIES Current liabilities: Accounts payable $ 1,010,482 $ 72,963 $ 828,592 $ 1,912,037 $ 1,529,877 Employee wages payable 163,973 179 136,047 300,199 299,665 Compensated absences 248,415 - 202,381 450,796 207,269 Due to other governments 13,912 176 30,844 44,932 34,813 Current portion of revenue bonds payable 755,000 - 785,000 1,540,000 - Accrued interest payable 29,132 - 82,455 111,587 - Current liabilities payable from restricted assets: Customer deposits payable 16,373 32,000 7,308 55,681 - Total current liabilities 2,237,287 105,318 2,072,627 4,415,232 2,071,624 Noncurrent liabilities: Revenue bonds payable, net 6,690,917 - 24,133,790 30,824,707 - Loans payable - - 4,412,000 4,412,000 - Compensated absences 62,104 - 50,595 112,699 51,818 Net Pension Liability 2,695,940 1,297 2,424,635 5,121,872 2,330,359 Total noncurrent liabilities 9,448,961 1,297 31,021,020 40,471,278 2,382,177 Total liabilities 11,686,248 106,615 33,093,647 44,886,510 4,453,801 Deferred inflow of resources: Pension GASB 68 412,207 198 370,725 783,130 356,310 Total deferred inflows 412,207 198 370,725 783,130 356,310 Total liabilities and deferred inflows 12,098,455 106,813 33,464,372 45,669,640 4,810,111 NET POSITION Net investment in capital assets 139,724,658 62,632,807 102,136,543 304,494,008 5,986,022 Restricted for debt service 1,175,500 - 1,634,409 2,809,909 - Restricted for rate stabilization 4,177,811 1,929,266 - 6,107,077 - Unrestricted 27,499,528 17,332,423 20,326,080 65,158,031 15,083,255 Total net position $ 172,577,497 $ 81,894,496 $ 124,097,032 $ 378,569,025 $ 21,069,277 The notes to the financial statements are an integral part of this statement Business-type Activities Enterprise Funds CITY OF REDMOND STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2015 2015 Comprehensive Annual Financial Report 19 City of Redmond ---PAGE BREAK--- Governmental Activities- Water/ UPD Water/ Stormwater Internal Wastewater Wastewater Management Totals Service Funds Operating revenues: Charges for services $ 21,522,221 4,921,781 11,961,161 38,405,163 17,374,737 Metro service 14,114,783 2,024,735 - 16,139,518 - Charges for replacement - - - - 2,378,063 Charges for insurance - - - - 1,170,182 Total operating revenues 35,637,004 6,946,516 11,961,161 54,544,681 20,922,982 Operating expenses: Administrative and general 2,778,349 350,810 2,592,412 5,721,571 - Purchased water 6,768,749 1,207,290 - 7,976,039 - Metro service 13,556,523 1,993,768 - 15,550,291 - Supplies - - - - 215,806 Maintenance and operations 4,794,203 826,745 3,524,502 9,145,450 18,465,647 Taxes 749,920 163,590 179,145 1,092,655 - Depreciation and amortization 3,944,706 1,357,839 1,692,755 6,995,300 1,071,800 Total operating expenses 32,592,450 5,900,042 7,988,814 46,481,306 19,753,253 Operating income (loss) 3,044,554 1,046,474 3,972,347 8,063,375 1,169,729 Nonoperating revenues (expenses): Interest and investment revenue 254,142 146,278 240,710 641,130 140,349 Net change in fair value of the investment (85,900) (47,800) (73,103) (206,803) (32,494) Grant income 51,944 - 2,619,392 2,671,336 1,156 Interest expense (352,534) - (564,447) (916,981) - Gain (Loss) on disposal of capital assets - - (56,205) (56,205) 121,538 Insurance recovery - - - - 511,739 Lease and other revenue 163,654 72,722 42,343 278,719 247,069 Total nonoperating revenues (expenses) 31,306 171,200 2,208,690 2,411,196 989,357 Income before contributions and transfers 3,075,860 1,217,674 6,181,037 10,474,571 2,159,086 Capital contributions 4,908,110 1,074,142 2,450,979 8,433,231 - Transfers in 318,142 - - 318,142 11,622 Transfers out - - (318,142) (318,142) (147,260) Change in net position 8,302,112 2,291,816 8,313,874 18,907,802 2,023,448 Total net position - beginning, as previously reported 167,151,084 $ 79,604,064 $ 118,369,462 365,124,610 21,531,572 Changes in Accounting Principles-GASB 68 (2,875,699) (1,384) (2,586,304) (5,463,387) (2,485,743) Total net position - ending $ 172,577,497 $ 81,894,496 $ 124,097,032 $ 378,569,025 $ 21,069,277 The notes to the financial statements are an integral part of this statement Enterprise Funds CITY OF REDMOND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-type Activities- 2015 Comprehensive Annual Financial Report 20 City of Redmond ---PAGE BREAK--- Page 1 of 2 Governmental Activities- Water/ UPD Water/ Stormwater Internal Wastewater Wastewater Management Totals Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 35,493,080 6,981,630 11,898,778 54,373,488 $ 18,464,136 Cash received for replacement - - - - 2,378,063 Cash payments to suppliers (21,730,293) (3,532,592) (1,184,280) (26,447,165) (4,223,282) Cash payments to employees (3,659,279) (561) (2,715,172) (6,375,012) (14,278,447) Cash payments to other governments (750,578) (163,414) (180,658) (1,094,650) 109 Internal activity - payments to other funds (2,296,758) (1,031,012) (2,157,222) (5,484,992) (536,461) Other operating receipts 70,033 691 42,343 113,067 758,803 Net cash provided (used) by operating activities 7,126,205 2,254,742 5,703,789 15,084,736 2,562,921 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Nonoperating transfers in/transfers out - - - - (135,638) Grant proceeds 72,271 - 985,769 1,058,040 1,156 Net cash provided by noncapital financing activities 72,271 - 985,769 1,058,040 (134,482) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,765,380) (109,091) (18,699,602) (20,574,073) (1,509,725) Proceeds from sale of other assets 93,623 72,030 - 165,653 121,538 Cash payments to suppliers 35,847 (20,555) 51,586 66,878 - Capital contributions 2,396,425 12,325 1,346,613 3,755,363 - Loan/grant proceeds - - 8,855,068 8,855,068 - Interest paid on revenue bonds (379,066) - (1,005,240) (1,384,306) - Principal paid on other debt (725,000) - (765,000) (1,490,000) - Net cash provided (used) for capital and related financing activities (343,551) (45,291) (10,216,575) (10,605,417) (1,388,187) CASH FLOWS FROM INVESTING ACTIVITIES Internal activity, net investment purchases (5,251,237) (1,496,275) 3,846,854 (2,900,658) (457,205) Interest on investments 156,182 94,589 176,020 426,791 107,229 Net cash provided (used) in investing activities (5,095,055) (1,401,686) 4,022,874 (2,473,867) (349,976) Net increase (decrease) in cash and cash equivalents 1,759,870 807,765 495,857 3,063,492 690,276 Cash and cash equivalents-beginning of year 2,876,556 $ 1,772,258 $ 3,449,860 $ 8,098,674 1,914,883 Cash and cash equivalents-end of year $ 4,636,426 $ 2,580,023 $ 3,945,717 $ 11,162,166 $ 2,605,159 The notes to the financial statements are an integral part of this statement Enterprise Funds CITY OF REDMOND STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-type Activities- 2015 Comprehensive Annual Financial Report 21 City of Redmond ---PAGE BREAK--- Page 2 of 2 Governmental Activities- Water/ UPD Water/ Stormwater Internal Wastewater Wastewater Management Totals Service Funds Cash and cash equivalents Operating fund cash $ 4,620,052 2,548,024 3,938,409 11,106,485 2,605,159 Customer deposits 16,373 32,000 7,308 55,681 - Cash and cash equivalents-end of year $ 4,636,425 $ 2,580,024 $ 3,945,717 $ 11,162,166 $ 2,605,159 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ 3,044,554 1,046,474 3,972,347 8,063,375 1,169,729 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 3,944,706 1,357,839 1,692,755 6,995,300 1,071,800 Decrease (increase) in accounts receivable (143,924) 35,114 (62,384) (171,194) (80,783) Decrease (increase) in inventory (34,496) - - (34,496) 9,304 Decrease (increase) in prepaid expenses - - - - (9,417) Increase (decrease) in accounts payable 239,896 (184,991) 38,912 93,817 (584,924) Increase (decrease) due to other governments (659) 176 (1,513) (1,996) 109 Increase (decrease) in employee wages payable 93,940 (513) 93,703 187,130 266,604 Increase (decrease) in compensated absences payable 8,682 - 14,437 23,119 45,131 Reclassify other income 70,033 691 42,343 113,067 758,805 Increase (decrease) in GASB 68 adjustment (96,527) (48) (86,811) (183,386) (83,437) Net cash provided (used) by operating activities $ 7,126,205 $ 2,254,742 $ 5,703,789 $ 15,084,736 $ 2,562,921 Noncash investing, capital and financing activities: Developers contributed infrastructure valued at $ 2,511,685 1,061,817 1,104,366 4,677,868 - Fair value of investments decreased by (85,900) (47,800) (73,103) (206,803) (48,266) The notes to the financial statements are an integral part of this statement Enterprise Funds CITY OF REDMOND STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-type Activities- 2015 Comprehensive Annual Financial Report 22 City of Redmond ---PAGE BREAK--- Firefighters Pension Agency Fund Funds ASSETS Cash and cash equivalents $ 197,645 $ 2,745,189 Investments: U.S. Government Securities 1,223,363 9,928,408 Money Market Funds 134,732 614,896 Local Government Investment Pool 47,460 883,810 Receivables: Accounts Receivable - - Interest 3,130 24,222 Construction in Progress - 938,943 Total Assets 1,606,330 15,135,468 LIABILITIES Accounts payable $ - $ (1,052) Due to other governments - 270,993 Custodial - 13,681,664 Trust account - 1,183,863 Total Liabilities - 15,135,468 NET POSITION Held in trust for pension benefits $ 1,606,330 $ - Firefighters Pension Fund ADDITIONS Intergovernmental revenue $ 146,358 Investment interest 9,511 Total additions 155,869 DEDUCTIONS Benefit payments 28,466 Administrative expenses 5,500 Total deductions 33,966 Change in net position 121,903 Net position-beginning 1,484,427 Net position-ending $ 1,606,330 The notes to the financial statements are an integral part of these statements STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUNDS For the year ended December 31, 2015 CITY OF REDMOND STATEMENT OF NET POSITION FIDUCIARY FUNDS As of December 31, 2015 CITY OF REDMOND 2015 Comprehensive Annual Financial Report 23 City of Redmond ---PAGE BREAK--- NOTE 1: Summary of Significant Accounting Policies The City of Redmond was incorporated on December 31, 1912 and operates under the laws of the State of Washington applicable to a Non-Charter Mayor/Council form of government (elected Mayor and City Council composed of seven members). Both Mayor and Council are elected to four-year terms. The City provides general government services including public safety, highways and streets, parks and recreation, planning and zoning, permits and inspection, sanitation, general administrative, and water and wastewater services. The accounting and reporting policies of the City of Redmond conform to generally accepted accounting principles for governments and are regulated by the Washington State Auditor’s Office. The City’s Comprehensive Annual Financial Report (CAFR) is prepared in accordance with Governmental Accounting Standards Board (GASB) Statements and the following notes detail the City’s significant accounting policies. Reporting Entity The City’s CAFR includes the financial statements for the City of Redmond and its component units; entities for which the City is considered to be financially accountable. The City has one component unit presented in the fiduciary fund statements, Redmond Community Facilities District (CFD), which was created in 2014 for the purpose of financing the construction of a pedestrian/bicycle bridge over SR 520 at the Overlake Transit Station. The CFD is reported as a component unity of the City of Redmond because the CFD was formed by the City for the sole purpose of levying special assessments to finance the construction of the pedestrian bridge that, upon completion, will be transferred to the City of Redmond. In addition, three members of the Redmond City Council serve on the District’s five-member Board of Supervisors, and the City’s Finance Director serves as the District’s Treasurer. Accounting and reporting services are provided by the City’s Finance Department. Because the City cannot use the resources of the CFD to support its programs, bears no financial obligations related to the CFD or its projects, and does not have the ability to impose its will on the CFD, the City acts in a fiduciary capacity only. Therefore, the District is reported in the fiduciary fund statements in the City of Redmond’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2015. (See Note 13 - Component Units for additional information.) Basic Financial Statements The City’s basic financial statements consist of government-wide statements, including a Statement of Net Position and a Statement of Activities, and fund financial statements which provide a more detailed level of financial information. The government-wide financial statements report information on all of the non-fiduciary activities of the primary government and its component units. The effect of inter-fund 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. 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. 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 instead as general revenues. 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. 2015 Comprehensive Annual Financial Report 24 City of Redmond ---PAGE BREAK--- Measurement Focus and Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of 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 City 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 expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Under the modified accrual basis of accounting, property taxes, sales taxes, utility taxes, franchise taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current period. Grant revenue is recognized for cost reimbursement grants when the expenditure occurs in accordance with GASB Statement 33. When the expenditure is incurred, grant revenue is considered to have been earned and therefore available and recognized as revenue. Entitlement grant revenue is not tied to expenditures and is recognized when the City is entitled to receive it according to the grant agreement. Financial Statement Presentation The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It accounts for all financial resources and transactions except those required to be accounted for in another fund. The Capital Investments Program Fund accounts for financial resources to be used for the acquisition, construction, and preservation of major capital facilities other than those financed by proprietary funds. The City reports the following major proprietary funds: The Water/Wastewater Fund accounts for the activities of providing water and sewer services to its citizens. The UPD Water/Wastewater Fund accounts for the activities of providing water and sewer services to an urban planned development outside the City limits. Both of these utilities’ operations are self- supported through user charges. The Stormwater Management Fund accounts for the operation, construction, and maintenance of the City’s stormwater management system. The utility’s operations are self-supported through fees. Additionally, the City reports the following fund types: Internal Service Funds account for fleet maintenance, information technology, and insurance services provided to other departments of the City on a cost reimbursement basis. Agency Funds account for assets held by the City as an agent for private individuals or other governments. Agency funds are custodial in nature (assets equal liabilities) and do not involve the measurement of the results of operations. The City has four Agency Funds: Intergovernmental Custodial, Municipal Employees Benefit Trust, Contractor’s Deposits, and Redmond Community Facilities District. 2015 Comprehensive Annual Financial Report 25 City of Redmond ---PAGE BREAK--- The Pension Trust Fund accounts for the activities of the Firefighter’s Pension Fund, which accumulates resources for excess pension benefit payments to qualified firefighters. Special Revenue Funds are used to account for specific revenues that are restricted to or reserved for expenditures for particular purposes. Debt Service Funds account for the accumulation of resources for and the payment of general obligation and special assessment bonds. The City does not have any permanent funds. As a general rule the effect of inter-fund activity has been eliminated from the government-wide financial statements. Direct expenses of the functional categories are included in the government-wide Statement of Activities while indirect expense allocations are eliminated. Indirect expenses are primarily charged to the various functions through the use of internal service funds for fleet maintenance and information technology. Elimination of payments to internal service funds are treated as expense reductions. No other indirect expenses are allocated to the various governmental functions. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government’s utility functions 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. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. The proprietary fund statements distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s utility funds and internal service funds are charges to customers for sales and services, vehicle replacement, and insurance. The City also recognizes as operating revenue the portion of utility connection fees intended to recover the cost of connecting new customers to the water and sewer system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, taxes, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non- operating revenues and expenses. Budgets and Budgetary Accounting The City of Redmond budgets its funds in accordance with the Revised Code of Washington (RCW) 35A.34. In compliance with the code, budgets for all funds are established with the exception of the LID Control and the LID Guaranty Debt Service Funds, and Fiduciary funds. Budgets established for proprietary funds are “management budgets” and as such are not required to be shown in this report. The biennial budget is proposed by the Mayor and adopted by the City Council with legal budgetary control at the fund level for all funds. Expenditures and other financing uses may not exceed budgeted appropriations at these levels. The Mayor may authorize transfers within all funds. The City Council must approve by ordinance any additional appropriations which increase the total at the fund level. Any unexpended appropriation balances lapse at the end of the biennium. In addition to authorizing the budget, the City Council biennially approves the Capital Investments Program. This is a six-year plan for capital project expenditures and anticipated revenue sources. Expenditures and revenues for these projects are budgeted in the Capital Projects Funds and Enterprise Funds. The City prepares all biennial budgets on the modified accrual basis which conforms to generally accepted accounting principles. The CAFR includes budgetary comparisons for the general and capital projects governmental funds with legally adopted budgets. 2015 Comprehensive Annual Financial Report 26 City of Redmond ---PAGE BREAK--- The budget process and the time limits under which a budget must be developed are established by State law. The City uses a “budgeting for outcomes” format and follows the procedures outlined below in the year preceding the first year of the two-year budget to establish its biennial budget:  In winter, community meetings are held to affirm or revise the City’s budget priorities. The Mayor appoints staff and citizens to teams which interpret these priorities and develop the primary factors that the City should support to pursue the given priority. These factors are used by staff to develop budget offers.  In spring, the Mayor develops and submits a budget calendar to the City Council for approval.  In June, the City Clerk publishes notice for the first public hearing. Also around mid-year staff prepares a six-year forecast and reviews this forecast with the City Council at a public meeting.  Throughout the summer, City staff create budget offers and review revenue and expenditure estimates.  In October, preliminary budget estimates are made available to the public.  Sixty days before the ensuing fiscal year, the Mayor files the preliminary budget with the City Clerk’s office.  During the first two weeks of November, the City Clerk publishes notice of the filing of the preliminary budget and publishes notice of public hearings.  The City Council holds a series of study sessions to review the preliminary budget to determine if they wish to make any modifications to the Mayor’s recommended programs.  Public hearings are held prior to the adoption of the budget for the public to comment on recommended programs and to offer ideas for new programs.  Prior to the beginning of the first calendar year of the biennial budget, the City Council, by a majority of the members present, adopts a final operating budget by ordinance.  The Final Budget document is printed and distributed and posted on the City’s website after adoption. Assets, Liabilities, and Net Position Cash and Investments It is the City’s policy to invest temporary cash surpluses. These investments are reported on the Statement of Net Position and the governmental funds Balance Sheet as cash and cash equivalents or investments. Included in cash and cash equivalents are currency on hand, demand deposits with banks or other financial institutions, investments with the Local Government Investment Pool, investments in U.S. Government Mutual Funds and investments with original maturities of three months or less. Interest is allocated to each fund on the basis of investments owned. In accordance with City policy and Washington State law, authorized investment purchases include Certificates of Deposit with financial institutions qualified by the Washington Public Deposit Protection Commission, US Treasury and Agency Securities, Bankers’ Acceptances, Bonds of Washington State and any local government in Washington State which have, at the time of purchase, one of the three highest credit ratings of a nationally recognized rating agency, repurchase agreements, the State Investment Pool (which is a 2a7-like pool), and mutual funds used specifically for debt issues related to arbitrage. The City reports its deposit and investment risk disclosures in accordance with GASB 40 (see Note In accordance with GASB 31, investments in external 2a7-like pools, money market investments, and participating interest-earning investment contracts with remaining maturities of one year or less at the time of purchase are stated at amortized cost. All other investments including the Firefighter’s Pension Fund are stated at fair value. Receivables The City of Redmond recognizes receivables in its financial statements based on the accounting requirements for that statement. These receivables are as follows: 2015 Comprehensive Annual Financial Report 27 City of Redmond ---PAGE BREAK--- Property Taxes The City’s property tax collections records show that approximately 99% of the property taxes due are collected during the year of levy and delinquent taxes are collected in the next few years. The City performs an analysis of all uncollected property taxes to test materiality of the uncollected balance as well as the collectability. Based on this analysis the City will determine the classification of the uncollected portion of property taxes; revenue versus uncollected property taxes. When property taxes become three years delinquent, the County is required by State statute to foreclose on the property. Historically, all taxes have been collected; therefore no allowance for uncollectible taxes is recorded. Sales Taxes There is a running two-month lag in remittance of sales tax to the City. Sales taxes collected in November and December are not remitted by the State to the City until January and February of the following year and they are reported as receivables at year-end. There is no allowance for uncollectible sales taxes because all sales taxes are required by law to be collected by businesses at the time of sale and remitted to the State. Investment Interest Interest receivable consists of interest earned on investments at the end of the year, accrued interest on investments purchased between interest dates, and accrued interest and penalties on special assessments receivable. In proprietary funds and the government-wide Statement of Net Position, investment interest is recorded as receivable, regardless of its payment date. In the governmental fund statements and schedules, investment interest is recorded as receivable if it will be paid to the City within 60 days of year-end. Accounts Receivable Customer accounts receivable consist of amounts owed by private individuals or organizations for goods and services provided. Unbilled services provided to utility customers are estimated at year-end and included in accounts receivable. Uncollectible amounts are considered immaterial and the direct write-off method is used. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e. the current portion of inter-fund loans) or “advances to/from other funds” (i.e. the non-current portion of inter-fund loans). All other outstanding balances between funds are reported as “due to/from other funds”. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Inventories Inventories are defined as assets which may be held for internal consumption or for resale. The City uses the following policies in valuing and recording inventory items: In proprietary funds a perpetual inventory is maintained, in which the cost is held in an asset account when inventory items are purchased, and expensed when the item is consumed. The first-in, first-out valuation method, which approximates market, is used to value the inventory. A physical inventory is taken at year-end. No inventory is maintained in governmental funds; however, the internal service fund inventories are included in the “Governmental Activities” on the Statement of Net Position. Restricted Assets Restricted assets include those monies reserved for customers’ deposits, bond reserve monies and impact fees. 2015 Comprehensive Annual Financial Report 28 City of Redmond ---PAGE BREAK--- Advance on Service Contract For fiscal years prior to December 31, 2012, the City amortized under guidance provided by FASB 71 the Tolt Pipeline project and the Tolt Meter project with the City of Seattle. In further review, this is not a deferred outflow of resources but rather an advance on a service contract. Capital Assets General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide Statement of Net Position but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business-type activities column of the government-wide Statement of Net Position and in the respective funds. Capital assets are defined by the City as land and buildings with an original cost of $50,000 or more each, machinery, equipment, software, vehicles, transportation and utility infrastructure and other improvements with an original cost of $10,000 or more each and an estimated useful life of more than one year, and all artwork regardless of its initial cost. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Land, construction in progress, and works of art are not depreciated. Property, plant, and equipment of the City are depreciated using the straight-line method over the following estimated useful lives: Asset Years Buildings/Building improvements 50 Other improvements 15-50 Vehicles 3-15 Machinery and equipment 6-20 Utility infrastructure 10-100 Streets, paths, trails 50 Street lights and traffic signals 30 Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation, compensatory time in lieu of overtime and sick leave benefits. Twenty-five percent of unused sick leave is payable at retirement or death. Any outstanding sick leave is lost at resignation; therefore, outstanding sick leave at year-end is not accrued because the payment cannot be deemed probable nor can the amount be reasonably estimated. All vacation and compensatory time is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans’ fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. 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. 2015 Comprehensive Annual Financial Report 29 City of Redmond ---PAGE BREAK--- Other Post-Employment Benefits Lifetime full medical coverage is provided to uniformed Police and Fire personnel who became members of the Law Enforcement Officers and Fire Fighters (LEOFF 1) retirement system prior to October 1, 1977. A liability for the accumulated unfunded actuarially required contribution is reported in the Statement of Net Position. The actual medical costs are reported as expenditures in the year they are incurred, and are paid out of the General Fund. Deferred Outflows/Inflows of Resources In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. Deferred charges on debt refunding result from the difference in the carrying value of refunded debt and the reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Deferred outflows related to pension plans are discussed in detail in Note 7: Pension Plans. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The City has one item that qualifies for reporting in this category. Deferred inflows related to pension plans are discussed in detail in Note 7: Pension Plans. 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. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other 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. Fund Balance In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Fund balances are categorized as Nonspendable or Spendable amounts as follows: Nonspendable Fund Balance: fund resources that are in a form that either never could be spent or in a form that is temporarily not spendable. This can include resources that are spendable in form but are under legal restrictions that temporarily or permanently bar spending. Spendable amounts are further segregated into categories based on the degree to which the uses of resources are constrained.  Restricted Fund Balance: fund resources that are subject to restrictions that are legally enforceable by outside parties. This includes resources raised through enabling legislation.  Committed Fund Balance: fund resources that are legally limited by the resolution by the City Council. A resolution must be taken to impose limitations on the use of these resources, and another resolution is required to modify or eliminate those limitations.  Assigned Fund Balance: fund resources that are limited by the mayor, or department directors based on delegation, for its intended use. This type of limitation can be imposed by the highest level of decision making within the entity or a designee, but little or no formal action is required to modify or eliminate those limitations. 2015 Comprehensive Annual Financial Report 30 City of Redmond ---PAGE BREAK---  Unassigned Fund Balance: fund resources that are in spendable form and are not restricted, committed or assigned. Flow assumption: When expenditure is incurred for purposes for which both restricted and unrestricted resources are available, it is the City’s policy to use restricted resources first. When expenditure is incurred for purposes for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications could be used, it is the City’s policy to spend committed resources first, then assigned and unassigned, in that order. However, prior to the commencement of any project, the flow assumption is reviewed to ensure that the proper resources are being used. NOTE 2: Reconciliation of Government-Wide and Fund Financial Statements Explanation of aggregated differences between the governmental fund balance sheet and the government-wide statement of net position The governmental fund balance sheet includes reconciliation between total fund balance and total net position as reported in the government-wide statement of net position. The details of the aggregated differences are presented below. Some liabilities, including bonds, loans and compensated absences payable, are not due and payable in the current period and therefore are not reported in the funds: The net pension asset, net pension liability, and deferred inflows and deferred outlfows are reported in the government-wide statement of net position but not in the governmental balance sheet Explanation of aggregated differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. The details of the aggregated differences are presented below. G.O Bonds payable $ (58,530,000) Unamortized bond premiums (3,139,732) Deferred outflows on refunding 2,323,243 Loans payable (1,511,212) Accrued interest payable (199,821) Compensated absences (4,196,442) Other post-employment benefits (4,032,222) (69,286,186) Net pension asset $ 11,084,335 Deferred outflows of resources 3,918,492 Net pension liability (19,554,736) Deferred inflows of resources (6,157,844) (10,709,753) 2015 Comprehensive Annual Financial Report 31 City of Redmond ---PAGE BREAK--- Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds: Developer/Private asset contributions $ 1,155,936 Net adjustment to increase net change in fund balances - governmental funds to arrive at change in net position- governmental activities $ 1,155,936 Repayment of the principal of long-term debt consumes the current financial resources of governmental funds, and governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the government-wide statement of activities: Principal repayments: General obligation bonds $ 12,530,000 Public Works Trust Fund Loans repayment 166,336 Amortization of debt premiums 190,951 Amortization of deferred loss on refunding (70,780) Proceeds from long-term debt issuance (9,996,063) Deferred outflows from long-term debt issuance 951,425 Net adjustment to decrease net change in fund balances- governmental funds to arrive at change in net position- governmental activities $ 3,771,869 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Change in accrued interest payable $ 26,223 Change in compensated absences payable (350,354) Change in other post-employment benefits payable (543,483) Net adjustment to decrease net change in fund balances- governmental funds to arrive at change in net position- governmental activities $ (867,614) NOTE 3: Deposits and Investments Deposits As of December 31, 2015 the carrying amount of the City's cash demand deposits with Key Bank was $3,743,770 and the in-transit items were $263,096. The carrying amount and bank balance of the City's cash demand deposits at U.S. Bank at December 31, 2015 was $600,392. $2,000,000 was held at Opus Bank certificate of deposit and $8,049,410 was held in a public funds money market account. $929,920 retained from contractors pending acceptance of City construction projects was held in escrow or savings accounts at various banks. $142,055 was held at City of Redmond Client Trust Account at Wells Fargo. Petty cash totaled $48,500, of which $35,770 was allocated to various City offices and $12,730 was unallocated and remains in the City's demand deposit account at Bank of America. $10,000 is held by the City of Bellevue for use by the Eastside Narcotics Task Force. Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the City will not be able to recover deposits or collateral securities that are in the possession of outside party. The City of Redmond’s deposits are entirely covered by the Federal Depository Insurance Corporation (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington State Public Deposit Protection Commission The FDIC insures the first $250,000 of the City’s deposits. The deposit balances over $250,000 are insured by 2015 Comprehensive Annual Financial Report 32 City of Redmond ---PAGE BREAK--- the State statute permits additional amounts to be assessed on a pro rata basis to members of the pool in the event the pool’s collateral should be insufficient to cover a loss. Investments The Local Government Investment Pool (LGIP) is invested in a manner generally consistent with the Securities and Exchange Commission’s Rule 2a-7 of the Investment Company Act of 1940. Accordingly, participants’ balances in the LGIP are subject to minimal interest rate risk, as the weighted average maturity of the portfolio will not exceed 60 days. Per GASB 40 guidelines the balances are also not subject to custodial credit risk. The credit risk of the LGIP is limited as most investments are either obligations of the US government, government sponsored enterprises, or insured demand deposit accounts and certificates of deposit. Investments or deposits held by the LGIP are either insured or held by a third-party custody provider in the LGIP’s name. The fair value of the City’s pool investments is determined by the pool’s share price. The City has no regulatory oversight responsibility for the LGIP which is governed by the Washington State Finance Committee and is administered by the State Treasurer. The LGIP is audited annually by the Office of the State Auditor, an independently elected public official. The City includes the LGIP as an investment for internal tracking, but it is disclosed on the financial statements as a cash equivalent. As of December 31, 2015, the City had the following investments and maturities: Investment Type Fair Value Less Than 1 Year 1 to 5 Years Federal Farm Credit Bank 32,137,890 4,999,030 27,138,860 Federal Home Loan Bank 38,014,394 10,988,150 27,026,244 Federal Home Loan Mortgage Corporation 45,823,390 9,003,630 36,819,760 Federal National Mortgage Association 25,326,703 2,996,160 22,330,543 Local Gov’t Bonds 7,025,528 5,584,010 1,441,518 Treasury Notes 13,934,320 - 13,934,320 Subtotal 162,262,225 33,570,980 128,691,245 Investments reported as cash equivalents: Money Market (Opus) 8,049,410 8,049,410 Certificate of Deposit (Opus) 2,000,000 2,000,000 Local Government Investment Pool 14,444,315 14,444,315 Subtotal 24,493,725 24,493,725 Total 186,755,950 58,064,705 128,691,245 Interest Rate Risk As a means of limiting its exposure to interest rate risk, the City’s policy requires that it diversifies its investments by security type and institution, and limits holdings in any one type of investment with any one issuer. The City coordinates its investment maturities to closely match cash flow needs and restricts the maximum investment term to less than five years from the purchase date. Credit Risk State law and City policy limit investments to those authorized by State Statute including commercial paper and bonds of the State of Washington and any local government in the State of Washington which have, at the time of investment, one of the three highest credit ratings of a nationally recognized rating agency. The City further limits its holdings in commercial paper to 10% of the portfolio and 10% per issuer, and local government bonds to 25% of the portfolio and 10% of issuer. At December 31, 2015 the City held no investments in commercial paper. Additionally, the City restricts its investment in mutual fund bonds to be used for arbitrage purposes only. Concentration of Credit Risk The City diversifies its investments by security type and institution. 100% of the City’s portfolio may be invested in US Treasury Notes, Bonds or Certificates, US Government Sponsored Corporations, or the State Investment 2015 Comprehensive Annual Financial Report 33 City of Redmond ---PAGE BREAK--- Pool. 50% of the portfolio may be invested in Certificates of Deposit with no more than 10% held by any one issuer and not exceeding 20% of the issuer’s net worth. 25% of the portfolio may be invested in Bankers Acceptances (10% per issuer), State of Washington or Local Government Bonds (10% per issuer), and Repurchase Agreements (25% per dealer). 10% of the portfolio may be invested in Commercial Paper and other authorized investments. On December 31, 2015 more than five percent of the City’s investments were held in Federal Farm Credit Bank, Federal Home Loan Bank, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation bonds. Reconciliation of cash and investments by type to the statements is detailed in the following tables. Cash & Investments by Type Opus Bank-certificate of deposit $ 2,000,000 Opus Bank-money market 8,049,410 State Investment Pool (LGIP) 14,444,315 Key Bank Public Checking 3,743,770 Deposit in Transit less payments posted Jan 2016 77,337 Outstanding Checks at 12/31/2015 (3,643,084) U.S. Bank 600,392 Petty Cash/Advance Travel 35,770 Wells Fargo Trust Account RCP 142,055 Contractor's Retainage Money Market 929,920 City of Bellevue - outside agency 10,000 Federal Home Loan Bank 38,014,394 Federal Farm Credit Bank 32,137,890 Federal Home Loan Mortgage Corporation 45,823,390 Federal National Mortgage Association 25,326,703 Local Gov't Bonds 7,025,528 US Treasury Notes 13,934,320 Grand Total Cash & Investments by Type $188,652,110 Cash & Equivalents* Restricted Cash Rate Stabilization Fund Investments Restricted Investments Governmental Funds General Fund $ 4,259,863 $ 454,814 $ - $ 26,904,646 $ 4,691,232 Capital Investments Program Fund 3,551,935 - - 22,343,246 11,695 Other Governmental Funds 1,341,070 72,042 - 8,830,474 335 Proprietary Funds Water/Wastewater 4,620,052 16,373 4,177,811 23,827,136 1,175,500 UPD Water/Wastewater 2,548,024 32,000 1,929,266 14,308,710 - Stormwater Management 3,938,409 7,308 - 23,198,924 1,634,409 Internal Service Funds 2,605,159 - - 16,396,174 - Fiduciary Funds Firefighter’s Pension Fund 197,645 - - - 1,405,555 Agency Funds 2,745,189 - - - 11,427,114 $ 25,807,346 $ 582,537 $ 6,107,077 $135,809,310 $ 20,345,840 Grand Total Cash & Investments by Statements $188,652,110 2015 Comprehensive Annual Financial Report 34 City of Redmond ---PAGE BREAK--- NOTE 4: Governmental Fund Balances Governmental fund balances are classified as either spendable or non-spendable. Spendable fund balances are further categorized as restricted, committed, assigned, and unassigned. Restricted amounts are restricted by contract or grant document, committed amounts committed by codification by the City Council and the assigned are assigned by action by the City’s mayor or department director based on delegated authority. The breakdown of what makes up each of the fund balance categories from the governmental Balance Sheet that is designated for a particular purpose is shown below. Restricted For: Advance life support $ 1,273,492 Cable access 1,014,487 Capital projects 18,383,684 Debt service 1,065,607 Fire 2,018,375 Parks 618,017 Planning-transportation 731,630 Police 4,468,315 Reserves 454,814 Solid waste recycling 660,952 Tourism 579,883 Total $ 31,269,256 Committed For: Arts $ 172,925 Capital equipment replacement 3,074,935 Development Review 662,619 Fire equipment 5,000,076 Parks maintenance 1,165,336 Police 8,500 Recreation activities 774,608 Travel 20,000 Total $ 10,878,999 Assigned For: Capital assets $ 12,109,050 Community events 39,946 Maintenance 1,353,939 Human services fund 25,640 Parks 16,253 Real Property Fund 13,247 Reserves 6,576,638 Transportation 2,653,580 Business tax 340,037 Total $ 23,128,330 2015 Comprehensive Annual Financial Report 35 City of Redmond ---PAGE BREAK--- NOTE 5: Receivables Property Taxes The King County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Collections are distributed on a daily basis. Property Tax Calendar January 1 Taxes are levied and become an enforceable lien against properties. February 14 Tax bills are mailed. April 30 First of two equal installment payments is due. May 31 Assessed value of property established for next year's levy at 100 percent of market value. October 31 Second installment is due. Property taxes are recorded as a receivable when levied. During the year, property tax revenues are recognized when cash is received. At year-end, property tax revenues are recognized for December collections to be distributed by the county treasurer in January and February. Under Washington State law a city may levy property taxes up to $3.60 per $1,000 of assessed valuation. The assessed value was $15,887,420,578 for the City in 2015. The City of Redmond's maximum property tax levy rate has been reduced from $3.60 to $3.10, or $.50, as a result of annexing to the King County Library District in May, 1990. In addition to the limitation previously noted, the City's levy rate is also subject to the following: Washington State law in RCW 84.55.010 limits the growth of regular property taxes to one percent per year or IPD, whichever is less, after adjustments for new construction and annexations, unless an increase greater than this limit is approved by the voters. If the assessed valuation increases by more than one percent due to revaluation, the levy rate will be decreased. The Washington State Constitution limits the total regular property tax levy to a maximum of one percent of assessed valuation or $10 per $1,000 of the market value of a property. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the one percent limit. Accordingly, the City levied $1.49 per $1,000 of assessed value for general governmental services and no additional voter-approved excess tax levy. 2015 Comprehensive Annual Financial Report 36 City of Redmond ---PAGE BREAK--- NOTE 6: Capital Assets Capital asset activity for the year ended December 31, 2015 was as follows: NET INVESTMENT IN CAPITAL ASSETS Beginning Ending Balance Increases Decreases Balance Primary Government GOVERNMENTAL ACTIVITIES Capital assets, not being depreciated: Land 100,567,769 $ 27,578,450 $ (1,681,919) $ 126,464,300 $ Construction in Progress 20,013,290 20,529,488 (22,917,016) 17,625,762 Art 549,078 - (200) 548,878 Total capital assets, not being depreciated 121,130,137 $ 48,107,938 $ (24,599,135) $ 144,638,940 $ Capital Assets, Being Depreciated: Buildings/Building Improvements 75,668,934 $ 526,775 $ - $ 76,195,709 $ Improvements Other than Buildings 30,883,565 2,412,918 - 33,296,483 Machinery and Equipment 28,260,486 2,304,591 (1,596,553) 28,968,524 Infrastructure 241,125,830 20,201,396 (660,260) 260,666,966 Total capital assets, being depreciated 375,938,815 $ 25,445,680 $ (2,256,813) $ 399,127,682 $ Less Accumulated Depreciation for: Buildings/Building Improvements (19,594,062) $ (1,580,560) $ - $ (21,174,622) $ Improvements Other than Buildings (12,329,578) (1,071,824) - (13,401,402) Machinery and Equipment (17,916,784) (2,071,539) 1,454,893 (18,533,430) Infrastructure (89,936,886) (5,324,162) (95,261,048) Total accumulated depreciation (139,777,310) $ (10,048,085) $ 1,454,893 $ (148,370,502) $ Total capital assets, being depreciated, net 236,161,505 $ 15,397,595 $ (801,920) $ 250,757,180 $ Governmental activities capital assets, net 357,291,642 $ 63,505,533 $ (25,401,055) $ 395,396,120 $ Governmental Activities Capital assets not being depreciated $ 144,638,940 Capital assets being depreciated 399,127,682 Less accumulated depreciation (148,370,502) Less GO Bonds (58,530,000) Less bond premium (3,139,732) Less Public Works Trust Fund loans (1,511,212) Plus deferred outflow on refunding bonds 2,323,243 Governmental Activities, net investment in capital assets $ 334,538,419 2015 Comprehensive Annual Financial Report 37 City of Redmond ---PAGE BREAK--- Depreciation expense was charged to functions/programs of the primary government as follows: NET INVESTMENT IN CAPITAL ASSETS Depreciation expense was charged to Business-Type Activities as follows: The Business-Type Activities also had $23,487 in amortization expense that is included with depreciation expense in the financial statements. Governmental Activities General Government $ 1,323,654 Security 1,168,502 Physical Environment 22,116 Transportation, Including Depreciation of General Infrastructure Assets 6,326,135 Economic Environment 70,823 Culture and Recreation 1,136,855 Total Depreciation Expense – Governmental Activities $ 10,048,085 Beginning Balance Increases Decreases Ending Balance BUSINESS-TYPE ACTIVITIES Capital Assets, Not Being Depreciated: Land $ 22,148,078 $ 3,472,196 $ - $ 25,620,274 Construction In Progress 39,095,842 20,028,891 (48,128,279) 10,996,454 Total Capital Assets, Not Being Depreciated 61,243,920 23,501,087 (48,128,279) 36,616,728 Capital Assets, Being Depreciated: Buildings/Building Improvements 37,958,924 - - 37,958,924 Improvements Other Than Buildings 297,614,622 49,728,814 (598,768) 346,744,668 Machinery and Equipment 860,925 746,342 (149,342) 1,457,925 Total Capital Assets, Being Depreciated 336,434,471 50,475,156 (748,110) 386,161,517 Less Accumulated Depreciation for: Buildings/Building Improvements (6,873,430) (759,179) - (7,632,609) Improvements Other Than Buildings (71,854,691) (6,175,428) 280,626 (77,749,493) Machinery and Equipment (593,359) (37,206) 93,137 (537,428) Total Accumulated Depreciation (79,321,480) (6,971,813) 373,763 (85,919,530) Total Capital Assets, Being Depreciated, Net 257,112,991 43,503,343 (374,347) 300,241,987 Business-Type Activities Capital Assets, Net $ 318,356,911 $ 67,004,430 $ (48,502,626) $ 336,858,715 Business-Type Activities Capital assets not being depreciated $ 36,616,728 Capital assets being depreciated 386,161,517 Less accumulated depreciation (85,919,530) Less Revenue bonds (29,170,000) Less bond premium (3,194,707) Unspent bond proceeds - Business-Type Activities, net investment in capital assets $ 304,494,008 Business-Type Activities Water/Wastewater $ 3,921,509 UPD Water/Wastewater 1,357,549 Stormwater 1,692,755 Total Depreciation Expense – Business-type Activities $ 6,971,813 2015 Comprehensive Annual Financial Report 38 City of Redmond ---PAGE BREAK--- Note 7: Pension Plans The following table represents the aggregate pension amounts for all plans subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2015: Aggregate Pension Amounts – All Plans Pension liabilities $ 27,006,967 Pension assets $ 11,084,335 Deferred outflows of resources $ 4,827,859 Deferred inflows of resources $ 7,297,288 Pension expense/expenditures $ 2,555,672 State Sponsored Pension Plans Substantially all of the City’s full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380 Olympia, WA 98540-8380 Or the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov. Public Employees’ Retirement System (PERS) PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service. The AFC is the average of the member’s 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, an optional cost-of-living adjustment (COLA), and a one- time duty-related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 2015 Comprehensive Annual Financial Report 39 City of Redmond ---PAGE BREAK--- employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: PERS Plan 1 Actual Contribution Rates: Employer Employee January through June 2015 9.21% 6.00% July through December 2015 11.18% 6.00% The City’s actual contributions to the plan were $1,420,634 for the year ended December 31, 2015. PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member’s 60 highest-paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions:  With a benefit that is reduced by three percent for each year before age 65; or  With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return-to-work rules. PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: PERS Plan 2/3 Actual Contribution Rates: Employer 2/3 Employee 2 January through June 2015 9.21% 4.92% July through December 2015 11.18% 6.12% Employee PERS Plan 3 varies The City’s actual contributions to the plan were $1,793,969 for the year ended December 31, 2015. 2015 Comprehensive Annual Financial Report 40 City of Redmond ---PAGE BREAK--- Public Safety Employees’ Retirement System (PSERS) PSERS Plan 2 was created by the 2004 Legislature and became effective July 1, 2006. To be eligible for membership, an employee must work on a full time basis and:  Have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job; or  Have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or  Function as a limited authority Washington peace officer, as defined in RCW 10.93.020; or  Have primary responsibility to supervise eligible members who meet the above criteria. PSERS membership includes:  PERS 2 or 3 employees hired by a covered employer before July 1, 2006, who met at least one of the PSERS eligibility criteria and elected membership during the period of July 1, 2006 to September 30 2006; and  Employees hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. PSERS covered employers include:  Certain State of Washington agencies (Department of Corrections, Department of Natural Resources, Gambling commission, Liquor Control Board, Parks and Recreation Commission, and Washington State Patrol),  Washington State Counties,  Washington State Cities (except for Seattle, Spokane, and Tacoma),  Correctional entities formed by PSERS employers under the Interlocal Cooperation Act. PSERS Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the average final compensation (AFC) for each year of service. The AFC is based on the member’s 60 consecutive highest creditable months of service. Benefits are actuarially reduced for each year that the member’s age is less than 60 (with ten or more service credit years in PSERS), or less than 65 (with fewer than ten service credit years). There is no cap on years of service credit. Members are eligible for retirement at the age of 65 with five years of service; or at the age of 60 with at least ten years of PSERS service credit; or at age 53 with 20 years of service. Retirement before age 60 is considered an early retirement. PSERS members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. PSERS Plan 2 retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, an optional cost-of living adjustment (COLA), and a one- time duty-related death benefit, if found eligible by the Department of Labor and Industries. PSERS Plan 2 members are vested after completing five years of eligible service. Contributions The PSERS Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The Plan 2 employer rates include components to address the PERS Plan 1 unfunded actuarial accrued liability and administrative expense currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates. The PSERS Plan 2 required contribution rates (expressed as a percentage of current-year covered payroll) for 2015 were as follows: PSERS Plan 2 Actual Contribution Rates: Employer Employee January through June 2015 10.54% 6.36% July through December 2015 11.54% 6.59% 2015 Comprehensive Annual Financial Report 41 City of Redmond ---PAGE BREAK--- The City’s actual contributions to the plan were $15,556 for the year ended December 31, 2015. Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows:  20+ years of service – 2.0% of FAS  10-19 years of service – 1.5% of FAS  5-9 years of service – 1% of FAS The FAS is the basic salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months’ salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non-duty disability payments, a cost-of living adjustment (COLA), and a one-time duty-related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2015. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, a cost-of- living allowance (based on the CPI), capped at three percent annually and a one-time duty-related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2015 were as follows: LEOFF Plan 2 Actual Contribution Rates: Employer Employee State and local governments 5.23% 8.41% Ports and Universities 8.59% 8.41% The City’s actual contributions to the plan were $1,345,836 for the year ended December 31, 2015. The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the 2015 Comprehensive Annual Financial Report 42 City of Redmond ---PAGE BREAK--- recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2015, the state contributed $58,339,032 to LEOFF Plan 2. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2015 with a valuation date of June 30, 2014. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary’s (OSA) 2007-2012 Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2014 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2015. Plan liabilities were rolled forward from June 30, 2014, to June 30, 2015, reflecting each plan’s normal cost (using the entry-age cost method), assumed interest and actual benefit payments.  Inflation: 3% total economic inflation; 3.75% salary inflation  Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are also expected to grow by promotions and longevity.  Investment rate of return: 7.5% Mortality rates were based on the RP-2000 report’s Combined Healthy Table and Combined Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime. There were minor changes in methods and assumptions since the last valuation.  The OSA updated demographic assumptions, consistent with the changes from the 2007-2012 Experience Study Report, used when valuing the PERS 1 and TERS 1 Basic Minimum COLA.  The OSA corrected how valuation software calculates a member’s entry age under the entry age normal actuarial cost method. Previously, the funding age was rounded, resulting in an entry age one year higher in some cases.  For purposes of calculating the Plan 2/3 Entry Age Normal Cost contribution rates, the OSA now uses the current blend of Plan 2 and Plan 3 salaries rather than using a long-term membership assumption of two- thirds Plan 2 members and one-third Plan 3 members.  The OSA changed the way it applies salary limits, as described in the 2007-2012 Experience Study Report. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent. To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term discount rate to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the long-term expected rate of return, a 7.5 percent future investment rate of return on invested assets was assumed for the test. Contributions from plan members and employers are assumed to continue being made at contractually required rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a component for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.5 percent was used to determine the total liability. Long-Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.5 percent was determined using a building-block-method. The Washington State Investment Board (WSIB) used a best estimate of expected future rates of return (expected returns, net of pension plan investment expense, including inflation) to develop each major asset class. Those expected returns make up one component of WSIB’s capital market assumptions. The WSIB uses the capital market assumptions and their target asset allocation to simulate future investment 2015 Comprehensive Annual Financial Report 43 City of Redmond ---PAGE BREAK--- returns at various future times. The long-term expected rate of return of 7.5 percent approximately equals the median of the simulated investment returns over a 50-year time horizon. Estimated Rates of Return by Asset Class 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, 2015, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB’s most recent long-term estimate of broad economic inflation. Asset Class Target Allocation % Long-Term Expected Real Rate of Return Arithmetic Fixed Income 20% 1.70% Tangible Assets 5% 4.40% Real Estate 15% 5.80% Global Equity 37% 6.60% Private Equity 23% 9.60% 100% Sensitivity of NPL The table below presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, 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 (6.5 percent) or 1-percentage point higher (8.5 percent) than the current rate. 1% Decrease Current Discount Rate 1% Increase PERS 1 $ 17,658,350 $ 14,503,747 $ 11,791,078 PERS 2/3 36,510,478 12,486,262 (5,908,179) PSERS 2 128,855 16,958 (62,640) LEOFF 1 (472,727) (738,921) (965,802) LEOFF 2 9,319,560 (9,306,205) (23,322,800) Pension Plan Fiduciary Net Position Detailed information about the State’s pension plans’ fiduciary net position is available in the separately issued DRS financial report. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At December 31, 2015, the City reported a total pension liability of $27,006,967 for its proportionate share of the net pension liabilities and a total pension asset of $10,045,126 for its proportionate share of the net pension assets as follows: Liability or (Asset) PERS 1 $ 14,503,747 PERS 2/3 $ 12,486,262 PSERS 2 $ 16,958 LEOFF 1 738,921) LEOFF 2 9,306,205) 2015 Comprehensive Annual Financial Report 44 City of Redmond ---PAGE BREAK--- The amount of the asset reported above for LEOFF Plan 2 reflects a reduction for State pension support provided to the City. The amount recognized by the City as its proportionate share of the net pension asset, the related State support, and the total portion of the net pension asset that was associated with the City were as follows: Asset LEOFF 2 – employer’s proportionate share $ (9,306,205) LEOFF 2 – State’s proportionate share of the net pension liability/(asset) associated with the employer $ (6,153,272) TOTAL $ (15,459,477) At December 31, the City’s proportionate share of the collective net pension liabilities was as follows: Proportionate Share 6/30/14 Proportionate Share 6/30/15 Change in Proportion PERS 1 0.279429% 0.277269% -0.002160% PERS 2/3 0.344517% 0.349456% 0.004939% PSERS 2 0.090607% 0.092909% 0.002302% LEOFF 1 0.058235% 0.061310% 0.003075% LEOFF 2 0.863922% 0.905449% 0.041527% Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer’s proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer Allocations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2015. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2015, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2015, the state of Washington contributed 39.80 percent of LEOFF 2 employer contributions pursuant to RCW 41.27.726 and all other employers contributed the remaining 60.20 percent of employer contributions. The collective net pension liability (asset) was measured as of June 30, 2015, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2014, with update procedures used to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2015, the City recognized pension expense as follows: Pension Expense PERS 1 $ 724,178 PERS 2/3 $ 1,524,068 PSERS 2 $ 20,238 LEOFF 1 $ (169,600) LEOFF 2 $ 495,003 TOTAL $ 2,593,887 2015 Comprehensive Annual Financial Report 45 City of Redmond ---PAGE BREAK--- Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ - $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 793,513 Changes of assumptions $ - $ - Changes in proportion and differences between contributions and proportionate share of contributions $ - $ - Contributions subsequent to the measurement date $ 782,882 $ - TOTAL $ 782,882 $ 793,513 PERS 2/3 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 1,327,293 $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 3,333,241 Changes of assumptions $ 20,118 $ - Changes in proportion and differences between contributions and proportionate share of contributions $ 158,920 $ - Contributions subsequent to the measurement date $ 1,004,273 $ - TOTAL $ 2,510,604 $ 3,333,241 PSERS Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 15,887 $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 8,411 Changes of assumptions $ 105 $ - Changes in proportion and differences between contributions and proportionate share of contributions $ - $ - Contributions subsequent to the measurement date $ 7,253 $ - TOTAL $ 23,245 $ 8,411 2015 Comprehensive Annual Financial Report 46 City of Redmond ---PAGE BREAK--- LEOFF 1 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ - $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 124,744 Changes of assumptions $ - $ - Changes in proportion and differences between contributions and proportionate share of contributions $ - $ - Contributions subsequent to the measurement date $ - $ - TOTAL $ - $ 124,744 LEOFF 2 Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 814,913 $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 2,819,731 Changes of assumptions $ 24,547 $ - Changes in proportion and differences between contributions and proportionate share of contributions $ - $ 217,648 Contributions subsequent to the measurement date $ 671,668 $ - TOTAL $ 1,511,128 $ 3,037,379 TOTAL OF ALL PLANS Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 2,158,093 $ - Net difference between projected and actual investment earnings on pension plan investments $ - $ 7,079,640 Changes of assumptions $ 44,770 $ - Changes in proportion and differences between contributions and proportionate share of contributions $ 158,920 $ 217,648 Contributions subsequent to the measurement date $ 2,466,076 $ - TOTAL $ 4,827,859 $ 7,297,288 Deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2015 Comprehensive Annual Financial Report 47 City of Redmond ---PAGE BREAK--- Firefighters’ Pension Plan The City is the administrator of the Firefighters’ Pension Plan (FPP), a single-employer defined benefit pension plan established in conformance with Revised Code of Washington (RCW) 41.18. The Pension Board consists of five members: the Mayor, who is the chairman of the board, the City Clerk, the City Treasurer, and two regularly employed firefighters elected by secret ballot of the firefighters, each of whom serve two-year terms. Costs of administering the Plan are paid from the Firefighters’ Pension Plan. The Plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to Plan members and beneficiaries. Retirement benefit provisions are established in state statute and may be amended only by the State Legislature. Membership is limited to firefighters employed prior to March 1, 1970 when the LEOFF retirement system was established. The City’s obligation under the Plan consists of paying the difference between pension and medical benefits provided by LEOFF and those provided by the FPP for covered firefighters who retire after March 1, 1970. Benefits and refunds of the Plan are recognized when due and payable in accordance with the terms of the Plan. At December 31, 2015, there are two inactive plan members currently receiving benefits, one inactive plan member not receiving benefits because LEOFF benefits exceed those provided by FPP, and there are no active plan members. The pension plan is closed to new entrants. Under State law, the FPP is provided an allocation of 25% of all moneys received by the State from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF, and City contributions required to meet projected future pension obligations. These on-behalf tax revenues were recognized in the general fund and expensed out to the Firefighters’ Pension Plan. The fire insurance premium for 2015 was $146,358, which was sufficient to pay the 2015 Firefighter’s Pension Plan expenses of $33,966. The financial activity of the Firefighters’ Pension Plan is presented in the Statement of Net Position – Fiduciary Funds, and the Statement of Changes in Net Position – Fiduciary Funds. No separate stand-alone financial report is issued for the Firefighters’ Pension Plan. Although the City administers the pension plan, it is funded 100% by a percentage of the tax on fire insurance premiums which is received from the state annually. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Firefighters’ Pension 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 plan. 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. Investment Policy The Firefighter’s Pension Plan follows the City’s policy to invest temporary cash surpluses. These investments are reported on the Statement of Net Position - Fiduciary Funds as cash and cash equivalents or investments. Included in cash and cash equivalents are currency on hand, demand deposits with banks or other financial institutions, investments with the Local Government Investment Pool, investments in U.S. Government Mutual Funds and investments with original maturities of three months or less. Interest is allocated to the fund on the basis of investments owned. Year Ended December 31: PERS 1 PERS 2/3 PSERS 2 LEOFF 1 LEOFF 2 Total 2016 (307,538) (858,249) (691) (48,405) (982,698) (2,197,581) 2017 (307,538) (858,249) (691) (48,405) (982,698) (2,197,581) 2018 (307,538) (858,250) (692) (48,405) (982,707) (2,197,592) 2019 129,101 747,839 4,326 20,471 606,682 1,508,419 2020 2,666 119,587 122,253 2021 2,663 23,915 26,578 Total (793,513) (1,826,909) 7,581 (124,744) (2,197,919) (4,935,504) 2015 Comprehensive Annual Financial Report 48 City of Redmond ---PAGE BREAK--- In accordance with City policy and Washington State law, authorized investment purchases include Certificates of Deposit with financial institutions qualified by the Washington Public Deposit Protection Commission, US Treasury and Agency Securities, Bankers’ Acceptances, Bonds of Washington State and any local government in Washington State which have, at the time of purchase, one of the three highest credit ratings of a nationally recognized rating agency, repurchase agreements, the State Investment Pool (which is a 2a7-like pool), and mutual funds used specifically for debt issues related to arbitrage. In accordance with GASB 31, investments in external 2a7-like pools, money market investments, and participating interest-earning investment contracts with remaining maturities of one year or less at the time of purchase are stated at amortized cost. All other investments including the Firefighter’s Pension Plan are stated at fair value. The City reports its deposit and investment risk disclosures in accordance with GASB 40. See Note 4 – Cash and Investments for detail. Net Pension Liability The Net Pension Liability for the Firefighters’ Pension Plan was measured as of January 1, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The components of the City's net pension liability (asset) for the Firefighters’ Pension Plan at December 31, 2015 are as follows: Total pension liability $ 567,121 Less: Plan fiduciary net position 1,606,330 City’s net pension liability (asset) $ (1,039,209) Plan fiduciary net position as a percentage of the total pension liability 283.24% City of Redmond Firefighter’s Pension Plan Changes in Net Pension Liability Total Pension Liability Plan Fiduciary Net Position Net Pension Liability Firefighters' Pension Plan – Balances at 1/1/2015 $ 483,433 $ 1,484,427 $ (1,000,994) Changes for the year: - Service Cost - - - Interest 15,014 - 15,014 Changes in benefit terms - - - Differences between expected and actual experience 97,140 - 97,140 Changes of assumptions - - - Contributions – employer - 146,358 (146,358) Contributions – employees - - - Net investment income - 9,511 (9,511) Benefit payments, including refunds of contributions (28,466) (28,466) - Administrative expense - (5,500) 5,500 Other changes - - - Net changes 83,688 121,903 (38,215) Balance at 12/31/2015 567,121 1,606,330 (1,039,209) 2015 Comprehensive Annual Financial Report 49 City of Redmond ---PAGE BREAK--- The Schedule of Changes in Net Pension Liability and Schedule of Contributions presented in Required Supplementary Information following the notes to the financial statements presents ten-year trend information about whether the net pension liability (asset) is increasing or decreasing over time and the factors affecting the changes. Annual Money-weighted Rate of Return For 2015, the money-weighted rate of return for the Firefighter’s Pension Plan investments was 0.62%. The annual money-weighted rate of return on pension plan investments is calculated as the internal rate of return on pension plan investments, net of pension plan investment expense. The money-weighted rate of return expresses investment performance, net of pension plan investment expense, adjusted for the changing amounts actually invested. The Schedule of Investment Returns presented in Required Supplementary information following the notes to the financial statements presents ten-year trend information for the annual money-weighted rate of return. Discount Rate and Investment Earnings The discount rate is the single rate that reflects the long-term expected rate of return on pension plan investments that are expected to be used to finance payment of benefits, to the extent that the pension Plan’s Fiduciary net Position is projected to be sufficient to make projected benefit payments and pension plan assets are expected to be invested using a strategy to achieve that return, and a yield or index rate for 20-year, tax- exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another scale), to the extent that conditions for use of the long-term expected rate of return are not met. Since the Fiduciary net Position is projected to be positive in all future years, the discount rate is equal to the Investment Earnings assumption of 3.2%. Sensitivity of the net pension liability to changes in the discount rate The following presents the net pension liability of the Firefighters’ Pension Plan, calculated using the discount rate of 3.2%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1- percentage-point lower or 1-percentage-point higher than the current rate: Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of January 1, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Salary Increases (inflation only) 3.5% Investment earnings 3.2% Growth in membership 0.0% Postretirement benefit increases Related to salaries 3.5% Related to Consumer Price Index 2.5% Actuarial Cost Method Entry Age Normal Valuation of Assets Market value basis Future fire insurance premium tax revenues are assumed to increase at the rate of 2.5% per year and are assumed to stop after 2020. Mortality rates were based on the RP-2000 Mortality Table (combined healthy) projected to 2019 using 50% of Projection Scale AA, with ages set back one year for males and forward one year for females (set forward two years for disabled members). 1% Decrease Current Discount Rate 1% Increase City's net pension liability (asset) $ (971,153) (1,039,209) $(1,100,774) 2015 Comprehensive Annual Financial Report 50 City of Redmond ---PAGE BREAK--- Municipal Employees Benefit Trust By majority vote, City employees approved the City's withdrawal from the Social Security System pursuant to U.S.C.A., Section 418 effective January 1, 1975. Permanent employees working 1,040 or more hours per year are eligible but not required to participate in the plan. Temporary employees working less than 1,040 hours per year are required to participate in the plan. Participating permanent employees may choose to defer income tax in accordance with Internal Revenue Code Section 401K, on all, part or none of their contribution while temporary employees may not defer income tax on any of their contribution. There were 808 permanent and 281 temporary participants with account balances at December 31, 2015. The Municipal Employees Benefit Trust Plan is a defined contribution plan with participants contributing an amount equal to the current Social Security rate One hundred percent of the contributions made by employees hired before April 1, 1986 go to MEBT. Employees hired on or after April 1, 1986 contribute 6.2% to MEBT and 1.45% to Medicare. Permanent employees may make additional contributions up to the limit set by the Internal Revenue Code. The City contributes 7.65% for permanent employees and 4.75% for temporary employees. Of the City’s contribution, 1.45% goes to Medicare for employees hired on or after April 1, 1986. Eighty percent of the remaining City contribution goes to MEBT and 20% to administrative fees. The City's contribution is based on the payroll for all employees who are eligible to participate in the plan, regardless of the number of participants. The City’s payroll for participating employees in 2015 was $54,978,760. Employee contributions were $3,465,753. City contributions were $3,465,753. The City's total payroll was $60,951,259. Plan assets consisting of stocks, bonds, and guaranteed insurance contracts, are not the property of the City and are not subject to the claims of the City's general creditors. The Plan is administered by the Plan Committee consisting of seven employee members appointed by the City. The Plan Committee administers the MEBT Plan according to the Plan Document adopted by the City and all applicable IRS regulations. Plan provisions may be established or amended by a majority vote of the Plan Committee. Employees who elect not to participate in the Municipal Employees Benefit Trust plan retain the disability and survivor income insurance provided by the Standard Insurance Company. Actuarial determinations are not required because long term disability insurance and survivor income insurance are provided by a group insurance policy with Standard Insurance Company, and each participant shall at his normal retirement date instruct the Plan Committee to acquire a non-forfeitable, non-transferable annuity contract, pay retirement benefits in or annual installments (no contributions by the City or the participant shall be added to his account after retirement), pay a single sum in cash, or elect to defer any or all retirement benefits to a later date. 2015 Comprehensive Annual Financial Report 51 City of Redmond ---PAGE BREAK--- NOTE 8: Other Postemployment Benefits Plan Description As required by the Revised Code of Washington (RCW) Chapter 41.26, the City provides lifetime medical care for members of the Law Enforcement Officers and Firefighters (LEOFF) retirement system hired before October 1, 1977 under a defined benefit healthcare plan administered by the City. The members’ necessary hospital, medical, and nursing care expenses not payable by worker’s compensation, social security, insurance provided by another employer, other pension plan, or any other similar source are covered. Most medical coverage for eligible retirees is provided by one of the City’s employee medical insurance programs. Under the authorization of the LEOFF Disability Board, direct payment is made for other retiree medical expenses not covered by standard medical plan benefit provisions. Financial reporting for the LEOFF retiree healthcare plan is included in the City’s Comprehensive Annual Financial Report. Funding Policy Funding for LEOFF retiree healthcare costs is provided entirely by the City as required by RCW. The City’s funding policy is based upon pay-as-you-go financing requirements. Annual OPEB Cost and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost is calculated based upon the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period of thirty years as of January 1, 2009. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB. The net OPEB obligation of $4,032,224 is included as a noncurrent liability on the Statement of Net Position. The City’s OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years were as follows: Fiscal Year Ended Annual OPEB Cost Contribution as a Percentage of OPEB Cost Net OPEB Obligation 12/31/2013 $ 889,135 52% $ 3,115,171 12/31/2014 $ 876,171 57% $ 3,488,741 12/31/2015 $ 1,014,411 46% $ 4,032,224 Fiscal Year Ending 12/31/2013 Fiscal Year Ending 12/31/2014 Fiscal Year Ending 12/31/2015 Determination of Annual Required Contribution: 1-Annual Normal Cost (BOY) $ 57,908 $ 57,908 $ 40,376 2-Amortization of UAAL (BOY) 849,114 849,114 1,024,563 3-Interest to EOY + x 36,281 36,281 37,273 4-ARC at EOY $ 943,303 $ 943,303 $ 1,102,212 5-Interest on Net OPEB Obligation $ 107,472 $ 124,607 $ 122,106 6-Adjustment to ARC 161,640 191,739 209,907 7-Annual OPEB Cost $ 889,135 $ 876,171 $ 1,014,411 8-Employer Contributions 460,757 502,601 470,928 9-Change in Net OPEB Obligation – 428,378 373,570 543,483 10-Net OPEB Obligation-BOY [(11) prior year] $ 2,686,793 $ 3,115,171 $ 3,488,741 Net OPEB Obligation-end of year + (10)] $ 3,115,171 $ 3,488,741 $ 4,032,224 * is the assumed interest rate that year: 4.0% in 2013, 4.0% in 2014, 4.0% in 2015. 2015 Comprehensive Annual Financial Report 52 City of Redmond ---PAGE BREAK--- As of January 1, 2015, the most recent actuarial valuation date, the plan was 0% funded. The City’s funding progress, the accrued liability for benefits, the actuarial value of the assets, the unfunded actuarial accrued liability (UAAL), the covered payroll, and the UAAL as a percentage of covered payroll for 2015 and preceding years were as follows: Fiscal Year Ended Actuarial Value of Assets Actuarial Accrued Liabilities Entry Age Unfunded Actuarial Accrued Liabilities (UAAL) Funded Ratio Covered Payroll UAAL As a Percentage of Covered Payroll Dec. 31, 2006 - 8,512,284 8,512,284 0 764,518 1,113% Dec. 31, 2007 - 8,512,284 8,512,284 0 557,587 1,527 Dec. 31, 2008 - 8,512,284 8,512,284 0 446,200 1,908 Dec. 31, 2009 - 9,290,267 9,290,267 0 442,308 2,100 Dec. 31, 2010 - 9,430,652 9,430,652 0 461,106 2,045 Dec. 31, 2011 - 9,549,490 9,549,490 0 480,703 1,987 Dec. 31, 2012 - 14,420,000 14,420,000 0 262,000 5,504 Dec. 31, 2013 - 14,664,000 14,664,000 0 249,000 5,889 Dec. 31, 2014 - 14,893,000 14,893,000 0 249,000 5,981 Dec. 31, 2015 - 17,029,000 17,029,000 0 23,000 74,039 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. 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 with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short- term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. In the January 1, 2015 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions used included a 3.50% discount rate, which is based upon the long-term investment yield on the investments that are expected to be used to finance payment of benefits. A medical inflation rate of 7.4% in 2015, grading down to an ultimate rate of 4.1%, was used along with a long-term care inflation rate of 4.75%. The UAAL is being amortized on a closed basis at the assumed discount rate. The remaining amortization period at January 1, 2015 was 24 years. 2015 Comprehensive Annual Financial Report 53 City of Redmond ---PAGE BREAK--- Note 9: Construction Commitments At December 31, 2015 the City had significant contractual obligations on construction projects: (In thousands) Transportation Projects $1,825 Transportation Maintenance 139 General Government 4,539 Parks 49 Utilities Projects 554 Total $7,106 Note 10: Interfund Transfers Interfund transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, to move receipts for debt service from the fund collecting the receipts to a debt service fund as debt service payments become due, and to use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Interfund transfers at December 31, 2015 were as follows: Transfer from General Fund Capital Investments Program Fund Other Governmental Funds Internal Service Funds Total Transfer to General Fund $ - $ 2,961,300 $ 137,863 $ 135,638 $ 3,234,801 Capital Investments Program Fund 2,462,356 - 7,947,283 - 10,409,639 Other Governmental Funds 5,696,007 85,000 - - 5,781,007 Total $ 8,158,363 $ 3,046,300 $ 8,085,146 $ 135,638 $ 19,425,447 Note 11: Long-Term Obligations General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds have been issued for general government activities and are being repaid from debt service funds. In 2013 the City issued $33,085,000 in limited tax general obligation refunding bonds with an interest rate of 3.75% to advance refund $32,760,000 of outstanding 2004 Limited Tax General Obligation Lease Revenue Bonds. The reacquisition price exceeded the net carrying amount of the old debt by $1,530,533. This amount is being charged to operations through the year 2035 using the straight-line method. The remaining balance of $1,373,629 is reported as a deferred outflow in the statement of net position. In November, 2015, the City Council of the City of Redmond adopted ordinance 2809, providing for the issuance of two series of Limited Tax General Obligation and Refunding Bonds in the aggregate principal amount of not to 2015 Comprehensive Annual Financial Report 54 City of Redmond ---PAGE BREAK--- exceed $31,000,000 to provide funds to finance the costs of transportation improvements, to refund certain outstanding limited tax general obligations of the City, and to finance costs of issuance of each series of bonds. In December, 2015, the City issued $9,280,000 in limited tax general obligation refunding bonds with an interest rate of 3.00% to advance refund $8,940,000 of outstanding 2008 Limited Tax General Obligation Bonds. The reacquisition price exceeded the net carrying amount of the old debt by $951,425. This amount is being charged to operations through the year 2035 using the straight-line method. The remaining balance of $949,614 is reported as a deferred outflow in the statement of net position. As discussed in Note 19 – Subsequent Events, the City issued an additional $17,630,000 in Limited Tax General Obligation and Refunding Bonds in January 2016. General obligation bonds outstanding at December 31, 2015 are as follows: Issue Maturity Interest Amount Redemptions Outstanding Date Date Rate Issued to Date 12/31/2015 2008 LTGO Bonds 9/4/2008 12/1/2028 4.0% - 5.0% $ 33,935,000 $ 17,695,000 $ 16,240,000 2011 LTGO Bonds 3/16/2011 12/1/2021 2.0% - 4.5% 8,035,000 3,345,000 4,690,000 2013 LTGO Refunding Bonds 9/12/2013 12/1/2035 1.75% - 5.0% 33,085,000 4,765,000 28,320,000 2015 LTGO Refunding Bonds 12/15/2015 12/1/2028 3.0% 9,280,000 0 9,280,000 Total General Obligation Bonds $ 84,335,000 $ 25,805,000 $ 58,530,000 Annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Year Ending December 31 Principal Interest 2016 3,720,000 2,387,648 2017 3,850,000 2,275,638 2018 3,970,000 2,153,438 2019 4,095,000 2,027,038 2020 4,290,000 1,833,825 2021-2025 16,805,000 6,606,088 2026-2030 13,575,000 3,144,269 2031-2035 8,225,000 1,140,444 $ 58,530,000 $ 21,568,388 Revenue Bonds The City issues revenue bonds to finance construction projects for the City’s utilities. Revenue bonds are payable from revenues generated by the user fees, and are backed by the Water/Wastewater and Stormwater utilities. Revenue bonds generally require a cash reserve be maintained of 120% of the current portion of revenue bonds payable, plus interest. Revenue bonds outstanding at year end are as follows: Issue Date Maturity Date Interest Rate Amount Issued Redemptions to Date Outstanding 12/31/2015 2008 Water/ Wastewater Bonds 12/3/2008 12/1/2023 4.0% - 5.0% $ 11,755,000 $ 4,500,000 $ 7,255,000 2014 Stormwater Bonds 7/24/2014 12/1/2034 3.26% - 4.25% $ 22,950,000 $ 1,035,000 $ 21,915,000 Total Revenue Bonds $ 34,705,000 $ 5,535,000 $ 29,170,000 2015 Comprehensive Annual Financial Report 55 City of Redmond ---PAGE BREAK--- Annual debt service requirements to maturity for revenue bonds are as follows: Business-type Activities Year Ending December 31 Principal Interest 2016 1,540,000 1,339,048 2017 1,590,000 1,286,598 2018 1,650,000 1,224,198 2019 1,710,000 1,158,098 2020 1,795,000 1,087,535 2021-2025 8,125,000 4,153,650 2026-2030 6,395,000 2,461,550 2031-2035 6,365,000 719,490 $ 29,170,000 $ 13,430,167 Public Works Trust Fund Loans The City’s governmental activities currently have two State of Washington Public Works Trust Fund Loans with principal outstanding of $1,511,212. The interest rates are 0.25% and 1.00%. These loans are considered obligations of the general government and are being repaid from General Fund revenues which are transferred to the Capital Investments Program Fund where the loan payments are recorded. The City’s business type activities currently have one on State of Washington Public Works Trust Fund Loan outstanding. In 2012 the City Council of the City of Redmond adopted the Resolution #1371 in 2012 accepting a Washington State Department of Ecology (DOE) loan for funding towards the Redmond Way Water Quality Facility. The loan amount of $4,412,000 was drawn down on September 2, 2015. The loan bears interest at the rate of 2.6% per annum, calculated on the basis of a 365 day year. The final loan amount will be repaid from the City’s utility funds in equal installments semiannually over a term of twenty years. Public Works Trust Fund Loans outstanding at December 31, 2015 are as follows: Year Ending Principal Interest Principal Interest 2016 94,451 $ 3,778 $ 140,338 $ 152,356 $ 2017 94,451 3,542 182,210 110,483 2018 94,451 3,306 187,005 105,689 2019 94,451 3,070 191,925 100,769 2020 94,451 2,834 196,975 95,719 2021-2025 472,254 10,626 1,065,399 398,070 2026-2030 472,254 4,723 1,213,136 250,332 2031-2035 94,449 236 1,235,012 82,109 1,511,212 $ 32,115 $ 4,412,000 $ 1,295,527 $ Governmental Activities Business Type Activities 2015 Comprehensive Annual Financial Report 56 City of Redmond ---PAGE BREAK--- Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2015 was as follows: Beginning Balance Additions Reductions Ending Balance Due Within One Year Governmental Activities: Bonds Payable: G.O. Bonds $ 61,780,000 $ 9,280,000 $ (12,530,000) $ 58,530,000 $ 3,720,000 Premiums 2,614,620 716,063 (190,951) 3,139,732 - Total bonds payable 64,394,620 9,996,063 (12,720,951) 61,669,732 3,720,000 PWTF loans 1,677,548 - (166,336) 1,511,212 94,451 Other post-employment benefits payable 3,488,739 543,483 - 4,032,222 - Compensated absences 4,060,049 4,255,491 (3,860,007) 4,455,533 3,564,425 Net pension liability - 21,885,095 - 21,885,095 - Governmental activity long-term liabilities $ 73,620,956 $ 36,680,132 $ (16,747,294) $ 93,553,794 $ 7,378,876 Business-Type Activities: Beginning Balance Additions Reductions Ending Balance Due Within One Year Bonds Payable: Revenue Bonds $ 30,660,000 $ - $ (1,490,000) $ 29,170,000 $ 1,540,000 For issuance premiums 3,380,461 - (185,755) 3,194,706 - Total Bonds Payable 34,040,461 - (1,675,755) 32,364,706 1,540,000 PWTF loans - 4,412,000 - 4,412,000 - Compensated absences 540,377 356,802 (333,684) 563,495 450,796 Net pension liability - 5,121,872 - 5,121,872 - Business-type activity long-term liabilities $ 34,580,838 $ 9,890,674 $ (2,009,439) $ 42,462,073 $ 1,990,796 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year end $2,330,359 of internal service funds net pension liability and $259,087 of internal service funds compensated absences are included in the above amounts. Compensated absences for governmental activities are liquidated in the governmental fund from which the employee’s salary is paid. Governmental funds typically used to liquidate compensated absences are the General Fund, Recreation Activities Fund, Advanced Life Support Fund, and the Recycling Fund. Arbitrage Arbitrage occurs when the City invests funds borrowed at tax-exempt rates of interest in higher yielding taxable securities. These interest earnings in excess of interest expense must be remitted to the federal government. At the fund level, the City recognizes this liability only when it is due and payable. The City had no arbitrage excess earnings liability in 2015. Additional information on the City’s long-term liabilities is provided in the City’s Debt Manual which is available at: http://www.redmond.gov/Government/FinancesandBudget/FinancialReports/. 2015 Comprehensive Annual Financial Report 57 City of Redmond ---PAGE BREAK--- NOTE 12: Leases Operating Leases: Copier Leases Operating lease obligations are primarily for rental of copy machines. Total expenditures for leases were $11,543 for the year ended December 31, 2015. The future minimum lease payments are as follows: Year Ending December 31 Amount 2016 $ 11,543 2017 11,543 2018 11,543 2019 8,174 Total $ 42,803 Note 13: Component Units Component Units Reported in Fiduciary Fund Statements Redmond Community Facilities District 2014-1 (District) is a special purpose district formed on July 15, 2014 by Resolution No. 1411 of the City Council of the City of Redmond, Washington. RCW 36.145 authorizes cities to form community facilities districts when the owners of one hundred percent (100%) of the land to be included in the district petition the city to do so. In May 2014 the City of Redmond received a petition from Microsoft Corporation to form a community facilities district for the purpose of financing the construction of a pedestrian/bicycle bridge over SR 520 at the Overlake Transit Station and the construction of canopy coverage for waiting areas at the Overlake Transit Station. The District is an independently governed, special purpose district, vested with the corporate authority included under Article VII, section 9 of the state Constitution to make local improvements by special assessments. Construction of the improvements will be financed through special assessments of $33,300,000 levied against specific Microsoft Corporation properties. The assessment will be paid in fifteen equal annual installments, with the first installment due in November, 2015. The project will be advance-funded by Microsoft in annual installments between December 2014 and December 2017. The design and construction of the project elements will be administered by Sound Transit. Sound Transit has agreed to pay any cost of the improvements in excess of the assessed amounts. Upon completion of construction in 2020, ownership of the improvements will be transferred to the City of Redmond. The CFD is reported as a component unity of the City of Redmond because the CFD was formed by the City for the sole purpose of levying special assessments to finance the construction of the pedestrian bridge that, upon completion, will be transferred to the City of Redmond. The District’s Board of Supervisors consists of three members of the Redmond City Council and two representatives nominated by the petitioner. The City Finance Director is the Treasurer for the District, and City staff provides fiduciary, accounting and reporting services to the District. Because the City cannot use the resources of the CFD to support its programs, bears no financial obligations related to the CFD or its projects, and does not have the ability to impose its will on the CFD, the City acts in a fiduciary capacity only. Therefore, the District is reported in the fiduciary fund statements in the City of Redmond’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2015. Questions concerning the CFD or requests for financial statements may be addressed to Redmond Community Facilities District Treasurer, c/o Director of Finance & Information Services, City of Redmond, PO Box 97010, Redmond, WA 98073-9710. 2015 Comprehensive Annual Financial Report 58 City of Redmond ---PAGE BREAK--- NOTE 14: Joint Ventures and Operations Water Storage and Pumping Facility In February 1990, the City of Redmond joined with the City of Bellevue to construct, operate, and maintain a joint- use water storage and pumping facility located on the common boundary of the two cities. The City of Redmond has an undivided interest in the facility of 44%, and the City of Bellevue has an undivided interest of 56%. The City of Redmond’s share of costs to construct the joint-use facility totaled $2,078,539 and is reported on the business-type activity financial statements as improvements other than buildings. The City recognizes depreciation expense annually. Accumulated depreciation totals $1,529,804 with a net book value of $548,735. The city reimbursed the City of Bellevue $36,430 for its share of operating costs in 2015. Budget monitoring information can be obtained from the City of Bellevue Budget Department, 450 – 110th Avenue NE, Bellevue, WA 98004. Cascade Water Alliance In April 1999, the City of Redmond entered into an interlocal agreement with seven other water providers in the region to create the Cascade Water Alliance. The purpose of the Alliance is to provide water supply to meet current and future needs of the Alliance’s members in a cost-effective and environmentally responsible manner. The Alliance is governed by a Board of Directors consisting of one individual representative appointed by resolution of the member’s legislative authority. Each member entity must pay annual dues based on the number of units served by the water system within their jurisdiction. The City of Redmond’s dues for 2015 were $573,763. The City of Redmond also paid the Alliance $1,981,650 in 2015 for Regional Capital Facilities Charges for new hookups to the water system that Redmond collected from new customers. A member may withdraw from the Alliance with a resolution of its legislative authority expressing such intent. The Board will then determine the withdrawing member’s obligations to the Alliance, as well as the withdrawing member’s allocable share of the Alliance’s then-existing obligations. The member’s withdrawal shall be effective upon payment of obligations. Members do not hold legal ownership rights in any assets owned by the Alliance. In 2011, the CWA’s Board passed a resolution offering to purchase the outstanding credits from its members at a discounted rate. These credits were awarded to its members who transferred or retained an independent water supply in excess of its needs. The Alliance’s members were allowed to use such credits to apply against future The CWA offered to buy out the RCFC credits at $2,500 per Cascade Equivalent Residential Unit (CERU) from its members. The City of Redmond chose the one-time redemption option. The payment was finalized and the total of $ 3,076,875 was sent to the City of Redmond in December 2012. Such receipt was reported as capital contributions in the city’s Water/Wastewater fund on the proprietary funds’ Statement of Revenues, Expenses, and Changes in Fund Net Position. These monies will be held to be used to call the outstanding revenue bonds issued in 2008 when these become callable in 2019. Audited financial information can be obtained from Cascade Water Alliance, 520 - 112th Avenue NE, Suite 400, Bellevue, WA 98004. Eastside Narcotics Task Force (ENTF) The Eastside Narcotics Task Force (ENTF) was formed by the Cities of Redmond, Bellevue, Kirkland, Mercer Island, and Issaquah in 1981 for the purpose of mutual support in the fight against drug crimes. In 1990, ENTF engaged the support services of King County Prosecutor’s Office. The King County Sheriff’s Office joined ENTF in 2002 to also provide support in the fight against drug crimes. On May 3rd, 2010, the ENTF amended the Interlocal Cooperative Agreement to include the Washington State Patrol. As of October of 2009, Issaquah permanently withdrew its ENTF membership. The US Postal Service joined ENTF on October 1st, 2013. Mercer Island and the King County Sheriff’s Office are no longer members. The Task Force is governed by an Executive Board whose members are composed of the Chief Law Enforcement Officer, or his/her designee, from each participating jurisdiction. The Board is responsible for 2015 Comprehensive Annual Financial Report 59 City of Redmond ---PAGE BREAK--- formulating policy, establishing annual budgets, adding members, appointing the Administering Agency, and acquiring, holding, and disposing of real and personal property, and has final approval of expenditures and disbursements of revenues (seized and forfeited assets). A Commander, who is an officer from the Bellevue Police Department with a rank of Captain or higher, is responsible for the operation and the accomplishment of the goals and objectives of the Task Force. The City of Redmond’s financial responsibility is to provide an officer, a vehicle, and to pay for the officer’s ENTF travel, if required. Redmond had one detective embedded in the ENTF in 2015 due to its financial position and continues to provide one detective to the ENTF in 2016. Dissolution of the Task Force is scheduled to occur on June 30th, 2016, due to lack of funding resulting from the legalization of marijuana. Member agencies share in the costs and proceeds of the operation of the Task Force on a percentage basis. Redmond’s estimated share at 12/31/2015 is 10.3%. As of 12/31/2015, the forfeiture balance of the ENTF was $281,848. However, there are significant expenses that ENTF has to incur prior to dissolution, which could result in a negative reserve balance. If the ENTF’s reserves were negative, each member of the Task Force would need to restore that balance. Budget monitoring information can be obtained from Eastside Narcotics Task Force, c/o Carl Krikorian, Police Fiscal Manager, Bellevue Police Department, 450 – 110th Avenue NE, Bellevue, WA 98004 or P.O. Box 90012, Bellevue, WA 98009. A Regional Coalition for Housing (ARCH) In November 1992, the City of Redmond joined the Cities of Kirkland, Bellevue, and King County to establish A Regional Coalition for Housing (ARCH). The agreement was recently amended in 2010. Since its inception, King County, the Cities of Redmond, Bellevue, Kirkland, Bothell, Clyde Hill, Hunts Point, Issaquah, Kenmore, Mercer Island, Newcastle, Sammamish, Woodinville, Yarrow Point, and Beaux Arts Village joined ARCH. ARCH’s purpose is to cooperatively formulate affordable housing goals and policies and to foster efforts to provide affordable housing for low and moderate-income households by combining public funding with private- sector resources. ARCH assists member governments in developing housing policies, strategies, programs, and development regulations; identifies and prioritizes projects which the member cities fund directly through their own grants, Community Development Block Grants and US Department of Housing and Urban Development’s (HUD) grants. ARCH is governed by an Executive Board composed of a Chief Executive Officer from each member. The Executive Board is responsible for review and approval of all budgetary, financial, policy and contractual matters. The Board is assisted by an administrative staff and a Citizen Advisory Board. Each member city provides operating funding and contributes operating revenues as specified in the annual budget for ARCH. Contributions from the member cities are based on each member’s population. Contributions by member agencies are held in the ARCH Housing Trust Fund Account and dispersed by the Administering Agency for approved projects. In 2015 the city contributed $70,461 for operations or 11.113% of the total contributions for operations by all members. The City has also contributed $150,000 to the housing trust fund. $497,891 out of the balance has been committed to projects which leaves the remaining $24,509 as uncommitted balance in the Trust Fund in 2015. Members may withdraw from the ARCH agreement by giving one year’s written notice to the Executive Board, by December 31st of any year, of its intention to terminate, effective December 31st of the following year. Members remain legally and financially responsible for any obligation incurred while a member of ARCH. Upon dissolution, the agreement provides for distribution of all property and assets among the members based on the percentage of the total annual contributions during the period of the agreement paid by each member. The City’s share of assets is deemed immaterial and thus is not reflected in the financial statements. Budget monitoring information can be obtained from ARCH, c/o Art Sullivan, 16225 NE 87th Street, A-3, Redmond, WA 98052. 2015 Comprehensive Annual Financial Report 60 City of Redmond ---PAGE BREAK--- EPSCA The Eastside Public Safety Communications Agency (EPSCA), an emergency regional radio access service provider operation, was established on May 26, 1992, by an interlocal agreement among the Cities of Redmond, Bellevue, Kirkland, and Mercer Island. The Agreement was amended in 1993, to include the City of Issaquah as an additional Principal. EPSCA began principal operations of the 800 MHz radio system in December 1995. EPSCA is governed by an Executive Board, which is comprised of the Chief Executive Officers of the Principals. The Executive Board is responsible for review and approval of all budgetary, financial, and contractual matters. An Operations Committee, composed of the Chief of Police and Fire Chief of each Principal, reports to the Board and oversees budget preparation, rates, revenues, expenditures, policies and other operational issues. The Committee also includes representation from non-Principal EPSCA user agencies. EPSCA has developed an Eastside radio communications system which is integrated with a regional radio communications network. Its capital funding derives from a September 15th, 1992 voter-approved King County excess property tax levy of $57,016,764. EPSCA’s portion of the levy was $10,004,469. Operating revenues derive from fees charged to the Principals for communications services and from subscriber fees for communications services. The City of Redmond paid $166,327 to EPSCA in 2015. These fees would change when the access fee rate change or when radios are added or removed from the system. The interlocal agreement among the Eastside cities provides for a weighted vote according to the proportion of each Principal’s system radios in relation to the total number of system radios used by all Principals. As of December 31st, 2015, the weighted vote percentage was shown as follows: Redmond 24.620% Bellevue 46.529% Kirkland 17.516% Mercer Island 6.236% Issaquah 5.100% These percentages are reviewed and adjusted annually at January 1st, based on the number of radios on the system in use by current Principals as of December 31st of the preceding year. Upon dissolution, the interlocal agreement provides for distribution of assets among the Principals based on weighted voting percentages in force at the time of dissolution. Budget monitoring and compiled financial statements for EPSCA can be obtained from EPSCA, c/o Jessie Morgan, MS PSEPS, P.O. Box 97010, Redmond, WA 98073-9710. Hazardous Materials Unit and Response Team (HazMat) In January 1984, the City of Redmond joined the Cities of Bellevue, Kirkland, Bothell, and King County Fire Protection Districts 16 and 36 to form a Hazardous Materials Unit and Response Team (HazMat). The agreement was recently modified on July 13th, 2004. Current members are the Cities of Redmond, Bellevue, Kirkland, Bothell, Snoqualmie, along with Eastside Fire & Rescue, Woodinville Fire & Life Safety District, and King County Fire Districts 27 & 45. The purpose of the HazMat agreement is to provide equipment and personnel for improving the quality of emergency services through development of the cooperative HazMat unit as a normal function of fire protection services. The HazMat team is governed by a Joint Board which is composed of the Fire Chiefs of the member agencies plus one member from the HazMat team. The Joint Board is responsible for formulating policy, establishing annual budgets, and acquiring, holding, and disposing of real and personal property. With the exception of the member from the HazMat team, each representative on the Joint Board has a vote on all matters. The City of Bellevue has the administrative authority for operations conducted pursuant to the agreement and provides administrative and secretarial support to the Joint Board. 2015 Comprehensive Annual Financial Report 61 City of Redmond ---PAGE BREAK--- Members withdrawing from the agreement relinquish all rights to any reserve funds, equipment, or material purchased. Upon dissolution, the agreement provides for distribution of assets among the members based on the percentage of the total annual charges paid by each member during the period of the agreement. The HazMat team has no outstanding debt or leases in 2015. Operating revenues are provided by an annual charge assessed each member based on each member’s property values and number of emergency incidents. Budget monitoring information can be obtained from Eastside Hazardous Materials Joint Board, c/o Babette Bechtold, Bellevue Fire Department, P.O. Box 90012, Bellevue, WA 98004. Community Connectivity Consortium The Community Connectivity Consortium is a public corporation organized pursuant to the ordinances and approvals of the Consortium members and RCW 35.21.730 through 35.21.759 and RCW 39.34. The Consortium was created in 2011 and is governed by sixteen public agencies who are voting members: cities of Redmond, Bellevue, Kirkland, Renton, Auburn, Kent, Tukwila, Lake Washington School District, University of Washington, Bellevue College, Bellevue School District, Evergreen Hospital, Renton School District, Valley Communication Center, NORCOM, and King County. The Consortium sets the terms and conditions for sharing fiber optic installation projects, outlines how the parties will work together on fiber projects and establishes the original backbone of the Fiber Consortium network through contributions of budget, fiber assets, conduit, right of way and staff expertise. It has built over 35 miles of fiber optic cable, creating strategic connection points along the way. The partners use the fiber network to connect schools and universities to enhance learning; to connect hospitals, medical facilities and clinics to improve health care; connect government facilities for public safety, transportation and other needs; and to provide an open access network to serve the public with wireless and broadband access. The City of Redmond petitioned to join the Consortium as a non-voting member on May 14th, 2012, and became a voting member at the following year. As a member, Redmond paid approximately $4,000 for its annual dues in 2015. Redmond has the option to participate in fiber projects with project agreement that documents scope, roles and responsibilities, ownership, share of the overall project cost, etc. The Board can recommend new projects or services with increased dues and all members get to vote on the recommended budget each May. Besides getting the connectivity any member needs, members with similar interests may share the cost of new projects with one another. If the City decides to leave the Consortium, the assets Redmond acquired under any project agreements remains Redmond’s. For additional information, please contact Brenda Cooper, Board Chair, CIO City of Kirkland, [EMAIL REDACTED]. North King County Regional Public Safety Commuincation Agency (NORCOM) In November 2007, the City of Kirkland, with the Cities of Bellevue, Bothell, Clyde Hill, Medina, Mercer Island, and Snoqualmie, along with Eastside Fire and Rescue, King County Fire Protection Districts 27 and 45, King and Kittitas County Fire Protection District 51, Fire Department, Shoreline Fire Department, and Woodinville Fire and Life Safety District entered into an interlocal agreement to establish and maintain a consolidated emergency service communications center to the public for emergency medical services, fire and police. In 2008, the City of Redmond joined as a subscriber. Prior to the interlocal agreement, the formation efforts were carried out under a Joint Powers Agreement originally approved in 2005 and amended in 2006 and 2007. On July 1st, 2009, the separate dispatch operations of the Cities of Bellevue and Kirkland were combined and began operating as the North East King County Regional Public Safety Communications Agency (or NORCOM). NORCOM includes 911 telephone answering, computer aided dispatch of fire, police and EMS resources, public safety field technology and a records management system. Operating revenues are provided by user fees charged to each member based on average call volume. The City of Redmond paid $601,427 to NORCOM for calls for services and $39,838 for subscriber’s fees in 2015. Redmond will become a principal agency on January 1st, 2017. Additional financial information can be obtained from NORCOM, c/o Gwen Pilo, Finance Manager, P.O. Box 50911, Bellevue. WA 98015-0911. 2015 Comprehensive Annual Financial Report 62 City of Redmond ---PAGE BREAK--- NOTE 15: Contingencies and Litigation As of December 31, 2015, there were a number of damage claims and lawsuits pending against the City. However, in our opinion, neither the potential liability from any single claim or lawsuit, nor the aggregate potential liability resulting from all pending claims nor lawsuits, would affect materially, the financial condition of the City. NOTE 16: Risk Management The City is exposed to various risks of loss such as: theft, damage, destruction of assets, errors & omissions, injuries or property damage to others, employees’ health, and natural disasters. The City has three internal service funds to account for and finance its self-insured risks of loss. The City purchases commercial insurance for claims in excess of anticipated self-insured losses. All funds of the City participate in the self-insurance programs and make payments to the self-insurance funds based on estimates of the amounts needed to pay excess insurance and related risk management and service costs, prior and current year claims paid in the current year, and to maintain adequate reserves for catastrophic losses in a given year. Property and Liability Claims Program: The self-insured portion of the Insurance Claims and Reserve Fund provides coverage up to a maximum of $25,000 per occurrence for related claims and expenses. There were no claims that settled in 2015 which exceeded the City’s self-insurance limit; in 2014 there were no claims which exceeded the city’s self-insurance limit; in 2013 there were two claims which exceeded the city’s self-insurance limit. Reserves for open claims are established by an independent claims adjusting firm on a case reserve basis based on the assessment of the settlement potential and costs specifically associated with a particular claim, given the information available at the time. Cases are reviewed at least and are subject to periodic audits. Lawsuits are reviewed and handled directly by the City Attorney or the excess insurer’s appointed legal counsel. The City’s current approach to risk management stems from 2010 when the city conducted a comprehensive review of its property and liability risk programs. As a result, the City issued a request for proposal (RFP) for a broker/consultant and selected Bannon Carlson & Kessel, Inc. Bannon Carlson & Kessel, Inc. then conducted a search for service providers to meet the City’s needs. This resulted in the City selecting Travelers Insurance for liability coverage and retaining Affiliated FM for property coverage. As a result, the city’s risk program changed from a $100,000 self-insured retention for general liability claims to a $25,000 deductible. A deductible limit applies to all claim costs while a self-insured retention only applies to any judgment or settlement. The liability limits were extended to $20 million for general liability as described in the table below. There were no claims which settled in excess of deductible amounts in 2015; in 2014 there were no claims which exceeded the deductible amounts; in 2013 there were two claims which exceeded the deductible amounts. Property insurance coverage has remained with Travelers since September 1, 2013. Medical Self Insurance Program: For 2015 the Medical Self-Insurance Fund provided coverage up to a maximum of $150,000 per person per calendar year with the Excess Insurance covering an Unlimited Major Medical Maximum. There were six claimants who exceeded the per-person limit in 2015; in 2014 there were three claimants who exceeded the per-person limit; in 2013 there was one claimant who exceeded the per-person limit. All funds of the City from which employee wages are paid make premium payments to the Medical Self-Insurance Fund based on health insurance rates derived from actual fund experience and historical and market trend rates. Council authorized the City to self-insure workers’ compensation benefits effective January 1, 1998 for employee injuries and illnesses. For 2015 the City self-insures $500,000 of each accident or illness and purchases excess insurance above that, up to the statutory requirements. No reported claim for 2015, 2014, or 2013 exceeded the City’s self-insurance coverage. Claims handling is currently contracted to an independent, qualified third party administrator (TPA). 2015 Comprehensive Annual Financial Report 63 City of Redmond ---PAGE BREAK--- As of December 31, 2015, the City had reserves of $1,041,486 in the Insurance Fund, $9,674,102 in the Medical Self-Insurance Fund, and $490,214 in the Workers’ Compensation Fund to provide against risk of future loss. Claims liabilities of $990,274 have been reported in the Medical Self-Insurance Fund and $41,486 in the Workers’ Compensation Fund based on estimates provided by the City’s third party administrators. Historical claims liabilities for incurred but not reported (IBNR) in the Insurance Claims and Reserve Fund average 15% to 17% of paid claims for the year. Reported claims liabilities are based on the requirements of GASB Statement 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the self-insurance funds’ claims liabilities in 2014 and 2015 were: Medical Workers' Insurance Insurance Compensation Fund Fund Fund December 31, 2014: Unpaid claims, beginning of fiscal year $ - $ 1,355,600 $ 80,517 Claims incurred (including IBNRs) 182,304 6,774,892 390,160 Claims payments (182,304) (6,924,892) (431,799) Unpaid claims-December 31, 2014: $ - $ 1,205,600 $ 38,878 December 31, 2015: Unpaid claims, beginning of fiscal year $ - $ 1,205,600 $ 38,878 Claims incurred (including IBNRs) 296,689 8,313,432 397,015 Claims payments (296,689) (8,528,758) (394,407) Unpaid claims-December 31, 2015: $ - $ 990,274 $ 41,486 Commercial insurance policies were purchased to protect the City from claims which exceed the coverage provided by the self-insurance funds. Coverage Self-Insured Retention Property policy limit $150,000,000 $100,000 Earth movement $50,000,000 3%/$100,000 minimum per location Flood $50,000,000 $100,000 Employee theft $1,000,000 $10,000 General liability – per occurrence $1,000,000 $25,000 General liability – aggregate $2,000,000 Law enforcement $1,000,000 $25,000 Employment related practices $1,000,000 $25,000 Auto liability $1,000,000 $25,000 Umbrella excess liability $20,000,000 $10,000 (excess of general liability, auto, law enforcement liability) Employment-related practices excess $9,000,000 Underground storage tank liability $1,000,000 $5,000 Blanket fidelity (employee dishonesty) $1,000,000 $10,000 deductible Excess worker’s compensation statutory $500,000 Excess medical insurance unlimited $150,000 2015 Comprehensive Annual Financial Report 64 City of Redmond ---PAGE BREAK--- NOTE 17: Accounting and Reporting Changes GASB Statements 68 and 71 Implementation The City implemented GASB Statement 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, and GASB Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement 68, in 2015. These Statements address accounting and financial reporting for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts that have the following characteristics:  Contributions from employers and nonemployer contributing entities to the pension plan and earnings on those contributions are irrevocable.  Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms.  Pension plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan members. As discussed in detail in Note 7: Pension Plans, the City participates in several statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and defined contribution plans. Statement 68 requires the liability of employers and nonemployer contributing entities to employees for defined benefit pensions (net pension liability) to be measured as the portion of the present value of projected benefit payments to be provided through the pension plan to current active and inactive employees that is attributed to those employees’ past periods of service (total pension liability), less the amount of the pension plan’s fiduciary net position. Statement 71 requires that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. Implementation of GASB Statements 68 and 71 resulted in changes in the Statement of Net Position including an increase in net pension liabilities of $27,006,967, an increase in net pension assets of $10,083,341, an increase in deferred outflows of resources of $4,827,859 and an increase in deferred inflows of resources of $7,297,284. Changes impacting the Statement of Activities resulted in a decrease in pension expense of $2,859,605, and decreases in net assets of $16,827,489 for governmental activities and $5,463,386 for business type activities due to changes in accounting principles. In addition, the Required Supplementary Information section includes Schedules of Proportionate Share of the Net Pension Liability and Schedules of Employer Contributions for each pension plan. NOTE 18: Subsequent Events In January 2016, the City issued $6,000,000 in limited tax general obligation bonds and $11,630,000 in limited tax general obligation refunding bonds with interest rates of between 2% and 5% to advance refund $11,675,000 of outstanding 2008 Limited Tax General Obligation Bonds and to provide the funds to finance the costs of transportation improvements. The City has brought a condemnation action in order to acquire three easements necessary to complete the City’s Cleveland Street Couplet street project. There was disagreement on the value of one of the parcels, with the City’s appraiser valuing the property at $190,000 and the property owner’s appraiser valuing the property at $897,341. As a result of mediation, an agreement was reached on May 4, 2016, in the amount of $550,000. The City has budgeted funds for the acquisition that are sufficient to cover this amount. 2015 Comprehensive Annual Financial Report 65 City of Redmond ---PAGE BREAK--- NOTE 19: Prior Period Adjustments Contributed Intangible Land Rights Adjustments were made to recognize $22,779,557 in intangible land rights contributed to the City between 2010 and 2014 that were not previously reported. Intergovernmental Revenues In 2015, payments from previous years totaling $570,166 were returned to the Washington State Department of Transportation (WSDOT). The repayment was due to a deficiency resulting from use of the incorrect consultant agreement on the Redmond Central Connector Phase 1, 148th Seismic and 156th Overlay projects which was identified during the Project Management Review done by WSDOT. The City was allowed to rebill for these funds using 2014 construction expenditures, and $335,000 was rebilled. 2015 Comprehensive Annual Financial Report 66 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Taxes $ 126,573,121 $ 126,573,121 $ 63,338,221 $ 63,338,221 $ (63,234,900) Licenses and permits 19,884,410 19,884,410 9,720,283 9,720,283 (10,164,127) Contributions 659,991 659,991 66,687 66,687 (593,304) Intergovernmental 3,607,494 3,615,892 3,103,642 3,103,642 (512,250) Charges for services 28,434,052 28,439,052 14,815,209 14,815,209 (13,623,843) Fines and forfeitures 1,118,006 1,118,006 613,556 613,556 (504,450) Investment income 845,167 809,693 307,514 307,514 (502,179) Net change in fair value of investment - - (99,443) (99,443) (99,443) Miscellaneous 1,042,978 1,078,118 304,097 304,097 (774,021) Total Revenues 182,165,219 182,178,283 92,169,766 92,169,766 (90,008,517) EXPENDITURES Current General government 36,750,182 35,701,973 16,414,295 16,414,295 19,287,678 Security of persons and property 91,872,018 92,587,742 44,684,473 44,684,473 47,903,269 Physical environment - - 16,957 16,957 (16,957) Transportation 19,684,762 20,813,095 8,752,185 8,752,185 12,060,910 Economic development 9,735,608 9,526,887 4,648,988 4,648,988 4,877,899 Social Services 1,651,753 1,875,048 882,947 882,947 992,101 Culture and recreation 18,296,080 18,079,785 8,841,562 8,841,562 9,238,223 Capital outlay 7,123,808 7,123,808 488,709 488,709 6,635,099 Debt service Principal 1,179,912 777,223 94,451 94,451 682,772 Interest and Issuance Costs - - 4,014 4,014 (4,014) Total Expenditures 186,294,123 186,485,561 84,828,581 84,828,581 101,656,980 Excess (deficiency) of revenues over (under) expenditures (4,128,904) (4,307,278) 7,341,185 7,341,185 11,648,463 OTHER FINANCING SOURCES (USES) Insurance recoveries - - 7,460 7,460 7,460 Disposition of capital assets 304,480 304,480 - - (304,480) Transfers in 8,257,435 8,257,435 3,234,801 3,234,801 (5,022,634) Transfers out (15,668,970) (16,581,659) (8,158,363) (8,158,363) 8,423,296 Total other financing sources and uses (7,107,055) (8,019,744) (4,916,102) (4,916,102) 3,103,642 Net change in fund balance (11,235,959) (12,327,022) 2,425,083 2,425,083 14,752,105 Fund balance-beginning 33,312,726 35,911,896 34,817,144 34,817,144 (1,094,752) Prior period adjustment - - (73,700) (73,700) (73,700) Fund balance-ending $ 22,076,767 $ 23,584,874 $ 37,168,527 $ 37,168,527 $ 13,583,653 City of Redmond Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the year ended December 31, 2015 2015 Comprehensive Annual Financial Report 67 City of Redmond REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- 2014 2015 Employer's proportion of the net pension liability (asset) % 0.279429% 0.277269% Employer's proportionate share of the net pension liability (asset) $ 14,076,367 14,503,747 TOTAL $ 14,076,367 14,503,747 Employer's covered employee payroll $ 312,232 218,317 Employer's proportionate share of the net pension liability as a percentage of covered employee payroll % 4508.30% 6643.43% Plan fiduciary net position as a percentage of the total pension liability % 61.19 59.10% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Proportionate Share of the Net Pension Liability PERS 1 2015 Comprehensive Annual Financial Report 68 City of Redmond ---PAGE BREAK--- 2014 2015 Employer's proportion of the net pension liability (asset) % 0.344517% 0.349456% Employer's proportionate share of the net pension liability (asset) $ 6,963,932 12,486,262 TOTAL $ 6,963,932 12,486,262 Employer's covered employee payroll $ 30,236,495 30,078,969 Employer's proportionate share of the net pension liability as a percentage of covered employee payroll % 23.03% 41.51% Plan fiduciary net position as a percentage of the total pension liability % 93.29 89.20% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Proportionate Share of the Net Pension Liability PERS 2, 3 2015 Comprehensive Annual Financial Report 69 City of Redmond ---PAGE BREAK--- 2014 2015 Employer's proportion of the net pension liability (asset) % 0.090607% 0.092909% Employer's proportionate share of the net pension liability (asset) $ (13,121) 16,958 TOTAL $ (13,121) 16,958 Employer's covered employee payroll $ 262,742 240,933 Employer's proportionate share of the net pension liability as a percentage of covered employee payroll % ‐4.99% 7.04% Plan fiduciary net position as a percentage of the total pension liability % 105.01 95.08% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Proportionate Share of the Net Pension Liability PSERS 2015 Comprehensive Annual Financial Report 70 City of Redmond ---PAGE BREAK--- 2014 2015 Employer's proportion of the net pension liability (asset) % 0.058235% 0.061310% Employer's proportionate share of the net pension liability (asset) $ (706,269) (738,921) TOTAL $ (706,269) (738,921) Employer's covered employee payroll $ 242,276 67,708 Employer's proportionate share of the net pension liability as a percentage of covered employee payroll % ‐291.51% ‐1091.33% Plan fiduciary net position as a percentage of the total pension liability % 126.91 127.36% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Proportionate Share of the Net Pension Liability LEOFF 1 2015 Comprehensive Annual Financial Report 71 City of Redmond ---PAGE BREAK--- 2014 2015 Employer's proportion of the net pension liability (asset) % 0.863922% 0.905449% Employer's proportionate share of the net pension liability (asset) $ (11,464,616) (9,306,205) State's proportionate share of the net pension liability (asset) associated with the employer $ (7,414,046) (6,153,272) TOTAL $ (18,878,662) (15,459,477) Employer's covered employee payroll $ 24,636,066 26,650,217 Employer's proportionate share of the net pension liability as a percentage of covered employee payroll % ‐46.54% ‐34.92% Plan fiduciary net position as a percentage of the total pension liability % 116.75 111.67% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Proportionate Share of the Net Pension Liability LEOFF 2 2015 Comprehensive Annual Financial Report 72 City of Redmond ---PAGE BREAK--- 2014 2015 Statutorily or contractually required contributions $ 28,195 20,005 Contributions in relation to the statutorily or contractually required contributions $ (28,195) (20,005) Contribution deficiency (excess) $ 0 0 Covered employer payroll $ 312,232 218,317 Contributions as a percentage of covered employee payroll % 9.03% 9.16% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Employer Contributions PERS 1 2015 Comprehensive Annual Financial Report 73 City of Redmond ---PAGE BREAK--- 2014 2015 Statutorily or contractually required contributions $ 1,510,166 1,645,522 Contributions in relation to the statutorily or contractually required contributions $ (1,510,166) (1,645,522) Contribution deficiency (excess) $ 0 0 Covered employer payroll $ 30,236,495 30,078,969 Contributions as a percentage of covered employee payroll % 4.99% 5.47% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Employer Contributions PERS 2, 3 2015 Comprehensive Annual Financial Report 74 City of Redmond ---PAGE BREAK--- 2014 2015 Statutorily or contractually required contributions $ 16,636 14,328 Contributions in relation to the statutorily or contractually required contributions $ (16,636) (14,328) Contribution deficiency (excess) $ 0 0 Covered employer payroll $ 262,472 240,933 Contributions as a percentage of covered employee payroll % 6.34% 5.95% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Employer Contributions PSERS 2015 Comprehensive Annual Financial Report 75 City of Redmond ---PAGE BREAK--- 2014 2015 Statutorily or contractually required contributions $ 0 0 Contributions in relation to the statutorily or contractually required contributions $ 0 0 Contribution deficiency (excess) $ 0 0 Covered employer payroll $ 242,276 67,708 Contributions as a percentage of covered employee payroll % 0.00% 0.00% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Employer Contributions LEOFF 1 2015 Comprehensive Annual Financial Report 76 City of Redmond ---PAGE BREAK--- 2014 2015 Statutorily or contractually required contributions $ 1,244,059 1,242,193 Contributions in relation to the statutorily or contractually required contributions $ (1,244,059) (1,242,193) Contribution deficiency (excess) $ 0 0 Covered employer payroll $ 24,636,066 26,650,217 Contributions as a percentage of covered employee payroll % 5.05% 4.66% * Until a full 10‐year trend is compiled, information is presented only for those years for which information is available. As of December 31, 2015 Last 10 Fiscal Years* REQUIRED SUPPLEMENTARY INFORMATION City of Redmond Schedule of Employer Contributions LEOFF 2 2015 Comprehensive Annual Financial Report 77 City of Redmond ---PAGE BREAK--- 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Total Pension Liability(1) Service cost (Entry Age Normal Cost) - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Interest 15,014 10,399 17,645 17,590 20,627 20,705 28,542 28,580 24,961 25,294 Changes of benefit terms - - - - - - - - - - Differences between expected and actual experience 97,140 154,238 (231,779) (1,918) (98,267) (6,793) 223,274 (18,525) 38,329 (21,658) Changes of assumptions - - - - - - - - - - Benefit payments, including refunds of contributions (28,466) (12,372) (12,224) (15,672) (18,834) (13,912) (11,124) (10,055) (13,146) (3,636) Net Change in Total Pension Liability 83,688 152,265 (226,358) - (96,474) - 240,692 - 50,144 - Total Pension Liability - Beginning 483,433 331,168 557,526 557,526 654,000 654,000 413,308 413,308 363,164 363,164 Total Pension Liability - Ending 567,121 $ 483,433 $ 331,168 $ 557,526 $ 557,526 $ 654,000 $ 654,000 $ 413,308 $ 413,308 $ 363,164 $ Plan Fiduciary Net Position Contributions - Employer 146,358 $ 145,808 $ 138,204 $ 127,252 $ 135,412 $ 133,868 $ 119,354 $ 121,832 $ 106,728 $ 98,572 $ Contributions - Member - - - - - - - - - - Net Investment Income 9,511 10,994 12,269 8,757 9,043 128 24,919 30,027 32,031 18,216 Benefit payments, including refunds of contributions (28,466) (12,372) (12,224) (15,672) (18,834) (13,912) (11,124) (10,055) (13,146) (3,636) Administrative Expense (5,500) (5,261) (1,350) (5,264) (1,000) (7,000) - - (1,262) (2,332) Other - - - - - - (2,750) (6,684) (1,329) - Net Change in Plan Fiduciary Net Position: 121,903 139,169 136,899 115,073 124,621 113,084 130,399 135,120 123,022 110,820 Plan Fiduciary Net Position - Beginning 1,484,427 1,345,258 1,208,359 1,093,286 968,665 855,581 725,182 590,062 467,040 356,220 Plan Fiduciary Net Position - Ending 1,606,330 $ 1,484,427 $ 1,345,258 $ 1,208,359 $ 1,093,286 $ 968,665 $ 855,581 $ 725,182 $ 590,062 $ 467,040 $ Net Pension Liability (Asset) - Ending - (1,039,209) $ (1,000,994) $ (1,014,090) $ (650,833) $ (535,760) $ (314,665) $ (201,581) $ (311,874) $ (176,754) $ (103,876) $ Plan fiduciary net position as a percentage of the total pension liability 283.24% 307.06% 406.22% 216.74% 196.10% 148.11% 130.82% 175.46% 142.77% 128.60% Covered employee payroll - $ - $ - $ - $ - $ 91,040 $ 91,040 $ 85,323 $ 82,200 $ 75,804 $ Net pension liability (asset) as a percentage of covered employee payroll n/a n/a n/a n/a n/a -345.63% -221.42% -365.52% -215.03% -137.03% Required Supplementary Information City of Redmond Firefighter's Pension Plan Schedule of Changes in Net Pension Liability Last 10 Fiscal Years 2015 Comprehensive Annual Financial Report 78 City of Redmond ---PAGE BREAK--- 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Actuarially determined contribution - $ - $ - $ - $ (13,832) $ (13,832) $ (15,979) $ - $ 606 $ 606 $ Actual contribution in relation to the above 146,358 $ 145,808 $ 138,204 $ 127,252 $ 135,412 $ 133,868 $ 119,354 $ 121,832 $ 106,728 $ 98,572 $ Contribution deficiency (excess) 146,358 $ 145,808 $ 138,204 $ 127,252 $ 149,244 $ 147,700 $ 135,333 $ 121,832 $ 106,122 $ 97,966 $ Covered employee payroll n/a n/a n/a n/a n/a 91,040 $ 91,040 $ 85,323 $ 82,200 $ 75,804 $ Contributions as a % of covered employee payroll n/a n/a n/a n/a n/a 162.2% 148.7% 142.8% 129.1% 129.2% Notes to Schedule Valuation date: January 1, 2016 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry Age Normal Cost Amortization method Level amortization of the Net Pension Liability as a level dollar amount over a five-year period. Asset valuation method Market value Salary increases 3.50% Investment rate of return 3.20% Growth in membership 0% Postretirement benefit increases 1. Related to salaries 3.50% 2. Related to Consumer Price Index 2.50% Retirement age 65 Mortality Based on the RP-2000 Mortality Table (combined healthy) for males. City of Redmond Firefighter's Pension Plan Schedule of Contributions Last 10 Fiscal Years Required Supplementary Information 2015 Comprehensive Annual Financial Report 79 City of Redmond ---PAGE BREAK--- 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Annual money-weighted rate of return, net of investment expense 0.62% 0.78% 0.97% 0.76% 0.88% 0.01% 2.85% 3.62% 5.99% 4.53% City of Redmond Firefighter's Pension Plan Schedule of Investment Returns Last 10 Fiscal Years Required Supplementary Information 2015 Comprehensive Annual Financial Report 80 City of Redmond ---PAGE BREAK--- Fiscal Year Ended Actuarial Value of Assets Actuarial Accrued Liabilities Entry Age Unfunded Actuarial Accrued Liabilities (UAAL) Funded Ratio Covered Payroll UAAL As a Percentage of Covered Payroll Dec. 31, 2006 - $ 8,512,284 $ 8,512,284 $ 0% 764,518 $ 1113% Dec. 31, 2007 - $ 8,512,284 $ 8,512,284 $ 0% 557,587 $ 1527% Dec. 31, 2008 - $ 8,512,284 $ 8,512,284 $ 0% 446,200 $ 1908% Dec. 31, 2009 - $ 9,290,267 $ 9,290,267 $ 0% 442,308 $ 2100% Dec. 31, 2010 - $ 9,430,652 $ 9,430,652 $ 0% 461,106 $ 2045% Dec. 31, 2011 - $ 9,549,490 $ 9,549,490 $ 0% 480,703 $ 1987% Dec. 31, 2012 - $ 14,420,000 $ 14,420,000 $ 0% 262,000 $ 5504% Dec. 31, 2013 - $ 14,664,000 $ 14,664,000 $ 0% 249,000 $ 5889% Dec. 31, 2014 - $ 14,893,000 $ 14,893,000 $ 0% 249,000 $ 5981% Dec. 31, 2015 - $ 17,029,000 $ 17,029,000 $ 0% 23,000 $ 74039% Schedule of Funding Progress Required Supplementary Information LEOFF I Medical Benefits 2015 Comprehensive Annual Financial Report 81 City of Redmond ---PAGE BREAK--- Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are restricted to/committed for expenditures for particular purposes. The Recreation Activities Fund provides salaries, equipment and supplies needed to conduct year-round recreational programs. Funding comes from class fees, sports leagues, and transfers from the General Fund. The Development Review Fund was established in 2013 to provide support services for large, private development in the City. Funding is provided through fees negotiated with developers. The Cable Access Fund was established in 2003 to monitor expenditures for cable access equipment, public education, service enhancement, and government access to television. The primary source of revenues is fees and contributions from cable television subscribers. The Operating Grants Fund includes expenditures for special studies and pilot programs to support commute trip reduction in partnership with area employers. It is funded by federal, state, and local grants, private contributions and a portion of the business tax surcharge. The Advanced Life Support Fund accounts for the provision of Advanced Life Support (ALS) services (paramedic) within the City and Fire District 34 areas. The City provides these services in contract with King County Medic One and the County provides the resources for this service. The Aid Car Donation Fund accounts for donations of monies for the acquisition, maintenance and repair of a medical emergency aid car and other fire department emergency equipment and supplies. The Real Estate Excise Tax Fund accounts for proceeds of the ½ of 1% Real Estate Excise Tax. This tax is collected by King County at the time property is sold in the City of Redmond and then remitted to the City. These funds must be used for construction of capital projects. The Felony Seizure Fund accounts for monies and proceeds from the sale of property seized during drug and felony investigations. These funds are legally required to be expended on drug and felony related police activities. The Tourism Fund is supported by a 1% special excise tax on overnight lodging in Redmond. This tax provides resources to support tourism development and promotion activities in Redmond. The Solid Waste Recycling Fund accounts for monies received primarily through garbage franchise fees. Fund expenditures made are to develop, administer and improve solid waste collection and education. Debt Service Funds Debt Service Funds account for the accumulation of resources for and the payment of general obligation and special assessment bonds. The Special Levy Fund accounts for the debt service on the voter-approved general obligation bonds. There are currently no bond issues outstanding that are paid from this fund. In 1994 the City issued bonds to purchase land and build a new fire station. These bonds were refunded in 2008. These bonds were retired in 2013. The Regular Levy Fund accounts for the debt service on City Council approved (councilmanic) general obligation debt. These currently include 2008 long-term general obligation bonds to fund the Bear Creek Parkway expansion as well as refunding the 1998 Fire bonds, 2011 long-term general obligation bonds to fund Park improvements, and 2013 City Hall refunding bonds. 2015 Comprehensive Annual Financial Report 82 City of Redmond ---PAGE BREAK--- Page 1 of 4 Recreation Development Cable Operating Activities Review Access Grants ASSETS Cash and cash equivalents $ 123,109 $ 73,284 $ 142,602 $ 40,215 Cash with outside agency - - - - Investments 774,818 461,227 897,496 706,512 Receivables: Taxes - - - - Accounts 66,854 - 171 Interest 1,681 1,001 2,038 1,565 Due from other funds - - - - Due from other governments - 151,714 - 63,863 Restricted assets: Deposit investment - - - - Cash - - - 72,042 Total Assets $ 966,462 $ 687,226 $ 1,042,136 $ 884,368 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 18,949 $ - $ 27,649 $ 10,167 Employee wages payable 40,485 24,608 - 21,597 Due to other funds - - - - Due to other governments 3,852 - - 120,974 Payable from restricted assets: Deposits payable - - - - Deferred-unearned revenue 128,568 - - - Total Liabilities 191,854 24,608 27,649 152,738 Fund balances Nonspendable - - - - Spendable: Restricted - - 1,014,487 731,630 Committed 774,608 662,618 - - Assigned - - - - Unassigned - - - - Total Fund Balances 774,608 662,618 1,014,487 731,630 Total Liabilities and Fund Balances $ 966,462 $ 687,226 $ 1,042,136 $ 884,368 NONMAJOR GOVERNMENTAL FUNDS CITY OF REDMOND COMBINING BALANCE SHEET December 31, 2015 Special Revenue Funds 2015 Comprehensive Annual Financial Report 83 City of Redmond ---PAGE BREAK--- ASSETS Cash and cash equivalents Cash with outside agency Investments Receivables: Taxes Accounts Interest Due from other funds Due from other governments Restricted assets: Deposit investment Cash Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Employee wages payable Due to other funds Due to other governments Payable from restricted assets: Deposits payable Deferred-unearned revenue Total Liabilities Fund balances Nonspendable Spendable: Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Page 2 of 4 Special Revenue Funds Advanced Aid Car/ Real Estate Life Support Dispatch Donation Excise Tax $ - $ 54,313 $ 594,074 - - - - 341,831 3,738,944 - - 611,507 - - - - 778 9,703 - - - 1,608,122 - - - - - - - - $ 1,608,122 $ 396,922 $ 4,954,228 $ 13,469 $ 1,310 $ - 192,275 - - 128,482 - - 404 - - - - - - - - 334,630 1,310 - - - - 1,273,492 395,612 4,954,228 - - - - - - - - - 1,273,492 395,612 4,954,228 $ 1,608,122 $ 396,922 $ 4,954,228 CITY OF REDMOND December 31, 2015 2015 Comprehensive Annual Financial Report 84 City of Redmond ---PAGE BREAK--- ASSETS Cash and cash equivalents Cash with outside agency Investments Receivables: Taxes Accounts Interest Due from other funds Due from other governments Restricted assets: Deposit investment Cash Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Employee wages payable Due to other funds Due to other governments Payable from restricted assets: Deposits payable Deferred-unearned revenue Total Liabilities Fund balances Nonspendable Spendable: Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Page 3 of 4 Special Revenue Funds Felony Solid Waste Seizure Tourism Recycling Total $ 6,545 $ 83,841 $ 67,815 $ 1,185,798 10,000 - - 10,000 40,857 527,675 426,811 7,916,171 - - - 611,507 - - - 67,025 113 1,201 943 19,023 - - - - - - 188,528 2,012,227 335 - - 335 - - - 72,042 $ 57,850 $ 612,717 $ 684,097 $ 11,894,128 $ - $ 32,834 $ 8,828 $ 113,206 - - 14,317 293,282 - - - 128,482 36 - - 125,266 335 - - 335 - - - 128,568 371 32,834 23,145 789,139 - - - - 57,479 579,883 660,952 9,667,763 - - - 1,437,226 - - - - - - - - 57,479 579,883 660,952 11,104,989 $ 57,850 $ 612,717 $ 684,097 $ 11,894,128 CITY OF REDMOND December 31, 2015 2015 Comprehensive Annual Financial Report 85 City of Redmond ---PAGE BREAK--- ASSETS Cash and cash equivalents Cash with outside agency Investments Receivables: Taxes Accounts Interest Due from other funds Due from other governments Restricted assets: Deposit investment Cash Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Employee wages payable Due to other funds Due to other governments Payable from restricted assets: Deposits payable Deferred-unearned revenue Total Liabilities Fund balances Nonspendable Spendable: Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Page 4 of 4 Total Nonmajor Regular Levy Governmental GO Bonds Total Funds $ 145,272 $ 145,272 $ 1,331,070 - - 10,000 914,303 914,303 8,830,474 - - 611,507 - - 67,025 6,032 6,032 25,055 - - - - - 2,012,227 - - - 335 - - 72,042 $ 1,065,607 $ 1,065,607 12,959,735 $ - $ - $ 113,206 - - 293,282 - - 128,482 - - 125,266 - - - 335 - - 128,568 - - 789,139 - - - 1,065,607 1,065,607 10,733,370 - - 1,437,226 - - - - - - 1,065,607 1,065,607 12,170,596 $ 1,065,607 $ 1,065,607 $ 12,959,735 December 31, 2015 Debt Service Fund 2015 Comprehensive Annual Financial Report 86 City of Redmond ---PAGE BREAK--- Page 1 of 4 Recreation Development Cable Operating Activities Review Access Grants REVENUES Taxes $ - $ - $ - $ - Licenses and Permits - 1,099,484 - 104,264 Contributions 28,004 - 7,879 - Intergovernmental - - - 174,831 Charges for services 2,338,196 - - - Fines and forfeitures - - - - Investment income 9,432 4,122 9,061 6,455 Net change in fair value of investment (2,281) (1,358) (2,642) (2,080) Miscellaneous 308,854 - - - Total Revenues 2,682,205 1,102,248 14,298 283,470 EXPENDITURES Current General government - - - - Security of persons and property - - - - Physical environment - - - - Transportation - - - 1,292,403 Economic environment - 709,391 99,809 45 Social Services 273,505 - - - Culture and recreation 2,378,644 - - - Capital outlay - - 69,121 - Debt service: Principal - - - - Interest and debt issue costs - - - - Total Expenditures 2,652,149 709,391 168,930 1,292,448 30,056 392,857 (154,632) (1,008,978) OTHER FINANCING SOURCES (USES) Refunding bonds issued - - - - Premium on refunding bonds issued - - - - Payment to refunded bond escrow agent - - - - Disposition of capital assets - - - - Transfers in - - - 1,006,666 Transfers out - - - - Total other financing sources (uses) - - - 1,006,666 Net change in fund balances 30,056 392,857 (154,632) (2,312) Fund balances-beginning 744,552 269,761 1,169,119 733,942 Fund balances-ending $ 774,608 $ 662,618 $ 1,014,487 $ 731,630 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Excess (deficiency) of revenues over (under) expenditures For the Year Ended December 31, 2015 Special Revenue Funds 2015 Comprehensive Annual Financial Report 87 City of Redmond ---PAGE BREAK--- REVENUES Taxes Licenses and Permits Contributions Intergovernmental Charges for services Fines and forfeitures Investment income Net change in fair value of investment Miscellaneous Total Revenues EXPENDITURES Current General government Security of persons and property Physical environment Transportation Economic environment Social Services Culture and recreation Capital outlay Debt service: Principal Interest and debt issue costs Total Expenditures OTHER FINANCING SOURCES (USES) Refunding bonds issued Premium on refunding bonds issued Payment to refunded bond escrow agent Disposition of capital assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances-beginning Fund balances-ending Excess (deficiency) of revenues over (under) expenditures Page 2 of 4 Advanced Aid Car/ Real Estate Life Support Dispatch Donations Excise Tax $ - $ - $ 7,151,603 - - - 15 1,922 - 8,062 - - 6,594,002 - - - 5,100 - 252 3,166 42,880 - (1,006) (11,006) - 52,317 - 6,602,331 61,499 7,183,477 - - - 6,454,742 30,852 - - - - - - - - - - - - - - - - - 11,017 - - - - - - - 6,454,742 41,869 - 147,589 19,630 7,183,477 - - - - - - - - - - - - - - - - - (7,947,283) - - (7,947,283) 147,589 19,630 (763,806) 1,125,903 375,982 5,718,034 $ 1,273,492 $ 395,612 $ 4,954,228 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Special Revenue Funds 2015 Comprehensive Annual Financial Report 88 City of Redmond ---PAGE BREAK--- REVENUES Taxes Licenses and Permits Contributions Intergovernmental Charges for services Fines and forfeitures Investment income Net change in fair value of investment Miscellaneous Total Revenues EXPENDITURES Current General government Security of persons and property Physical environment Transportation Economic environment Social Services Culture and recreation Capital outlay Debt service: Principal Interest and debt issue costs Total Expenditures OTHER FINANCING SOURCES (USES) Refunding bonds issued Premium on refunding bonds issued Payment to refunded bond escrow agent Disposition of capital assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances-beginning Fund balances-ending Excess (deficiency) of revenues over (under) expenditures Page 3 of 4 Felony Solid Waste Seizure Tourism Recycling Total $ - $ 387,138 $ - $ 7,538,741 - - - 1,203,748 - - - 37,820 - - 160,590 343,483 - - 553,222 9,485,420 10,802 - - 15,902 494 4,833 4,176 84,871 (121) (1,553) (1,256) (23,303) - - 70,904 432,075 11,175 390,418 787,636 19,118,757 - - - - 10,540 - - 6,496,134 - - 640,223 640,223 - - - 1,292,403 - 161,552 - 970,797 - - - 273,505 - - - 2,378,644 - - - 80,138 - - - - - - - - 10,540 161,552 640,223 12,131,844 635 228,866 147,413 6,986,913 - - - - - - - - - - - - - - - - - - - 1,006,666 - (137,863) - (8,085,146) - (137,863) - (7,078,480) 635 91,003 147,413 (91,567) 56,844 488,880 513,539 11,196,556 $ 57,479 $ 579,883 $ 660,952 $ 11,104,989 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Special Revenue Funds 2015 Comprehensive Annual Financial Report 89 City of Redmond ---PAGE BREAK--- REVENUES Taxes Licenses and Permits Contributions Intergovernmental Charges for services Fines and forfeitures Investment income Net change in fair value of investment Miscellaneous Total Revenues EXPENDITURES Current General government Security of persons and property Physical environment Transportation Economic environment Social Services Culture and recreation Capital outlay Debt service: Principal Interest and debt issue costs Total Expenditures OTHER FINANCING SOURCES (USES) Refunding bonds issued Premium on refunding bonds issued Payment to refunded bond escrow agent Disposition of capital assets Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances-beginning Fund balances-ending Excess (deficiency) of revenues over (under) expenditures Page 4 of 4 Total Nonmajor Regular Levy Governmental GO Bonds Total Funds $ 1,242,078 $ 1,242,078 $ 8,780,819 - - 1,203,748 - - 37,820 - - 343,483 384,905 384,905 9,870,325 - - 15,902 9,091 9,091 93,962 (2,691) (2,691) (25,994) - - 432,075 1,633,383 1,633,383 20,752,140 - - - - - 6,496,134 - - 640,223 - - 1,292,403 - - 970,797 - - 273,505 - - 2,378,644 - - 80,138 - 2,910,000 2,910,000 2,910,000 2,463,314 2,463,314 2,463,314 5,373,314 5,373,314 17,505,158 (3,739,931) (3,739,931) 3,246,982 9,280,000 9,280,000 9,280,000 716,063 716,063 716,063 (9,996,063) (9,996,063) (9,996,063) - - - 4,774,341 4,774,341 5,781,007 - - (8,085,146) 4,774,341 4,774,341 (2,304,139) 1,034,410 1,034,410 942,843 31,197 31,197 11,227,753 $ 1,065,607 $ 1,065,607 $ 12,170,596 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Debt Service Fund 2015 Comprehensive Annual Financial Report 90 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Intergovernmental $ 10,842,122 $ 10,842,122 $ 3,913,775 $ 3,913,775 $ (6,928,347) Contributions 248,133 248,133 68,500 68,500 (179,633) Charges for services 8,926,684 8,926,684 1,945,511 1,945,511 (6,981,173) Investment income 667,574 667,574 255,961 255,961 (411,613) Net change in fair value of investment - - (65,807) (65,807) (65,807) Miscellaneous 374,156 374,156 178,602 178,602 (195,554) Total Revenues 21,058,669 21,058,669 6,296,542 6,296,542 (14,762,127) EXPENDITURES Current Physical environment 20,000 20,000 - - 20,000 Capital outlay 50,378,946 50,378,946 20,438,118 20,438,118 29,940,828 Debt service Principal - 1,385,000 751,886 751,886 633,114 Interest - 409,176 218,847 218,847 190,329 Total Expenditures 50,398,946 52,193,122 21,408,851 21,408,851 30,784,271 Excess (deficiency) of revenues over (under) expenditures (29,340,277) (31,134,453) (15,112,309) (15,112,309) 16,022,144 OTHER FINANCING SOURCES (USES) Bond/loan proceeds 5,250,000 5,250,000 - - (5,250,000) Transfers in 20,301,961 20,301,961 10,409,639 10,409,639 (9,892,322) Transfers out (10,227,883) (10,227,883) (3,046,300) (3,046,300) 7,181,583 Total other financing sources and uses 15,324,078 15,324,078 7,363,339 7,363,339 (7,960,739) Net change in fund balance (14,016,199) (15,810,375) (7,748,970) (7,748,970) 8,061,405 Fund balance-beginning 28,338,986 33,783,941 33,783,942 33,783,942 1 Prior period adjustment - - (496,466) (496,466) (496,466) Fund balance-ending $ 14,322,787 $ 17,973,566 $ 25,538,506 $ 25,538,506 $ 7,564,940 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CAPITAL IMPROVEMENTS PROGRAM CAPITAL PROJECTS FUNDS For the year ended December 31, 2015 2015 Comprehensive Annual Financial Report 91 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Charges for services $ 4,665,269 $ 4,665,269 $ 2,338,196 $ 2,338,196 $ (2,327,073) Contributions 16,208 16,208 28,004 28,004 11,796 Investment income 24,312 24,312 9,432 9,432 (14,880) Net change in fair value of investment - - (2,281) (2,281) (2,281) Miscellaneous 615,914 615,914 308,854 308,854 (307,060) Total Revenues 5,321,703 5,321,703 2,682,205 2,682,205 (2,639,498) EXPENDITURES General government 464,843 - - - - Social Services 280,711 527,017 273,505 273,505 253,512 Culture and recreation 4,920,253 5,138,790 2,378,644 2,378,644 2,760,146 Total Expenditures 5,665,807 5,665,807 2,652,149 2,652,149 3,013,658 Excess (deficiency) of revenues over (under) expenditures (344,104) (344,104) 30,056 30,056 374,160 Net change in fund balance (344,104) (344,104) 30,056 30,056 374,160 Fund balance-beginning 629,564 744,551 744,552 744,552 1 Fund balance-ending $ 285,460 $ 400,447 $ 774,608 $ 774,608 $ 374,161 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL RECREATION ACTIVITIES SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 92 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Licenses and permits $ 700,344 $ 1,479,359 $ 1,099,484 $ 1,099,484 $ (379,875) Charges for services 946 946 - - (946) Investment income 3,531 3,531 4,122 4,122 591 Net change in fair value of investment - - (1,358) (1,358) (1,358) Total Revenues 704,821 1,483,836 1,102,248 1,102,248 (381,588) EXPENDITURES Economic Environment 1,249,188 1,753,597 709,390 709,390 1,044,207 Total Expenditures 1,249,188 1,753,597 709,390 709,390 1,044,207 Excess (deficiency) of revenues over (under) expenditures (544,367) (269,761) 392,858 392,858 662,619 Net change in fund balance (544,367) (269,761) 392,858 392,858 662,619 Fund balance-beginning 700,131 269,761 269,761 269,761 - Fund balance-ending $ 155,764 $ - $ 662,619 $ 662,619 $ 662,619 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DEVELOPMENT REVIEW FUND 2015 Comprehensive Annual Financial Report 93 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Contributions $ - $ - $ 7,879 $ 7,879 $ 7,879 Investment income (10,000) (20,000) 9,061 9,061 29,061 Net change in fair value of investment - - (2,642) (2,642) (2,642) Total Revenues (10,000) (20,000) 14,298 14,298 34,298 EXPENDITURES Economic Environment 130,950 266,910 99,809 99,809 167,101 Capital outlay 50,000 50,000 69,121 69,121 (19,121) Total Expenditures 180,950 316,910 168,930 168,930 147,980 Excess (deficiency) of revenues over (under) expenditures (190,950) (336,910) (154,632) (154,632) 182,278 Net change in fund balance (190,950) (336,910) (154,632) (154,632) 182,278 Fund balance-beginning 959,974 1,169,118 1,169,119 1,169,119 1 Fund balance-ending $ 769,024 $ 832,208 $ 1,014,487 $ 1,014,487 $ 182,279 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CABLE ACCESS SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 94 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2013-2015 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Intergovernmental $ 953,203 $ 953,203 $ 174,831 $ 174,831 $ (778,372) Licenses and Permits - - 104,264 104,264 104,264 Investment income 10,569 10,569 6,455 6,455 (4,114) Net change in fair value of investment - - (2,080) (2,080) (2,080) Total Revenues 963,772 963,772 283,470 283,470 (680,302) EXPENDITURES Transportation 3,450,104 3,399,575 1,292,403 1,292,403 2,107,172 Economic environment - - 45 45 (45) Total Expenditures 3,450,104 3,399,575 1,292,448 1,292,448 2,107,127 Excess (deficiency) of revenues over (under) expenditures (2,486,332) (2,435,803) (1,008,978) (1,008,978) 1,426,825 OTHER FINANCING SOURCES (USES) Transfers in 2,023,642 2,023,642 1,006,666 1,006,666 (1,016,976) Total other financing sources (uses) 2,023,642 2,023,642 1,006,666 1,006,666 (1,016,976) Net change in fund balance (462,690) (412,161) (2,312) (2,312) 409,849 Fund balance-beginning 503,763 733,942 733,942 733,942 - Fund balance-ending $ 41,073 $ 321,781 $ 731,630 $ 731,630 $ 409,849 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL OPERATING GRANTS SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 95 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Intergovernmental $ - $ - $ 8,062 $ 8,062 $ 8,062 Charges for services 13,216,371 13,216,371 6,594,002 6,594,002 (6,622,369) Investment income - - 252 252 252 Net change in fair value of investments - - - - - Contributions - - 15 15 15 Total Revenues 13,216,371 13,216,371 6,602,331 6,602,331 (6,614,040) EXPENDITURES Security of persons and property 12,296,028 12,296,028 6,454,742 6,454,742 5,841,286 Total Expenditures 12,296,028 12,296,028 6,454,742 6,454,742 5,841,286 Excess (deficiency) of revenues over (under) expenditures 920,343 920,343 147,589 147,589 (772,754) Net change in fund balance 920,343 920,343 147,589 147,589 (772,754) Fund balance-beginning 451,250 1,125,903 1,125,903 1,125,903 - Fund balance-ending $ 1,371,593 $ 2,046,246 $ 1,273,492 $ 1,273,492 $ (772,754) For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ADVANCED LIFE SUPPORT SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 96 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Contributions 8,104 8,104 1,922 1,922 (6,182) Fines and forfeitures - - 5,100 5,100 5,100 Investment income 6,686 6,686 3,166 3,166 (3,520) Net change in fair value of investment - - (1,006) (1,006) (1,006) Miscellaneous 145,874 145,874 52,317 52,317 (93,557) Total Revenues 160,664 160,664 61,499 61,499 (99,165) EXPENDITURES Security of persons and property 60,000 60,000 30,852 30,852 29,148 Capital outlay 150,000 150,000 11,017 11,017 138,983 Total Expenditures 210,000 210,000 41,869 41,869 168,131 Excess (deficiency) of revenues over (under) expenditures (49,336) (49,336) 19,630 19,630 68,966 Net change in fund balance (49,336) (49,336) 19,630 19,630 68,966 Fund balance-beginning 333,138 375,981 375,982 375,982 1 Fund balance-ending $ 283,802 $ 326,645 $ 395,612 $ 395,612 $ 68,967 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AID CAR DISPATCH SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 97 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Taxes $ 8,363,600 $ 8,863,600 $ 7,151,603 $ 7,151,603 $ (1,711,997) Investment income - - 42,880 42,880 42,880 Net change in fair value of investment - - (11,006) (11,006) (11,006) Total Revenues 8,363,600 8,863,600 7,183,477 7,183,477 (1,680,123) OTHER FINANCING SOURCES (USES) Transfers out (12,190,883) (12,690,883) (7,947,283) (7,947,283) (4,743,600) Total other financing sources (uses) (12,190,883) (12,690,883) (7,947,283) (7,947,283) (4,743,600) Net change in fund balance (3,827,283) (3,827,283) (763,806) (763,806) 3,063,477 Fund balance-beginning 4,504,932 5,718,034 5,718,034 5,718,034 - Fund balance-ending $ 677,649 $ 1,890,751 $ 4,954,228 $ 4,954,228 $ 3,063,477 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL REAL ESTATE EXCISE TAX SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 98 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Fines and forfeitures $ 6,000 $ 6,000 $ 10,801 $ 10,801 $ 4,801 Investment income 1,200 1,200 494 494 (706) Net change in fair value of investment - - (121) (121) (121) Total Revenues 7,200 7,200 11,174 11,174 3,974 EXPENDITURES Security of persons and property - - 10,540 10,540 (10,540) Total Expenditures - - 10,540 10,540 (10,540) Excess (deficiency) of revenues over (under) expenditures 7,200 7,200 634 634 (6,566) Net change in fund balance 7,200 7,200 634 634 (6,566) Fund balance-beginning 34,765 56,844 56,844 56,844 - Fund balance-ending $ 41,965 $ 64,044 $ 57,478 $ 57,478 $ (6,566) For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FELONY SEIZURE SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 99 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Taxes $ 774,676 $ 774,676 $ 387,138 $ 387,138 $ (387,538) Investment income 9,855 9,855 4,833 4,833 (5,022) Net change in fair value of investment - - (1,553) (1,553) (1,553) Total Revenues 784,531 784,531 390,418 390,418 (394,113) EXPENDITURES Economic development 444,980 444,980 161,552 161,552 283,428 Total Expenditures 444,980 444,980 161,552 161,552 283,428 Excess (deficiency) of revenues over (under) expenditures 339,551 339,551 228,866 228,866 (110,685) OTHER FINANCING SOURCES (USES) Transfers out (280,000) (280,000) (137,863) (137,863) 142,137 Total other financing sources (uses) (280,000) (280,000) (137,863) (137,863) 142,137 Net change in fund balance 59,551 59,551 91,003 91,003 31,452 Fund balance-beginning 485,359 488,880 488,880 488,880 - Fund balance-ending $ 544,910 $ 548,431 $ 579,883 $ 579,883 $ 31,452 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL TOURISM SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 100 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Intergovernmental $ 267,300 $ 267,300 $ 160,590 $ 160,590 $ (106,710) Charges for services 1,237,119 1,237,119 553,222 553,222 (683,897) Investment income 5,359 5,359 4,176 4,176 (1,183) Net change in fair value of investment - - (1,256) (1,256) (1,256) Miscellaneous - - 70,904 70,904 70,904 Total Revenues 1,509,778 1,509,778 787,636 787,636 (722,142) EXPENDITURES Physical environment 1,549,058 1,549,058 640,223 640,223 908,835 Total Expenditures 1,549,058 1,549,058 640,223 640,223 908,835 Excess (deficiency) of revenues over (under) expenditures (39,280) (39,280) 147,413 147,413 186,693 Net change in fund balance (39,280) (39,280) 147,413 147,413 186,693 Fund balance-beginning 466,405 513,539 513,539 513,539 - Fund balance-ending $ 427,125 $ 474,259 $ 660,952 $ 660,952 $ 186,693 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SOLID WASTE RECYCLING SPECIAL REVENUE FUND 2015 Comprehensive Annual Financial Report 101 City of Redmond ---PAGE BREAK--- Variance with Original Final Actual Final Budget Budget Budget 2015 2015-2016 Positive 2015-2016 2015-2016 Actual Biennium (Negative) REVENUES Taxes $ 2,513,966 $ 2,513,966 $ 1,242,078 $ 1,242,078 $ (1,271,888) Charges for services 770,447 770,447 384,905 384,905 (385,542) Investment income - - 9,091 9,091 9,091 Net change in fair value of investment - - (2,691) (2,691) (2,691) Total Revenues 3,284,413 3,284,413 1,633,383 1,633,383 (1,651,030) EXPENDITURES Principal 10,749,112 6,110,000 2,910,000 2,910,000 3,200,000 Interest 1,830 5,292,749 2,463,314 2,463,314 2,829,435 Total Expenditures 10,750,942 11,402,749 5,373,314 5,373,314 6,029,435 Excess (deficiency) of revenues over (under) expenditures (7,466,529) (8,118,336) (3,739,931) (3,739,931) 4,378,405 OTHER FINANCING SOURCES (USES) Refunding bonds issued - 22,607,231 9,280,000 9,280,000 (13,327,231) Premium on refunding bonds issued - 249,118 716,063 716,063 466,945 Payment to refunded bond escrow agent (22,856,349) (9,996,063) (9,996,063) 12,860,286 Transfers in 7,464,698 7,464,698 4,774,341 4,774,341 (2,690,357) Transfers out - (7,000,000) - - 7,000,000 Total other financing sources (uses) 7,464,698 464,698 4,774,341 4,774,341 4,309,643 Net change in fund balance (1,831) (7,653,638) 1,034,410 1,034,410 8,688,048 Fund balance-beginning 29,396 31,197 31,197 31,197 - Fund balance-ending $ 27,565 $ (7,622,441) $ 1,065,607 $ 1,065,607 $ 8,688,048 For the year ended December 31, 2015 CITY OF REDMOND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL REGULAR LEVY DEBT SERVICE FUND 2015 Comprehensive Annual Financial Report 102 City of Redmond ---PAGE BREAK--- Internal Service Funds Internal Service Funds are used to account for the financing of goods and services provided by one department or agency to another department or agency of the City. The Fleet Maintenance Fund accounts for the cost of maintaining all City vehicles and construction equipment except fire equipment. All costs, including depreciation, are included in establishing the rate to be charged to each department. The Insurance Fund accounts for the payment of all City insurance premiums and claims for which each City department is charged. The Medical Self-Insurance Fund accounts for all revenues, expenses and reserves associated with the City's medical self-insurance program. The Worker’s Compensation Fund accounts for all revenues, expenses, and reserves associated with the City’s self-insurance program workman’s compensation. The Information Technology Fund accounts for the costs of information technology implementation, management, and support for all City departments. 2015 Comprehensive Annual Financial Report 103 City of Redmond ---PAGE BREAK--- Page 1 of 2 Fleet Medical Maintenance Insurance Self-Insurance ASSETS Current assets: Cash and cash equivalents $ 666,789 104,173 1,449,407 Investments 4,196,591 655,635 9,122,186 Receivables: Accounts and contracts - - 80,783 Interest 9,479 1,487 20,752 Inventory 37,012 - - Prepaid Insurance - 453,171 - Total current assets 4,909,871 1,214,466 10,673,128 Noncurrent assets: Land 584,292 - - Buildings 510,196 - - Improvements other than buildings 248,876 - - Equipment 12,909,602 - - Construction in progress 27,248 - - Less accumulated depreciation (9,128,440) - - Total capital assets (net of depreciation) 5,151,774 - - Total noncurrent assets 5,151,774 - - Total Assets $ 10,061,645 1,214,466 10,673,128 Deferred outflow of resources: Pension GASB 68 41,946 4,492 141 Total deferred outflows 41,946 4,492 141 Total assets and deferred outflows 10,103,591 1,218,958 10,673,269 LIABILITIES Current liabilities: Accounts payable $ 67,720 126,642 997,591 Employee wages payable 23,585 2,112 11 Compensated absences 44,218 5,023 185 Due to other governments 149 - - Total current liabilities 135,672 133,777 997,787 Noncurrent liabilities: Compensated absences 11,055 1,256 46 Net Pension Liability 343,743 36,811 1,157 Total noncurrent liabilities 354,798 38,067 1,203 Total Liabilities 490,470 171,844 998,990 Deferred inflow of resources: Pension GASB 68 52,558 5,628 177 Total deferred inflows 52,558 5,628 177 Total liabilities and deferred inflows 543,028 177,472 999,167 NET POSITION Net investment in capital assets 5,151,774 - - Unrestricted 4,408,789 1,041,486 9,674,102 Total net position $ 9,560,563 $ 1,041,486 $ 9,674,102 The notes to the financial statements are an integral part of this statement. December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS 2015 Comprehensive Annual Financial Report 104 City of Redmond ---PAGE BREAK--- Page 2 of 2 Workers' Information Compensation Technology Total ASSETS Current assets: Cash and cash equivalents $ 110,861 273,929 2,605,159 Investments 697,728 1,724,034 16,396,174 Receivables: Accounts and contracts - - 80,783 Interest 1,579 3,405 36,702 Inventory - - 37,012 Prepaid Insurance - - 453,171 Total current assets 810,168 2,001,368 19,609,001 Noncurrent assets: Land - - 584,292 Buildings - 109,298 619,494 Improvements other than buildings - 107,322 356,198 Equipment - 830,248 13,739,850 Construction in progress - 64,122 91,370 Less accumulated depreciation - (276,742) (9,405,182) Total capital assets (net of depreciation) - 834,248 5,986,022 Total noncurrent assets - 834,248 5,986,022 Total Assets $ 810,168 2,835,616 25,595,023 Deferred outflow of resources: Pension GASB 68 7,873 229,913 284,365 Total deferred outflows 7,873 229,913 284,365 Total assets and deferred outflows 818,041 3,065,529 25,879,388 LIABILITIES Current liabilities: Accounts payable $ 210,244 127,680 1,529,877 Employee wages payable 2,996 270,961 299,665 Compensated absences 4,429 153,414 207,269 Due to other governments 34,664 - 34,813 Total current liabilities 252,333 552,055 2,071,624 Noncurrent liabilities: Compensated absences 1,107 38,354 51,818 Net Pension Liability 64,522 1,884,126 2,330,359 Total noncurrent liabilities 65,629 1,922,480 2,382,177 Total Liabilities 317,962 2,474,535 4,453,801 Deferred inflow of resources: Pension GASB 68 9,865 288,082 356,310 Total deferred inflows 9,865 288,082 356,310 Total liabilities and deferred inflows 327,827 2,762,617 4,810,111 NET POSITION Net investment in capital assets - 834,248 5,986,022 Unrestricted 490,214 (531,336) 15,083,255 Total net position $ 490,214 $ 302,912 $ 21,069,277 The notes to the financial statements are an integral part of this statement. December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS 2015 Comprehensive Annual Financial Report 105 City of Redmond ---PAGE BREAK--- Page 1 of 2 Fleet Medical Maintenance Insurance Self-Insurance Operating revenues: Charges for services $ 71,952 1,033,455 10,914,301 Charges for replacement 2,378,063 - - Charges for insurance - - - Total operating revenues 2,450,015 1,033,455 10,914,301 Operating expenses: Supplies 139,272 - - Maintenance and operations 1,118,916 1,071,653 11,261,255 Depreciation and amortization 994,313 - - Total Operating Expenses 2,252,501 1,071,653 11,261,255 Operating income (loss) 197,514 (38,198) (346,954) Nonoperating revenues (expenses): Interest and investment revenue 36,010 6,630 80,954 Net change in fair value of the investment (7,196) (1,614) (18,256) Grant income - - - Gain (loss) on disposal of capital assets 121,538 - - Insurance recovery - 5,396 506,343 Lease and other revenue 4,894 730 214,003 Total nonoperating revenues (expenses) 155,246 11,142 783,044 Income (loss) before contributions and transfers 352,760 (27,056) 436,090 Transfers in 11,622 - Transfers out - (11,622) (135,638) Change in net position 364,382 (38,678) 300,452 Total net position - beginning, as previously reported 9,562,844 $ 1,119,430 $ 9,374,884 Changes in Accounting Principles-GASB 68 (366,663) (39,266) (1,234) Total net position - ending $ 9,560,563 $ 1,041,486 $ 9,674,102 The notes to the financial statements are an integral part of this statement. INTERNAL SERVICE FUNDS For the year ended December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION 2015 Comprehensive Annual Financial Report 106 City of Redmond ---PAGE BREAK--- Page 2 of 2 Workers' Information Compensation Technology Total Operating revenues: Charges for services $ - 5,355,029 17,374,737 Charges for replacement - - 2,378,063 Charges for insurance 1,170,182 - 1,170,182 Total operating revenues 1,170,182 5,355,029 20,922,982 Operating expenses: Supplies 71 76,463 215,806 Maintenance and operations 736,695 4,277,128 18,465,647 Depreciation and amortization - 77,487 1,071,800 Total Operating Expenses 736,766 4,431,078 19,753,253 Operating income (loss) 433,416 923,951 1,169,729 Nonoperating revenues (expenses): Interest and investment revenue 4,802 11,953 140,349 Net change in fair value of the investment (2,146) (3,282) (32,494) Grant income 1,156 - 1,156 Gain (loss) on disposal of capital assets - - 121,538 Insurance recovery - - 511,739 Lease and other revenue 2,364 25,078 247,069 Total nonoperating revenues (expenses) 6,176 33,749 989,357 Income (loss) before contributions and transfers 439,592 957,700 2,159,086 Transfers in - - 11,622 Transfers out - - (147,260) Change in net position 439,592 957,700 2,023,448 Total net position - beginning, as previously reported 119,447 $ 1,354,967 $ 21,531,572 Changes in Accounting Principles-GASB 68 (68,825) (2,009,755) (2,485,743) Total net position - ending $ 490,214 $ 302,912 $ 21,069,277 The notes to the financial statements are an integral part of this statement. INTERNAL SERVICE FUNDS For the year ended December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION 2015 Comprehensive Annual Financial Report 107 City of Redmond ---PAGE BREAK--- Page 1 of 2 Fleet Medical Maintenance Insurance Self-Insurance CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 71,952 $ 1,033,455 $ 10,833,518 Cash received for replacement 2,378,063 - - Cash payments to suppliers (996,376) (887,826) (765,981) Cash payments to employees (469,965) (50,690) (10,713,852) Cash payments to other governments (5,823) - - Internal activity - payments to other funds (174,049) (17,724) - Other operating receipts 4,893 6,124 720,346 Net cash provided (used) by operating activities 808,695 83,339 74,031 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Nonoperating transfers in/transfers out 11,622 (11,622) (135,638) Grant proceeds - - - Net cash provided by noncapital financing activities 11,622 (11,622) (135,638) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,157,861) - - Proceeds from sale of other assets 121,538 - - Net cash provided (used) for capital and related financing activities (1,036,323) - - CASH FLOWS FROM INVESTING ACTIVITIES Internal activity, net investment purchases 312,370 (45,383) 312,666 Interest on investments 29,482 4,896 63,416 Net cash provided (used) in investing activities 341,852 (40,487) 376,082 Net increase (decrease) in cash and cash equivalents 125,846 31,230 314,475 Cash and cash equivalents-beginning of year 540,943 72,942 1,134,931 Cash and cash equivalents-end of year $ 666,789 $ 104,172 $ 1,449,406 Cash at the end of the year consists of: Operating fund cash $ 666,789 $ 104,173 $ 1,449,407 Cash and cash equivalents-end of year $ 666,789 $ 104,173 $ 1,449,407 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ 197,514 (38,198) (346,954) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 994,313 - - Decrease (increase) in accounts receivable - - (80,783) Decrease (increase) in inventory 9,304 - - Decrease (increase) in prepaid expenses - (9,417) - Increase (decrease) in accounts payable (406,301) 122,803 (218,778) Increase (decrease) due to other governments (5,823) - - Increase (decrease) in employee wages payable 18,692 1,384 11 Increase (decrease) in compensated absences payable 8,410 1,961 231 Reclassify other income 4,893 6,124 720,346 Increase (decrease) in GASB 68 adjustment (12,307) (1,318) (42) Net cash provided (used) by operating activities $ 808,695 83,339 74,031 Noncash investing, capital and financing activities: Fair value of investments decreased by (12,354) (1,930) (26,853) The notes to the financial statements are an integral part of this statement. For the Year Ended December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS 2015 Comprehensive Annual Financial Report 108 City of Redmond ---PAGE BREAK--- Page 2 of 2 Worker's Information Compensation Technology Totals CASH FLOWS FROM OPERATING ACTIVITIES - Cash received from customers $ 1,170,182 $ 5,355,029 18,464,136 Cash received for replacement - - 2,378,063 Cash payments to suppliers (6,368) (1,566,731) (4,223,282) Cash payments to employees (545,982) (2,497,958) (14,278,447) Cash payments to other governments 6,371 (439) 109 Internal activity - payments to other funds (17,270) (327,418) (536,461) Other operating receipts 2,364 25,076 758,803 Net cash provided (used) by operating activities 609,297 987,559 2,562,921 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Nonoperating transfers in/transfers out - - (135,638) Grant proceeds 1,156 - 1,156 Net cash provided by noncapital financing activities 1,156 - (134,482) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets - (351,864) (1,509,725) Proceeds from sale of other assets - - 121,538 Net cash provided (used) for capital and related financing activities - (351,864) (1,388,187) CASH FLOWS FROM INVESTING ACTIVITIES Internal activity, net investment purchases (522,324) (514,534) (457,205) Interest on investments 1,449 7,986 107,229 Net cash provided (used) in investing activities (520,875) (506,548) (349,976) Net increase (decrease) in cash and cash equivalents 89,578 129,147 690,276 Cash and cash equivalents-beginning of year 21,283 144,784 1,914,883 Cash and cash equivalents-end of year $ 110,861 $ 273,931 $ 2,605,159 Cash at the end of the year consists of: Operating fund cash $ 110,861 $ 273,929 $ 2,605,159 Cash and cash equivalents-end of year $ 110,861 $ 273,929 $ 2,605,159 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) 433,416 923,953 1,169,731 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization - 77,487 1,071,800 Decrease (increase) in accounts receivable - - (80,783) Decrease (increase) in inventory - - 9,304 Decrease (increase) in prepaid expenses - - (9,417) Increase (decrease) in accounts payable 169,695 (252,343) (584,924) Increase (decrease) due to other governments 6,371 (439) 109 Increase (decrease) in employee wages payable 632 245,885 266,604 Increase (decrease) in compensated absences payable (870) 35,399 45,131 Reclassify other income 2,364 25,076 758,803 Increase (decrease) in GASB 68 adjustment (2,311) (67,459) (83,437) Net cash provided (used) by operating activities $ 609,297 987,559 2,562,921 Noncash investing, capital and financing activities: Fair value of investments decreased by (2,054) (5,075) (48,266) The notes to the financial statements are an integral part of this statement. For the Year Ended December 31, 2015 CITY OF REDMOND COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS 2015 Comprehensive Annual Financial Report 109 City of Redmond ---PAGE BREAK--- Agency Funds Agency Funds are used to report resources held by the reporting government in a purely custodial capacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. The Intergovernmental Custodial Fund accounts for revenues which are transferred to other governmental agencies. The Municipal Employees Benefit Trust (MEBT) accounts for retirement monies until they are transferred to an investment firm. In 1975, City employees voted to replace the Federal Social Security Program with this private retirement plan. The Contractor’s Deposit Fund accounts for cash bond deposits received from contractors or private parties and amounts retained from contractor's payments on City projects as a performance guarantee. The Redmond Community Facilities District Fund accounts for the activities of the Redmond Community Facilities District, for which the City provides fiduciary services. 2015 Comprehensive Annual Financial Report 110 City of Redmond ---PAGE BREAK--- Redmond Inter- Community Governmental Contractor's Facilities Custodial MEBT Deposits District Total ASSETS Cash and cash equivalents $ 36,817 $ 51,975 $ 964,648 $ 1,691,749 $ 2,745,189 Investments 232,397 328,079 219,215 10,647,423 11,427,114 Receivables - - - 24,222 24,222 Construction in Progress - - - 938,943 938,943 Total assets $ 269,214 $ 380,054 $ 1,183,863 $ 13,302,337 $ 15,135,468 LIABILITIES Accounts payable $ (1,779) $ - $ - $ 727 $ (1,052) Due to other governments 270,993 - - - 270,993 Custodial - 380,054 - 13,301,610 13,681,664 Trust account - - 1,183,863 1,183,863 Total liabilities $ 269,214 $ 380,054 $ 1,183,863 $ 13,302,337 $ 15,135,468 CITY OF REDMOND COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS December 31, 2015 2015 Comprehensive Annual Financial Report 111 City of Redmond ---PAGE BREAK--- 1/1/15 12/31/15 BALANCE ADDITIONS DELETIONS BALANCE INTERGOVERNMENTAL CUSTODIAL ASSETS Cash and cash equivalents $ 55,659 $ 1,512,114 $ 1,530,956 $ 36,817 Investments 444,647 232,397 444,647 232,397 Total Assets $ 500,306 $ 1,744,511 $ 1,975,603 $ 269,214 LIABILITIES Accounts payable $ 4,064 $ 15,923 $ 21,766 $ (1,779) Due to other governments 496,242 1,071,149 1,296,398 270,993 Total Liabilities $ 500,306 $ 1,087,072 $ 1,318,164 $ 269,214 MEBT ASSETS Cash and cash equivalents $ 4,292 $ 8,353,766 $ 8,306,083 $ 51,975 Investments 34,290 328,079 34,290 328,079 Total Assets $ 38,582 $ 8,681,845 $ 8,340,373 $ 380,054 LIABILITIES Custodial $ 38,582 $ 9,087,536 $ 8,746,064 $ 380,054 Total Liabilities $ 38,582 $ 9,087,536 $ 8,746,064 $ 380,054 REDMOND COMMUNITY FACILITIES DISTRICT ASSETS Cash and cash equivalents $ 367,126 $ 13,006,723 $ 11,682,100 $ 1,691,749 Investments 2,932,874 10,678,766 2,964,217 10,647,423 Interest receivable - 24,222 - 24,222 Construction in progress - 938,943 - 938,943 Total Assets $ 3,300,000 $ 24,648,654 $ 14,646,317 $ 13,302,337 LIABILITIES Accounts payable $ 833,046 $ 727 $ 833,046 $ 727 Custodial 2,466,954 13,223,579 2,388,923 13,301,610 Total Liabilities $ 3,300,000 $ 13,224,306 $ 3,221,969 $ 13,302,337 CONTRACTORS DEPOSIT ASSETS Cash and cash equivalents $ 636,815 $ 1,085,640 $ 757,807 $ 964,648 Investments 181,242 219,215 181,242 219,215 Total Assets $ 818,057 $ 1,304,855 $ 939,049 $ 1,183,863 LIABILITIES Trust account $ 834,362 $ 516,681 $ 167,180 $ 1,183,863 Accounts payable (16,305) 16,305 - - Total Liabilities $ 818,057 $ 532,986 $ 167,180 $ 1,183,863 TOTALS - ALL AGENCY FUNDS ASSETS Cash and cash equivalents $ 1,063,892 $ 23,958,243 $ 22,276,946 $ 2,745,189 Investments 3,593,053 11,458,457 3,624,396 11,427,114 Interest receivable - 24,222 - 24,222 Construction in progress - 938,943 - 938,943 Total Assets $ 4,656,945 $ 36,379,865 $ 25,901,342 $ 15,135,468 LIABILITIES Accounts payable $ 820,805 $ 32,955 $ 854,812 $ (1,052) Due to other governments 496,242 1,071,149 1,296,398 270,993 Custodial 2,505,536 22,311,115 11,134,987 13,681,664 Trust accounts 834,362 516,681 167,180 1,183,863 Total Liabilities $ 4,656,945 $ 23,931,900 $ 13,453,377 $ 15,135,468 CITY OF REDMOND COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended December 31, 2015 2015 Comprehensive Annual Financial Report 112 City of Redmond ---PAGE BREAK--- CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 2015 Comprehensive Annual Financial Report 113 City of Redmond ---PAGE BREAK--- 2015 2014 Governmental funds capital assets: Land $ 125,880,008 $ 99,983,477 Buildings 75,576,215 75,049,440 Improvements other than buildings 32,940,285 30,527,367 Machinery and equipment 15,228,675 14,817,813 Artwork 548,878 549,078 Infrastructure 260,666,965 241,125,829 Construction in progress 17,534,392 20,013,290 Total governmental funds capital assets $ 528,375,418 $ 482,066,294 Investments in governmental funds capital assets by source: General fund $ 318,438,721 $ 303,181,176 Special revenue funds 9,774,658 9,727,020 Impact fees 39,732,184 38,178,188 Federal grants 19,139,505 15,609,194 General obligation bonds 87,669,373 87,669,373 Private gifts 53,620,977 27,701,343 Total governmental funds capital assets $ 528,375,418 $ 482,066,294 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. CITY OF REDMOND CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE DECEMBER 31, 2015 and 2014 2015 Comprehensive Annual Financial Report 114 City of Redmond ---PAGE BREAK--- Page 1 of 2 Improvements Other than Machinery and Function and Activity Land Buildings Buildings Equipment General government Finance $ - $ - $ - $ 3,449,723 Planning - - - 1,234,940 General government 33,729,179 36,574,075 8,140,840 (1,134,953) Public works/general 5,171,065 2,592,361 319,688 203,138 Total general government 38,900,244 39,166,436 8,460,528 3,752,848 Security Police - 7,531,872 92,458 2,124,660 Fire 3,263,488 17,930,731 287,807 8,599,907 Total security 3,263,488 25,462,603 380,265 10,724,567 Transportation 45,460,834 - - 155,235 Culture and recreation Parks and recreation 38,148,629 9,124,651 23,899,492 562,366 Senior center 106,814 1,822,525 200,000 33,660 Total culture and recreation 38,255,443 10,947,176 24,099,492 596,026 Total governmental funds capital assets $ 125,880,009 $ 75,576,215 $ 32,940,285 $ 15,228,676 December 31, 2015 CITY OF REDMOND CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY 2015 Comprehensive Annual Financial Report 115 City of Redmond ---PAGE BREAK--- Page 2 of 2 Construction in Function and Activity Artwork Infrastructure Progress Total General government Finance $ - $ - $ - $ 3,449,723 Planning - - 230,759 1,465,699 General government 92,998 15,154,300 (17,044,782) 75,511,657 Public works/general - - (1,128,284) 7,157,968 Total general government 92,998 15,154,300 (17,942,307) 87,585,047 Security Police - - 4,359,435 14,108,425 Fire - - 165,157 30,247,090 Total security - - 4,524,592 44,355,515 Transportation - 237,024,140 26,475,272 309,115,481 Culture and recreation Parks and recreation 455,879 8,488,525 4,476,834 85,156,376 Senior center - - - 2,162,999 Total culture and recreation 455,879 8,488,525 4,476,834 87,319,375 Total governmental funds capital assets $ 548,877 $ 260,666,965 $ 17,534,391 $ 528,375,418 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. December 31, 2015 CITY OF REDMOND CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY 2015 Comprehensive Annual Financial Report 116 City of Redmond ---PAGE BREAK--- Governmental Governmental Funds Capital Funds Capital Assets Assets 1-1-2015 Additions Deductions 12-31-2015 Function and Activity General government Finance $ 3,149,032 $ 313,985 $ 13,294 $ 3,449,723 Planning 1,212,550 263,335 10,186 1,465,699 General government 49,793,595 25,920,355 202,293 75,511,657 Public works/general 8,323,572 115,216 1,280,820 7,157,968 Total general government 62,478,749 26,612,891 1,506,593 87,585,047 Security Police 10,735,087 3,499,962 126,624 14,108,425 Fire 30,268,573 11,017 32,500 30,247,090 Total security 41,003,660 3,510,979 159,124 44,355,515 Transportation 296,793,903 35,721,001 23,399,423 309,115,481 Culture and recreation Parks and recreation 79,626,983 6,119,748 590,355 85,156,376 Senior center 2,162,999 - - 2,162,999 Total culture and recreation 81,789,982 6,119,748 590,355 87,319,375 Total governmental funds capital assets $ 482,066,294 $ 71,964,619 $ 25,655,495 $ 528,375,418 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net position. DECEMBER 31, 2015 CITY OF REDMOND CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY 2015 Comprehensive Annual Financial Report 117 City of Redmond ---PAGE BREAK--- Statistical Section This part of the City of Redmond’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 City’s overall financial health. Contents Page Financial Trends 119 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity 125 These schedules contain information to help the reader assess the City’s tax revenue sources. Debt Capacity 130 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information 137 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 139 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. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 2015 Comprehensive Annual Financial Report 118 City of Redmond ---PAGE BREAK--- Schedule 1 Net Position by Component (in thousands) Last Ten Fiscal Years Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental activities Net investment in capital assets 209,981 $ 231,771 $ 238,895 $ 256,114 $ 257,663 $ 266,802 $ 276,636 $ 281,614 $ 292,662 $ 334,538 $ Restricted 23,428 24,320 24,203 25,938 29,689 24,278 23,862 32,721 33,146 42,938 Unrestricted 55,978 67,326 77,758 83,798 57,264 60,788 59,691 55,938 56,107 27,885 Total governmental activities net position 289,387 $ 323,417 $ 340,856 $ 365,850 $ 344,616 $ 351,868 $ 360,189 $ 370,273 $ 381,915 $ 405,361 $ Business-type activities Net investment in capital assets 193,432 $ 212,565 $ 228,193 $ 234,272 $ 242,798 $ 256,195 $ 264,018 $ 282,586 $ 287,209 $ 304,494 $ Restricted - - 7,686 1,372 2,221 2,221 3,367 3,851 6,917 6,917 Unrestricted 22,841 35,988 37,126 48,280 51,970 50,415 57,802 58,123 70,999 67,158 Total business-type activities net position 216,273 $ 248,553 $ 273,005 $ 283,924 $ 296,989 $ 308,831 $ 325,187 $ 344,560 $ 365,125 $ 378,569 $ Primary government Net investment in capital assets 403,413 $ 444,336 $ 467,088 $ 490,386 $ 500,461 $ 522,997 $ 540,654 $ 564,200 $ 579,871 $ 639,032 $ Restricted 23,428 24,320 31,889 27,310 31,910 49,458 27,229 36,572 40,063 49,855 Unrestricted 78,819 103,314 114,884 132,078 109,234 88,244 117,493 114,061 127,106 95,043 Total primary government net position 505,660 $ 571,970 $ 613,861 $ 649,774 $ 641,605 $ 660,699 $ 685,376 $ 714,833 $ 747,040 $ 783,930 $ 2015 Comprehensive Annual Financial Report 119 City of Redmond ---PAGE BREAK--- Schedule 2 Changes in Net Position (in thousands) Last Ten Fiscal Years Page 1 of 2 Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Expenses Governmental activities: General government 14,024 $ 13,390 $ 14,823 $ 18,222 $ 19,571 $ 22,195 $ 16,791 $ 18,474 $ 16,852 $ 21,021 $ Security 34,353 41,105 40,940 40,319 36,764 37,563 45,901 46,494 46,622 49,832 Physical Environment 3,395 3,360 3,962 3,763 5,283 4,382 3,197 2,991 2,950 286 Economic environment 3,458 3,488 3,689 4,664 5,719 5,155 4,979 4,738 4,984 5,851 Transportation 9,533 10,616 16,502 16,530 42,052 13,093 14,695 12,240 12,645 13,339 Mental/physical health 98 98 97 12 13 890 - - - - Culture and Recreation 8,908 9,551 11,104 11,103 14,457 12,819 12,080 12,677 12,754 12,358 Interest on long-term debt 2,012 1,990 2,045 1,891 1,813 3,506 3,310 2,433 2,837 2,731 Total governmental activities expenses 75,781 83,598 93,162 96,504 125,672 99,603 100,953 100,047 99,644 105,418 Business-type activities: Water/wastewater 20,915 22,528 26,467 27,085 25,191 27,519 28,397 30,505 31,032 32,592 UPD Water/wastewater 3,610 5,466 5,908 4,963 5,542 5,752 6,121 5,988 5,981 5,900 Stormwater 5,949 6,188 6,580 6,746 6,407 7,061 7,249 6,935 7,581 7,989 Total business-type activities net position 30,474 34,182 38,955 38,794 37,140 40,332 41,767 43,428 44,594 46,481 Total primary government expenses 106,255 $ 117,780 $ 132,117 $ 135,298 $ 162,812 $ 139,935 $ 142,720 $ 143,475 $ 144,238 $ 151,899 $ Program Revenues Governmental activities: Charges for services: General government 2,746 $ 3,040 $ 3,066 $ 3,198 $ 3,355 $ 8,640 $ 3,738 $ 3,416 $ 3,331 $ 3,114 $ Security 10,687 13,223 13,881 15,764 13,776 15,825 16,450 15,566 15,140 17,993 Physical Environment 376 372 379 421 468 590 1,032 1,025 553 Economic environment 10,573 12,874 14,256 16,573 9,132 3,491 13,487 14,649 14,857 15,142 Transportation 652 1,398 433 13 11 2,971 1,129 1,203 1,242 392 Culture and Recreation 1,701 1,774 1,793 2,050 2,171 3,351 2,555 2,284 2,587 2,713 Operating grants and contributions 6,967 5,903 7,383 2,830 8,334 760 4,571 1,350 1,718 1,898 Capital grants and contributions 5,312 5,227 5,240 19,834 3,419 2,513 1,648 3,180 4,147 3,913 Total governmental activities program revenues 39,014 43,811 46,431 60,683 40,666 37,551 44,168 42,680 44,047 45,718 2015 Comprehensive Annual Financial Report 120 City of Redmond ---PAGE BREAK--- Schedule 2 (continued) Changes in Net Position (in thousands) Last Ten Fiscal Years Page 2 of 2 Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Business-type activities: Charges for services: Water/wastewater 21,085 26,127 24,960 26,577 25,451 27,977 29,688 32,747 33,055 35,637 UPD Water/wastewater 3,363 5,525 5,098 4,829 5,362 5,850 6,600 6,682 6,798 6,947 Stormwater 7,466 11,315 10,715 10,656 11,002 11,154 11,117 11,494 11,737 11,961 Operating grants and contributions 0 523 19 58 602 599 1,194 5,013 5,678 2,671 Capital grants and contributions 13,341 21,160 20,735 6,681 7,060 6,403 9,449 6,900 8,442 8,433 Total business-type activities program revenues 45,255 64,650 61,527 48,801 49,477 51,983 58,048 62,836 65,710 65,649 Total primary government program revenues 84,269 $ 108,461 $ 107,958 $ 109,484 $ 90,143 $ 89,534 $ 102,216 $ 105,516 $ 109,757 $ 111,367 $ Net (Expense)/Revenue Governmental activities (36,768) $ (39,787) $ (46,733) $ (35,821) $ (85,007) $ (62,080) $ (56,786) $ (57,368) $ (55,597) $ (59,700) $ Business-type activities 14,781 30,470 22,571 10,007 12,337 11,180 16,280 19,408 21,116 19,168 Total primary government net expense (21,987) (9,317) (24,162) (25,814) (72,670) (50,900) (40,506) (37,960) (34,481) (40,532) General Revenues and Other Changes in Net Position Governmental Activities: Taxes Property taxes 12,621 13,039 18,589 19,446 20,930 21,978 22,611 22,234 22,817 23,564 Sales taxes 20,071 24,420 20,675 18,996 19,038 24,895 20,722 22,584 22,131 25,385 Other 22,174 27,404 19,578 19,263 18,664 19,338 20,221 20,473 19,396 23,170 Investment interest 3,665 5,135 4,087 2,087 1,114 937 632 162 836 765 Miscellaneous 582 4,203 1,121 1,008 4,103 2,063 1,049 1,991 1,136 1,682 Contribution/disposal of capital assets 7 (384) 121 14 (76) 88 118 7 922 3,198 Transfers 29 - - - - - - - - - Total governmental activities 59,149 73,817 64,171 60,814 63,773 69,299 65,353 67,451 67,238 77,764 Business-type activities: Investment interest 1,298 1,668 1,740 737 623 519 227 400 434 Miscellaneous 149 143 140 176 105 143 177 (262) (950) (694) Transfers (29) - - - - - - - - - Total business-type activities 1,418 1,811 1,880 913 728 662 168 (35) (550) (260) Total primary government 60,567 $ 75,628 $ 66,051 $ 61,727 $ 64,501 $ 69,961 $ 65,521 $ 67,416 $ 66,688 $ 77,504 $ Change in Net Position Governmental activities 22,380 $ 34,030 $ 17,439 $ 24,994 $ (21,234) $ 7,252 $ 8,566 $ 10,084 $ 11,641 $ 18,064 $ Business-type activities 16,200 32,280 24,452 10,919 13,065 11,842 16,449 19,373 20,566 18,908 Total primary government 38,580 $ 66,310 $ 41,891 $ 35,913 $ (8,169) $ 19,094 $ 25,015 $ 29,457 $ 32,207 $ 36,972 $ 2015 Comprehensive Annual Financial Report 121 City of Redmond ---PAGE BREAK--- Schedule 3 Fund Balances, Governmental Funds (in thousands) Last Ten Fiscal Years Modified Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund Reserved 23 $ 32 $ - $ - $ - $ - $ - $ - $ - $ - $ Unreserved 9,035 14,653 16,177 6,489 4,504 - - - - - Nonspendable** - - - - - - - - - - Spendable**: Restricted - - - - - 6,139 7,087 7,083 7,380 7,106 Committed - - - - - 16,689 8,266 8,997 8,947 9,442 Assigned - - - - - - 11,472 12,364 10,166 11,019 Unassigned - - - - - 11,105 11,977 8,792 8,324 9,601 Total* 9,058 $ 14,685 $ 16,177 $ 6,489 $ 4,504 $ 33,933 $ 38,802 $ 37,236 $ 34,817 $ 37,168 $ Reserved 1,550 $ 1,608 $ 1,526 $ 1,244 $ 273 $ - $ - $ - $ - $ - $ Unreserved, reported in: Special revenue funds 24,249 32,280 38,603 31,914 27,499 - - - - - Capital projects funds 39,688 37,125 47,384 61,866 47,277 - - - - - Nonspendable** - - - - - - - - - - Spendable**: Restricted - - - - - 20,752 16,775 25,638 25,220 24,163 Committed - - - - - 23,029 - 1,222 1,014 1,437 Assigned - - - - - - 20,542 16,929 18,777 12,109 Unassigned - - - - - - - - - - Total all other governmental funds*: 65,487 $ 71,013 $ 87,513 $ 95,024 $ 75,049 $ 43,781 $ 37,317 $ 43,789 $ 45,011 $ 37,709 $ *In 2011 The substantial increase in the fund balance of the General Fund and decrease in the fund balance of All Other Governmental Funds resulted from the implementation of GASB 54. **Starting with the fiscal year ending December 31, 2011 the City implemented GASB 54 which required a new classification for fund balances. All Other Governmental Funds 2015 Comprehensive Annual Financial Report 122 City of Redmond ---PAGE BREAK--- Schedule 4 Changes in Fund Balances, Governmental Funds (in thousands) Last Ten Fiscal Years Page 1 of 2 Modified Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues Taxes 54,353 $ 64,271 $ 58,256 $ 57,101 $ 57,958 $ 66,211 $ 63,555 $ 65,291 $ 64,344 $ 72,119 $ Special assessments 273 245 287 88 - - - - - - Licenses and permits 7,639 9,920 8,297 7,057 6,523 6,510 7,509 8,871 9,168 10,924 Contributions from property owners 4,035 3,677 2,629 10,554 6,474 270 987 518 470 173 Intergovernmental 15,057 17,459 18,077 26,569 18,465 18,404 19,999 19,907 21,669 7,361 Charges for services 8,007 9,258 12,325 15,448 8,880 9,860 13,046 12,571 12,102 26,631 Fines and forfeitures 52 826 864 1,053 1,038 2,204 1,952 812 637 629 Investment income 3,146 4,406 3,752 2,237 1,238 856 514 (18) 525 466 Miscellaneous 581 1,011 1,011 957 601 972 917 611 1,463 915 Total revenues 93,143 111,073 105,498 121,064 101,177 105,287 108,479 108,563 110,378 119,218 Expenditures General government 12,963 12,384 13,785 18,087 15,132 12,943 14,948 15,391 14,621 16,414 Security (persons/property) 33,247 40,155 39,775 43,229 41,858 42,191 44,126 44,583 47,251 51,181 Physical environment 3,416 3,382 3,817 3,728 3,475 4,405 3,098 3,038 3,249 657 Transportation 4,415 6,712 6,685 9,260 6,552 8,200 8,958 8,097 8,063 10,045 Economic environment 3,524 3,382 3,907 4,343 4,649 4,864 4,830 4,624 5,293 5,620 Social Services 98 98 97 12 13 890 - - - 1,156 Culture and Recreation 8,072 8,690 9,901 10,060 10,913 10,642 11,159 11,606 11,869 11,220 Capital outlay 12,303 23,865 39,832 28,016 34,282 24,591 17,470 10,472 15,108 21,007 Debt service: Principal 1,940 2,540 2,448 3,109 3,008 3,584 4,955 4,262 3,666 3,756 Interest and debt issue costs 2,110 2,041 2,565 3,420 3,298 3,575 1,925 2,337 2,776 2,686 Total expenditures 82,088 103,249 122,812 123,264 123,180 115,885 111,469 104,410 111,896 123,742 Excess of revenues over (under) expenditures 11,055 $ 7,824 $ (17,314) $ (2,200) $ (22,003) $ (10,598) $ (2,990) $ 4,153 $ (1,518) $ (4,524) $ 2015 Comprehensive Annual Financial Report 123 City of Redmond ---PAGE BREAK--- Schedule 4 (continued) Changes in Fund Balances, Governmental Funds (in thousands) Last Ten Fiscal Years Page 2 of 2 Modified Accrual Basis of Accounting 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other Finance Sources (Uses) Insurance recoveries - $ - $ 111 $ - $ 8 $ 3 $ - $ - $ 45 $ 7 $ Proceeds from borrowing - - 36,560 - - 8,643 1,794 34,522 - 9,996 Bond proceeds to refunding trustee - - (1,328) - - - - (34,291) - (9,996) Disposition of capital assets 4 3,196 - 49 45 18 53 26 84 - Transfers in 17,335 23,294 12,929 27,681 19,536 25,071 18,091 24,853 14,263 19,425 Transfers out (17,297) (23,161) (12,966) (27,707) (19,547) (24,976) (18,544) (24,357) (14,070) (19,289) Total other financing sources (uses) 42 3,329 35,306 23 42 8,759 1,394 753 322 143 Net change in fund balances 11,097 $ 11,153 $ 17,992 $ (2,177) $ (21,961) $ (1,839) $ (1,596) $ 4,906 $ (1,196) $ (4,381) $ Debt service as a percentage of noncapital expenditures 5.63% 5.77% 6.04% 6.85% 7.09% 7.84% 7.32% 7.02% 6.66% 6.27% 2015 Comprehensive Annual Financial Report 124 City of Redmond ---PAGE BREAK--- Schedule 5 Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years Total Taxable Fiscal Year 2006 8,759,508,942 $ 1,551,414,614 $ 10,310,923,556 $ 1.23 $ 2007 9,821,026,886 $ 1,359,505,337 $ 11,180,532,223 $ 1.18 $ 2008 12,739,900,548 $ 1,332,371,332 $ 14,072,271,880 $ 1.47 $ 2009 13,205,438,085 $ 1,333,419,562 $ # 14,538,857,647 $ 1.35 $ 2010 11,966,374,536 $ 1,362,914,250 $ 13,329,288,786 $ 1.58 $ 2011 11,283,288,467 $ 1,509,947,105 $ 12,793,235,572 $ 1.72 $ 2012 10,962,633,787 $ 1,712,255,548 $ 12,674,889,335 $ 1.78 $ 2013 11,110,361,194 $ 1,863,285,684 $ 12,973,646,878 $ 1.73 $ 2014 12,192,519,668 $ 1,942,543,498 $ 14,135,063,166 $ 1.63 $ 2015 13,995,021,898 $ 1,892,398,680 $ 15,887,420,578 $ 1.49 $ Source: King County Accounting Division Real and personal property has been assessed at 100% of the estimated value. * Tax rates are per $1,000 of assessed value. Assessed Valuation Tax Rate* Total Direct Real Property Personal Property 2015 Comprehensive Annual Financial Report 125 City of Redmond ---PAGE BREAK--- Schedule 6 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years General Obligation Total School Hospital Emer. Redmond Capital King Co. King Co. General Debt Direct WA King Port Of District District King Co. Medical Facilities Ferry*** Flood*** Fund Service Rate* State County Seattle #414 #2 Library Service Area** District District 2006 1.20 0.03 1.23 2.50 1.33 0.23 2.65 0.54 0.53 0.22 - - - 9.23 2007 1.15 0.03 1.18 2.33 1.29 0.23 2.57 0.50 0.50 0.21 0.05 - - 8.86 2008 1.45 0.02 1.47 2.13 1.21 0.22 2.33 0.45 0.45 0.30 0.05 0.06 0.10 8.76 2009 1.33 0.02 1.35 1.96 1.10 0.20 2.23 0.40 0.42 0.27 0.04 0.05 0.09 8.11 2010 1.56 0.02 1.58 2.22 1.28 0.22 2.80 0.46 0.49 0.30 0.04 0.003 0.11 9.50 2011 1.70 0.02 1.72 2.28 1.34 0.22 2.98 0.48 0.57 0.30 0.05 0.004 0.11 10.05 2012 1.76 0.02 1.78 2.42 1.42 0.23 3.53 0.49 0.57 0.30 0.05 0.004 0.12 10.91 2013 1.73 0.00 1.73 2.57 1.54 0.23 3.75 0.52 0.57 0.30 0.05 0.004 0.13 11.39 2014 1.63 0.00 1.63 2.47 1.52 0.22 3.51 0.47 0.56 0.34 0.04 0.003 0.15 10.91 2015 1.49 0.00 1.49 2.29 1.34 0.19 3.30 0.40 0.50 0.30 0.04 0.003 0.14 9.99 Source: King County Assessor's Office *Tax rates are per $1,000 of assessed value. **New taxing district as of 2007. ***New taxing districts as of 2008. City Direct Rates Total Direct and Overlapping Rate Initiative 747 passed in November 2001, and subsequent actions by the Washington State Legislature in 2007 limited the annual optional increase in property tax levies to the lesser of one percent or the implicit price deflator. Overlapping Rates 2015 Comprehensive Annual Financial Report 126 City of Redmond ---PAGE BREAK--- Schedule 7 Principal Property Taxpayers Current Year andTen Years Ago 2015 2006 Taxpayer Rank Rank Microsoft (includes $ 1,925,325,000 1 12.12% $ 147,373,675 1 1.43% AvalonBay Communities Inc 276,603,000 2 1.74% - BRE Properties 122,017,000 3 0.77% 62,652,000 7 0.61% Essex Redmond Hill 116,829,000 4 0.74% - Nintendo 92,847,100 5 0.58% 63,887,569 6 0.62% G&I VII Redmond Town Center 76,738,730 6 0.48% - ASN-Washington Holding 72,367,000 7 0.46% - Hines Reit Daytona Laguna 63,483,000 8 0.40% - PS Business Parks LP (formerly Yett Family Partnership) 56,540,200 9 0.36% 50,226,300 8 - Arden Realty 55,378,500 10 0.35% - Puget Sound Energy - 106,139,104 5 1.03% Safeco - - 141,358,062 3 1.37% PPR Redmond Retail LLC (Redmond Town Center) - - 156,175,255 2 1.51% Communities Trust - - 116,316,300 4 1.13% Verizon - - 44,518,461 9 0.43% Aerojet General Corporation (General Dynamics) - - 23,912,030 10 0.23% TOTAL $ 2,858,128,530 17.99% $ 912,558,756 8.36% Source: King County Assessor * In 2015 the estimated value of real and personal property in the City of Redmond was $15,887,420,578. * * In 2006 the estimated value of real and personal property in the City of Redmond was $10,310,923,556. Percentage of Total City Taxable Assessed Value* Percentage of Total City Taxable Assessed Value** Taxable Assessed Value Taxable Assessed Value 2015 Comprehensive Annual Financial Report 127 City of Redmond ---PAGE BREAK--- Schedule 8 Property Tax Levies and Collections Last Ten Calendar Years Fiscal Year Amount Percentage of Levy Amount Percentage of Levy 2006 12,691,175 12,491,154 98.4239% 199,344 12,690,498 99.99% 2007 12,957,835 12,856,101 99.2149% 100,768 12,956,869 99.99% 2008 18,692,476 18,510,492 99.0264% 180,705 18,691,197 99.99% 2009 19,538,614 19,322,310 98.8929% 214,135 19,536,445 99.99% 2010 21,033,841 20,844,302 99.0989% 186,935 21,031,237 99.99% 2011 22,023,478 21,853,561 99.2285% 170,181 22,023,742 100.00% 2012 22,468,454 22,311,302 99.3006% 154,582 22,465,884 99.99% 2013 22,307,588 22,156,984 99.3249% 134,489 22,291,473 99.93% 2014 22,858,505 22,717,813 99.3845% 111,629 22,829,442 99.87% 2015 23,578,642 23,424,013 99.3442% (1,376) 23,422,637 99.34% Source: King County Assessor and City of Redmond Finance Department Collected within the Fiscal Year of the Levy Total Collections to Date Taxes Levied for the Fiscal Year* Collections in Subsequent Years 2015 Comprehensive Annual Financial Report 128 City of Redmond ---PAGE BREAK--- Schedule 9 Summary of Sales Tax Revenues Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Retail Trade Sales Tax Electronics and Appliances 671,664 638,768 531,796 1,087,674 1,445,772 1,087,674 1,869,159 1,903,851 1,340,660 1,384,435 Furniture 336,218 262,470 436,382 266,049 288,418 266,049 338,453 361,114 396,235 431,383 General Merchandise 1,537,810 1,515,512 911,412 1,343,640 1,363,100 1,343,640 1,400,435 1,434,422 1,368,845 1,271,899 Miscellaneous Retail Trade 137,621 146,303 470,973 612,515 683,478 612,515 692,829 661,752 682,805 647,039 Other 3,838,023 4,356,254 4,196,636 2,375,512 2,501,637 2,375,512 2,557,826 2,765,333 2,900,178 3,091,632 Total - Retail Trade 6,521,336 6,919,307 6,547,199 5,685,390 6,282,405 5,685,390 6,858,702 7,126,472 6,688,723 6,826,388 Other Sectors Sales Tax Accommodation & Food Services 1,653,784 1,739,732 1,777,479 1,689,694 1,784,896 1,689,694 2,057,634 2,164,327 2,295,177 2,511,185 Construction 3,151,657 3,125,692 3,783,006 3,771,855 2,486,201 3,771,855 2,957,652 4,051,349 3,720,225 3,437,489 Information 1,536,738 4,814,199 1,051,283 1,385,499 974,378 1,385,499 1,452,926 1,422,008 1,537,307 3,206,629 Miscellaneous 1,896,963 2,229,314 1,867,005 1,621,406 1,650,525 1,621,406 1,937,798 2,036,384 2,334,976 2,627,185 Service 1,770,263 1,490,641 1,827,122 1,388,234 1,604,083 1,388,234 1,802,839 1,742,126 1,698,195 2,436,498 Wholesale 2,132,688 2,526,034 2,127,576 2,395,461 2,976,015 2,395,461 2,138,684 2,276,487 2,157,140 2,466,591 Total - Other Sectors Sales Tax 12,142,092 15,925,612 12,433,471 12,252,149 11,476,098 12,252,149 12,347,533 13,692,681 13,743,020 16,685,577 Adjustments * - - 118,361 Total - Retail Trade & Other Sectors 18,663,428 22,844,919 19,099,031 17,937,539 17,758,503 17,937,539 19,206,235 20,819,153 20,431,743 23,511,965 Sales Taxes - Miscellaneous 1,407,234 1,575,433 1,576,329 1,278,411 1,279,366 1,278,411 1,469,886 1,739,060 1,699,683 1,873,176 Total Sales Tax 20,070,662 24,420,352 20,675,360 19,215,950 19,037,869 19,215,950 20,676,121 22,558,213 22,131,426 25,385,141 Notes: * Includes One-Time Adjustments in 2008, also includes an SST Mitigation payment of $85,660 in 2008. Sales Tax - Miscellaneous includes Sales Tax-Criminal Justice, Washington State Use Tax and Hotel/Motel Tax. Fiscal Year 2015 Comprehensive Annual Financial Report 129 City of Redmond ---PAGE BREAK--- Schedule 10 Ratios of Outstanding Debt by Type Last Ten Fiscal Years Percentage Public Of Per General Special Works Total Capita Fiscal Obligation Assessment Trust Capital Private Revenue Primary Personal Debt Per Year Bonds Bonds Fund Loans Leases Contract Bonds Loans Government Income* Capita** 2006 42,504,603 780,000 2,238,775 - - - 609,477 46,132,855 1.76% 925 2007 40,531,384 585,000 1,867,058 - - - 465,385 43,448,827 1.49% 857 2008 72,455,000 530,000 1,495,340 - - 11,755,000 85,356 86,320,696 2.91% 1,682 2009 70,040,000 170,000 1,161,728 - - 11,190,000 - 82,561,728 2.74% 1,591 2010 67,540,000 - 828,118 - - 10,600,000 - 78,968,118 2.59% 1,471 2011 72,270,000 - 548,686 - - 9,985,000 - 82,803,686 2.72% 1,501 2012 68,920,000 - 2,140,792 - - 9,345,000 - 80,405,792 2.51% 1,452 2013 65,280,000 - 1,843,885 - - 8,680,000 - 75,803,885 2.26% 1,358 2014 64,394,621 - 1,677,549 - - 30,660,000 - 96,732,170 2.67% 1,676 2015 58,530,000 - 1,511,212 - - 29,170,000 4,412,000 93,623,212 5.48% 1,582 * 2015 per capita income of $68,877 from US Bureau of Economic Analysis. 2015 population total of 59,180 from State of Washington Office of Financial Management. Governmental Activities Business-Type Activities 2015 Comprehensive Annual Financial Report 130 City of Redmond ---PAGE BREAK--- Schedule 11 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Percentage of Fiscal General Actual Taxable Year Obligation Bonds Value of Property* 2006 42,504,603 0.42% 852 2007 40,531,384 0.36% 800 2008 72,455,000 0.51% 1,412 2009 70,040,000 0.48% 1,350 2010 67,540,000 0.51% 1,258 2011 72,270,000 0.56% 1,310 2012 68,920,000 0.54% 1,245 2013 65,280,000 0.50% 1,169 2014 61,780,000 0.44% 1,071 2015 58,530,000 0.37% 989 Source: King County Assessor * In 2015 the estimated value of real and personal property in the City of Redmond was $15,887,420,578 Details regarding the City's outstanding debt can be found in the notes to the financial statements. Per Capita 2015 Comprehensive Annual Financial Report 131 City of Redmond ---PAGE BREAK--- Schedule 12 Direct and Overlapping Governmental Activities Debt As of December 31, 2015 Estimated Net Debt Percentage Estimated Share of Outstanding Applicable* Overlapping Debt Overlapping Debt: King County 1,289,458,130 $ 4.10% 52,867,783 $ Port of Seattle 305,535,000 4.10% 12,526,935 School District #405 620,969,040 4.69% 29,123,448 School District #414 405,891,089 31.44% 127,612,158 Hospital District #2 218,964,039 23.74% 51,982,063 King CountyRural Library 108,262,805 6.94% 7,513,439 Fire District #34 31,525,717 5.19% 1,636,185 Total Overlapping Debt 2,980,605,820 283,262,011 Direct Debt: City of Redmond** 60,041,212 100.00% 60,041,212 Total Direct and Overlapping Debt 3,040,647,032 $ 343,303,223 $ *Applicable percentage is determined by the ration of assessed valuation of taxable property in overlapping unit to valuation of property subject to taxation in the City of Redmond. **City of Redmond Overlapping Debt - [prev. year] Tax Roll Source:King County Finance Office; King County Assessor Fire Dist #34 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 King County Port of Seattle S.D. #405 S.D. #414 Hospital District #2 K. C. Library City of Redmond Direct Debt 2015 Comprehensive Annual Financial Report 132 City of Redmond ---PAGE BREAK--- Schedule 13 Legal Debt Margin Information (in thousands) Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Debt limit 773,319 $ 838,540 $ 955,493 $ 990,408 $ 998,139 $ 934,746 $ 970,751 $ 1,055,921 $ 1,190,433 $ 1,191,557 $ Total net debt applicable to limit 42,259 40,287 72,182 69,767 67,267 71,996 70,785 67,124 63,458 60,041 Legal debt margin 731,060 $ 798,253 $ 883,311 $ 920,641 $ 930,872 $ 862,750 $ 899,966 $ 988,797 $ 1,126,975 $ 1,131,516 $ Total net debt applicable to limit as a percentage of debt limit 5.46% 4.80% 4.80% 7.04% 6.74% 7.70% 7.29% 6.36% 5.33% 5.04% Councilmanic Excess Levy - $ 397,185,514 $ 238,311,309 (238,311,309) 238,311,309 158,874,206 60,041,212 - 60,041,212 - - - 60,041,212 - 178,270,097 $ 158,874,206 $ *Property assessed at 100% of the estimated value. Total Debt Outstanding Less amount available in Debt Service Fund Net Debt Outstanding Remaining Debt Capacity Fiscal Year Total Capacity Statutory Debt Limit December 31, 2015 Assessed Value: Note: Under State law voters may approve general obligation debt issues of up to 7.5% of assessed valuation. This 7.5% debt capacity is allocated evenly among general government, parks/open space, and utilities resulting in a 2.5% limit for each. Within the 2.5% limit, the City Council has authority to issue bonds without voter approval for a combined total of up to 1.5% of the City's assessed valuation. $15,887,420,578 Parks and Open Space 397,185,514 $ - 2.50% of Assessed Value 1.50% of Assessed Value 397,185,514 $ - - 397,185,514 397,185,514 Debt Outstanding: Bonds General Capacity Special Purpose Capacity Utility Purposes - - - - - 1,131,515,331 $ 60,041,212 60,041,212 - 60,041,212 397,185,514 $ 397,185,514 $ - - 1,191,556,543 $ - 1,191,556,543 2015 Comprehensive Annual Financial Report 133 City of Redmond ---PAGE BREAK--- Schedule 14 Pledged-Revenue Coverage Last Ten Fiscal Years Page 1 of 3 Less: Special Fiscal Gross Operating Net Available Coverage Assessment Year Revenue Expenses Revenue Principal Interest Collections Principal Interest Coverage 2006* N/A N/A N/A N/A N/A N/A 273,089 265,000 55,532 0.85 2007* N/A N/A N/A N/A N/A N/A 244,988 195,000 39,378 1.05 2008 37,014,274 28,868,139 8,146,135 - - N/A 286,814 55,000 28,775 3.40 2009 40,094,938 28,376,280 11,718,658 565,000 532,513 10.68 92,929 360,000 25,796 0.24 2010^ 38,542,022 26,557,555 11,984,467 590,000 512,887 10.87 - 170,000 8,820 - 2011 41,162,374 29,963,912 11,198,462 615,000 489,288 10.14 - - - - 2012 45,741,065 30,807,455 14,933,610 640,000 464,688 13.52 - - - - 2013 46,932,427 32,346,978 14,585,449 665,000 439,088 13.21 - - - - 2014***** 47,944,999 33,038,457 14,906,542 970,000 762,950 8.60 - - - - 2015 50,427,052 34,943,803 15,940,299 1,490,000 1,383,348 5.60 - - - - Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. The stormwater utility and the water/wastewater utility are combined into the waterworks utility for purposes of the 2008 debt issuance. * Revenue bond coverage ratio is not applicable as bonds were called early and paid off. Includes operating and investment income excluding unrealized gains or losses on investments. Excludes depreciation and amortization, includes operating transfers out. The 1993 Refunding Bond Issue required coverage of 1.25. The 2008 Revenue Bond Issue requires coverage of 1.20. In 2014 the City issued the utility system revenue bonds not to exceed $26.70 million. This debt issuance is to provide funds to finance certain costs of additions, betterments, and extensions to the City's combined water supply, wastewater, storm, and surface water drainage system. ^ The Special Assessment bonds were paid in full in 2010 Historical Operating Results - Debt Service Coverage (Unaudited) 2011 2012 2013 2014 2015 Income (loss) before contributions and transfers 5,181,902 $ 6,377,286 $ 11,669,167 $ 11,781,117 $ 9,256,897 $ Adjustments: Interest and Fiscal Charges 463,122 438,741 412,866 669,491 916,981 Depreciation Expense 4,642,930 4,838,721 5,093,496 5,575,052 5,637,461 Grants (related to capital expenditures) (440,402) (1,071,419) (4,810,737) (5,266,408) (2,364,078) Rate Stabilization Account Transfers - (1,146,447) (483,450) (800,000) (1,250,000) Capital Facilities Charges 1,669,681 5,759,744 2,988,782 3,538,986 3,743,038 Net Revenue Available for Debt Services 11,517,233 $ 15,196,626 $ 14,870,124 $ 15,498,238 $ 15,940,299 $ Outstanding Parity Bonds Annual Debt Service 1,104,288 1,104,688 1,104,088 1,732,950 2,873,348 Debt Service Coverage 10.4 13.8 13.5 8.9 5.6 Net Revenues Available for Other Purposes 10,412,945 $ 14,091,938 $ 13,766,036 $ 13,765,288 $ 13,066,951 $ Water/Wastewater Revenue Bonds Special Assessment Bonds Debt Service Debt Service 2015 Comprehensive Annual Financial Report 134 City of Redmond ---PAGE BREAK--- Schedule 14 Pledged-Revenue Coverage Page 2 of 3 The following tables provide historical information regarding the number of water, wastewater and stormwater utility customers (accounts) for the past five years. 2011 2012 2013 2014 2015 Single Family 11,129 11,203 11,372 11,524 11,688 Multifamily 208 210 208 208 209 Commercial 942 937 893 897 891 Irrigation 186 191 199 209 217 Other 10 10 12 13 15 Total 12,475 12,551 12,684 12,851 13,020 Transfer of accounts to the City of Kirkland from an earlier annexation. Multi-use (commercial, multifamily, irrigation.) 2011 2012 2013 2014 2015 Single Family 10,583 10,665 10,830 11,000 11,175 Multifamily 205 211 233 209 210 Commercial 885 887 880 881 877 Irrigation 1 1 1 1 1 Other 10 10 18 14 16 Total 11,684 11,774 11,962 12,105 12,279 Transfer of accounts to the City of Kirkland from an earlier annexation. Multi-use (commercial, multifamily, irrigation.) Stormwater 2011 2012 2013 2014 2015 Residential 10,710 10,790 10,932 11,087 11,244 Other 1,157 1,161 1,154 1,211 1,223 Total 11,867 11,951 12,086 12,298 12,467 Commercial and multifamily NUMBER OF WATER CUSTOMERS NUMBER OF WASTEWATER CUSTOMERS NUMBER OF STORMWATER CUSTOMERS 2015 Comprehensive Annual Financial Report 135 City of Redmond ---PAGE BREAK--- Schedule 14 Pledged-Revenue Coverage Page 3 of 3 LARGEST CUSTOMERS OF THE SYSTEM FOR THE YEAR ENDED DECEMBER 31, 2015 Customer Water Consumption (000'S) Water Billings Wastewater Billings King County Stormwater Billings Total Revenue % of Total Gross Revenue MICROSOFT 34,412 1,831,935 $ 331,271 $ 1,080,500 $ 1,066,387 $ 4,310,093 $ 8.49% CITY OF REDMOND 4,184 309,741 19,191 53,036 1,204,936 1,586,904 3.12% UNISEA INC 4,741 141,735 78,169 326,111 46,825 592,840 1.17% SIXTY-01 APARTMENT COMPLEX 4,452 202,378 65,384 207,847 64,121 539,730 1.06% ESSEX REDMOND HILL NE LP 3,490 145,904 50,032 160,684 51,002 407,622 0.80% DIG-KW REDMOND, LLC 3,413 142,128 47,476 160,667 47,971 398,242 0.78% ESSEX REDMOND HILL CWLP 2,885 122,117 45,836 148,215 46,667 362,835 0.71% CAMBRIAN APARTMENTS 3,383 155,704 49,027 151,479 - 356,210 0.70% EASTSIDE RETIREMENT ASSN 2,943 132,868 35,465 117,265 65,716 351,314 0.69% KING COUNTY PARKS/MARYMOOR 3,287 206,279 - - - 206,279 0.41% 67,190 3,390,789 $ 721,851 $ 2,405,804 $ 2,593,625 $ 9,112,069 $ 17.94% Based on percentage of total Gross Revenue Reflects the amount paid to King County for wastewater treatment. King County wastewater treatment rates are passed directly to City customers. 2015 Comprehensive Annual Financial Report 136 City of Redmond ---PAGE BREAK--- Schedule 15 Demographic and Economic Statistics Last Ten Fiscal Years 2006 49,890 2,626,958 $ 52,655 $ 8,014 22,616 3.6 2007 50,680 2,924,743 $ 57,710 $ 8,126 22,869 3.0 2008 51,320 2,983,796 $ 58,141 $ 8,098 23,144 3.6 2009 51,890 2,952,749 $ 56,904 $ 8,369 23,323 6.6 2010 53,680 2,959,700 $ 55,136 $ 8,789 24,227 7.0 2011 55,150 3,189,711 $ 57,837 $ 9,060 24,671 5.6 2012 55,360 3,326,582 $ 60,090 $ 9,288 24,770 4.5 2013 55,840 3,505,077 $ 62,770 $ 9,413 24,872 3.5 2014 57,700 3,974,203 $ 68,877 $ 9,628 25,549 3.8 2015 59,180 - $ - $ 9,879 26,141 4.0 * State of Washington, Office of Financial Management. King County Per Capita Personal Income applied to Redmond population. Information is one year behind, 2015 will be updated in the 2016 CAFR King County Per Capita Personal Income as provided by Bureau of Economic Analysis. BEA is one year behind, 2015 will be updated in the 2015 CAFR # Lake Washington School District total as of October, 2008; includes schools with Redmond addresses, although some are located in unincorporated King County. Statistics are not available to determine the number of students from the Redmond/King County populace. State of Washington, Department of Employment Security (figures are prorated on Redmond's relationship to the County's unemployment rate). Fiscal Year Redmond Personal Income (in thousands)** King County Per Capita Personal Income*** Number of Housing Units Redmond Population* School Enrollment# Unemployment Rate## 2015 Comprehensive Annual Financial Report 137 City of Redmond ---PAGE BREAK--- Schedule 16 Principal Employers Current Year and Nine Years Ago 2015 2006 Employer Employees Rank Employees Rank Microsoft Corporation (includes Open Tech) 34,358 1 45.07% 31,280 1 73.77% Terex (formerly Genie Industries) 2,656 2 3.48% 2,213 2 5.22% Eurest Dining Services @ Microsoft 1,041 3 1.37% 701 9 - Nintendo of America Inc. (includes Nintendo Software Technology) 945 4 1.24% 677 10 1.60% AT&T Mobility 831 5 1.09% - - Lake Washington School District * 818 6 1.07% 897 7 2.12% United Parcel Service 757 7 0.99% - - Physio Control 706 8 0.93% - - Honeywell 677 9 0.89% 894 8 2.11% United Parcel Service 757 7 0.99% - - Aerojet 530 10 0.70% - - Volt Technical Resources, LLC (includes VMC Consulting) - - 1,896 3 4.47% Group Health * - - 1,080 6 2.55% Safeco Insurance Co.* - - 1,081 5 2.55% Cingular Wireless - - 1,683 4 3.97% TOTAL 44,076 57.82% 42,402 98.35% Source: City of Redmond Finance Dept., Business License Division *Employer exempt from business license requirement **Total city employment including exempt businesses listed is 76,227 for 2015. ***Total city employment including exempt businesses listed was 71,616 for 2006. Percentage of Total City Employment** Percentage of Total City Employment*** 2015 Comprehensive Annual Financial Report 138 City of Redmond ---PAGE BREAK--- Schedule 17 Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function/Program General Government Executive 11.00 11.50 11.00 14.00 13.00 13.00 12.00 12.00 15.00 19.00 Finance and Information Services 58.60 62.60 63.60 59.97 55.81 56.81 54.50 54.50 53.50 56.00 Human Resources 8.00 9.63 9.63 13.43 11.50 11.50 11.50 11.50 11.50 11.54 Legal 4.25 4.25 4.25 4.25 4.25 4.25 3.75 3.75 3.75 3.75 Planning and Community Development 50.24 50.81 58.31 50.72 43.65 43.65 61.91 61.91 73.89 71.89 Security Police 110.50 115.50 127.50 128.40 127.30 127.10 129.10 128.10 129.30 130.41 Fire 141.20 149.20 171.20 168.50 164.50 160.50 160.25 160.25 160.50 163.50 Culture and Recreation 50.82 54.12 62.22 62.67 61.55 61.54 60.56 60.56 60.69 61.02 Public Works 77.18 75.75 77.75 79.05 72.71 72.76 66.23 66.23 66.23 72.02 Water/Wastewater 38.78 39.60 39.60 40.60 39.29 39.25 34.16 34.16 37.53 38.44 UPD Water/Wastewater 5.94 5.94 5.94 5.94 - - Stormwater Management 29.46 29.77 29.77 28.77 31.67 31.67 30.85 30.85 27.60 26.90 Total 585.97 608.67 660.77 656.30 625.23 622.03 624.81 623.81 639.49 654.47 Source: City Budget Office 2015 Comprehensive Annual Financial Report 139 City of Redmond ---PAGE BREAK--- Schedule 18 Operating Indicators by Function/Program Last Ten Fiscal Years* Function/Program Police Calls dispatched 24,473 24,276 24,286 27,030 27,531 23,215 22,640 23,768 24,586 25,508 Parking violations 1,140 1,189 1,137 1,116 1,179 858 893 1,042 907 937 Traffic violations 8,120 7,381 9,381 10,532 13,574 7,990 5,033 4,875 5,036 5,990 Fire Calls for service (fire and aid) 10,905 9,896 10,508 10,740 10,404 9,587 9,783 9,941 10,653 9,864 Average response time (fire & aid) - minutes & seconds 7:27 7:14 6:30 6:30 6:24 6:43 6:41 5:12 5:16 6:44 Fire prevention maintenance inspections 1,421 1,394 1,500 2,587 1,606 1,690 1,452 1,658 841* 2,127 Operations inspections 484 19 495 - 256 1,353 - - - 598 Culture and Recreation # Preschool registrations 12,851 25,000 21,412 19,456 20,093 19,540 22,569 24,874 24,990 Youth registrations 20,292 24,377 26,415 18,046 19,118 23,244 27,525 21,344 23,092 Teen program registrations 25,843 28,047 25,097 18,722 19,512 15,764 16,272 16,048 17,027 Adult program registrations 54,585 61,450 59,959 43,151 41,920 45,313 43,180 39,379 38,633 Senior Center participants 84,752 45,028 45,807 37,443 41,785 45,050 46,279 46,241 44,771 Utility Services Residential units served 12,805 13,195 13,563 13,669 13,972 14,236 14,473 14,773 15,033 15,240 Commercial units served 1,440 1,451 1,474 1,482 1,429 1,434 1,439 1,407 1,428 1,437 Water Average daily demand (gallons) * The Fire Prevention Maintenance inspection program was re-structured through a LEAN initiative process during 2014, resulting in a reduced number of inspections completed for the year. Program was suspended January 2007 - March 2008 Data is no longer seperated for maintenance inspections # New programs were added in 2007 Method of calculation changed in 2007 to more accurately assess number of visitors Sewage treatment provided by King County Wastewater Treatment Division 2015 6,520,473 6,754,372 5,900,305 5,877,325 6,132,129 6,441,596 6,594,716 7,095,464 2014 21,651 13,329 19,186 43,945 44,742 2013 2007 6,981,844 2006 6,506,569 2011 2008 2010 2009 2012 2015 Comprehensive Annual Financial Report 140 City of Redmond ---PAGE BREAK--- Schedule 19 Capital Asset Statistics by Function/Program Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Police Number of stations 1 1 1 1 1 1 1 1 1 1 Number of police vehicles 49 49 50 45 59 59 59 59 61 59 Fire Number of stations 6 6 6 6 6 6 7 7 7 7 Number of fire engines 9 11 11 9 9 8 8 8 8 8 Number of aid vehicles 16 15 15 16 15 16 16 16 16 16 Transportation Center lane miles of paved roads 136 137 138 138 142 143 143 146 146 148 Traffic signals 89 90 91 95 98 102 103 104 104 105 Street lights 983 1,132 1,290 1,286 1,279 1,343 1,456 1,512 1,554 1,604 Bridges 9 9 9 9 9 18 18 18 18 18 Culture and Recreation Number of developed parks 30 30 30 30 30 30 31 31 36 35 Number of undeveloped parks 9 7 7 8 8 8 11 11 15 13 Acres of developed parks 1,200 1,200 1,172 1,203 1,204 1,205 1,205 1,205 1,232 1,217 Acres of undeveloped parks 105 105 105 106 106 106 114 114 155 105 Miles of developed trails 44 44 44 44 36 37 37 37 36 45 Fiscal Year Page 1 of 2 2015 Comprehensive Annual Financial Report 141 City of Redmond ---PAGE BREAK--- Schedule 19 (continued) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Utility Services Water Storage Capacity (millions of gallons) 31.8 31.8 31.8 31.8 31.8 31.8 31.8 31.8 31.8 31.8 Number of wells 5 5 5 5 5 5 5 5 5 5 Miles of main 304 309 315 327 328 331 332 329 333 328 Sewer Number of manholes 5,918 6,733 6,937 6,645 6,651 6,716 6,760 6,801 6,901 6,977 Miles of main 194 214 219 211 212 214 215 216 219 221 Number of pumplift stations 21 23 23 23 23 23 24 23 23 23 Stormwater # of manholes/catch basins 9,621 9,951 10,327 10,475 10,529 10,578 10,674 10,830 11,050 11,169 Miles of pipe 162 167 172 173 174 175 178 179 183 185 Oil water separators 24 24 24 24 24 24 24 24 24 24 Fiscal Year Page 2 of 2 2015 Comprehensive Annual Financial Report 142 City of Redmond