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City of Salem Five-Year Financial Forecast FY 2021 - 2025 % INC/DEC FY21 FY22 FY23 FY24 FY25 FY23-FY25 RECAP BUDGETED PROJECTED PROJECTED PROJECTED PROPERTY TAXES PRIOR YEAR LEVY LIMIT 107,591,472 111,930,861 116,782,246 121,001,802 125,526,847 PROPOSITION 2.5 INCREASE TO LEVY 2.50% 2,689,787 2,798,272 2,919,556 3,025,045 3,138,171 NEW GROWTH 1,649,602 2,053,113 1,300,000 1,500,000 1,500,000 TOTAL: LEVY LIMIT (not included in total) 111,930,861 116,782,246 121,001,802 125,526,847 130,165,018 REVENUES ACTUAL REAL ESTATE AND PERSONAL PRO 2.75% 107,207,389 110,173,970 114,503,754 118,511,386 122,659,284 LOCAL RECEIPTS MOTOR VEHICLE 3.00% 4,100,000 4,500,000 4,635,000 4,774,050 4,917,272 HOTEL MOTEL TAX 5.00% 350,000 550,000 577,500 606,375 636,694 MEALS TAX 3.00% 400,000 850,000 875,500 901,765 928,818 BOAT EXCISE TAX 1.00% 530,000 30,000 30,300 30,603 30,909 CANNABIS EXCISE TAX Varies 400,000 950,000 950,000 1,000,000 1,025,000 INTEREST ON TAXES 1.00% 400,000 550,000 555,500 561,055 566,666 " Urban Renewal (Chap 121A) 500,000 500,000 500,000 500,000 500,000 IN LIEU OF TAXES 1.00% 700,000 700,000 700,000 700,000 700,000 CANNABIS CBA Varies 500,000 1,000,000 1,000,000 1,300,000 1,400,000 CHARGES FOR SERVICES 2.50% 1,600,000 2,350,000 2,408,750 2,468,969 2,530,693 PARKING FEES 3.00% 1,500,000 2,500,000 2,575,000 2,652,250 2,731,818 LICENSES AND PERMITS 2.00% 172,500 300,000 306,000 312,120 318,362 FINES & FORFEITS 2.00% 600,000 800,000 816,000 832,320 848,966 INVESTMENT INCOME 0.00% 171,750 150,000 150,000 150,000 150,000 MEDICAID 1.00% 450,000 450,000 454,500 459,045 463,635 MISC. RECURRING (INCLUDES MEDICAID/ 2.00% 0 100,000 102,000 104,040 106,121 MISC. NON-RECURRING 0.00% 230,000 0 0 0 0 TOTAL: LOCAL RECEIPTS Varies 12,604,250 16,280,000 16,636,050 17,352,592 17,854,953 CHERRY SHEET REVENUE 1.00% 34,399,470 35,244,772 35,597,220 35,953,192 36,312,724 Sec 6-1 ---PAGE BREAK--- City of Salem Five-Year Financial Forecast FY 2021 - 2025 % INC/DEC FY21 FY22 FY23 FY24 FY25 FY23-FY25 RECAP BUDGETED PROJECTED PROJECTED PROJECTED OFS - RECURRING Varies 975,000 1,361,195 975,000 1,250,000 1,500,000 OTHER FINANCIAL SOURCES (OFS) - NON-RECURRING OVERLAY SURPLUS STABILIZATION FUND FREE CASH - for a particular purpose FREE CASH - level the tax rate 500,000 1,000,000 500,000 500,000 500,000 ARPA OFS - NON RECURRING 0.00% 500,000 1,000,000 500,000 1,500,000 1,500,000 ENTERPRISE FUNDS SEWER ENTERPRISE FUND REVENUE 3.50% 10,165,959 10,547,323 10,916,479 11,298,556 11,694,006 WATER ENTERPRISE FUND REVENUE 3.50% 5,795,306 5,729,664 5,930,202 6,137,759 6,352,581 TRASH ENTERPRISE FUND 3.00% 899,925 899,925 926,923 954,730 983,372 PEG ACCESS ENTERPRISE FUND 691,250 691,250 691,250 691,250 691,250 TOTAL ENTERPRISE FUND REVENUE varies 17,552,440 17,868,162 18,464,854 19,082,296 19,721,209 TOTAL REVENUES 173,238,549 181,928,098 186,676,878 193,649,465 199,548,170 EXPENDITURES TOTAL: GENERAL GOVERNMENT 3.00% 7,752,464 9,163,410 9,438,312 9,721,462 10,013,106 TOTAL: PUBLIC SAFETY 3.50% 22,042,166 23,072,889 23,350,667 24,167,940 25,013,818 TOTAL: PUBLIC WORKS & FACILITIES varies 3,747,358 4,097,953 4,220,892 4,347,518 4,477,944 TOTAL: HUMAN SERVICES 3.00% 1,640,930 1,800,728 1,698,388 1,749,339 1,801,819 TOTAL: CULTURAL AND RECREATIONAL 3.00% 3,024,885 3,382,603 3,130,729 3,224,651 3,321,391 FIXED COSTS CONTRIBUTORY RETIREMENT 5.50% 12,778,085 13,687,118 14,439,909 15,234,105 16,071,980 NON-CONTRIBUTORY PENSIONS -3.00% 10,034 10,315 10,006 9,705 9,414 Sec 6-2 ---PAGE BREAK--- City of Salem Five-Year Financial Forecast FY 2021 - 2025 % INC/DEC FY21 FY22 FY23 FY24 FY25 FY23-FY25 RECAP BUDGETED PROJECTED PROJECTED PROJECTED WORKMANS COMPENSATION CITY/SCHO 3.00% 491,305 528,270 544,118 560,442 577,255 UNEMPLOYMENT COMPENSATION 3.00% 300,000 300,000 309,000 318,270 327,818 GROUP INSURANCE 6.00% 15,427,036 16,022,048 16,983,371 18,002,373 19,082,516 MEDICARE 3.00% 1,262,407 1,278,187 1,316,533 1,356,029 1,396,709 MUNICIPAL INSURANCE- CITY ONLY 3.00% 292,384 373,500 384,705 396,246 408,134 HEALTH REIMBURSEMENT ACCOUNT 0 0 0 0 RETIREMENT ANTICIPATION STABILIZATIO 3.00% 600,000 600,000 618,000 636,540 655,636 TRANSFER TO CPA FUND 0 0 0 0 0 SALEM 2026 FUND 25,000 50,000 75,000 75,000 100,000 C.I.P. (TO EXISTING FUND) 0.00% 0 0 0 0 TRANSFERS OUT-NLCS 3.00% 0 0 0 0 TRANSFERS OUT- BENTLEY 2.00% 0 0 0 TOTAL: FIXED COSTS 31,186,251 32,849,438 34,680,642 36,588,709 38,629,462 TOTAL: DEBT SERVICE 3.52% 7,627,024 7,408,350 7,687,974 7,968,106 8,258,576 TOTAL: ESSEX TECH ASSESSMENT 2.50% 2,637,453 2,602,989 2,668,064 2,734,765 2,803,134 CITY EXPENDITURE TOTAL Varies 79,759,293 84,378,360 86,875,667 90,502,492 94,319,250 TOTAL: EDUCATION 2.50% 63,449,649 66,597,919 68,262,867 69,969,439 71,718,675 SCHOOL EXPENDITURE TOTAL 2.50% 63,449,649 66,597,919 68,262,867 69,969,439 71,718,675 TOTAL: SEWER ENTERPRISE varies 8,017,900 8,329,470 8,350,642 8,807,986 9,298,287 TOTAL: WATER ENTERPRISE varies 6,449,189 6,478,342 6,726,526 7,179,340 7,670,616 TOTAL: TRASH ENTERPRISE 3.00% 3,876,199 3,962,443 4,081,316 4,203,756 4,329,868 TOTAL: PEG ENTERPRISE 0.00% 691,250 691,250 691,250 691,250 691,250 ENTERPRISE FUND EXPENDITURE TOTAL 19,034,538 19,461,505 19,849,734 20,882,332 21,990,021 TOTAL - CITY, SCHOOL, AND ENTERPRISE 162,243,480 170,437,784 174,988,268 181,354,262 188,027,946 TOTAL: CHERRY SHEET ASSESSMENT 2.00% 9,049,302 9,430,263 9,618,868 9,811,246 10,007,471 OTHER EXPENDITURES Sec 6-3 ---PAGE BREAK--- City of Salem Five-Year Financial Forecast FY 2021 - 2025 % INC/DEC FY21 FY22 FY23 FY24 FY25 FY23-FY25 RECAP BUDGETED PROJECTED PROJECTED PROJECTED CHERRY SHEET OFFSET 2.00% 126,561 376,580 384,112 391,794 399,630 OVERLAY 2.00% 701,588 911,581 929,812 948,408 967,377 SNOW AND ICE DEFICIT various 1,471,340 771,892 800,000 800,000 800,000 Less S/I Ammortization Less S/I Stabilization Less S/I School Portion OTHER DEFICITS RAISED ON RECAP 61,591 Prior Year Overlay Deficit 20,429 TOTAL: OTHER EXPENDITURES 1,509,630 2,060,052 1,500,000 1,500,000 1,500,000 TOTAL EXPENDITURES 172,802,412 181,928,099 186,107,137 192,665,508 199,535,416 BUDGET GAP 436,136 0 569,742 983,957 12,754 Sec 6-4 ---PAGE BREAK--- Five Year Financial Forecast – Narrative Executive Summary The five-year financial forecast for the City of Salem is used as a budget tool that enables municipal officials to review operating needs, identify fiscal challenges and opportunities, and help develop long term budgeting policies as part of an overall strategic plan. The five- year financial forecast is invaluable in identifying key areas that the City needs to focus on such as rising health insurance costs, retirement assessments, and collective bargaining agreements. It also helps the City plan for its capital budget, debt service management, and long-term sustainability. Financial forecasting is the process of projecting revenues and expenditures over a five to ten-year period. Factors that affect forecasting are current and future economic conditions, collective bargaining agreements, future operating and capital scenarios, and other factors that affect future revenues and expenditures. The five-year financial forecast is also used as a communication tool for both the City Council and the public. The forecast is always evolving and is constantly updated as information becomes available. The FY22 budget reflects a commitment to increasing our police force, and a serious investment in our public infrastructure. Revenues Tax Levy: $110,173,970 The tax levy is the City’s primary revenue source, comprising approximately 60% of the City’s total general fund revenues to be raised in FY2022. Residential property values currently pay 73.16% of the total property taxes, while commercial, industrial, and personal property values pay 26.84%. The City has a split tax rate of 1.70, which translates to a residential rate of $13.25 and a commercial rate of $26.31 for FY22. The City realizes an automatic 2.5% increase to the tax levy under Proposition 2 ½, plus any increase due to “new growth” in the City. New growth includes new development, condominium conversions, and renovations/expansions to existing properties, to name a few. The City has typically averaged approximately $1,000,000 per year in new growth; however, the final new growth number for FY22 is $2,053,113. Sec 6-5 ---PAGE BREAK--- Local Receipts: $16,280,000 Local receipts are locally generated revenues other than real and personal property taxes. Examples include motor vehicle excise, investment income, hotel/motel tax, fees, rentals, and charges. The City is seeing a healthy recovery from COVID-19 and is increasing its estimates by $3.6 million over FY21 projections. Cherry Sheet Revenue (State Aid): $35,244,772 Named for the cherry-colored paper on which it was originally printed, the Cherry Sheet is the official notification by the Commissioner of Revenue to municipalities and regional school districts of estimated state aid to be paid and charges to be assessed over the next fiscal year. Cherry Sheets are usually issued each spring, following enactment by the Legislature of the state budget for the following year. This year, the Legislature has increased the estimated state aid to the City of Salem by approximately $448,625 from the FY2021 amount. This included decreases in Charter Tuition Reimbursement of $5,755 and School Choice Receiving Tuition by $4,169, and Veterans & Blind Exemption by $4,722. Chapter 70 appropriation has been increased from $25,807,152 in FY21 to $25,936,602 in FY22, a 0.5% increase Also, increased were, Unrestricted General Government Aid (UGGA) by $256,382 or 3.5%. It is difficult to gauge the amount that the Commonwealth will allocate to the 351 municipalities due to the volatile economy. Nevertheless, we need to assume a figure for purposes of completing the five-year financial forecast. Therefore, it is predicted that the State will increase the FY2022 appropriation by 1% each year through FY2025. We hope that this is a conservative estimate; however, it could be the opposite. School Building Assistance: $0 The Massachusetts School Building Authority (MSBA) administers the school building assistance program that reimburses cities, towns, and regional school districts varying percentages of their school construction costs depending on the wealth of the community or district and the category of reimbursement. The City of Salem was lucky enough to receive 90% reimbursement for all its building projects. The City is not anticipating any School Building Assistance funds in FY22. Sec 6-6 ---PAGE BREAK--- Enterprise Fund Revenue: $17,868,162 An enterprise fund, authorized by MGL Chapter 44, Section 53F ½ is a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. It allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy, if any. The City of Salem has three Enterprise Funds; water, sewer, and solid waste. The water and sewer enterprise funds, with estimated revenues of $5,729,664 and $10,547,323 respectively, strive for full cost recovery, including indirect costs that are appropriated in the general fund. Water and sewer enterprise fund revenues are estimated to have various increases over the next three fiscal years depending on the costs of assessments from the Salem Beverly Water Supply Board and the South Essex Sewer District, as well as the debt service from some of the major projects underway in the City, including the completion of the water meter project, the reconstruction of several water mains, rehabilitation of the Folly Hill storage tanks, South River Basin upgrades, Canal Street Upgrades Phase II and water meter replacements. In FY 2013, the City Council voted to combine the water and sewer enterprise funds for FY 2014, as allowed by the Department of Revenue as outlined in Bulletin 2012-B (page 3/7). Historically, the Water Enterprise fund revenue was not being sufficient to cover expenses and we have had to appropriate free cash to cover the deficits. By combining the funds, the City now utilizes sewer revenue to help offset the water deficit. The water and sewer funds will remain in SEPARATE funds for accounting and budgeting purposes within the City. But they will be COMBINED for reporting purposes on the City’s annual financial statements (CAFR) and when calculating Retained Earnings by the Department of Revenue. For FY22, the administration is recommending a water rate increase of 0.45% and a sewer rate increase of 3.8%. The Solid Waste Enterprise fund, established in FY08, does not recoup all operating costs. However, the $899,925 estimated revenues will cover approximately 22.7% of the total cost of $3,962,443 in FY2022. Other Financial Resources – Recurring: $1,361,195 The City has three “receipts reserve” accounts; Harbormaster, Witch House, and Golf Course. Receipts reserve accounts are accounts in which proceeds are earmarked by law and placed in separate accounts for appropriation for particular purposes. The City treats these Sec 6-7 ---PAGE BREAK--- accounts similar to Enterprise Funds, by which the fees charged cover the expenses of the particular program. It is estimated that the revenues generated will increase each year by 2.5% to keep up with rising costs of running each of the three departments. This account is expected to be level funded for the foreseeable future. Expenses General Government: $9,163,410 Departments under General Government include all of the financial offices and overhead support functions, including Mayor, City Council, Finance, Assessing, Legal, Treasury, Collector, Purchasing, and the City Clerk/Elections. The expense increase for FY22 is 18.2%. Note, this increase is unusual due to cuts that were assumed during the FY21 budget process because of COVID-19. The FY22 appropriations assumed restored cuts as well as a new department, which is an outlier situation in the financial forecast. This amount includes the impact of collective bargaining agreement settlements, increases for exempt staff, and initiatives supported by the Mayor’s office. The estimated increases for FY2023-2025 is projected at approx. 3% Public Safety: $23,072,889 Departments under Public Safety include Police, Fire, Inspectional Services, Electrical and Harbormaster. The estimated expense increase for public safety for the City will be 3% for police and fire and 3% for inspectional services, electrical and harbormaster for FY2023 through FY2025. These increases are expected due to the historical costs of collective bargaining agreements for police and fire, including minimum staffing levels, as well as the rising costs of utilities for both electrical and harbormaster departments and public safety resource needs resulting from increases in tourism. In FY2022, Public Safety is seeing a 4.68% increase. This amount includes addressing academy training needs resulting from multiple projected retirements. Public Works and Facilities: $4,097,953 Departments under Public Works and Facilities include Public Services, Engineering, Snow and Ice Removal and the Parking Department. Estimated expense increase for public services is expected to increase at 3% per year through FY2025. Sec 6-8 ---PAGE BREAK--- The FY2022 budget reflects an 9.36% increase for public works, reflecting increases in Tree maintenance and other initiatives identified to improve services through the City. Engineering and Parking operating expenses are expected to increase by 3% per year through FY2025, and the Snow and Ice budget will be level funded through FY2025. Human Services: $1,800,728 Departments under Human Services include the Health Department, Council on Aging, and Veteran’s Services. Although the benefits of veterans decreased this year due to less veterans applying for benefits, expenses in human services are still projected to increase by 3% per year due to normal increases in salaries and expenses, needs of an aging population, and the uncertainty of the number of veterans returning from war. Cultural and Recreation: $3,382,603 Departments under Cultural and Recreation include the Library, Park and Recreation, Golf Course, Witch House, Winter Island, Pioneer Village, and the Historical Commission. Expenses in Culture and Recreation are projected to increase by 3% per year due to normal increases in salaries and expenses. Fixed Costs: $32,849,438 Fixed costs are costs that are legally or contractually mandated such as health insurance, retirement assessment, Medicare, worker’s compensation, unemployment, and several other items. Fixed costs continue to be the biggest challenge in municipal budgets. Each fixed cost has its own projected increase over the five-year forecast that reflects the average costs municipalities are seeing in each category. The projected increases through FY2025 for each fixed cost are as follows: Health Insurance: 8% o As a member of state GIC, Salem will see an FY22 increase of 3.86%. To be conservative, the average increase for FY23-25 will be Retirement Assessment: 7% o Estimated increases needed to fully fund liability by 2032 per current funding schedule. Retirement Anticipation Stabilization Fund: 3% o This fund is for those employees who retire and are due sick/vacation buyback. Medicare: 3% o Average increase in wages for City workers over the past several years. Municipal Insurance: 3% o Historical average of our increases since 2006. Worker’s Compensation: 3% Sec 6-9 ---PAGE BREAK--- o We are fully insured and expect rates to increase at this level. o FY22 we will continue to share the cost with the school department. Unemployment: 3% o Reasonable estimate base on current economic conditions. Non – Contributory Pension: o Negative number due to the shrinking number of those retirees who are part of this group. Fixed Costs – Debt Service: $7,408,350 (Long Term - $6,805,440 & Short Term - $612,364) Debt service is the repayment cost, usually stated in annual terms and based on an amortization schedule, of the principal and interest on any particular bond issue. The overall debt service for the City is scheduled to decrease for existing debt; however, as part of our capital planning and the anticipated interest rate increase, we estimating a 3.5% increase in the total cost of debt service so that we can actively manage the replacement of vehicles and machinery, maintenance on existing buildings and infrastructure, and construction of new facilities. Assessment – Essex Technical Vocational High School: $2,602,989 The assessment to the City of Salem reflects the number of students attending the school and the associated costs. The assessment decreased in FY2022 resulting from lower enrollment numbers. To be conservative these assessments are projected to decrease -2.58% through FY2025. Education - Salem School District: $66,597,919 The School Committee oversees the budget process for the schools, and it has a bottom-line budget of $66,597,919 for FY22, an increase of 4.96% from FY21. For financial forecasting purposes, we expect that the cost of education will increase the general fund budget by 2.5% per year in both personnel and non-personnel expenses. The City’s finance director and the School’s business administrator continue to work on cost saving measures and shared services to ensure that the level of staff at the SPS will be adequate to provide quality education to its students. Sec 6-10 ---PAGE BREAK--- Enterprise Fund Expenses: $19,461,505 Expenses in the enterprise fund represent personnel, expenses, contracted services, assessments, and debt service costs for the three enterprise funds of the City: water, sewer, and solid waste. Expenses in the funds are projected to rise from FY2023 to FY2025 as follows: Water Enterprise o Personnel: 5% o Expenses: 5% o Assessments: 3.5% o Debt Service: per debt schedule (actual and projected) Sewer Enterprise o Personnel: 5% o Expenses: 5% o Assessments: 3.5% o Debt Service: per debt schedule (actual and projected) Solid Waste Enterprise o Personnel: 3% o Expenses: 3% o Contracted Services: 15% Cherry Sheet Assessment: $9,430,263 Named for the cherry-colored paper on which it was originally printed, the Cherry Sheet is the official notification by the Commissioner of Revenue to municipalities and regional school districts of estimated state aid to be paid and charges to be assessed over the next fiscal year. Cherry Sheets are usually issued each spring, following enactment by the Legislature of the state budget for the following year. The categories of charges include mosquito control projects, RMV non-renewal surcharge, MBTA, and tuition assessment. This year’s overall assessments, have increased by 2% or $184,908 from last year’s assessment of $9,245,355, which reflects an increase in Charter School Tuition of $150,300 and an increase to the School Choice Tuition Assessment of $5,690. Other changes in assessments included increases in Mosquito control, MBTA, and a reduction in Special Education. Sec 6-11 ---PAGE BREAK--- It is projected that the Cherry Sheet assessment from the Commonwealth will increase 6% from FY2023 to FY2025. Other Expenditures: $2,060,052 Overlay: $911,581 o Overlay is an account established annually to fund anticipated property tax abatements exemptions and uncollected taxes in that year. It is anticipated that overlay will vary in its increases due to the triennial certifications of values per the DOR and the increased values of properties throughout the City. Typically, a municipality will increase its overlay on certification years (our next triennial is scheduled for 2024) due to the adjustments typically made to conform to all Massachusetts General Laws for assessing property taxes. Snow and Ice Deficit $771,892. All amortized costs have been paid. Cherry Sheet Offset: $376,580 o Offset receipts are receipts from the Cherry Sheet that are to be used for a specific purpose (school lunch and public library). These obligations are expected to increase 3% for FY2022 to FY2025. Conclusion The City of Salem, like all municipalities throughout the Commonwealth, continue to struggle with rising fixed costs and contractual obligations that make balancing budgets very challenging. In most cases, Proposition 2 ½, the law that regulates the increases a municipality can increase its property taxes, does not allow for property tax revenue to keep up with the costs of doing business. The five-year financial forecast is a tool that helps us best manage the challenges. It is a tool that uses reasonable estimates in both revenue and expenditure trends while considering the overall economic picture of the current times. The goal is to project revenues and expenditures up to five years into the future which will help the administration analyze where current trends are leading and estimate if money will be available for discretionary spending such as capital purchases, collective bargaining settlements, and new municipal program. It also will help identify those “budget buster” items that need reform from the local or state government. The five-year forecast, combined with the capital improvement program and FY2022 budget will continue to be the basis for all future financial planning for the City of Salem. Sec 6-12 ---PAGE BREAK--- City of Salem - Debt Policy Bond Ratings – Upgraded Standard & Poor’s Rating Services On June 08, 2018 the City of Salem received notification from Standard and Poor’s that they City’s bond rating remains at AA/Stable based on their view of the City’s financial management procedures and sound budgeting practices. The bond rating helps decrease the City’s borrowing costs and sends a positive message regarding the City’s approach to budgeting both operational and capital needs. S&P assigned the ‘AA’ long-term rating to the city’s series back in 2016 and the City has maintained that rating. The outlook is stable. The bond rating is a great acknowledgement of all of the City’s management of its finances. This is a confirmation Salem is managing its resources as well as it can. Reasons for the rating cited by Standard and Poor’s reflects their opinion of the city’s: Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA); Strong management, with "good" financial policies and practices under our financial management assessment (FMA) methodology; Strong budgetary performance, with a slight operating surplus in the general fund and operating surplus at the total- governmental – fund level in fiscal 2017 Strong budgetary flexibility, with an available fund balance in fiscal 2017 of 9.5% of operating expenditures; Very strong liquidity, with total government available cash at 15.9% of total governmental fund expenditures and 5x governmental debt service, and access to external liquidity we consider strong; Adequate debt and contingent liability position, with debt service carrying charges at 3.2% of expenditures and net direct debt that is 35.8% of total governmental fund revenue, as well as low overall net debt at less than 3.0% of market Sec 6-13 ---PAGE BREAK--- value, but a large pension and other postemployment benefit (OPEB) obligation and the lack of a plan to sufficiently address the obligation; and Strong institutional framework score. Capital Improvement Projects When the city finances capital projects by issuing bonds, it will pay back the bonds within a period not to exceed the expected useful life of the project. Total net debt service payments from general obligation debt will not exceed five percent of total annual operating budget as listed on part 1a of the annual tax rate recapitulation as submitted to the Department of Revenue. Per the total amount to be raised on the FY22 Tax Rate Recapitulation Sheet - $191,199,145 this limit would be $9,559,957. Debt will only be issued for capital that is valued greater than $25,000 and has a depreciable life of five or more years. A cash flow statement will be required for each project funded with long term debt. Total general obligation debt will not exceed the limits provided in the state statues. Whenever possible, the city will use special revenue funds, special assessments, or other self-supporting bonds, instead of general obligation bonds. The city will not use long-term debt for current operations unless otherwise allowed via special legislation. The city will maintain good communications with bond rating agencies about its financial condition. The city will follow a policy of full disclosure on every financial report and bond prospectus. General Information on Debt Authorization and Legal Limit Notes and notes including refunding notes are generally authorized on behalf of the City by vote of two-thirds of all the members of the City Council with the approval of the Mayor. Provision is made for a referendum on the filing of a petition bearing the requisite number of signatures. Borrowings for certain purposes require state administrative approval. When serial bonds or notes have been authorized, bond anticipation notes may be issued by the officers authorized to issue the serial bonds or notes Temporary loans in anticipation of certain state and county reimbursements are generally authorized by majority vote but provision is made for temporary Sec 6-14 ---PAGE BREAK--- loans in anticipation of current revenues and federal grants and for other purposes in certain circumstances without City Council authorization. The general debt limit of the City consists of a normal debt limit and a double debt limit. The normal debt limit is 5 percent of the valuation of taxable property as last equalized by the State Department of Revenue. The City can authorize debt up to this amount without State approval. It can authorize debt up to twice this amount (the double debt limit) with the approval of the State’s Municipal Finance Oversight Board. Based on the City's equalized valuation (EQV) of $6,641,110,700 effective January 1, 2021, its normal debt limit is $332,055,535 and its double debt limit is $664,111,070. There are many categories of general obligation debt which are exempt from and do not count against the general debt limit. Among others, these exempt categories include revenues anticipation notes and grant anticipation notes; emergency loans exempted by special laws, bonds for water (limited to 10 percent of equalized valuation), housing, urban renewal and economic development (subject to various debt limits) and electric, gas, community antenna television systems, and telecommunication systems (subject to separate limits. Revenue bonds and water pollution abatement revenue bonds are not subject to these debt limits. The general debt limit and the special debt limit for water bonds apply at the time debt is authorized. The other special debt limits generally apply at the time the debt is incurred. The amount borrowed in each fiscal year by the issue of revenue anticipation notes is limited to the tax levy of the prior fiscal year, together with the net receipts in the prior fiscal year from the motor vehicle excise and certain payments made by the Commonwealth in lieu of taxes. The fiscal year ends on June 30. Notes may mature in the following fiscal year, and notes may be refunded into the following fiscal year to the extent of the uncollected, unabated current tax levy and certain other items, including revenue deficits, overlay deficits, final judgments and lawful un-appropriated expenditures, which are to be added to the next tax levy, but excluding deficits arising from a failure to collect taxes of earlier years. In any event, the period from an original borrowing to its final maturity cannot exceed one year. Types of Obligations General Obligations - Massachusetts cities and towns are authorized to issue general obligation indebtedness of the following types: Sec 6-15 ---PAGE BREAK--- Serial Bonds and Notes.- These are generally required to be payable in equal or diminishing annual principal amounts beginning no later than the end of the next fiscal year commencing after the date of issue and ending within the terms permitted by law. Level debt service is permitted for bonds and notes issued for certain purposes including self supporting enterprise purposes, certain state aided school projects and for projects for which debt service has been exempted from property tax limitations. The maximum terms vary from one year to 40 years, depending on the purpose of the issue. Most of the purposes are capital projects. Bonds or notes may be made callable and redeemed prior to their maturity, and a redemption premium may be paid. Refunding bonds or notes may be issued subject to the maximum term measured from the date of the original bonds or notes. Serial bonds may be issued as "qualified bonds" with the approval the state Municipal Finance Oversight Board consisting of the Attorney General, the State Treasurer, the State Auditor, and the Director of Accounts, subject to such conditions and limitations (including restrictions on future indebtedness) as may be required by the Board. Qualified bonds may mature in not less than 10 or more than 30 years from their dates and are not subject to the amortization requirements described above. The State Treasurer is required to pay the debt service on qualified bonds and thereafter to withhold the amount of the debt service from state aid or other state payments. Administrative costs and any loss of interest income to the State are to be assessed upon the city or town. Bond Anticipation Notes (BAN). These generally must mature within two years of their original dates of issuance but may be refunded from time to time for a period not to exceed five years from their original dates of issuances, provided that (except for notes issued for certain school projects that have been approved for state school construction aid) for each year that the notes are refunded beyond the second year they must be paid in part from revenue funds in an amount at least equal to the minimum annual payment that would have been required if the bonds had been issued at the end of the second year. The maximum term of bonds issued to refund bond anticipation notes is measured from the date of the original issue of the notes, (except for certain school projects). Revenue Anticipation Notes (RAN). These are issued to meet current expenses in anticipation of taxes and other revenues. They must mature within one year but, if payable in less than one year, may be refunded from time to time up to one year from the original date of issue. (Such notes may be extended beyond fiscal year end in an amount not exceeding current receivables.) Grant Anticipation Notes (GAN). These are issued for temporary financing in anticipation of federal grants and state and county reimbursements. Generally they must mature within two years, but may be refunded from time to time as long as the municipality remains entitled to the grant or reimbursement. Sec 6-16 ---PAGE BREAK--- Revenue Bonds - Cities and towns may issue revenue bonds for solid waste disposal facilities and for projects financed under the Commonwealth's Water Pollution Abatement or Drinking Water Revolving Loan Programs and for certain economic development projects supported by tax increment financing. In addition to general obligation bonds and notes, cities and towns having electric departments may issue electric revenue bonds, and notes in anticipation of such bonds, subject to the approval of the State Department of Telecommunications and Energy. Sec 6-17 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 Aggregate Debt Service Part 1 of 4 DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 7,106,880.00 3,463,436.68 10,570,316.68 06/30/2023 7,034,443.00 2,994,690.05 10,029,133.05 06/30/2024 6,577,058.00 2,686,250.04 9,263,308.04 06/30/2025 6,459,726.00 2,409,485.33 8,869,211.33 06/30/2026 5,617,447.00 2,164,591.73 7,782,038.73 06/30/2027 5,100,224.00 1,952,233.77 7,052,457.77 06/30/2028 4,895,000.00 1,754,453.39 6,649,453.39 06/30/2029 4,250,000.00 1,567,081.50 5,817,081.50 06/30/2030 4,065,000.00 1,400,606.50 5,465,606.50 06/30/2031 4,045,000.00 1,245,834.61 5,290,834.61 06/30/2032 3,950,000.00 1,101,437.68 5,051,437.68 06/30/2033 4,035,000.00 958,400.18 4,993,400.18 06/30/2034 3,680,000.00 815,659.56 4,495,659.56 06/30/2035 2,980,000.00 704,872.05 3,684,872.05 06/30/2036 2,250,000.00 625,122.00 2,875,122.00 06/30/2037 2,025,000.00 559,593.84 2,584,593.84 06/30/2038 1,665,000.00 501,887.62 2,166,887.62 06/30/2039 1,705,000.00 448,256.36 2,153,256.36 06/30/2040 1,635,000.00 394,334.50 2,029,334.50 06/30/2041 1,605,000.00 340,575.12 1,945,575.12 06/30/2042 1,650,000.00 285,840.75 1,935,840.75 06/30/2043 1,475,000.00 233,178.23 1,708,178.23 06/30/2044 1,010,000.00 192,537.57 1,202,537.57 06/30/2045 1,040,000.00 160,796.94 1,200,796.94 06/30/2046 1,070,000.00 128,125.02 1,198,125.02 06/30/2047 1,090,000.00 93,212.50 1,183,212.50 06/30/2048 1,130,000.00 57,262.50 1,187,262.50 06/30/2049 765,000.00 20,125.00 785,125.00 06/30/2050 330,000.00 4,525.00 334,525.00 Total $90,240,778.00 $29,264,406.02 $119,505,184.02 Par Amounts Of Selected Issues December 14 2006 DW-05-12 800,778.00 October 15 2010 (SQ) -Water Systems Improvement 960,000.00 October 15 2010 (SQ) -Water Meters 1,000,000.00 October 15 2010 (SQ) -Water Main 1,100,000.00 October 15 2010 (SQ) -Sewer Pump Station 80,000.00 October 15 2010 (SQ) -South River Basin Upgrade 650,000.00 October 15 2010 (SQ) -Fire Pumper Truck 125,000.00 October 15 2010 (SQ) -School Infrastructure 25,000.00 October 15 2010 (SQ) -Roads, Sidewalks & Crosswalks 420,000.00 Sec 6-18 ---PAGE BREAK--- October 15 2010 (SQ) -Furlong Park Remodeling 80,000.00 October 15 2010 (SQ) -Roads, Sidewalks & Crosswalks 2 50,000.00 October 15 2010 (SQ) -Canal St. Improvement Design 150,000.00 October 15 2010 (SQ) -School Ballfield Remodeling 20,000.00 September 27 2012 -Water System Improvements 950,000.00 September 27 2012 -Sewer Pump Station Upgrade 130,000.00 September 27 2012 -South River Basin Upgrade 325,000.00 September 27 2012 -South River Basin Upgrade 2 235,000.00 September 27 2012 -Forrester Street Drain Relief 255,000.00 September 27 2012 -City Hall Roof 540,000.00 September 27 2012 -City Hall Skylights 110,000.00 September 27 2012 -City Hall Windows 280,000.00 September 27 2012 -City Hall Masonry Repairs 695,000.00 September 27 2012 -Roads, Sidewalks & Crosswalks 425,000.00 September 27 2012 -Collins Cove Seawall 85,000.00 September 27 2012 -Remediation 1,135,000.00 September 27 2012 -Collins School 1,065,000.00 September 27 2012 -Collins School 2 4,365,000.00 September 27 2012 -Saltonstall School 965,000.00 September 27 2012 -Saltonstall School 2 2,025,000.00 December 19 2013 -Saltonstall School 1,165,000.00 December 19 2013 -Collins Middle School 2,410,000.00 December 19 2013 -School Building Repairs 80,000.00 December 19 2013 -School Equipment 30,000.00 December 19 2013 -Police Equipment 50,000.00 December 19 2013 -Fire Equipment 620,000.00 December 19 2013 -Electric Dept Equipment 30,000.00 December 19 2013 -Parks & Rec 105,000.00 December 19 2013 -Canal Street Utility Program 2,850,000.00 December 19 2013 -Cur Ref of Jan 15 2003 Bowditch School 165,000.00 December 19 2013 -Cur Ref of Jan 15 2003 Carlton School 120,000.00 December 19 2013 -Adv Ref of Jan 1 2005 School 360,000.00 December 19 2013 -Adv Ref of Jan 1 2005 Carlton School 95,000.00 December 3 2014 -South River Basin Upgrade 1,400,000.00 December 3 2014 -Drain Improvements 210,000.00 December 3 2014 -Road Improvements 800,000.00 December 3 2014 -Bertram Field 840,000.00 December 3 2014 -Electric- Generator 35,000.00 December 3 2014 -Parking- Water Proofing 770,000.00 December 3 2014 -Planning- MBTA Station 350,000.00 December 2 2015 -Folly Hill Tank Storage I 880,000.00 December 2 2015 -Folly Hill Tank Storage II 440,000.00 December 2 2015 -System Flushing/Valve Maintenance 175,000.00 December 2 2015 -Meter Replacement Program 40,000.00 December 2 2015 -Valve Pipe Replacement 40,000.00 December 2 2015 -I/I Study, Design & Construction 550,000.00 December 2 2015 -Canal St. Phase II 1,300,000.00 December 2 2015 -Illicit Connection Removal 75,000.00 December 2 2015 -Line Extension, Rehab & Upgrades 25,000.00 December 2 2015 -Garage Updates 100,000.00 December 2 2015 -Kiosk Umbrellas 20,000.00 December 2 2015 -Computer Replacement Program 85,000.00 December 2 2015 -District-Wide Security Updates 25,000.00 December 2 2015 -Replace Lunchroom/Cafeteria Equipment 10,000.00 December 2 2015 -HS Transformer Replacement 15,000.00 Sec 6-19 ---PAGE BREAK--- December 2 2015 -Saltonstall Elementary School I 430,000.00 December 2 2015 -Saltonstall Elementary School II 175,000.00 December 2 2015 -Collins Middle School I 280,000.00 December 2 2015 -Collins Middle School II 600,000.00 December 2 2015 -Collins Middle School III 850,000.00 December 2 2015 -Golf Course Equipment 35,000.00 December 2 2015 -Wrought Iron Fence 25,000.00 December 2 2015 -Blaney Street Terminal - City Match 175,000.00 December 2 2015 -Winter Island Pathway & Fort Restoration 25,000.00 December 2 2015 -Police Vehicle GPS Units 15,000.00 December 2 2015 -DPS 1988 Ladder Replacement 120,000.00 December 2 2015 -DPS 2000 Dump Truck Replacement 80,000.00 December 2 2015 -Paving 405,000.00 December 2 2015 -Seawalls 140,000.00 November 17 2016 -Advance Refunding October 15 2007 High School 2,182,000.00 November 17 2016 -Adv Ref Oct 15 2007 Water System Improvements 1,013,000.00 November 17 2016 -Collins Middle School 695,000.00 November 17 2016 -Districtwide Computer Replacement (School) 30,000.00 November 17 2016 -Saltonstall School Parking/DropOff Area 100,000.00 November 17 2016 -Salerno Automotive Roof Replace (School) 30,000.00 November 17 2016 -Folly Hill Tank Storage (Water) 325,000.00 November 17 2016 -Water Meter Replacement Program 60,000.00 November 17 2016 -Rehab Gallows Hill Water Tanks 1 780,000.00 November 17 2016 -Rehab Gallows Hill Water Tanks 2 130,000.00 November 17 2016 -Water System Upgrade (Valves & Hydrants) 425,000.00 November 17 2016 -Water System Improvements 980,000.00 November 17 2016 -Water Leak Protection, Flushing & GIS Admin 1 125,000.00 November 17 2016 -Water Leak Protection, Flushing & GIS Admin 2 125,000.00 November 17 2016 -Canal Street Sewer Phase 2 1,285,000.00 November 17 2016 -Sewer Leak Detection, Flushing & GIS Admin 340,000.00 November 17 2016 -Sewer Illicit Connection Removal 645,000.00 November 17 2016 -Bikeway & Roadway Improvements 230,000.00 November 17 2016 -Painting Pedestrian & Historical Lights 5,000.00 November 17 2016 -Bike Path Design/Construction 5,000.00 November 17 2016 -McGrath Park Paving/Concession Stand 105,000.00 November 17 2016 -Roads Sidewalk & Crosswalks (Non-Chapter 90) 110,000.00 November 17 2016 -General Building Maintenance Upgrades 5,000.00 November 17 2016 -Replace Fire Engine 2 or 5 330,000.00 November 17 2016 -Citywide Computer Replacement 75,000.00 November 17 2016 -Winter Island Electrical Upgrades RVField(Ph 5,000.00 November 17 2016 -Blaney Street Pier & Terminal (City Match) 190,000.00 November 17 2016 -Mary Jane Lee Park (Phase II) 40,000.00 November 17 2016 -Old City Hall Window Replacement 85,000.00 November 17 2016 -Open Space/Pocket Park Upgrades(Public 5,000.00 November 17 2016 -Ford F550 6-wheel dump Truck (unit 50,000.00 November 17 2016 -Ford F550 6-wheel Dump Truck (unit 40,000.00 November 17 2016 -2000 Int'l Dump Truck (unit 95,000.00 November 17 2016 -Trash Packer (Public Services) 50,000.00 November 17 2016 -2-Ton Propane Hot Box (Public Services) 25,000.00 November 17 2016 -Automation of South Harbor Garages (Parking) 360,000.00 November 17 2016 -Parking Garage Upgrades 130,000.00 November 17 2016 -Transfer Station Property Remediation 550,000.00 June 27 2018 -Planning Blaney St Pier & Terminal 85,000.00 June 27 2018 -Police GPS for Vehicles 15,000.00 June 27 2018 -Old Town Hall Roof 35,000.00 Sec 6-20 ---PAGE BREAK--- June 27 2018 -Bike Path Master Plan Upgrades 85,000.00 June 27 2018 -Canal St Roadway & Bike Path Improvements I 10,000.00 June 27 2018 -Canal St Roadway & Bike Path Improvements II 1,000,000.00 June 27 2018 -Citywide Traffic Calming Improvements II 45,000.00 June 27 2018 -Essex St Roadway Improvements I 15,000.00 June 27 2018 -Essex St Roadway Improvements II 30,000.00 June 27 2018 -First/Swampscott Rd Intersection Improvement II 80,000.00 June 27 2018 -Seawall at Collins Cove 85,000.00 June 27 2018 -South Salem Walk & Downtown Walk 15,000.00 June 27 2018 -Inflatable Boat & Motor II 5,000.00 June 27 2018 -Annual Life Cycle Management II 30,000.00 June 27 2018 -Fiber Optic Network Phase II 215,000.00 June 27 2018 -Telephone System Replacement I 65,000.00 June 27 2018 -Telephone System Replacement II 50,000.00 June 27 2018 -Basketball Court Renovations 15,000.00 June 27 2018 -Memorial Park Pillars & Fencing Phase II 10,000.00 June 27 2018 -Playground Upgrades 20,000.00 June 27 2018 -Historic Wrought Iron Fence- Salem Commons II 20,000.00 June 27 2018 -Dickson Memorial Chapel Restoration 35,000.00 June 27 2018 -Forest River Conservation Area Improvements 10,000.00 June 27 2018 -License Plate Readers 10,000.00 June 27 2018 -Roof Replacement Police II 500,000.00 June 27 2018 -Public Services Ford F150 15,000.00 June 27 2018 -Public Services Dump Truck (Sander) 45,000.00 June 27 2018 -Fire Chief Response Vehicle I 10,000.00 June 27 2018 -Parking Ford F150 5,000.00 June 27 2018 -Marked Cruisers 25,000.00 June 27 2018 -K9 Crusier 5,000.00 June 27 2018 -29 Passenger Bus 15,000.00 June 27 2018 -42 Passenger Bus 25,000.00 June 27 2018 -77 Passenger Bus 25,000.00 June 27 2018 -Traffic Signal Upgrades 10,000.00 June 27 2018 -Utility Pole Replacement 10,000.00 June 27 2018 -First Swampscott Rd Intersection Improvements 35,000.00 June 27 2018 -Forest River Park & Pool Improvements 35,000.00 June 27 2018 -Loring & Lafayette Improvements 130,000.00 June 27 2018 -McGrath Park Additional Assessments 85,000.00 June 27 2018 -Roads & Sidewalks 680,000.00 June 27 2018 -IT Annual Inventory (City) 60,000.00 June 27 2018 -IT Document Management System 145,000.00 June 27 2018 -IT Facilities Assessment Software 110,000.00 June 27 2018 -Library HVAC Upgraeds 65,000.00 June 27 2018 -Library Structural Upgrades 35,000.00 June 27 2018 -Basketball Court Renovations 2 85,000.00 June 27 2018 -Betram Field Schematic Design Phase II 40,000.00 June 27 2018 -Salem Common Fence 30,000.00 June 27 2018 -Winter Island Function Hall Accessibility 10,000.00 June 27 2018 -Parking Equipment/Kiosks 30,000.00 June 27 2018 -Traffic Signal Communication Upgrades 35,000.00 June 27 2018 -Historic Cemetery Restoration 65,000.00 June 27 2018 -Lafayette Park Restoration 10,000.00 June 27 2018 -Police Dive Equipment 30,000.00 June 27 2018 -Police Fire Alarm Replacement 10,000.00 June 27 2018 -School District Computer Replacement 10,000.00 June 27 2018 -Annual Life Cycle Management I (Schools) 15,000.00 Sec 6-21 ---PAGE BREAK--- June 27 2018 -Annual Life Cycle Management II (Schools) 65,000.00 June 27 2018 -Bentley School HVAC Equipment 10,000.00 June 27 2018 -High School HVAC Upgrades 35,000.00 June 27 2018 -IT Annual Inventory Schools 115,000.00 June 27 2018 -Bentley School Roof Replacement 40,000.00 June 27 2018 -Water System Upgrades- Valves & Hydrants 940,000.00 June 27 2018 -Water Distribution System Improvements 1,085,000.00 June 27 2018 -Water System Flushing, Valves, Leak & GIS 115,000.00 June 27 2018 -Water System Transmission System 115,000.00 June 27 2018 -Water- Salem Pump Station & Booster Station 10,000.00 June 27 2018 -Water- Essex St Improvements 160,000.00 June 27 2018 -Sewer Pump Station I 35,000.00 June 27 2018 -Sewer Pump Station II 3,110,000.00 June 27 2018 -Sewer System Flushing, Valve, Leak & GIS I 115,000.00 June 27 2018 -Sewer System Flushing, Valve, Leak & GIS II 255,000.00 June 27 2018 -Swampscott Rd Sewer Pump Station II 30,000.00 June 27 2018 -Sewer MS4 Compliance/Connection Removal II 530,000.00 June 27 2018 -Canal St Sewer Upgrades Phase I 285,000.00 June 27 2018 -Sewer- Essex St Improvements 160,000.00 September 25 2019 -Senior Center Construction 4,900,000.00 September 25 2019 -Planning- Blaney Street Pier & Terminal 1 40,000.00 September 25 2019 -Planning- Blaney Street Pier & Terminal 2 205,000.00 September 25 2019 -Telephone System Replacement 1 75,000.00 September 25 2019 -Telephone System Replacement 2 30,000.00 September 25 2019 -Bike Path Design/ Construction 1 20,000.00 September 25 2019 -Boston Street Roadway Improvements 70,000.00 September 25 2019 -First Swampscott Rd Intersection Improvements2 250,000.00 September 25 2019 -370 Essex St. HVAC Design, & Construction 365,000.00 September 25 2019 -Boston Street Corridor Roadway Improvements 1 70,000.00 September 25 2019 -Boston Street Corridor Roadway Improvements 2 120,000.00 September 25 2019 -Bridge Street Massworks Roadway Improvements 2 95,000.00 September 25 2019 -Canal Street Bike Path 1 150,000.00 September 25 2019 -Canal Street Bike Path 2 320,000.00 September 25 2019 -Canal Street Corridor Roadway Improvements 1 105,000.00 September 25 2019 -Canal Street Corridor Roadway Improvements 2 135,000.00 September 25 2019 -Essex St. Ped. & Vehicle Access Improvements 2 1,385,000.00 September 25 2019 -First/Swampscott Rd Intersection Improvements 615,000.00 September 25 2019 -First/Swampscott Rd Intersection Improvements 95,000.00 September 25 2019 -Forest River Park and Pool Design 95,000.00 September 25 2019 -Forest River Park Seawall Replacement 1 1,595,000.00 September 25 2019 -Forest River Park Seawall Replacement 2 580,000.00 September 25 2019 -Roads, Sidewalks, & Crosswalks 475,000.00 September 25 2019 -Replacement School Bldg Grounds Equipment 1 45,000.00 September 25 2019 -Replacement School Bldg Grounds Equipment 2 5,000.00 September 25 2019 -Annual Equipment Life Cycle Mngment(Schools) 170,000.00 September 25 2019 -Telephone System Replacements (Schools) 1 270,000.00 September 25 2019 -Telephone System Replacements (Schools) 2 130,000.00 September 25 2019 -Bertram Field Schematic Design Phase II 2 40,000.00 September 25 2019 -High School College & Career Center Floor 65,000.00 September 25 2019 -Salerno Roof & Mechanical HVAC Replacement 105,000.00 September 25 2019 -Canal Street - Phase II (Sewer) 1 45,000.00 September 25 2019 -Sewer Pump Station 2,905,000.00 September 25 2019 -Canal Street (Sewer) Phase II 1 85,000.00 September 25 2019 -Canal Street (Sewer) Phase II 2 770,000.00 Sec 6-22 ---PAGE BREAK--- September 25 2019 -MS4 Compliance/Illicit Connection Removal 1 5,000.00 September 25 2019 -MS4 Compliance/Illicit Connection Removal 2 160,000.00 September 25 2019 -Pre-Paving Sewer/Drain Inspections 30,000.00 September 25 2019 -SSES Report Implementation 1 145,000.00 September 25 2019 -289 Derby Drain 305,000.00 September 25 2019 -Fowler & No Pine Street Sewer Rehabilitation 1 95,000.00 September 25 2019 -Fowler & No Pine Street Sewer Rehabilitation 2 295,000.00 September 25 2019 -Willow Ave Sewer Replacement 95,000.00 September 25 2019 -Rosie's Pond Flood Improvements 690,000.00 September 25 2019 -Water System Upgrades- Valves & Hydrants 985,000.00 September 25 2019 -Szetela Lane Water 245,000.00 September 25 2019 -Citywide Flushing, Valve Leak Detection, GIS 215,000.00 September 25 2019 -Citywide Water System Flushing, Maintenance 395,000.00 November 18 2020 -Recreation-Bertram Field Phase II 1,000,000.00 November 18 2020 -Recreation-Court Renovations 50,000.00 November 18 2020 -IT-Equipment Life-Cycle Mgmt Program (City) 75,000.00 November 18 2020 -IT-Equipment Life-Cycle Mgmt Program (School) 171,506.00 November 18 2020 -IT-View Permit Upgrade 74,680.00 November 18 2020 -Bridge Light LED Conversion 75,000.00 November 18 2020 -Smart Signalization Expansion 50,000.00 November 18 2020 -Electrical - Smart Signalization Expansion 50,000.00 November 18 2020 -Fire Station One Parapet 100,000.00 November 18 2020 -Winter Island Function Hall Deck/Accessibility 100,000.00 November 18 2020 -Court Renovations 125,000.00 November 18 2020 -Golf Course Cart Paths 375,000.00 November 18 2020 -Parking-Traffic Calming Improvements 64,718.00 November 18 2020 -Parking and Traffic-MP & SH Garage Maintenance 50,000.00 November 18 2020 -Museum Place Parking Garage 754,000.00 November 18 2020 -Common Fence 85,000.00 November 18 2020 -Planning-Gallows Hill Park Renovation 125,000.00 November 18 2020 -Furnace and Hot Water Replacement (Police) 110,174.00 November 18 2020 -Police Cameras 45,000.00 November 18 2020 -Police-Boiler and Heaters 109,300.00 November 18 2020 -City Wide Traffic Calming Improvements 15,000.00 November 18 2020 -Boston Street Corridor Roadway Improvements 186,500.00 November 18 2020 -Bridge Street (Massworks) Roadway Improvements 100,000.00 November 18 2020 -Forest River Park and Pool Design/Improvements 200,000.00 November 18 2020 -Willows Park Restoration 120,000.00 November 18 2020 -Derby St Complete Streets 350,000.00 November 18 2020 -Szetela Lance Shared Use Path 303,000.00 November 18 2020 -Roads, Sidewalks & Crosswalks (Non Ch 90) 1,240,000.00 November 18 2020 -School-Saltonstall Water Heaters 83,122.00 November 18 2020 Chiller & Assoc. HVAC System 350,000.00 November 18 2020 -Bentley Academy Boiler Replacement 400,000.00 November 18 2020 -Canal Street SSU Flood Mitigation Phase II 60,000.00 November 18 2020 -Derby St Drainage System Repairs 58,000.00 November 18 2020 -SSES Report Implementation (Eliminate I/I) 400,000.00 November 18 2020 -City Wide Sewer System Flushing & Maintenance 200,000.00 November 18 2020 -Pre-Paving Sewer/Drain Inspections 50,000.00 November 18 2020 -City Wide Water System Flushing & Maintenance 250,000.00 November 18 2020 -Water-Distribution Main System Initiatives 45,000.00 November 18 2020 -Water- Transmission Main System Initiatives 95,000.00 90,240,778.00 Sec 6-23 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 General Aggregate Debt Service Part 1 of 3 DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 2,958,878.00 1,501,183.15 4,460,061.15 06/30/2023 2,850,000.00 1,244,575.12 4,094,575.12 06/30/2024 2,550,000.00 1,114,025.12 3,664,025.12 06/30/2025 2,575,000.00 1,001,540.75 3,576,540.75 06/30/2026 2,230,000.00 899,781.38 3,129,781.38 06/30/2027 2,070,000.00 809,665.75 2,879,665.75 06/30/2028 2,120,000.00 721,503.24 2,841,503.24 06/30/2029 1,965,000.00 631,956.36 2,596,956.36 06/30/2030 1,900,000.00 549,456.36 2,449,456.36 06/30/2031 1,855,000.00 473,496.97 2,328,496.97 06/30/2032 1,820,000.00 403,706.29 2,223,706.29 06/30/2033 1,895,000.00 334,168.79 2,229,168.79 06/30/2034 1,615,000.00 264,540.68 1,879,540.68 06/30/2035 1,230,000.00 216,415.68 1,446,415.68 06/30/2036 640,000.00 188,406.29 828,406.29 06/30/2037 660,000.00 169,256.29 829,256.29 06/30/2038 635,000.00 149,912.55 784,912.55 06/30/2039 650,000.00 130,565.67 780,565.67 06/30/2040 540,000.00 112,631.30 652,631.30 06/30/2041 490,000.00 97,043.80 587,043.80 06/30/2042 485,000.00 82,065.68 567,065.68 06/30/2043 425,000.00 68,087.54 493,087.54 06/30/2044 325,000.00 57,040.64 382,040.64 06/30/2045 340,000.00 47,612.52 387,612.52 06/30/2046 345,000.00 37,884.39 382,884.39 06/30/2047 345,000.00 28,000.00 373,000.00 06/30/2048 355,000.00 17,900.00 372,900.00 06/30/2049 365,000.00 7,512.50 372,512.50 06/30/2050 90,000.00 1,125.00 91,125.00 Total $36,323,878.00 $11,361,059.81 $47,684,937.81 Par Amounts Of Selected Issues October 15 2010 (SQ) -Fire Pumper Truck 125,000.00 October 15 2010 (SQ) -Roads, Sidewalks & Crosswalks 420,000.00 October 15 2010 (SQ) -Furlong Park Remodeling 80,000.00 October 15 2010 (SQ) -Roads, Sidewalks & Crosswalks 2 50,000.00 October 15 2010 (SQ) -Canal St. Improvement Design 150,000.00 September 27 2012 -Forrester Street Drain Relief 255,000.00 September 27 2012 -City Hall Roof 540,000.00 Sec 6-24 ---PAGE BREAK--- September 27 2012 -City Hall Skylights 110,000.00 September 27 2012 -City Hall Windows 280,000.00 September 27 2012 -City Hall Masonry Repairs 695,000.00 September 27 2012 -Roads, Sidewalks & Crosswalks 425,000.00 September 27 2012 -Collins Cove Seawall 85,000.00 September 27 2012 -Remediation 1,135,000.00 December 19 2013 -Police Equipment 50,000.00 December 19 2013 -Fire Equipment 620,000.00 December 19 2013 -Electric Dept Equipment 30,000.00 December 19 2013 -Parks & Rec 105,000.00 December 19 2013 -Canal Street Utility Program 2,850,000.00 December 3 2014 -Drain Improvements 210,000.00 December 3 2014 -Road Improvements 800,000.00 December 3 2014 -Bertram Field 840,000.00 December 3 2014 -Electric- Generator 35,000.00 December 3 2014 -Parking- Water Proofing 770,000.00 December 3 2014 -Planning- MBTA Station 350,000.00 December 2 2015 -Golf Course Equipment 35,000.00 December 2 2015 -Wrought Iron Fence 25,000.00 December 2 2015 -Blaney Street Terminal - City Match 175,000.00 December 2 2015 -Winter Island Pathway & Fort Restoration 25,000.00 December 2 2015 -Police Vehicle GPS Units 15,000.00 December 2 2015 -DPS 1988 Ladder Replacement 120,000.00 December 2 2015 -DPS 2000 Dump Truck Replacement 80,000.00 December 2 2015 -Paving 405,000.00 December 2 2015 -Seawalls 140,000.00 November 17 2016 -Bikeway & Roadway Improvements 230,000.00 November 17 2016 -Painting Pedestrian & Historical Lights 5,000.00 November 17 2016 -Bike Path Design/Construction 5,000.00 November 17 2016 -McGrath Park Paving/Concession Stand 105,000.00 November 17 2016 -Roads Sidewalk & Crosswalks (Non-Chapter 90) 110,000.00 November 17 2016 -General Building Maintenance Upgrades 5,000.00 November 17 2016 -Replace Fire Engine 2 or 5 330,000.00 November 17 2016 -Citywide Computer Replacement 75,000.00 November 17 2016 -Winter Island Electrical Upgrades RVField(Ph 5,000.00 November 17 2016 -Blaney Street Pier & Terminal (City Match) 190,000.00 November 17 2016 -Mary Jane Lee Park (Phase II) 40,000.00 November 17 2016 -Old City Hall Window Replacement 85,000.00 November 17 2016 -Open Space/Pocket Park Upgrades(Public 5,000.00 November 17 2016 -Ford F550 6-wheel dump Truck (unit 50,000.00 November 17 2016 -Ford F550 6-wheel Dump Truck (unit 40,000.00 November 17 2016 -2000 Int'l Dump Truck (unit 95,000.00 November 17 2016 -Trash Packer (Public Services) 50,000.00 November 17 2016 -2-Ton Propane Hot Box (Public Services) 25,000.00 November 17 2016 -Transfer Station Property Remediation 550,000.00 June 27 2018 -Planning Blaney St Pier & Terminal 85,000.00 June 27 2018 -Police GPS for Vehicles 15,000.00 June 27 2018 -Old Town Hall Roof 35,000.00 June 27 2018 -Bike Path Master Plan Upgrades 85,000.00 June 27 2018 -Canal St Roadway & Bike Path Improvements I 10,000.00 June 27 2018 -Canal St Roadway & Bike Path Improvements II 1,000,000.00 June 27 2018 -Citywide Traffic Calming Improvements II 45,000.00 June 27 2018 -Essex St Roadway Improvements I 15,000.00 June 27 2018 -Essex St Roadway Improvements II 30,000.00 June 27 2018 -First/Swampscott Rd Intersection Improvement II 80,000.00 Sec 6-25 ---PAGE BREAK--- June 27 2018 -Seawall at Collins Cove 85,000.00 June 27 2018 -South Salem Walk & Downtown Walk 15,000.00 June 27 2018 -Inflatable Boat & Motor II 5,000.00 June 27 2018 -Annual Life Cycle Management II 30,000.00 June 27 2018 -Fiber Optic Network Phase II 215,000.00 June 27 2018 -Telephone System Replacement I 65,000.00 June 27 2018 -Telephone System Replacement II 50,000.00 June 27 2018 -Basketball Court Renovations 15,000.00 June 27 2018 -Memorial Park Pillars & Fencing Phase II 10,000.00 June 27 2018 -Playground Upgrades 20,000.00 June 27 2018 -Historic Wrought Iron Fence- Salem Commons II 20,000.00 June 27 2018 -Dickson Memorial Chapel Restoration 35,000.00 June 27 2018 -Forest River Conservation Area Improvements 10,000.00 June 27 2018 -License Plate Readers 10,000.00 June 27 2018 -Roof Replacement Police II 500,000.00 June 27 2018 -Public Services Ford F150 15,000.00 June 27 2018 -Public Services Dump Truck (Sander) 45,000.00 June 27 2018 -Fire Chief Response Vehicle I 10,000.00 June 27 2018 -Parking Ford F150 5,000.00 June 27 2018 -Marked Cruisers 25,000.00 June 27 2018 -K9 Crusier 5,000.00 June 27 2018 -29 Passenger Bus 15,000.00 June 27 2018 -42 Passenger Bus 25,000.00 June 27 2018 -77 Passenger Bus 25,000.00 June 27 2018 -Traffic Signal Upgrades 10,000.00 June 27 2018 -Utility Pole Replacement 10,000.00 June 27 2018 -First Swampscott Rd Intersection Improvements 35,000.00 June 27 2018 -Forest River Park & Pool Improvements 35,000.00 June 27 2018 -Loring & Lafayette Improvements 130,000.00 June 27 2018 -McGrath Park Additional Assessments 85,000.00 June 27 2018 -Roads & Sidewalks 680,000.00 June 27 2018 -IT Annual Inventory (City) 60,000.00 June 27 2018 -IT Document Management System 145,000.00 June 27 2018 -IT Facilities Assessment Software 110,000.00 June 27 2018 -Library HVAC Upgraeds 65,000.00 June 27 2018 -Library Structural Upgrades 35,000.00 June 27 2018 -Basketball Court Renovations 2 85,000.00 June 27 2018 -Betram Field Schematic Design Phase II 40,000.00 June 27 2018 -Salem Common Fence 30,000.00 June 27 2018 -Winter Island Function Hall Accessibility 10,000.00 June 27 2018 -Parking Equipment/Kiosks 30,000.00 June 27 2018 -Traffic Signal Communication Upgrades 35,000.00 June 27 2018 -Historic Cemetery Restoration 65,000.00 June 27 2018 -Lafayette Park Restoration 10,000.00 June 27 2018 -Police Dive Equipment 30,000.00 June 27 2018 -Police Fire Alarm Replacement 10,000.00 September 25 2019 -Senior Center Construction 4,900,000.00 September 25 2019 -Planning- Blaney Street Pier & Terminal 1 40,000.00 September 25 2019 -Planning- Blaney Street Pier & Terminal 2 205,000.00 September 25 2019 -Telephone System Replacement 1 75,000.00 September 25 2019 -Telephone System Replacement 2 30,000.00 September 25 2019 -Bike Path Design/ Construction 1 20,000.00 September 25 2019 -Boston Street Roadway Improvements 70,000.00 September 25 2019 -First Swampscott Rd Intersection Improvements2 250,000.00 Sec 6-26 ---PAGE BREAK--- September 25 2019 -370 Essex St. HVAC Design, & Construction 365,000.00 September 25 2019 -Boston Street Corridor Roadway Improvements 1 70,000.00 September 25 2019 -Boston Street Corridor Roadway Improvements 2 120,000.00 September 25 2019 -Bridge Street Massworks Roadway Improvements 2 95,000.00 September 25 2019 -Canal Street Bike Path 1 150,000.00 September 25 2019 -Canal Street Bike Path 2 320,000.00 September 25 2019 -Canal Street Corridor Roadway Improvements 1 105,000.00 September 25 2019 -Canal Street Corridor Roadway Improvements 2 135,000.00 September 25 2019 -Essex St. Ped. & Vehicle Access Improvements 2 1,385,000.00 September 25 2019 -First/Swampscott Rd Intersection Improvements 615,000.00 September 25 2019 -First/Swampscott Rd Intersection Improvements 95,000.00 September 25 2019 -Forest River Park and Pool Design 95,000.00 September 25 2019 -Forest River Park Seawall Replacement 1 1,595,000.00 September 25 2019 -Forest River Park Seawall Replacement 2 580,000.00 September 25 2019 -Roads, Sidewalks, & Crosswalks 475,000.00 November 18 2020 -Recreation-Bertram Field Phase II 1,000,000.00 November 18 2020 -Recreation-Court Renovations 50,000.00 November 18 2020 -IT-Equipment Life-Cycle Mgmt Program (City) 75,000.00 November 18 2020 -IT-Equipment Life-Cycle Mgmt Program (School) 171,506.00 November 18 2020 -IT-View Permit Upgrade 74,680.00 November 18 2020 -Bridge Light LED Conversion 75,000.00 November 18 2020 -Smart Signalization Expansion 50,000.00 November 18 2020 -Electrical - Smart Signalization Expansion 50,000.00 November 18 2020 -Fire Station One Parapet 100,000.00 November 18 2020 -Winter Island Function Hall Deck/Accessibility 100,000.00 November 18 2020 -Court Renovations 125,000.00 November 18 2020 -Golf Course Cart Paths 375,000.00 November 18 2020 -Parking-Traffic Calming Improvements 64,718.00 November 18 2020 -Parking and Traffic-MP & SH Garage Maintenance 50,000.00 November 18 2020 -Museum Place Parking Garage 754,000.00 November 18 2020 -Common Fence 85,000.00 November 18 2020 -Planning-Gallows Hill Park Renovation 125,000.00 November 18 2020 -Furnace and Hot Water Replacement (Police) 110,174.00 November 18 2020 -Police Cameras 45,000.00 November 18 2020 -Police-Boiler and Heaters 109,300.00 November 18 2020 -City Wide Traffic Calming Improvements 15,000.00 November 18 2020 -Boston Street Corridor Roadway Improvements 186,500.00 November 18 2020 -Bridge Street (Massworks) Roadway Improvements 100,000.00 November 18 2020 -Forest River Park and Pool Design/Improvements 200,000.00 November 18 2020 -Willows Park Restoration 120,000.00 November 18 2020 -Derby St Complete Streets 350,000.00 November 18 2020 -Szetela Lance Shared Use Path 303,000.00 November 18 2020 -Roads, Sidewalks & Crosswalks (Non Ch 90) 1,240,000.00 36,323,878.00 Aggregate I 11/ 4/2021 I 1:15 PM Hilltop Securities Inc. Public Finance Page 9 Sec 6-27 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 School Aggregate Debt Service DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 1,673,122.00 723,204.19 2,396,326.19 06/30/2023 1,680,000.00 637,667.58 2,317,667.58 06/30/2024 1,500,000.00 568,092.58 2,068,092.58 06/30/2025 1,330,000.00 511,542.58 1,841,542.58 06/30/2026 1,180,000.00 465,930.08 1,645,930.08 06/30/2027 1,180,000.00 423,664.46 1,603,664.46 06/30/2028 1,197,000.00 382,196.33 1,579,196.33 06/30/2029 865,000.00 346,081.32 1,211,081.32 06/30/2030 885,000.00 315,631.32 1,200,631.32 06/30/2031 915,000.00 284,506.32 1,199,506.32 06/30/2032 935,000.00 252,687.57 1,187,687.57 06/30/2033 950,000.00 220,562.57 1,170,562.57 06/30/2034 970,000.00 187,525.06 1,157,525.06 06/30/2035 645,000.00 160,687.55 805,687.55 06/30/2036 655,000.00 140,465.66 795,465.66 06/30/2037 525,000.00 121,325.02 646,325.02 06/30/2038 485,000.00 104,187.52 589,187.52 06/30/2039 500,000.00 87,059.40 587,059.40 06/30/2040 520,000.00 69,015.66 589,015.66 06/30/2041 535,000.00 50,337.53 585,337.53 06/30/2042 560,000.00 30,915.65 590,915.65 06/30/2043 430,000.00 13,362.52 443,362.52 06/30/2044 30,000.00 5,400.01 35,400.01 06/30/2045 30,000.00 4,687.51 34,687.51 06/30/2046 35,000.00 3,915.63 38,915.63 06/30/2047 35,000.00 3,062.50 38,062.50 06/30/2048 35,000.00 2,187.50 37,187.50 06/30/2049 35,000.00 1,312.50 36,312.50 06/30/2050 35,000.00 437.50 35,437.50 Total $20,350,122.00 $6,117,651.62 $26,467,773.62 Par Amounts Of Selected Issues October 15 2010 (SQ) -School Infrastructure 25,000.00 October 15 2010 (SQ) -School Ballfield Remodeling 20,000.00 September 27 2012 -Collins School 1,065,000.00 September 27 2012 -Collins School 2 4,365,000.00 September 27 2012 -Saltonstall School 965,000.00 Sec 6-28 ---PAGE BREAK--- September 27 2012 -Saltonstall School 2 2,025,000.00 December 19 2013 -Saltonstall School 1,165,000.00 December 19 2013 -Collins Middle School 2,410,000.00 December 19 2013 -School Building Repairs 80,000.00 December 19 2013 -School Equipment 30,000.00 December 19 2013 -Cur Ref of Jan 15 2003 Bowditch School 165,000.00 December 19 2013 -Cur Ref of Jan 15 2003 Carlton School 120,000.00 December 19 2013 -Adv Ref of Jan 1 2005 School 360,000.00 December 19 2013 -Adv Ref of Jan 1 2005 Carlton School 95,000.00 December 2 2015 -Computer Replacement Program 85,000.00 December 2 2015 -District-Wide Security Updates 25,000.00 December 2 2015 -Replace Lunchroom/Cafeteria Equipment 10,000.00 December 2 2015 -HS Transformer Replacement 15,000.00 December 2 2015 -Saltonstall Elementary School I 430,000.00 December 2 2015 -Saltonstall Elementary School II 175,000.00 December 2 2015 -Collins Middle School I 280,000.00 December 2 2015 -Collins Middle School II 600,000.00 December 2 2015 -Collins Middle School III 850,000.00 November 17 2016 -Advance Refunding October 15 2007 High School 2,182,000.00 November 17 2016 -Collins Middle School 695,000.00 November 17 2016 -Districtwide Computer Replacement (School) 30,000.00 November 17 2016 -Saltonstall School Parking/DropOff Area 100,000.00 November 17 2016 -Salerno Automotive Roof Replace (School) 30,000.00 June 27 2018 -School District Computer Replacement 10,000.00 June 27 2018 -Annual Life Cycle Management I (Schools) 15,000.00 June 27 2018 -Annual Life Cycle Management II (Schools) 65,000.00 June 27 2018 -Bentley School HVAC Equipment 10,000.00 June 27 2018 -High School HVAC Upgrades 35,000.00 June 27 2018 -IT Annual Inventory Schools 115,000.00 June 27 2018 -Bentley School Roof Replacement 40,000.00 September 25 2019 -Replacement School Bldg Grounds Equipment 1 45,000.00 September 25 2019 -Replacement School Bldg Grounds Equipment 2 5,000.00 September 25 2019 -Annual Equipment Life Cycle Mngment(Schools) 170,000.00 September 25 2019 -Telephone System Replacements (Schools) 1 270,000.00 September 25 2019 -Telephone System Replacements (Schools) 2 130,000.00 September 25 2019 -Bertram Field Schematic Design Phase II 2 40,000.00 September 25 2019 -High School College & Career Center Floor 65,000.00 September 25 2019 -Salerno Roof & Mechanical HVAC Replacement 105,000.00 November 18 2020 -School-Saltonstall Water Heaters 83,122.00 November 18 2020 Chiller & Assoc. HVAC System 350,000.00 November 18 2020 -Bentley Academy Boiler Replacement 400,000.00 20,350,122.00 Aggregate I 11/ 4/2021 I 1:15 PM Hilltop Securities Inc. Public Finance Page 14 Sec 6-29 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 Water Aggregate Debt Service DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 1,621,880.00 550,115.63 2,171,995.63 06/30/2023 1,644,443.00 475,472.29 2,119,915.29 06/30/2024 1,652,058.00 406,707.28 2,058,765.28 06/30/2025 1,659,726.00 338,426.94 1,998,152.94 06/30/2026 1,292,447.00 280,030.21 1,572,477.21 06/30/2027 935,224.00 238,241.00 1,173,465.00 06/30/2028 708,000.00 206,228.76 914,228.76 06/30/2029 525,000.00 180,068.76 705,068.76 06/30/2030 400,000.00 161,518.76 561,518.76 06/30/2031 420,000.00 145,918.76 565,918.76 06/30/2032 330,000.00 132,856.26 462,856.26 06/30/2033 350,000.00 121,331.26 471,331.26 06/30/2034 270,000.00 110,856.26 380,856.26 06/30/2035 280,000.00 102,081.26 382,081.26 06/30/2036 285,000.00 93,481.26 378,481.26 06/30/2037 290,000.00 84,787.51 374,787.51 06/30/2038 175,000.00 77,775.03 252,775.03 06/30/2039 175,000.00 72,300.01 247,300.01 06/30/2040 180,000.00 66,637.51 246,637.51 06/30/2041 180,000.00 60,506.26 240,506.26 06/30/2042 185,000.00 54,225.01 239,225.01 06/30/2043 185,000.00 47,737.51 232,737.51 06/30/2044 200,000.00 41,175.01 241,175.01 06/30/2045 205,000.00 34,550.01 239,550.01 06/30/2046 215,000.00 27,668.75 242,668.75 06/30/2047 215,000.00 20,075.00 235,075.00 06/30/2048 230,000.00 12,400.00 242,400.00 06/30/2049 95,000.00 4,325.00 99,325.00 06/30/2050 100,000.00 1,462.50 101,462.50 Total $15,003,778.00 $4,148,959.80 $19,152,737.80 Par Amounts Of Selected Issues December 14 2006 DW-05-12 800,778.00 October 15 2010 (SQ) -Water Systems Improvement 960,000.00 October 15 2010 (SQ) -Water Meters 1,000,000.00 October 15 2010 (SQ) -Water Main 1,100,000.00 September 27 2012 -Water System Improvements 950,000.00 Sec 6-30 ---PAGE BREAK--- December 2 2015 -Folly Hill Tank Storage I 880,000.00 December 2 2015 -Folly Hill Tank Storage II 440,000.00 December 2 2015 -System Flushing/Valve Maintenance 175,000.00 December 2 2015 -Meter Replacement Program 40,000.00 December 2 2015 -Valve Pipe Replacement 40,000.00 November 17 2016 -Adv Ref Oct 15 2007 Water System Improvements 1,013,000.00 November 17 2016 -Folly Hill Tank Storage (Water) 325,000.00 November 17 2016 -Water Meter Replacement Program 60,000.00 November 17 2016 -Rehab Gallows Hill Water Tanks 1 780,000.00 November 17 2016 -Rehab Gallows Hill Water Tanks 2 130,000.00 November 17 2016 -Water System Upgrade (Valves & Hydrants) 425,000.00 November 17 2016 -Water System Improvements 980,000.00 November 17 2016 -Water Leak Protection, Flushing & GIS Admin 1 125,000.00 November 17 2016 -Water Leak Protection, Flushing & GIS Admin 2 125,000.00 June 27 2018 -Water System Upgrades- Valves & Hydrants 940,000.00 June 27 2018 -Water Distribution System Improvements 1,085,000.00 June 27 2018 -Water System Flushing, Valves, Leak & GIS 115,000.00 June 27 2018 -Water System Transmission System 115,000.00 June 27 2018 -Water- Salem Pump Station & Booster Station 10,000.00 June 27 2018 -Water- Essex St Improvements 160,000.00 September 25 2019 -Water System Upgrades- Valves & Hydrants 985,000.00 September 25 2019 -Szetela Lane Water 245,000.00 September 25 2019 -Citywide Flushing, Valve Leak Detection, GIS 215,000.00 September 25 2019 -Citywide Water System Flushing, Maintenance 395,000.00 November 18 2020 -City Wide Water System Flushing & Maintenance 250,000.00 November 18 2020 -Water-Distribution Main System Initiatives 45,000.00 November 18 2020 -Water- Transmission Main System Initiatives 95,000.00 15,003,778.00 Aggregate I 11/ 4/2021 I 1:15 PM Hilltop Securities Inc. Public Finance Page 15 Sec 6-31 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 Sewer Aggregate Debt Service DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 778,000.00 666,427.45 1,444,427.45 06/30/2023 785,000.00 617,618.80 1,402,618.80 06/30/2024 795,000.00 581,318.80 1,376,318.80 06/30/2025 815,000.00 545,218.80 1,360,218.80 06/30/2026 835,000.00 509,418.80 1,344,418.80 06/30/2027 840,000.00 474,381.30 1,314,381.30 06/30/2028 855,000.00 440,006.30 1,295,006.30 06/30/2029 880,000.00 404,993.80 1,284,993.80 06/30/2030 865,000.00 370,568.80 1,235,568.80 06/30/2031 840,000.00 339,031.30 1,179,031.30 06/30/2032 850,000.00 309,812.55 1,159,812.55 06/30/2033 825,000.00 280,425.05 1,105,425.05 06/30/2034 810,000.00 251,293.80 1,061,293.80 06/30/2035 810,000.00 224,706.30 1,034,706.30 06/30/2036 655,000.00 202,240.66 857,240.66 06/30/2037 540,000.00 184,075.02 724,075.02 06/30/2038 370,000.00 170,012.52 540,012.52 06/30/2039 380,000.00 158,331.28 538,331.28 06/30/2040 395,000.00 146,050.03 541,050.03 06/30/2041 400,000.00 132,687.53 532,687.53 06/30/2042 420,000.00 118,634.41 538,634.41 06/30/2043 435,000.00 103,990.66 538,990.66 06/30/2044 455,000.00 88,921.91 543,921.91 06/30/2045 465,000.00 73,946.90 538,946.90 06/30/2046 475,000.00 58,656.25 533,656.25 06/30/2047 495,000.00 42,075.00 537,075.00 06/30/2048 510,000.00 24,775.00 534,775.00 06/30/2049 270,000.00 6,975.00 276,975.00 06/30/2050 105,000.00 1,500.00 106,500.00 Total $17,953,000.00 $7,528,094.02 $25,481,094.02 Par Amounts Of Selected Issues October 15 2010 (SQ) -Sewer Pump Station 80,000.00 October 15 2010 (SQ) -South River Basin Upgrade 650,000.00 September 27 2012 -Sewer Pump Station Upgrade 130,000.00 September 27 2012 -South River Basin Upgrade 325,000.00 Sec 6-32 ---PAGE BREAK--- September 27 2012 -South River Basin Upgrade 2 235,000.00 December 3 2014 -South River Basin Upgrade 1,400,000.00 December 2 2015 -I/I Study, Design & Construction 550,000.00 December 2 2015 -Canal St. Phase II 1,300,000.00 December 2 2015 -Illicit Connection Removal 75,000.00 December 2 2015 -Line Extension, Rehab & Upgrades 25,000.00 November 17 2016 -Canal Street Sewer Phase 2 1,285,000.00 November 17 2016 -Sewer Leak Detection, Flushing & GIS Admin 340,000.00 November 17 2016 -Sewer Illicit Connection Removal 645,000.00 June 27 2018 -Sewer Pump Station I 35,000.00 June 27 2018 -Sewer Pump Station II 3,110,000.00 June 27 2018 -Sewer System Flushing, Valve, Leak & GIS I 115,000.00 June 27 2018 -Sewer System Flushing, Valve, Leak & GIS II 255,000.00 June 27 2018 -Swampscott Rd Sewer Pump Station II 30,000.00 June 27 2018 -Sewer MS4 Compliance/Connection Removal II 530,000.00 June 27 2018 -Canal St Sewer Upgrades Phase I 285,000.00 June 27 2018 -Sewer- Essex St Improvements 160,000.00 September 25 2019 -Canal Street - Phase II (Sewer) 1 45,000.00 September 25 2019 -Sewer Pump Station 2,905,000.00 September 25 2019 -Canal Street (Sewer) Phase II 1 85,000.00 September 25 2019 -Canal Street (Sewer) Phase II 2 770,000.00 September 25 2019 -MS4 Compliance/Illicit Connection Removal 1 5,000.00 September 25 2019 -MS4 Compliance/Illicit Connection Removal 2 160,000.00 September 25 2019 -Pre-Paving Sewer/Drain Inspections 30,000.00 September 25 2019 -SSES Report Implementation 1 145,000.00 September 25 2019 -289 Derby Drain 305,000.00 September 25 2019 -Fowler & No Pine Street Sewer Rehabilitation 1 95,000.00 September 25 2019 -Fowler & No Pine Street Sewer Rehabilitation 2 295,000.00 September 25 2019 -Willow Ave Sewer Replacement 95,000.00 September 25 2019 -Rosie's Pond Flood Improvements 690,000.00 November 18 2020 -Canal Street SSU Flood Mitigation Phase II 60,000.00 November 18 2020 -Derby St Drainage System Repairs 58,000.00 November 18 2020 -SSES Report Implementation (Eliminate I/I) 400,000.00 November 18 2020 -City Wide Sewer System Flushing & Maintenance 200,000.00 November 18 2020 -Pre-Paving Sewer/Drain Inspections 50,000.00 17,953,000.00 Aggregate I 11/ 4/2021 I 1:15 PM Hilltop Securities Inc. Public Finance Page 16 Sec 6-33 ---PAGE BREAK--- City of Salem, Massachusetts Long-Term Debt Outstanding as of June 30, 2021 Parking Aggregate Debt Service DATE PRINCIPAL INTEREST TOTAL P+I 06/30/2021 - - - 06/30/2022 75,000.00 22,506.26 97,506.26 06/30/2023 75,000.00 19,356.26 94,356.26 06/30/2024 80,000.00 16,106.26 96,106.26 06/30/2025 80,000.00 12,756.26 92,756.26 06/30/2026 80,000.00 9,431.26 89,431.26 06/30/2027 75,000.00 6,281.26 81,281.26 06/30/2028 15,000.00 4,518.76 19,518.76 06/30/2029 15,000.00 3,981.26 18,981.26 06/30/2030 15,000.00 3,431.26 18,431.26 06/30/2031 15,000.00 2,881.26 17,881.26 06/30/2032 15,000.00 2,375.01 17,375.01 06/30/2033 15,000.00 1,912.51 16,912.51 06/30/2034 15,000.00 1,443.76 16,443.76 06/30/2035 15,000.00 981.26 15,981.26 06/30/2036 15,000.00 528.13 15,528.13 06/30/2037 10,000.00 150.00 10,150.00 Total $610,000.00 $108,640.77 $718,640.77 Par Amounts Of Selected Issues December 2 2015 -Garage Updates 100,000.00 December 2 2015 -Kiosk Umbrellas 20,000.00 November 17 2016 -Automation of South Harbor Garages (Parking) 360,000.00 November 17 2016 -Parking Garage Upgrades 130,000.00 610,000.00 Aggregate I 11/ 4/2021 I 1:15 PM Hilltop Securities Inc. Public Finance Page 18 Sec 6-34 ---PAGE BREAK--- City of Salem – Financial Reserve Policy Stabilization Fund A stabilization fund is a fund designed to accumulate amounts for capital and other future spending purposes, although it may be appropriated for any lawful purpose (MGL Ch. 40 §5B). Communities may establish one or more stabilization funds for different purposes and may appropriate into them in any year an amount not to exceed ten percent of the prior year’s tax levy. The total of all stabilization fund balances shall not exceed ten percent of the community’s equalized value, and any interest shall be added to and become a part of the funds. A two-thirds vote of the city council is required to establish, amend the purpose of, or appropriate money from the stabilization fund. The City has set a target level for minimum Stabilization fund of 5% of the City’s current general fund operating budget which is 7.26M based on 2019 budget of 145M. The stabilization fund shall be funded by appropriations from free cash, operating budget appropriations when available, and other one-time non-recurring revenues that become available for appropriation per M.G.L. 1. Any draw down of the stabilization fund from the prior fiscal year should be allocated from the certified free cash if available. 2. Twenty percent of any free cash available after funding #1 above will be allocated from free cash to the stabilization fund, up to the proposed reserve balance of the stabilization fund of operating budget). The stabilization fund should only be used for the following circumstances: 1. When net State Aid (receipts less assessments) is reduced by an amount less than the average of the prior two years. 2. When Local Receipts projected are below a three per cent increase of the prior two year’s actual receipts as reported on page three of the Tax Rate Recapitulation as certified by the Director of the Bureau of Accounts (excluding non-recurring receipts). 3. When there is a catastrophic or emergency event(s) that cannot be supported by current general fund appropriations. . Sec 6-35 ---PAGE BREAK--- Retirement Stabilization Fund The Retirement Stabilization Fund was created in FY 2008 to fund all appropriations for sick and vacation time earned by an employee as regulated by collective bargaining agreements or City of Salem policy for non-union and management employees. When budget season begins, the finance department will request each department to determine if there are any employees in their department who may be retiring. Departments (including Salem Public Schools) will submit list of employees and the anticipated amounts of each employee’s retirement buyout. In FY 2013 the Commonwealth of Massachusetts created Massachusetts General Law Chapter 40 Section 13D which authorizes the creation of a retirement stabilization account to fund future payment of accrued liabilities for compensated absences. A council order was submitted to the City Council on May 23, 2013 to adopt this legislation. The Finance Department will calculate the cumulative amount of anticipated retirement dollars needed for the following year’s budget and incorporate the amount into the Mayor’s recommended budget submitted to Council. There is line item within the Budget Transfers Out to account for retirement anticipations. This line item will be reviewed and voted on by the City Council as it does with other budgets. Once Council approves the budget, the funds are then booked into the Retirement Stabilization Fund as voted. Appropriations both into and from the Retirement Stabilization Fund require a 2/3 vote of the City Council. 1. The fund is limited to 10% of the prior year’s tax levy. Fiscal Year End Bal 2012 3,453,722 2013 3,438,799 2014 5,173,812 2015 5,831,296 2016 6,092,766 2017 6,037,015 2018 6,511,290 2019 7,397,757 2020 9,111,337 2021 10,043,960 Stabilization Fund Sec 6-36 ---PAGE BREAK--- 2. All interest earned in the Retirement Stabilization Fund will stay with the Fund. Any appropriations that are not used during the fiscal year will be carried over into the next fiscal year as a fund balance. All employees who are on the list will then be compensated at retirement for their accrued sick, vacation, and other benefits that they are entitled once approved by both Human Resources and the Department Head. If an employee retires and was not budgeted for in the Retirement Stabilization Fund, the department head shall submit a request to the human resource department who will verify the buyback amounts and forward the request to the Finance Department. The Finance Director will consider the request and fund it from surplus Retirement Stabilization funds or other available funds. It is the policy of the City to build up an adequate reserve in the retirement anticipation fund to cover those retirements that were not anticipated. At the end of FY 2021 we may transfer some free cash into this fund to cover FY 2022 retirements. In FY 2022 we are budgeting 600,000 to be transferred to this fund. Fiscal Year Budgeted 2012 400,000 2013 850,000 2014 600,000 2015 600,000 2016 400,000 2017 100,000 2018 - 2019 380,808 2020 452,314 2021 600,000 2022 600,000 Retirement Stabilization Fund Budgeted Amounts Sec 6-37 ---PAGE BREAK--- Other Post Employment Benefit (OPEB) (GASB 45) The City is mandated by the Governmental Accounting Standards Board (GASB) to start accounting for Other Post Employment Benefit (OPEB) as outlined in statement 45. In FY 2011 the City Council voted to establish an OPEB Stabilization Fund. We anticipate funding this account through annual appropriation from certified free cash (10%) as we do for our Capital Project and our Stabilization fund. In FY 2015 the Mayor modified the policy to move 5% of free cash to OPEB and 5% of free cash to the Retirement Board to help offset the pension liability. Five percent of free cash certified will be allocated to the OPEB Reserve Fund for the future liability of current worker’s post-employment benefits (other than retirement pension). This includes the cost of health, life, and dental benefits. The amount to be funded for GASB 45 is to be determined by an actuarial study that is to be performed by an actuary that the City chooses (perhaps in conjunction with actuarial studies done by the Salem Contributory Retirement System). Fiscal Year End Bal 2012 374,924 2013 675,003 2014 1,250,000 2015 1,507,000 2016 1,701,917 2017 2,189,299 2018 2,572,670 2019 2,830,000 2020 3,511,488 2021 4,914,890 Other Post Employment Benefit (OPEB) GASB 45 Sec 6-38 ---PAGE BREAK--- Capital Project Fund – Short-Term Supplemental Miscellaneous & Unanticipated Funds The City of Salem uses a capital project fund to supplement the short-term capital needs of the City. 1. Twenty percent of any free cash available after funding #1 above will be allocated from free cash to the Capital Improvement Program (CIP) Fund. These funds are used during the fiscal year for to supplement the Capital Improvement Plan (Section 7) for unanticipated or emergency equipment or repairs as needed, or for those items that don’t meet the CIP criteria (value > $25,000 and a life expectancy of 5 or more years). Fiscal Year End Bal 2012 525,874 2013 947,324 2014 1,300,000 2015 1,000,000 2016 1,521,621 2017 472,539 2018 89,285 2019 500,000 2020 2,315,098 2021 3,476,794 Capital Project Fund - Short Term Sec 6-39 ---PAGE BREAK--- Free Cash Free cash is the remaining, unrestricted funds from operations of the previous fiscal year including unexpended free cash from the previous year, actual receipts in excess of revenue estimates shown on the tax rate recapitulation sheet, and unspent amounts in budget line-items. Unpaid property taxes and certain deficits reduce the amount that can be certified as free cash. The calculation of free cash is based on the balance sheet as of June 30, which is submitted by the community's auditor, accountant, or comptroller. Free cash is not available for appropriation until certified by the Massachusetts Director of Accounts. Free cash is the term used for a community’s funds that are available for appropriation. Once free cash is certified, it is available for appropriation by City Council. Free cash may be used for any lawful municipal purpose and provides communities with flexibility to fund additional appropriations after the tax rate has been set. Free cash balances do not necessarily carry forward to the next fiscal year (July 1st); the Director’s certification expires on June 30th at the end of the fiscal year. The City’s policy is to use free cash for reserves, capital, and special uses in accordance with the policies set forth by the Mayor and Finance Director as stated above. Any free cash available after funding the above may be used to augment trust funds related to fringe benefits and un-funded liabilities related to employee benefits, Workers' Compensation Fund, Unemployment Fund, and any health benefits payable through Police and Fire operating budgets (111f settlements). Free Cash available may also be used to augment general fund appropriations for expenses that increased due to extraordinary and/or unforeseen events as detailed by the department head of the affected budget. Fiscal Year End Bal 2012 2,525,829 2013 5,498,710 2014 3,349,683 2015 4,949,767 2016 5,380,858 2017 4,922,937 2018 5,949,483 2019 7,638,739 2020 8,951,313 2021 17,444,553 Free Cash Certified by DOR Sec 6-40 ---PAGE BREAK--- Retained Earnings – Enterprise Funds Retained Earnings is the portion of Net Assets Unrestricted that is certified by the Department of Revenue as available for appropriation. Certification requires submission of a June 30 balance sheet accompanied by all information necessary to calculate free cash in the General Fund. Once certified, retained earnings may be appropriated through the following June 30 and no appropriation may be in excess of the certified amount. Retained earnings may be appropriated to: 1. Fund direct costs of the enterprise for the current fiscal year; 2. Fund costs appropriated in the General Fund operating budget and allocated to the enterprise for the current fiscal year; 3. Reimburse the General or other fund for subsidized capital costs of the enterprise not already reimbursed for the two full, immediately prior, fiscal years. The City of Salem generally uses Water & Sewer retained earnings to fund capital improvements that may come up during the fiscal year as well as emergency repairs needed due to water or sewer main breaks or other related repairs. Some capital equipment may be funded during the year from these as well. In FY 2013 the Mayor submitted a council order to request that the water and sewer enterprise funds be combined for FY 2014 as allowed by the Department of Revenue as outlined in Bulletin 2012-B (page 3/7). The Water Enterprise fund revenues had been insufficient to cover expenses and the City had to appropriate free cash to cover the deficits. Part of the problem was the one time use of retained earnings in FY 2012 to supplement the revenue. That funding was not used in FY 2013 and the rate increases were insufficient to cover expenses. In FY 2013 we had to raise $218,738 on the General Fund RECAP to cover the FY 2012 deficit. We also had to appropriate Free Cash to cover the June 30, 2013 deficit of $307,522.50. By combining the funds we can use sewer revenue to help offset the water deficit. We may be requesting an increase on both water and sewer rates for FY 2019 to cover increased debt expenses. The water and sewer funds will remain in separate funds for accounting and budgeting purposes within the City. However, they are combined for reporting purposes on the City’s annual financial statements (CAFR), when calculating Retained Earnings by the Department of Revenue, and when filing the City’s annual Tax Recapitulation (RECAP). The following are the Sewer and Water COMBINED retained earnings. Sec 6-41 ---PAGE BREAK--- The Trash Enterprise fund is not a fully self-supporting fund but has generated retained earnings. Fiscal Year Certified 2012 347,312 2013 1,704,682 2014 1,574,157 2015 1,803,130 2016 3,044,317 2017 2,449,470 2018 2,703,564 2019 2,500,000 2020 3,640,860 2021 3,239,564 Water-Sewer Retained Earnings Certified by DOR Fiscal Year Certified 2012 110,108 2013 323,738 2014 480,116 2015 327,688 2016 446,379 2017 489,884 2018 324,422 2019 113,461 2020 73,365 2021 343,181 Trash Retained Earnings Certified by DOR Sec 6-42 ---PAGE BREAK--- City of Salem - Investment Policy Section I - The investment of General Funds, Special Revenue Funds, Enterprise Funds, and Capital Projects Funds. Scope This section of the policy applies only to short term operating funds such as general funds, special revenue funds, enterprise funds, and capital project funds. Section 2 will deal with trust funds, bond proceeds, and any other funds with special circumstances such as stabilization funds. A separate Contributory Retirement Board, either local or county, is responsible for the investment of the pension funds. Objectives Massachusetts General Laws, Chapter 44, section 55B requires the municipal/district treasurer to invest all public funds except those required to be kept un-invested for purposes of immediate distribution. Modern banking systems enable the public treasurer to maintain even these funds in interest bearing form until the date a disbursement order clears through the banking system. The state law further requires that invested funds are to be placed at the highest possible rate of interest reasonably available, taking account of safety, liquidity and yield. Therefore, these guidelines are intended to further the objective of securing the highest return that is consistent with safety of principal while meeting the daily cash requirements for the operation of the entity's business. Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital through the mitigation of credit risk and interest rate risk. The diversification and prudent selection of investment instruments and choice of depository shall mitigate these risks. Credit risk is the risk of loss due to the failure of the security issuer or backer. Interest rate risk is the risk that the market value of the security will fall due to changes in general interest rates. Liquidity is the next most important objective. The overall investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. Since all possible cash demands cannot be anticipated, the treasurer shall carry out investment activities in a manner that provides for meeting unusual cash demands without the liquidation of investments that could result in forfeiture of accrued interest earnings, and loss of principal in some cases. Sec 6-43 ---PAGE BREAK--- Yield is the third, and last, objective. Investments shall be undertaken so as to achieve a fair market average rate of return, taking into account safety and liquidity constraints as well as all legal requirements. Investment Instruments The Treasurer may invest in the following instruments: 1. Massachusetts State pooled fund: Unlimited amounts (Pool is liquid) The Massachusetts Municipal Depository Trust (MMDT), an investment pool for state, local, county and other independent governmental authorities, is under the auspices of the Massachusetts State Treasurer and currently managed by Fidelity Investments. It invests in Bankers Acceptances, Commercial Paper of high quality, Bank Certificates of Deposit, Repurchase agreements (Repos), and U. S. Treasury Obligations. It has Federal Deposit Insurance Corporation (F.D.I.C.) pass-through insurance on the CD's and takes delivery on the Repos and Treasuries. Under Government Accounting Standards Board Regulation (GASB III), it is not considered an uncollateralized product. 2. U. S. Treasuries that will be held to maturity: Unlimited amounts (Up to one-year maturity from date of purchase) 3. U.S. Agency obligations that will be held to maturity. Unlimited amounts (Up to one-year maturity from date of purchase) 4. Bank accounts or Certificates of Deposit, hitherto termed CD's. (Up to one year) which are fully collateralized through a third party agreement: Unlimited amounts 5. Bank accounts and CD's (Up to one year) fully insured by F.D.I.C. and in some cases also Depository Insurance Fund of Massachusetts (D.I.F.M): $250,000 limit all bank accounts and CD’s in one institution are considered in the aggregate to receive the $250,000 insurance coverage. 6. Unsecured bank deposits of any kind such as other checking, savings, money market, or Certificates of Deposit accounts at Banks that do not fit the above categories. These investments are subject to the following limitations: These investments will be limited to no more than 5% of an institution's assets and no more than 10% of a municipality's cash. Their credit worthiness will be tracked by Veribanc, Sheshunoff, or other bank credit worthiness reporting systems. They will be diversified as much as possible. CD's will be purchased for no more than three months and will be reviewed frequently. 7. Money Market Mutual Funds that are registered with the Securities and Exchange Commission that have received the highest possible rating from at least one nationally recognized statistical rating organization and as otherwise referenced in the MGL 44 Section 55. Sec 6-44 ---PAGE BREAK--- Risk Tolerance Credit Risk is the risk that an issuer or other counterparty to an investment neither will fulfill its obligations. The City will manage credit risk several ways. There will be no limit to the amount of United States Treasury and United States Government Agency obligations, as they carry an AAA rating. In regards to other investments, the City will only purchase investment grade securities with a high concentration in securities rated A or better. The City may invest in the Massachusetts Municipal Depository Trust (MMDT) with no limit to the amount of funds placed in the fund. Custodial Risk is the risk for deposits that in the event of the failure of a depository financial institution, a municipality will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a municipality will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City will review the financial institution’s financial statements and the background of the advisor. The intent of qualification is to limit the city’s exposure to only those institutions with a proven financial strength, capital adequacy of the firm, and the overall affirmative reputation in the municipal industry. Further all securities not held directly by the city will be held in the city’s name and tax identification number by a third party custodian approved by the Treasurer and evidenced by safekeeping receipts showing individual CUSIP numbers for each security. Concentration of Credit Risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City will minimize concentration of credit risk by diversifying the investment portfolio so that the impact of potential losses from any one type of security or issuer will be minimized or not exist. Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair market value of an investment. The City will manage interest rate risk by managing duration in the account. Foreign Currency Risk is the risk that changes in foreign monetary exchange rates will adversely affect the fair value of an investment. The City will not invest in any instrument exposed to foreign currency risk. Diversification Diversification should be interpreted in two ways: in terms of maturity as well as instrument type and issuer. The diversification concept should include prohibition against over concentration of maturities as well as concentration in a specific institution. With the exception of U.S. Treasury obligations or investments fully collateralized by U.S. Treasuries or agencies, and State pools (MMDT), no more than 10% of the Town's investments shall be invested in a single financial institution. Sec 6-45 ---PAGE BREAK--- Authorization The Treasurer has authority to invest municipality/district funds, subject to the statutes of the Commonwealth cited above. Ethics The Treasurer (and any Assistant Treasurers) shall refrain from any personal activity that may conflict with the proper execution of the investment program or which could impair or appear to impair ability to make impartial investment decisions. Said individuals shall disclose to the Chief Executive Officer any material financial interest in financial institutions that do business with the City. They shall also disclose any large personal financial investment positions or loans that could be related to the performance of the town's investments. Relationship with Financial Institutions Financial institutions should be selected first and foremost with regard to safety. Municipalities/Districts should subscribe to and use one or more of the recognized bank rating services, such as Veribanc or Sheshunoff. Brokers should be recognized, reputable dealers. The Treasurer shall require any brokerage houses and broker/dealers, wishing to do business with the municipality, to supply the following information to the Treasurer: Audited financial statements Proof of National Association of Security Dealers certification A statement that the dealer has read the municipality's investment policy and will comply with it Proof of credit worthiness (minimum standards: at least five years in operation and a minimum capital of 10 million dollars) Section II - The Investment of Trust Funds and Bond Proceeds This section of the policy applies only to funds that could be invested long term, i.e. trust funds, stabilization funds and bond proceeds. For issues subject to arbitrage rebate, an arbitrage tracking system such as those available at banks and Mass Municipal Depository Trust (MMDT) will be used to track expenditures of and interest earned on borrowed funds. Alternative tracking systems should be approved by and used under the advice of Bond Counsel. Sec 6-46 ---PAGE BREAK--- Arbitrage Regulations Tax free debt may be issued by cities, towns, and districts, which means that they are able to borrow at rates well below market rates. At the same time, the federal government has issued regulations to prevent them from issuing debt with the goal of investing the borrowed funds at a higher rate of interest than that at which the money was borrowed, or committing arbitrage. If the federal regulations are not followed, there are fines and penalties, but even worse, the tax free status of the debt could be jeopardized. The following arbitrage regulations will be followed: Unless debt is issued as a "small issuer," that is, an entity issuing less than $10 million of tax exempt debt in a calendar year, the proceeds shall be used within certain prescribed time frames, or be subject to fines and penalties as described above. Following are the general rules and time frames for spending borrowed funds in order to avoid having to pay a rebate to the Federal government on investment income earned on the borrowed funds. All funds must be used according to the following schedules or sooner: CONSTRUCTION DEBT First six months: 10% First year: 45% Eighteen months: 75% Two years: 100% CAPITAL EXPENDITURES DEBT OTHER THAN CONSTRUCTION PROJECTS First six months: 15% First year: 60% Eighteen months: 100% ALL OTHER MUNICIPAL PURPOSE DEBT First six months: 100% Trust Funds Trust Funds may be co-mingled and invested in any instruments allowed by the Legal List issued by the Banking Commissioner each July. Each trust fund must be accounted for separately. Sec 6-47 ---PAGE BREAK--- Stabilization Funds The Stabilization Fund shall not exceed ten per cent of the equalized valuation of the city or town, and any interest shall be added to and become a part of the fund. The treasurer may invest the proceeds in the following: National Banks Savings Banks Cooperative banks or trust companies organized under Massachusetts laws Securities legal for savings banks ( i.e. those on the Legal List described above) Federal Savings and Loan Associations situated in the Commonwealth Massachusetts Municipal Depository Trust Reporting Requirements On a regular basis (quarterly, semi-annually, or annually), a report containing the following information will be prepared by the Treasurer and distributed to the Chief Executive Officer, Town Manager, and/or Finance Committee, as appropriate. The quarterly report will include the following information, as a minimum requirement: A listing of the individual accounts and individual securities held at the end of the reporting period. A listing of the short-term investment portfolio by security type and maturity to ensure compliance with the diversification and maturity guidelines established in the "Diversification" section of this Investment Policy. A summary of the income earned on a basis and year to date basis shall be reported. The municipal treasurer shall include in the report a brief statement of general market and economic conditions and other factors that may affect the City’s cash position. The report should demonstrate the degree of compliance with the tenets set forth in the Investment Policy. Sec 6-48 ---PAGE BREAK--- City of Salem - Fraud Policy The City of Salem is committed to protecting its revenue, property, information, and other assets from any attempt, either by members of the public, contractors, vendors, agents or its own employees, to gain by deceit, financial or other benefits at the expense of the taxpayers. City Officials and employees must, at all times, comply with all applicable laws and regulations. The City will not condone the activities of officials or employees who achieve results through violation of the law or unethical business dealings. The City does not permit any activity that fails to stand the closest possible public scrutiny. This policy sets out specific guidelines and responsibilities regarding appropriate actions that must be followed for the investigation of fraud and other similar irregularities. In FY 2015 the City hired the auditing firm of Melanson & Heath to conduct a fraud risk assessment covering accounts receivable, accounts payable and payroll. Melanson & Health will provide the Finance Director with a comprehensive report outlining how each department is performing in these areas and make recommendations as to what we can do to further protect the City’s assets. This will be an ongoing project with annual reviews and updates. Definitions Occupational fraud is defined by the Association of Certified Fraud Examiners as the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets. There are three major categories of occupational fraud. Asset Misappropriations – Theft or misuse of an organization’s assets. o Cash Fraudulent Disbursements – Perpetrator causes organization to disburse funds through some trick or device (e.g. submitting false invoices/time card/sheets, expense reimbursement schemes, check tampering, etc.) Skimming – Cash is stolen from an organization before it is recorded on the organization’s books and records. Sec 6-49 ---PAGE BREAK--- Cash Larceny – Cash is stolen from an organization after it has been recorded on the organization’s books and records. o Inventory and all other assets Misuse – Misuse of an organization’s inventory or assets for personal use (e.g. City vehicles, computers, supplies, etc.) Larceny – Inventory or other assets are stolen from an organization. Corruption – Wrongfully use influence in a business transaction in order to procure some benefit for themselves or another person, contrary to duty to employer or the rights of another. o Conflicts of Interest – An undisclosed economic or personal interest in a transaction that adversely affects the employer. o Bribery – The offering, giving, receiving, or soliciting of anything of value to influence an official act or business decision. o Illegal Gratuities – A party who benefits from an official act or a business decision gives a gift to a person who made the decision. An illegal gratuity does not require proof o Economic Extortion – An employee demands that a vendor/contractor/etc. pay to influence an official act or a business decision. Fraudulent Statements – Falsification of an organization’s financial statements. Other similar irregularities is defined as any activity involving questionable behavior or business dealings by members of the public, contractors, vendors, agents or government employees, that put government revenue, property, information and other assets at risk of waste or abuse. Applicability This policy applies to all Elected Officials and employees of the City of Salem as well as any business or individual doing business with the government. Sec 6-50 ---PAGE BREAK--- General Policy and Responsibility 1. It is the government’s intent to fully investigate any suspected acts of fraud or other similar irregularity. An objective and impartial investigation will be conducted regardless of the position, title, and length of service, or relationship with the government of any party who might be or becomes involved in or becomes/is the subject of such investigation. 2. Each Elected Official, Department Head, Commissioner and Manager is responsible for instituting and maintaining a system of internal control to provide reasonable assurance for the prevention and detection of fraud, misappropriations and other irregularities. Management should be familiar with the types of improprieties that might occur within their area of responsibility and be alert for any indications of such conduct. 3. The Finance Director has the primary responsibility for the investigation of all activity defined in this policy. 4. The Finance Director will notify their Independent Auditing Firm and the Mayor of a reported allegation of fraudulent or irregular conduct upon the commencement of the investigation to the extent practical. Throughout the investigation the Mayor will be informed of pertinent investigative findings. 5. In all circumstance where there are reasonable grounds to indicate that a fraud may have occurred, the Finance Department and/or Independent Auditor, subject to the advice of Mayor and City Solicitor, will contact the office of the District Attorney and/or the Salem Police. 6. Upon conclusion of the investigation, the results will be reported to the Mayor and others as determined necessary. 7. The City Solicitor will pursue every reasonable effort, including court ordered restitution, to obtain recovery of the City’s losses from the offender, or other appropriate source. Procedures 1. All Employees Any employee who has knowledge of an occurrence of irregular conduct, or has reason to suspect that a fraud has occurred, shall immediately notify his/her supervisor. If the employee has reason to believe that their supervisor may be involved or does not feel comfortable reporting the occurrence to their supervisor, the employee shall immediately notify the OTA. Sec 6-51 ---PAGE BREAK--- Employees have a duty to cooperate during an investigation. Employees who knowingly make false allegations will be subject to discipline and possible termination of employment. 2. City Management/Elected Officials/Board Members Upon notification from an employee of suspected fraud, or if management has reason to suspect that a fraud has occurred, they shall immediately notify the Finance Director. 3. Office of the Mayor Upon notification or discovery of a suspected fraud, the Finance Director and/or Independent Auditor will investigate the suspected fraud. In all circumstances, where there are reasonable grounds to indicate that a fraud may have occurred, the Finance Director or Independent Auditor will inform the Mayor. Subject to the advice of the City Solicitor, the Finance Director or Independent Auditor will contact the Office of the District Attorney and/or the Salem Police. 4. Contacts/Protocols After an initial review and a determination that the suspected fraud warrants additional investigation, the Finance Director or Independent Auditor will notify the Mayor. The Finance Director or Independent Auditor will coordinate the investigation with the Mayor and appropriate law enforcement officials. 5. Security of Evidence Once a suspected fraud is reported, the Finance Director or Independent Auditor, in consultation with the City Solicitor, shall take immediate action to prevent the theft, alteration, or destruction of relevant records. Such actions include, but are not necessarily limited to, removing the records and placing them in a secure location, limiting access to the location where the records currently exist, and preventing the individual suspected of committing the fraud from having access to the records. The records must be adequately secured until the Finance Director or Independent Auditor obtains the records to begin the audit investigation. Sec 6-52 ---PAGE BREAK--- 6. Personnel Actions If a suspicion of fraud is substantiated by the investigation, disciplinary action shall be taken by the Mayor, in consultation with the Personnel Director and the Finance Director or Independent Auditor. 7. Whistle-Blower Protection Under Massachusetts General Law Chapter 149, paragraphs 148A, 185 and 187, no employer or person acting on behalf of an employer shall: o Dismiss or threaten to dismiss an employee o Discipline or suspend, or threaten to discipline or suspend, an employee o Impose any penalty upon an employee; or o Intimidate or coerce an employee because the employee has acted in accordance with the requirements of this policy. The violation of this section will result in discipline up to an including dismissal in accordance with the applicable federal, state, and local administrative laws. 8. Media Issues Any City employee or elected official contacted by the media with respected to an audit investigation shall refer the media to the Mayor’s Office at [PHONE REDACTED]. The alleged fraud or audit investigation shall not be discussed with the media by any person other than the through the Mayor’s Office. If the Finance Director or Independent Auditor is contacted by the media regarding an alleged fraud or audit investigation, they will consult the Mayor, before responding to a media request. Neither the Finance Director nor Independent Auditor will discuss the details of any ongoing fraud investigation with the media that may compromise the integrity of the investigation. Sec 6-53 ---PAGE BREAK--- 9. Documentation At the conclusion of the investigation, the results will be reported to the Mayor and others as determined necessary. If the report concludes that the allegations are founded, the report will be forwarded to the Office of the District Attorney and/or the Salem Police. 10. Completion of the Investigation Upon completion of the investigation, including all legal and personnel action, any records, documents and other evidentiary material will be returned by the Finance Director or Independent Auditor to the appropriate department. 11. Training New employees are trained at the time of hiring about the City’s Code of Conduct and Fraud Policy. This training explicitly covers expectations of all employees regarding: Their duty to communicate certain matters; A list of the types of matters, including actual or suspected fraud, to be communicated along with specific examples; and Information on how to communicate those matters. Sec 6-54