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HomeMy WebLinkAbout04-06-16 Common Council Meeting AgendaOFFICIAL NOTICE OF MEETING A Regular meeting of the Common Council will be held on Wednesday, April 6, 2016, at 6:00 p.m. in the Common Council Chambers at City Hall, 108 East Green Street, Ithaca, New York. Your attendance is requested. AGENDA 1. PLEDGE OF ALLEGIANCE: 2. ADDITIONS TO OR DELETIONS FROM THE AGENDA: 3. PROCLAMATIONS/AWARDS: 3.1 Presentation of Quarterly Employee Recognition Award 4. SPECIAL ORDER OF BUSINESS: 5. SPECIAL PRESENTATIONS BEFORE COUNCIL: 5.1 Presentation by Catholic Charities on Plans to be a Refugee Resettlement Agency 6. PETITIONS AND HEARINGS OF PERSONS BEFORE COUNCIL: 7. PRIVILEGE OF THE FLOOR – COMMON COUNCIL AND THE MAYOR: 8. CONSENT AGENDA ITEMS: Superintendent of Public Works: 8.1 Mahogany Grill Alcohol Permit Request - Resolution 8.2 Ithaca Ale House Alcohol Permit Request - Resolution 8.3 Kilpatrick’s Restaurant - Alcohol Permit Request – Resolution 8.4 Sahara Restaurant Alcohol Permit Request - Resolution 8.5 Taste of Thai Alcohol Permit Request - Resolution 8.6 Le Café Cent-Dix Alcohol Permit Request - Resolution 8.7 Mercato Bar and Kitchen Restaurant Alcohol Permit Request - Resolution 9. CITY ADMINISTRATION COMMITTEE: 9.1 Finance - Approval of 2014 City Single Audit – Resolution 9.2 City Controller’s Report 10. PLANNING AND ECONOMIC DEVELOPMENT COMMITTEE: 10.1 Brindley Street Bridge Replacement – Designation of Lead Agency Resolution 10.2 Six-Mile Creek Watershed Conservation Easement – Resolution 10.3 An Ordinance to Amend the City of Ithaca Municipal Code, Chapter 325, Entitled “Zoning,” Article IV, Section 325-12, in Order to Amend the Approval Process for the Planned Unit Development (PUD) Common Council Meeting Agenda April 6, 2016 Page 2 11. REPORTS OF SPECIAL COMMITTEES: 12. NEW BUSINESS: 12.1 Possible Motion to Enter Into Executive Session to Discuss Contract Negotiations 13. INDIVIDUAL MEMBER – FILED RESOLUTIONS: 14. MAYOR’S APPOINTMENTS: 14.1 Appointments to City of Ithaca Local Board of Assessment Review - Resolution 14.2 Appointment to the Program Oversight Committee (POC) for the Community Housing Development Fund 14.3 Appointments to Various City Boards and Committees – Resolution (additional information may be distributed under separate cover) 15. REPORTS OF COMMON COUNCIL LIAISONS: 16. REPORT OF CITY CLERK: 17. REPORT OF CITY ATTORNEY: 18. MINUTES FROM PREVIOUS MEETINGS: 18.1 Approval of the March 2, 2016 Common Council Meeting Minutes – Resolution 19. ADJOURNMENT: If you have a disability that will require special arrangements to be made in order for you to fully participate in the meeting, please contact the City Clerk at 274-6570 at least 48 hours before the meeting. ______________________________ Julie Conley Holcomb, CMC City Clerk Date: March 31, 2016 8. CONSENT AGENDA ITEMS: Superintendent of Public Works: 8.1 Mahogany Grill Alcohol Permit Request - Resolution WHEREAS, the Superintendent of Public Works office has received a request to allow the Mahogany Grill restaurant to utilize certain areas along Aurora Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at the Mahogany Grill Restaurant, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for the Mahogany Grill Restaurant that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.2 Ithaca Ale House Alcohol Permit Request - Resolution WHEREAS, the Ithaca Ale House has requested permission to utilize certain areas along Aurora Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at the Ithaca Ale House, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for the Ithaca Ale House that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.3 Kilpatrick’s Restaurant - Alcohol Permit Request – Resolution WHEREAS, the Superintendent of Public Works office has received a request to allow Kilpatrick’s restaurant to utilize certain areas along North Tioga Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at Kilpatrick’s restaurant, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for Kilpatrick’s restaurant that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.4 Sahara Restaurant Alcohol Permit Request - Resolution WHEREAS, the Sahara Restaurant has requested permission to utilize certain areas along Aurora Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at the Sahara Restaurant, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for the Sahara Restaurant that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.5 Taste of Thai Alcohol Permit Request - Resolution WHEREAS, the Superintendent of Public Works office has received a request to allow the Taste of Thai Restaurant to utilize certain areas along the Primary Commons for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at the Taste of Thai Restaurant, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for the Taste of Thai Restaurant that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.6 Le Café Cent-Dix Alcohol Permit Request - Resolution WHEREAS, the Superintendent of Public Works office has received a request to allow Le Café Cent-Dix to utilize certain areas along North Aurora Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at Le Café Cent-Dix, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for Le Café Cent-Dix that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 8.7 Mercato Bar and Kitchen Restaurant Alcohol Permit Request - Resolution WHEREAS, the Superintendent of Public Works office has received a request to allow Mercato Bar and Kitchen Restaurant to utilize certain areas along North Aurora Street for outdoor dining; and WHEREAS, this use of public property has been deemed proper and successful; and WHEREAS, the City of Ithaca wishes to promote diverse uses of the Primary and Secondary Commons, including outdoor dining; and WHEREAS, it is Common Council's responsibility to determine whether or not to allow the serving and consumption of alcohol on the Primary and Secondary Commons; and WHEREAS, Common Council has determined that the use of this public property for outdoor dining at Mercato Bar and Kitchen Restaurant, including the responsible sale and consumption of alcohol, is desirable; and WHEREAS, Common Council has determined that any use of this or similar public property involving the same and consumption of alcohol should be covered by a minimum of $1,000,000 insurance under the Dram Shop Act; now, therefore be it RESOLVED, For the year 2016, Common Council hereby approves a revocable Alcoholic Beverage Permit for the outdoor sale and consumption of alcohol for Mercato Bar and Kitchen Restaurant that includes the sale of alcohol in accord with the terms and conditions set forth in application therefore, including minimum Dram Shop coverage in the amount of $1,000,000 and the approval of an outdoor dining permit. 9. CITY ADMINISTRATION COMMITTEE: 9.1 Finance - Approval of 2014 City Single Audit – Resolution RESOLVED, That the Independent Auditor’s Report for the period January 1, 2014, through December 31, 2014, prepared by the accounting firm of Insero & Company, formerly Ciaschi, Dietershagen, Little, Mickelson & Company, LLP, be accepted to comply with all the City’s applicable Governmental Accounting Standards Board (GASB) Statement 34 and other related audit and single-audit requirements. MANAGEMENT COMMENT LETTER Common Council City of Ithaca Ithaca, New York In planning and performing our audit of the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Ithaca (the City) for the year ended December 31, 2014, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified. We did identify deficiencies in internal control that we consider to be a material weaknesses, as defined above. Those deficiencies are defined in the Schedule of Findings and Questioned Costs as 03-001 and 10-001. During our audit, we also became aware of certain matters that are opportunities for strengthening internal controls and operating efficiency. This letter summarizes our current and prior year comments and recommendations regarding these matters. This letter does not affect our report dated March 17, 2016 on the financial statements of the City of Ithaca. NONCOMPLIANCE Late Filing of Single Audit Report Finding: Under the Single Audit Act of 1996 and OMB Circular A-133, the City was required to file the Single Audit reporting package by the end of the 9th month following the end of the fiscal year. This deadline was not met on a timely basis for the years ended December 31, 2003 through 2014. The City experienced difficulties in obtaining the information necessary to implement GASB Statement No. 34, for the years ending December 31, 2003 and 2004, resulting in late completion of financial statements for those years. In subsequent years, the City has endeavored to reestablish a current time line for financial reporting. Insero & Co. CPA s, LLP Rochester | Ithaca | Corning | Cortland | Watkins Glen | (800) 232-9547 | www.inserocpa.com - 2 - Recommendation: We recommend the requirements of OMB Circular A-133 and 2 C.F.R. 200 titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) be adhered to by striving to have all information required for the audit available on a timely basis. This will help insure timely audit report issuance and compliance with the filing deadline. MATERIAL WEAKNESS Capital Project Accounting Finding: Currently, City personnel account for the Capital Fund in spreadsheets and do not enter information in the City’s financial software system. This creates opportunities for errors to occur and not be detected by management in a timely manner. The City’s financial software system does not have the capability to account for the numerous capital projects in process. The City authorized the installation of the capital project accounting module of MUNIS, which was to be completed during the 2013 fiscal year. However, the new module has not yet been implemented. Recommendation: We recommended City personnel convert the current accounting process to incorporate the Capital Fund as a whole into its financial software system and continue to account for each project in spreadsheets, while pursuing a system that will provide the functionality desired to appropriately track Capital Fund activity. Current Status: The City is in process of setting up the chart of accounts for Capital Projects in MUNIS. Full implementation of the module is expected during the 2016 fiscal year. OTHER MATTERS Recurring Comments Fixed Asset Accounting Finding: Currently, City personnel account for fixed assets in spreadsheets rather than the City's financial software system. This creates greater opportunities for error. Inquiry with management revealed an upgrade to MUNIS is planned, which will include the fixed asset module. Recommendation: We recommend converting the current accounting process to incorporate fixed assets in the financial software system as soon as feasible. Physical Inventory of Capital Assets Finding: The City has not had a formal physical inventory of capital assets in recent years. The current list was created using lists provided by each department from the last physical inventory. A current physical inventory is necessary to ensure records only include assets currently in use. Discussions with City management revealed a committee of the City Council has been formed to work on this issue. Recommendation: We continue to recommend the City perform a physical inventory of all capital assets and update records as necessary. Current Status: No change from previous year. - 3 - Purchasing Policy Finding: During our prior year audit, City policy was not always followed when making purchases, specifically the use of purchase orders. The City requires purchase orders for purchases of $250 or more, however, 4 of 16 disbursements tested which required purchase orders did not have them. During our current year audit, however, purchase orders were present for all items tested. During the current and prior year audits, we noted the Purchasing Policy had not been updated to reflect the higher bidding thresholds under General Municipal Law. Inquiry of management revealed the Purchasing Policy is in the process of being updated; however, the process has proven to be a lengthy one. Having an outdated policy that does not meet the needs of the City and, therefore, is not enforced could send a message to staff that it is not important to follow other City policies. Recommendation: We recommend the Purchasing Policy be updated as soon as practicable and the updated policy adhered to by all departments. Held Checks Finding: During the current and prior year audits, a significant number of checks from various City accounts were written, but not sent to vendors in a timely manner. As a result, these bank accounts showed a large negative book balance. This practice has the effect of understating both cash and accounts payable balances. Through inquiry of City personnel, we determined the condition was related to the audit process at year end. Additionally, blank checks are held in the vault to be backdated if necessary and subsequently destroyed if not used. Recommendation: We continue to recommend procedures be developed and implemented stating checks only be written when funds are available and with the intention of sending payments timely. City staff has begun meeting to develop such procedures. We also recommend discontinuing the practice of holding blank checks in the vault for the purpose of backdating them. Current Status: No change from previous year. This communication is intended solely for the information and use of management, the Common Council, and others within the City of Ithaca, and is not intended to be and should not be used by anyone other than these specified parties. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AT THE CONCLUSION OF THE AUDIT Common Council City of Ithaca Ithaca, New York We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Ithaca (the City) for the year ended December 31, 2014, and have issued our report thereon dated March 17, 2016. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, and OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated September 25, 2015. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the government-wide financial statements were compensated absences, depreciation expense, and other postemployment benefits. Management's estimates of compensated absences, depreciation expense, and other postemployment benefits are based on current rates of compensation, an estimate of the useful lives of capital assets, and an actuarial validation of postemployment liabilities. We evaluated the key factors and assumptions used to develop the compensated absences, depreciation expense, and other postemployment benefit estimates in determining they are reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures concern capital assets, debt, and the liability for other postemployment benefits, the details of which are presented in Notes 3.A.5, 3.B.2, 3.B.3, and 3.B.4 to the financial statements. The financial statement disclosures are neutral, consistent, and clear. Insero & Co. CPA s, LLP Rochester | Ithaca | Corning | Cortland | Watkins Glen | (800) 232-9547 | www.inserocpa.com - 2 - Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated March 17, 2016. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Matters or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to Management’s Discussion and Analysis, budgetary comparison schedules, and the Schedule of Funding Progress, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining statements for the non-major funds, which accompany the financial statements but are not RSI. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. - 3 - We would like to thank you and your staff for the cooperation and support given to us during the course of our audit. We appreciate the opportunity to be of service to you and look forward to our continued involvement. Restriction on Use This information is intended solely for the use of the Common Council and management of the City of Ithaca, and is not intended to be and should not be used by anyone other than these specified parties. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 CITY OF ITHACA Ithaca, New York EXECUTIVE SUMMARY December 31, 2014 CITY OF ITHACA SUMMARY OF 2014 AUDIT REPORT AND FINDINGS -1 - Basic Financial Statements Description of Report and Findings Report of Independent Auditors on Basic Financial Statements (Page 1-2) Unmodified opinion on the City of Ithaca’s (the City) basic financial statements for the year ended December 31, 2014. Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on the City’s compliance with laws and regulations that may have a direct and material effect on the basic financial statements, and on the City’s internal control structure policies and procedures based on the auditor’s understanding of the internal control structure and assessment of control risk obtained as part of the audit of the basic financial statements. This report identified one material weakness in internal control over financial reporting and one instance of material noncompliance at the financial statement level. Single Audit (OMB Circular A-133) Report Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Report on 1) the City’s internal control structure policies and procedures used in administering federal award programs; 2) compliance requirements with respect to its federal award programs. This report identified no material instances of noncompliance and no material internal control weaknesses regarding compliance in accordance with OMB Circular A-133. There are several federal award program expenditures that amounted to $6,805,088. Auditor’s Communication with Those Charged with Governance at the Conclusion of the Audit A letter that specifically addresses certain required communications to the Common Council in accordance with professional standards -there were no comments of concern to be reported regarding the following: Qualitative Aspects of Accounting Practices Difficulties Encountered in Performing the Audit Corrected and Uncorrected Misstatements Disagreements with Management Management Representations Management Consultations with Other Independent Accountants Other Audit Matters or Issues Management Letter A letter to management with selected communications. ASSETS 2014 2013 2012 2011 2010 Assets: Cash and cash equivalents - Unrestricted $3,782,111 $5,649,526 $4,588,324 $5,751,781 $6,269,481 - Restricted 487,581 521,114 986,404 985,151 954,538 Investments 1,706,657 -0--0--0--0- Taxes receivable, net 927,452 688,271 778,459 781,190 927,500 Due from other funds 500,784 741,084 972,731 775,060 538,007 Due from state and federal governments 926,763 917,124 902,914 849,352 777,606 Due from other governments 968,733 703,139 1,150,150 938,525 729,573 Other receivables, net 399,645 329,456 368,676 381,459 405,761 Prepaid expenses 1,075,446 1,079,861 1,002,533 849,070 624,823 Inventories 197,290 196,801 183,206 179,463 170,281 Total Assets $10,972,462 $10,826,376 $10,933,397 $11,491,051 $11,397,570 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $461,325 $224,406 $259,948 $187,863 $189,376 Due to other funds 478,321 104,515 213,593 668,168 381,503 Due to other governments 474,442 252,038 270,616 475,807 521,659 Overpayments/Other liabilities 606,091 1,099,079 784,082 815,834 402,927 Deferred inflows of resources and unearned revenue 1,133,015 898,190 988,379 990,678 1,136,988 Total Liabilities 3,153,194 2,578,228 2,516,618 3,138,350 2,632,453 Fund Balances: Fund Balances - Reserved: Encumbrances 567,833 330,994 330,994 241,007 350,163 Inventory/prepaid expenses 1,272,736 1,276,662 1,185,739 1,028,533 795,104 Workers' compensation 100,000 100,000 100,000 100,000 100,000 Capital 487,581 521,114 586,404 585,151 654,538 Insurance 1,703,180 1,699,116 2,015,132 2,015,132 Health consortium deposit 1,706,657 300,000 300,000 300,000 Total Reserved 4,134,807 3,931,950 4,202,253 4,269,823 4,214,937 Fund Balances - Unreserved: Appropriated - Ensuing year's budget 393,177 622,022 299,632 995,000 792,000 Unappropriated 3,291,284 3,694,176 3,914,894 3,087,878 3,758,180 Total Unreserved 3,684,461 4,316,198 4,214,526 4,082,878 4,550,180 Total Fund Balances 7,819,268 8,248,148 8,416,779 8,352,701 8,765,117 Total Liabilities and Equity $10,972,462 $10,826,376 $10,933,397 $11,491,051 $11,397,570 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information DECEMBER 31, - 2 - CITY OF ITHACA COMPARATIVE BALANCE SHEET GENERAL FUND REVENUES 2014 2013 2012 2011 2010 Real property taxes $20,515,747 $20,182,407 $19,565,035 $18,984,427 $18,230,175 Real property tax items 797,917 736,563 723,411 719,400 609,475 Other nonproperty tax items 447,313 426,188 466,125 520,243 493,767 Sales tax 13,432,961 12,846,512 12,582,768 12,414,740 11,929,544 Departmental income 4,081,541 3,925,398 3,770,388 3,814,836 3,364,115 Intergovernmental charges 3,884,948 3,871,446 3,900,921 4,054,241 4,018,620 Use of money and property 304,793 331,483 307,154 275,892 311,929 Licenses and permits 951,807 591,047 967,836 350,504 369,486 Fines and forfeitures 1,086,057 1,036,963 1,136,988 1,143,641 1,224,768 Sale of property and compensation for loss 497,456 320,649 154,304 234,532 113,159 Miscellaneous local sources 1,305,433 1,337,709 1,489,152 1,292,617 1,475,097 Interfund revenues 282,294 284,143 301,430 223,401 288,610 State sources 3,446,149 3,641,632 3,502,169 3,198,583 3,244,623 Federal sources 371,022 215,407 160,249 266,570 281,618 Total Revenues 51,405,438 49,747,547 49,027,930 47,493,627 45,954,986 Other Financing Sources: Interfund Transfers 1,179,643 1,122,109 1,109,162 1,761,968 1,717,721 Total Revenues and Other Sources 52,585,081 50,869,656 50,137,092 49,255,595 47,672,707 EXPENDITURES Current: General governmental support 5,412,959 4,402,515 4,648,215 4,263,264 4,391,719 Public safety 13,410,005 14,309,135 14,372,138 14,893,551 14,895,511 Transportation 5,276,969 4,620,143 4,560,680 4,884,592 4,930,248 Economic assistance and opportunity 61,000 61,000 61,000 61,000 61,000 Culture and recreation 5,415,224 5,273,951 5,345,898 5,332,141 4,837,253 Home and community services 1,707,358 755,810 703,599 736,690 732,987 Employee benefits 15,254,314 14,820,542 13,868,667 12,958,075 10,810,462 Debt service (principal and interest)6,465,132 6,676,655 6,432,817 6,382,236 6,779,779 Total Expenditures 53,002,961 50,919,751 49,993,014 49,511,549 47,438,959 PERCENT INCREASE IN EXPENDITURES 104%102%101%104%102% Other Financing Uses: Interfund transfers 11,000 118,536 80,000 156,462 274,345 Total Expenditures and Other Uses 53,013,961 51,038,287 50,073,014 49,668,011 47,713,304 Excess of (Expenditures) Revenues (428,880)(168,631)64,078 (412,416)(40,597) Fund Balance, Beginning 8,248,148 8,416,779 8,352,701 8,765,117 8,805,714 Fund Balance, Ending $7,819,268 $8,248,148 $8,416,779 $8,352,701 $8,765,117 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, - 3 - CITY OF ITHACA COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE Modified Variance REVENUES Budget Actual Encumbrances Fav./(Unfav.) Real property taxes $20,520,104 $20,515,747 $$(4,357) Real property tax items 737,500 797,917 60,417 Other nonproperty tax items 13,624,000 13,880,274 256,274 Departmental income 4,672,775 4,081,541 (591,234) Intergovernmental charges 4,074,179 3,884,948 (189,231) Use of money and property 375,000 304,793 (70,207) Licenses and permits 779,050 951,807 172,757 Fines and forfeitures 1,170,000 1,086,057 (83,943) Sale of property and compensation for loss 376,199 497,456 121,257 Miscellaneous local sources 1,368,288 1,305,433 (62,855) Interfund revenues 282,294 282,294 -0- State sources 3,197,769 3,446,149 248,380 Federal sources 423,428 371,022 (52,406) Total Revenues 51,600,586 51,405,438 -0-(195,148) Other Financing Sources: Interfund transfers 1,362,208 1,179,643 (182,565) Total Revenues/Other Sources 52,962,794 52,585,081 -0-(377,713) EXPENDITURES Current: General governmental support 5,634,606 5,412,959 221,030 617 Public safety 13,623,207 13,410,005 188,996 24,206 Transportation 5,334,269 5,276,969 57,199 101 Economic assistance and opportunity 61,000 61,000 -0- Culture and recreation 5,511,037 5,415,224 9,654 86,159 Home and community services 1,798,313 1,707,358 90,954 1 Employee benefits 15,486,820 15,254,314 232,506 Debt service (principal and interest)6,466,558 6,465,132 1,426 Total Expenditures 53,915,810 53,002,961 567,833 345,016 Other Financing Uses: Interfund transfers 11,000 (11,000) Total Expenditures and Other Uses 53,915,810 53,013,961 334,016 Excess of (Expenditures)(953,016)(428,880)$-0-$(43,697) Appropriated Fund Balance 953,016 Net Change $-0-(428,880) Fund Balance, Beginning 8,248,148 Fund Balance, Ending $7,819,268 See Audit Reports for Complete Information - 4 - CITY OF ITHACA COMPARATIVE OPERATING STATEMENT - BUDGET vs. ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2014 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis Modified Variance REVENUES Budget Actual Encumbrances Fav./(Unfav.) Real property taxes $20,097,901 $20,182,407 $$84,506 Real property tax items 702,000 736,563 34,563 Nonproperty tax items 13,460,806 13,272,700 (188,106) Departmental income 4,028,426 3,925,398 (103,028) Intergovernmental charges 4,038,727 3,871,446 (167,281) Use of money and property 373,500 331,483 (42,017) Licenses and permits 900,733 591,047 (309,686) Fines and forfeitures 1,191,000 1,036,963 (154,037) Sale of property and compensation for loss 376,629 320,649 (55,980) Miscellaneous local sources 1,314,860 1,337,709 22,849 Interfund revenues 284,143 284,143 -0- State sources 3,247,733 3,641,632 393,899 Federal sources 226,941 215,407 (11,534) Total Revenues 50,243,399 49,747,547 -0-(495,852) Other Financing Sources: Interfund transfers 1,522,109 1,122,109 (400,000) Total Revenues/Other Sources 51,765,508 50,869,656 -0-(895,852) EXPENDITURES Current: General governmental support 4,679,513 4,402,515 121,536 155,462 Public safety 14,461,295 14,309,135 145,210 6,950 Transportation 4,941,896 4,620,143 62,233 259,520 Economic assistance and opportunity 61,000 61,000 -0- Culture and recreation 5,327,987 5,273,951 10,042 43,994 Home and community services 874,396 755,810 32,000 86,586 Employee benefits 15,253,308 14,820,542 432,766 Debt service (principal and interest)6,678,203 6,676,655 1,548 Total Expenditures 52,277,598 50,919,751 371,021 986,826 Other Financing Uses: Interfund transfers 118,536 118,536 -0- Total Expenditures and Other Uses 52,396,134 51,038,287 371,021 986,826 Excess of (Expenditures) (630,626)(168,631)$(371,021)$90,974 Appropriated Fund Balance 1,467,949 Net Change $837,323 (168,631) Fund Balance, Beginning 8,416,779 Fund Balance, Ending $8,248,148 See Audit Reports for Complete Information - 4a - CITY OF ITHACA COMPARATIVE OPERATING STATEMENT - BUDGET vs. ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2013 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis Modified Variance REVENUES Budget Actual Encumbrances Fav./(Unfav.) Real property taxes $19,562,775 $19,565,035 $$2,260 Real property tax items 589,500 723,411 133,911 Nonproperty tax items 13,115,000 13,048,893 (66,107) Departmental income 3,749,048 3,770,388 21,340 Intergovernmental charges 3,980,781 3,900,921 (79,860) Use of money and property 379,310 307,154 (72,156) Licenses and permits 706,250 967,836 261,586 Fines and forfeitures 1,215,000 1,136,988 (78,012) Sale of property and compensation for loss 229,286 154,304 (74,982) Miscellaneous local sources 1,297,308 1,489,152 191,844 Interfund revenues 301,430 301,430 -0- State sources 3,196,186 3,502,169 305,983 Federal sources 164,888 160,249 (4,639) Total Revenues 48,486,762 49,027,930 -0-541,168 Other Financing Sources: Interfund transfers 1,622,162 1,109,162 (513,000) Total Revenues/Other Sources 50,108,924 50,137,092 -0-28,168 Current: General governmental support 4,773,314 4,648,215 104,659 20,440 Public safety 14,610,998 14,372,138 145,042 93,818 Transportation 4,829,093 4,560,680 37,000 231,413 Economic assistance and opportunity 61,000 61,000 -0- Culture and recreation 5,387,591 5,345,898 41,693 -0- Home and community services 803,846 703,599 2,600 97,647 Employee benefits 14,292,241 13,868,667 423,574 Debt service (principal and interest)6,546,847 6,432,817 114,030 Total Expenditures 51,304,930 49,993,014 330,994 980,922 Other Financing Uses: Interfund transfers 80,000 80,000 -0- Total Expenditures and Other Uses 51,384,930 50,073,014 330,994 980,922 Excess of (Expenditures) Revenues (1,276,006)64,078 $(330,994)$1,009,090 Appropriated Fund Balance 1,276,006 Net Change $-0-64,078 Fund Balance, Beginning 8,352,701 Fund Balance, Ending $8,416,779 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information - 5 - CITY OF ITHACA COMPARATIVE OPERATING STATEMENT - BUDGET vs. ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2012 EXPENDITURES Modified Variance REVENUES Budget Actual Encumbrances Fav./(Unfav.) Real property taxes $18,844,225 $18,984,427 $$140,202 Real property tax items 536,000 719,400 183,400 Nonproperty tax items 12,827,000 12,934,983 107,983 Departmental income 3,571,339 3,814,836 243,497 Intergovernmental charges 4,079,206 4,054,241 (24,965) Use of money and property 476,000 275,892 (200,108) Licenses and permits 469,850 350,504 (119,346) Fines and forfeitures 1,121,500 1,143,641 22,141 Sale of property and compensation for loss 79,280 234,532 155,252 Miscellaneous local sources 1,275,925 1,292,617 16,692 Interfund revenues 298,401 223,401 (75,000) State sources 3,105,412 3,198,583 93,171 Federal sources 235,906 266,570 30,664 Total Revenues 46,920,044 47,493,627 -0-573,583 Other Financing Sources: Interfund transfers 1,761,968 1,761,968 -0- Total Revenues/Other Sources 48,682,012 49,255,595 -0-573,583 Current: General governmental support 4,400,806 4,263,264 59,130 78,412 Public safety 15,044,745 14,893,551 140,412 10,782 Transportation 4,894,672 4,884,592 10,000 80 Economic assistance and opportunity 61,000 61,000 -0- Culture and recreation 5,360,647 5,332,141 28,465 41 Home and community services 739,787 736,690 3,000 97 Employee benefits 13,183,989 12,958,075 225,914 Debt service (principal and interest)6,382,315 6,382,236 79 Total Expenditures 50,067,961 49,511,549 241,007 315,405 Other Financing Uses: Interfund transfers 82,000 156,462 (74,462) Total Expenditures and Other Uses 50,149,961 49,668,011 241,007 240,943 Excess of (Expenditures)(1,467,949)(412,416)$(241,007)$814,526 Appropriated Fund Balance 1,467,949 Net Change $-0-(412,416) Fund Balance, Beginning 8,765,117 Fund Balance, Ending $8,352,701 See Audit Reports for Complete Information - 5a - CITY OF ITHACA COMPARATIVE OPERATING STATEMENT - BUDGET vs. ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2011 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis EXPENDITURES Modified Variance REVENUES Budget Actual Encumbrances Fav./(Unfav.) Real property taxes $18,230,157 $18,230,175 $$18 Real property tax items 485,150 609,475 124,325 Nonproperty tax items 12,368,691 12,423,311 54,620 Departmental income 3,553,044 3,364,115 (188,929) Intergovernmental charges 4,027,076 4,018,620 (8,456) Use of money and property 508,050 311,929 (196,121) Licenses and permits 287,050 369,486 82,436 Fines and forfeitures 1,076,800 1,224,768 147,968 Sale of property and compensation for loss 104,166 113,159 8,993 Miscellaneous local sources 1,258,072 1,475,097 217,025 Interfund revenues 288,610 288,610 -0- State sources 3,260,520 3,244,623 (15,897) Federal sources 345,870 281,618 (64,252) Total Revenues 45,793,256 45,954,986 -0-161,730 Other Financing Sources: Interfund transfers 1,717,720 1,717,721 1 Total Revenues/Other Sources 47,510,976 47,672,707 -0-161,731 EXPENDITURES Current: General governmental support 4,519,708 4,391,719 127,988 1 Public safety 15,245,530 14,895,511 120,995 229,024 Transportation 5,129,605 4,930,248 33,510 165,847 Economic assistance and opportunity 61,000 61,000 -0- Culture and recreation 5,115,362 4,837,253 52,128 225,981 Home and community services 830,410 732,987 15,542 81,881 Employee benefits 11,053,624 10,810,462 243,162 Debt service (principal and interest)6,817,619 6,779,779 37,840 Total Expenditures 48,772,858 47,438,959 350,163 983,736 Other Financing Uses: Interfund transfers 94,345 274,345 (180,000) Total Expenditures and Other Uses 48,867,203 47,713,304 350,163 803,736 Excess of (Expenditures) Revenues (1,356,227)(40,597)$(350,163)$965,467 Appropriated Fund Balance 1,356,227 Net Change $-0-(40,597) Fund Balance, Beginning 8,805,714 Fund Balance, Ending $8,765,117 CITY OF ITHACA COMPARATIVE OPERATING STATEMENT - BUDGET vs. ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2010 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information - 6 - ASSETS 2014 2013 2012 2011 2010 Assets: Cash and cash equivalents - Unrestricted $316,372 $241,683 $298,253 $318,067 $672,354 - Restricted 3,803,578 3,798,541 3,792,393 3,784,380 3,772,343 Investments 53,195 -0--0--0--0- Due from other funds 38,603 30,225 8,328 255,883 347,044 Due from state and federal governments 10,000 25,000 -0--0--0- Other receivables, net 957,383 800,323 699,199 584,030 474,971 Prepaid expenses 81,389 84,639 86,802 70,366 48,583 Inventories 494,604 487,851 450,454 368,593 303,179 Total Assets $5,755,124 $5,468,262 $5,335,429 $5,381,319 $5,618,474 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $32,172 $15,778 $18,405 $25,986 $27,129 Due to other funds 149,069 6,323 42,706 62,071 24,291 Overpayments/Other liabilities 34,895 20,578 16,188 26,909 50,619 Total Liabilities 216,136 42,679 77,299 114,966 102,039 Fund Balances: Fund Balances - Reserved: Encumbrances 2,158 42,631 135,849 247,514 165,407 Inventory/Prepaid expenses 575,993 572,490 537,256 438,959 351,762 Capital 3,803,578 3,798,541 3,792,393 3,784,380 3,772,343 Insurance 53,195 53,087 52,960 -0-52,680 Total Reserved 4,434,924 4,466,749 4,518,458 4,470,853 4,342,192 Fund Balances - Unreserved: Appropriated - Ensuing year's budget -0--0--0-22,892 703,007 Unappropriated 1,104,064 958,834 739,672 772,608 471,236 Total Unreserved 1,104,064 958,834 739,672 795,500 1,174,243 Total Fund Balances 5,538,988 5,425,583 5,258,130 5,266,353 5,516,435 Total Liabilities and Fund Balances $5,755,124 $5,468,262 $5,335,429 $5,381,319 $5,618,474 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information CITY OF ITHACA COMPARATIVE BALANCE SHEET WATER FUND DECEMBER 31, - 7 - REVENUES 2014 2013 2012 2011 2010 Departmental income $4,344,618 $4,044,086 $3,930,294 $3,489,485 $3,072,787 Intergovernmental charges 173 600 3,003 2,182 927 Use of money and property 5,297 6,711 8,737 13,462 21,812 Sale of property and compensation for loss 9,228 6,611 2,881 9,179 38,637 Miscellaneous local sources -0-239 1,757 -0-2,767 State sources 10,000 25,000 10,254 5,031 -0- Total Revenues 4,369,316 4,083,247 3,956,926 3,519,339 3,136,930 Other Financing Sources: Interfund transfers 12,500 30,000 50,000 70,000 30,000 Total Revenues and Other Sources 4,381,816 4,113,247 4,006,926 3,589,339 3,166,930 EXPENDITURES Current: General governmental support 165,133 152,837 108,697 94,274 94,455 Home and community services 2,117,517 2,094,501 2,093,447 2,043,647 1,722,945 Employee benefits 906,224 895,611 879,709 820,234 615,105 Debt service (principal and interest)773,537 490,845 604,179 541,971 495,081 Total Expenditures 3,962,411 3,633,794 3,686,032 3,500,126 2,927,586 Other Financing Uses: Interfund transfers 306,000 312,000 329,117 339,295 335,936 Total Expenditures and Other Uses 4,268,411 3,945,794 4,015,149 3,839,421 3,263,522 Excess of Revenues (Expenditures) 113,405 167,453 (8,223)(250,082)(96,592) Fund Balance, Beginning 5,425,583 5,258,130 5,266,353 5,516,435 5,613,027 Fund Balance, Ending $5,538,988 $5,425,583 $5,258,130 $5,266,353 $5,516,435 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - WATER FUND FOR THE YEAR ENDED DECEMBER 31, - 8 - CITY OF ITHACA ASSETS 2014 2013 2012 2011 2010 Assets: Cash and cash equivalents - Unrestricted $579,400 $210,248 $-0-$-0-$32,062 - Restricted 2,449,197 2,445,954 2,441,995 2,436,857 2,429,112 Investments 42,795 -0--0--0--0- Due from other funds -0-96,221 88,785 298,406 392,334 Due from other governments 86,951 86,951 321,532 86,951 140,162 Other receivables, net 1,220,540 1,248,804 1,199,163 1,377,539 944,252 Prepaid expenses 122,107 156,645 160,648 130,229 88,343 Inventories 86,142 84,253 72,711 82,284 79,653 Total Assets $4,587,132 $4,329,076 $4,284,834 $4,412,266 $4,105,918 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other $29,379 $32,375 $206,037 $396,172 $36,073 Due to other funds 688,043 508,613 554,396 367,477 307,497 Other liabilities 92 92 92 82 150 Due to other governments 12,000 12,000 14,410 14,590 25,502 Total Liabilities 729,514 553,080 774,935 778,321 369,222 Fund Balances: Fund Balances - Reserved: Encumbrances 4,225 12,141 50,023 9,100 Inventory/Prepaid expenses 208,249 240,898 233,359 212,513 167,996 Capital 2,449,197 2,445,954 2,441,995 2,436,857 2,429,112 Insurance 42,795 42,709 42,607 42,517 42,381 Total Reserved 2,700,241 2,733,786 2,730,102 2,741,910 2,648,589 Fund Balances - Unreserved: Appropriated - Ensuing year's budget -0--0--0--0-231,435 Unappropriated 1,157,377 1,042,210 779,797 892,035 856,672 Total Unreserved 1,157,377 1,042,210 779,797 892,035 1,088,107 Total Fund Balances 3,857,618 3,775,996 3,509,899 3,633,945 3,736,696 Total Liabilities and Fund Balances $4,587,132 $4,329,076 $4,284,834 $4,412,266 $4,105,918 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information COMPARATIVE BALANCE SHEET SEWER FUND DECEMBER 31, - 9 - CITY OF ITHACA REVENUES 2014 2013 2012 2011 2010 Departmental income $5,811,904 $5,925,656 $5,718,893 $5,505,736 $5,235,636 Intergovernmental charges 16,345 19,182 26,037 41,912 21,105 Use of money and property 3,915 4,324 5,602 8,320 12,267 Sale of property and compensation for loss 3,679 2,934 3,810 15,855 42,165 Miscellaneous local sources -0--0--0--0-5,139 Total Revenues 5,835,843 5,952,096 5,754,342 5,571,823 5,316,312 Other Financing Sources: Interfund transfers 26,500 100,000 111,000 200,000 90,000 Total Revenues and Other Sources 5,862,343 6,052,096 5,865,342 5,771,823 5,406,312 EXPENDITURES Current: General governmental support 205,881 195,480 133,406 118,234 115,666 Home and community services 2,959,773 3,008,154 3,130,681 3,193,281 2,947,127 Employee benefits 1,317,920 1,532,790 1,514,320 1,435,507 1,060,319 Debt service (principal and interest)937,147 683,575 833,290 738,179 702,073 Total Expenditures 5,420,721 5,419,999 5,611,697 5,485,201 4,825,185 Other Financing Uses: Interfund transfers 360,000 366,000 377,691 389,373 385,518 Total Expenditures and Other Uses 5,780,721 5,785,999 5,989,388 5,874,574 5,210,703 Excess of Revenues (Expenditures)81,622 266,097 (124,046)(102,751)195,609 Fund Balance, Beginning 3,775,996 3,509,899 3,633,945 3,736,696 3,541,087 Fund Balance, Ending $3,857,618 $3,775,996 $3,509,899 $3,633,945 $3,736,696 Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information AND CHANGES IN FUND BALANCE - SEWER FUND FOR THE YEAR ENDED DECEMBER 31, - 10 - CITY OF ITHACA COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, ASSETS 2014 2013 2012 2011 2010 Assets: Cash and cash equivalents - Unrestricted $-0-$-0-$25,604 $-0-$60,005 Due from other funds 23,900 23,900 25,839 25,190 23,900 Other receivables, net 22,682 30,128 78,536 34,499 28,595 Prepaid expenses 11,164 11,856 13,128 9,535 9,535 Total Assets $57,746 $65,884 $143,107 $69,224 $122,035 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable/overdaft $359,298 $269,350 $20,397 $79,614 $23,223 Due to other funds 44,987 34,455 171,290 36,505 116,509 Due to other governments 2,594 2,144 1,020 423 2,726 Other liabilities (447)(447)(463)(297)(252) Total Liabilities 406,432 305,502 192,244 116,245 142,206 Fund Balances: Fund Balances - Reserved: Encumbrances -0--0--0--0-10,000 Prepaid expenses 11,164 11,856 13,128 9,535 9,335 Insurance 1,917 1,914 1,905 -0--0- Total Reserved 13,081 13,770 15,033 9,535 19,335 Fund Balances - Unreserved: Unappropriated (361,767)(253,388)(64,170)(56,556)(39,506) Total Unreserved (361,767)(253,388)(64,170)(56,556)(39,506) Total Fund Balances (Deficit)(348,686)(239,618)(49,137)(47,021)(20,171) Total Liabilities and Fund Balances (Deficit)$57,746 $65,884 $143,107 $69,224 $122,035 - 11 - CITY OF ITHACA COMPARATIVE BALANCE SHEET REFUSE AND GARBAGE FUND DECEMBER 31, Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information REVENUES 2014 2013 2012 2011 2010 Departmental income $501,489 $447,882 $467,605 $551,545 $486,035 Use of money and property 17 20 24 37 51 Total Revenues 501,506 447,902 467,629 551,582 486,086 Other Financing Sources: Interfund transfers 52,301 82,000 87,000 99,345 Total Revenues and Other Sources 501,506 500,203 549,629 638,582 585,431 EXPENDITURES Current: Home and community services 419,587 426,966 453,020 452,945 459,559 Employee benefits 179,008 161,942 170,405 171,902 136,660 Debt service (principal and interest)11,979 12,068 15,912 15,851 16,062 Total Expenditures and Other Uses 610,574 600,976 639,337 640,698 612,281 Excess of (Expenditures)(109,068)(100,773)(89,708)(2,116)(26,850) Fund Balance (Deficit), Beginning (239,618)(138,845)(49,137)(47,021)(20,171) Fund Balance (Deficit), Ending $(348,686)$(239,618)$(138,845)$(49,137)$(47,021) Data Presented is Extracted from City's Independent Audit Reports for Purposes of Additional Analysis See Audit Reports for Complete Information AND CHANGES IN FUND BALANCE - REFUSE AND GARBAGE FUND FOR THE YEAR ENDED DECEMBER 31, - 12 - CITY OF ITHACA COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, CITY OF ITHACA Ithaca, New York FINANCIAL REPORT December 31, 2014 CITY OF ITHACA TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2014 Independent Auditor’s Report ............................................................................................................1-2 Required Supplementary Information Management’s Discussion and Analysis .........................................................................................3-3k Basic Financial Statements Government-wide Financial Statements Statement of Net Position .............................................................................................................4-4a Statement of Activities ..................................................................................................................5 Governmental Fund Financial Statements Balance Sheet -Governmental Funds ..........................................................................................6-6a Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position ..........7 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ..................................................................................................................8-8a Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities .................................................9 Statement of Fiduciary Net Position -Fiduciary Fund ................................................................10 Notes to Financial Statements ....................................................................................................11-43 Required Supplementary Information Budgetary Comparison Schedule (Non-GAAP) -General Fund ...................................................44 Budgetary Comparison Schedule (Non-GAAP) -Budgeted Major Special Revenue Funds .......45-46 Schedule of Funding Progress ..........................................................................................................47 Notes to Required Supplementary Information ..............................................................................48 Supplementary Information Combining Balance Sheet -Non-Major Governmental Funds ......................................................49-49a Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non-Major Governmental Funds .................................................................................................50-50a Reports Required Under Government Auditing Standards In dependent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................................................51-52 Reports Required Under the Single Audit Act (OMB Circular A-133) In dependent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A-133 ......................................53-54 Schedule of Expenditures of Federal Awards .................................................................................55 Notes to Schedule of Expenditures of Federal Awards ..................................................................56 Schedule of Findings and Questioned Costs ...................................................................................57-59 INDEPENDENT AUDITOR’S REPORT Common Council City of Ithaca Ithaca, New York Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Ithaca (the City), as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Ithaca, as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Prior Period Financial Statements The financial statements of the City of Ithaca as of December 31, 2013 were audited by Ciaschi, Dietershagen, Little, Mickelson & Company, LLP who merged with Insero & Co. CPAs, LLP as of January 1, 2016, and whose report dated September 9, 2015, expressed an unmodified opinion on those statements. - 1 - Insero & Co. CPA s, LLP Rochester | Ithaca | Corning | Cortland | Watkins Glen | (800) 232-9547 | www.inserocpa.com - 2 - Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison information, and Schedule of Funding Progress on pages 3 – 3k, and 44 - 48 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statement s in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining non -major fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The combining and individual non-major fund financial statements and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non -major fund financial statements and the Schedule of Expenditures of Federal Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 17, 2016, on our consideration of the City of Ithaca’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3- Our discussion and analysis of the City of Ithaca’s (the City) financial performance provides an overview of the City’s financial activities for the fiscal year ended December 31, 2014. Please read it in conjunction with the City’s financial statements, which begin on page 4. FINANCIAL HIGHLIGHTS The liability for other postemployment health benefits at December 31, 2014 is $102,545,205. This liability is expected to grow each year as there is no legal mechanism in New York State to fund it. Assets of the City exceeded liabilities at the close of the most recent fiscal year by $14,768,352 (net position). Unrestricted net position showed a deficit of $(64,830,145)due to the accrual of other postemployment health benefits. Without the effect of this accrual,unrestricted net position would have been $37,715,060.Management has designated certain amounts of net position for particular purposes. See Note 3.D for management’s designation of unrestricted net position. The City’s expenses were $9,802,930 greater than the $69,524,812 generated in tax and other revenues for all governmental program activities. Expense associated with the implementation of GASB Statement No. 45 for the ye ar ending December 31, 2013 was $15,519,743, without which revenues would have exceeded expenses by $5,716,813. The City invested $18,807,554 in capital assets during the year, largely for the Ithaca Commons project and improvements in its water plant and transportation system. The General Fund recorded an operating decrease of $(428,880)in 2014 compared to a decrease of $(168,631)in 2013 and had a fund balanceof $7,819,268 at ye ar-end. Although revenues increased $1.7 million in 2014, expenditures increased $2.0 million, mostly in increased tax revenue deferrals, employee benefits and transportation expenditures. USING THIS ANNUAL REPORT This annual report consists of a series of basic financial statements. The Statement of Net Position and Statement of Activities (pages 4-5) provide information about the City as a whole and present a longer- term view of the City’s finances. Governmental Fund financial statements start on page 6. These statements,for Governmental Activities, tell how services were financed in the short term, as well as what remains for future spending. Governmental Fund financial statements also report the City’s operations in more detail than the Government-wide financial statements by providing information about the City’s most significant funds.The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside the government. Following these statements are notes that provide additional information essential to a full understanding of the data provided in the financial statements. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3a- In addition to basic financial statements, the annual report contains other information in the form of budgetary comparison schedules for the General Fund and Budgeted Major Special Revenue Funds, as well as combining statements for funds that are not considered Major Funds and, therefore, are not presented individually in the basic financial statements. Other information consists of the Schedule of Funding Progress related to the City’s liability for retiree health which is reported as other post- employment benefits. Reporting the City as a Whole Our analysis of the City as a whole begins on page 4, with the Government-wide financial statements. The Statement of Net Position and Statement of Activities report information about the City and about its activities in a way that helps answer the question of whether the City, as a whole, is better or worse off as a result of the year’s activities. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of current year revenues and expenses are taken into account regardless of when the cash is received or paid. These two statements report the City’s net assets and changes in them. One can think of the City’s net position, the difference between assets and liabilities, as one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net position is one indicator of whether its financial health is improving or deteriorating. One will need to consider other nonfinancial factors however, such as changes in the City’s property tax base and the condition of the City’s infrastructure, to assess the overall health of the City. In the Statement of Net Position and Statement of Activities, all of the City’s activities which are governmental in nature are reported in one column including general governmental support, public safety, transportation, economic assistance and opportunity, culture and recreation, home and community services and interest on long-term debt. Property and sales taxes, and state and federal grants finance most of these activities. Reporting the City’s Most Significant Funds Governmental Fund Financial Statements Analysis of the City’s Major Funds begins on page 6. The Governmental Fund financial statements provide detailed information about the most significant funds -not the City as a whole. Some funds are required to be established by State law. However, management establishes many other funds to help it control and manage money for particular purposes or to show it is meeting legal responsibilities for using certain taxes and grants. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3b- Governmental Funds: All of the City’s services are reported in the Governmental Funds, which focus on how money flows in and out of those funds,and the balances left at year end that are available for spending. These funds are reported using an accounting method called modified accrual accounting which measures cash and all other financial assets that can be readily converted to cash. The Governmental Fund financial statements provide a detailed short-term view of the City’s general governmental operations and the basic services it provides. Governmental Fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance City programs. The relationship (or differences) between Governmental Activities (reported in the Government-wide financial statements) and Governmental Funds is explained in a reconciliation following the Governmental Fund financial statements. The City as Trustee: The City is the trustee, or fiduciary, for other assets held on behalf of others. All of the City’s Fiduciary Activities are reported in a separate Statement of Fiduciary Net Position - Fiduciary Fund on page 10. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring the assets reported in this fund are used for their intended purposes. Component Unit. The City includes one separate legal entity in its report, the It haca Urban Renewal Agency (IU RA). Although legally separate, this “component unit” is important because the City is financially accountable for it. Complete financial statements for the IURA can be obtained by contacting the IURA at 108 East Green Street, Ithaca. NY 14850. THE CITY AS A WHOLE A portion of the City’s net position reflects its investment in capital assets (e.g. land, buildings, machinery, equipment and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided by other sources, as the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position represents resources subject to external restrictions on how they may be used and are reported as restricted. The remaining category of total resources is unrestricted, totaling $(64,830,145). Included in unrestricted net position is the City’s equity interest in two joint ventures of $12,940,645. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3c - Our analysis below focuses on the net position (Figure 1)and changes in net position (Figure 2)of the City’s Governmental Activities. Figure 1 Net Position Governmental Activities and Total Government Dollar Change Percent Change Restated 2013 2014 2013-2014 2013-2014 Current assets $ 52,841,947 $ 62,479,666 $ 9,637,719 18% Noncurrent assets 26,597,517 28,015,191 1,417,674 5% Capital assets, net 139,035,453 149,866,547 10,831,094 8% Deferred outflows of resources 346,381 919,596 573,215 165% Total Assets and Deferred Outflows 218,821,298 241,281,000 22,459,702 10% Current liabilities 40,224,663 62,915,322 22,690,659 56% Noncurrent liabilities 154,025,353 163,597,326 9,571,973 6% Total Liabilities 194,250,016 226,512,648 32,262,632 17% Net investment in capital assets 60,349,477 60,391,316 41,839 0% Restricted 17,789,053 19,207,181 1,418,128 8% Unrestricted (53,567,248)(64,830,145)(11,262,897)-21% Total Net Position $ 24,571,282 $ 14,768,352 $(9,802,930)-40% Current assets consist largely of $46,017,532 in unrestricted cash, $560,018 of cash restricted for various purposes, receivables of $12,028,969, and $2,070,500 in prepaid expenses and inventory. Noncurrent assets consist of cash restricted for future noncurrent expenses of $8,796,434, the long-term portion of loans receivable of $6,278,112 and the City’s equity interest in joint ventures of $12,940,645.The increase in current assets is largely due to the result of proceeds of debt and other sources to fund capital projects,as well as the timing of receivables and payables. Capital assets, net of accumulated depreciation,increased as a result of the City’s investment in buildings and infrastructure. Included in current liabilities are Bond Anticipation Notes (BANs)payable of $50,275,293, the current portion of long-term liabilities of $5,258,158 and various payables of $7,381,871. Noncurrent liabilities consist of bonds payable of $56,251,411,compensated absences of $2,456,029, other postemployment benefits payable of $102,545,205 and lease obligations of $2,344,681. The increase in current liabilities is primarily due to issuing additional BANs to fund capital projects. Noncurrent liabilities increased as a result of the increase in the liability for other postemployment benefits of $15,519,743 offset by the scheduled payment of debt. The amount of net investment in capital assets increased slightly overall due to the change in capital assets offset by an increase in the amount of debt incurred to fund capital projects. Restricted net position consists largely of $3,612,714 for debt service, $8,834,190 for home and community service programs, $6,740,356 for future capital projects, and $19,921 for cultural and recreational programs as of December 31,2014. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3d- Figure 2 demonstrates the operations of the City’s activities. Figure 2 Changes in Net Position Governmental Activities and Total Government Dollar Percent Changes in Net Assets Change Change Restated 2013 2014 2013-2014 2013-2014 REVENUES Program Revenues: Charges for services $ 19,862,260$20,678,882 $ 816,6224% Operating grants 2,912,872 2,817,838 (95,034)-3% Capital grants 3,279,574 6,686,974 3,407,400104% General Revenues: Property taxes and tax items 20,828,35021,313,664 485,3142% Nonproperty taxes 13,272,70014,740,925 1,468,22511% State sources 3,388,841 3,220,841 (168,000)-5% Use of money and property 345,724 317,564 (28,160)-8% Change in equity interest in joint venture (1,547,821)(1,441,892) 105,929-6% Other 1,079,107 1,190,016 110,90910% Total Revenues 63,421,607 69,524,812 6,103,205 10% PROGRAM EXPENSES General government 8,140,506 9,853,689 1,713,18321% Public safety 31,582,88829,108,980 (2,473,908)-8% Transportation 10,536,03411,738,493 1,202,45911% Economic assistance and opportunity 61,000 61,000 -0-0% Culture and recreation 12,008,70911,405,983 (602,726)-5% Home and community services 14,050,97613,496,066 (554,910)-4% Interest on long-term debt 2,459,999 3,663,531 1,203,53249% Total Expenses 78,840,112 79,327,742 487,630 1% (DECREASE) IN NET POSITION $(15,418,505)$(9,802,930)$ 5,615,575 -36% Governmental Activities The net position of the City’s activities decreased significantly due to the increase in the liability of other postemploym ent benefits. Charges for services showed an increase due to increased charges for water and sewer services. Capital grants were up due to funding for the Commons project. Since the capital outlay associated with the Commons project is capitalized and not expensed, this grant income is largely the reason for the more favorable result compared to 2013. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3e- Property tax and tax items increased 2% compared to an increase of 3%in 2013. Nonproperty taxes were up in 2014 as compared to 2013. Sales tax revenue continues to increase ($600,000), asa result of increasing development. Also contributing to the increase in nonproperty taxes was charges for sidewalk improvements in a new fund, Sidewalk Improvement District Fund. The change in the City’s equity interest in joint ventures is dependent on those entity’s yearly operating results. See Note 4 for more information about the City’s joint ventures. Overall expenses were up largely due to increases in health insurance and retirement costs. Expenses in general government support increased largely due to personnel costs and changes in deferred tax revenue. Public safety expenses decreased largely due to lower personnel costs, including employee benefits. Transportation expenses increased due to increased contractual and personnel costs, including employee benefits. Interest on debt increased as a result of the timing of payments and an increase in the accrual at year-end. Figure 3 Revenue by Source 2014 Ch arges for serv ic es 29.74% Op erating grants 4.05% Ca pital grants 9.62% Pro pert y an d tax it ems 30.66% No nproperty taxes 21.20% Un re stric ted St ate sources 4.63% Us e of money and propert y 0.46% Ch ange in equity in teres t in joint ventures (2.07)% Ot her 1.71% Revenue by Source 2013 Ch arges for serv ic es 31.31% Op erating grants 4.59% Ca pital grants 5.17% Pro perty and tax it ems 32.83% No npropert y taxes 20.92% Un re stric ted St ate sources 5.34% Us e of money and property 0.54% Ch ange in equity in teres t in joint ventures (2.40)% Ot her 1.70% CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3f- The cost of all Governmental Activities in 2014 in the Statement of Activities was $79,327,742. However, as shown in the Statement of Activities the amount ultimately financed for these activities through City property and payments in lieu of taxes was $49,144,048, because some of the cost was paid by those who directly benefited from the programs $(20,678,882) or by other governments and organizations that subsidized certain programs with grants and contributions $(9,504,812). Overall, City governmental program revenues, including fees for services and grants, were $30,183,694. The City paid for the remaining “public benefit” portion of Governmental Activities with $39,341,118 in taxes and other revenues, such as interest and general entitlements. Total cost and revenue comparison of the Governmental Activities for each of the City’s largest programs is presented below. Note that the City’s home and community service activities which provide water and sewer services include debt service costs in their fee structures. Because debt service costs are not expenses of this function,excess revenue generated by these activities is used to make debt principal and interest payments. Figure 4 Program Cost and Revenue Comparison -Governmental Activities 2014 0 4,000,000 8,000,000 12,000,000 16,000,000 20,000,000 24,000,000 28,000,000 32,000,000 Cost Revenue 2013 0 4,000,000 8,000,000 12,000,000 16,000,000 20,000,000 24,000,000 28,000,000 32,000,000 Cost Revenue CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3g- THE CITY’S FUNDS As the City completed the year, its Governmental Funds, as presented in the balance sheets on pages 6-6a, reported a combined fund balance of $13,734,276, which is less than last year’s total of $22,483,016, largely as a result of short-term financing in the Capital Fund. Figure 5 shows changes in fund balance for the year for the City's funds. Figure 5 Governmental Funds Fund Balance at Year Ending Governmental Fund Balances Dollar Percent Restated Change Change 2013 2014 2013-2014 2013-2014 General Fund 8,248,148 7,819,268 (428,880)-5% Water Fund 5,425,583 5,538,988 113,405 2% Sewer Fund 3,775,996 3,857,618 81,622 2% Special Grant Fund 1,766,466 2,003,800 237,33413% Capital Projects Fund (149,067)(9,450,069)(9,301,002)-6,239% Non-Major Funds: Refuse and Garbage Fund (239,618)(348,686)(109,068)46% Sidewalk Improvement Fund -0- 503,444 503,444N/A Debt Service Fund 3,458,329 3,612,714 154,385 4% Misc. Special Revenue Fund 22,901 22,921 20 0% Urban Renewal Fund 125,000 125,000 -0-0% Permanent Fund 49,278 49,278 -0-0% Totals 22,483,016 13,734,276 (8,748,740)-39% General Fund Budgetary Highlights Over the course of the year, the Common Council as well as the management of the City revised the City General Fund budget several times. These budget amendments consist of transfers between functions, encumbrances from the prior fiscal year and acceptance of grant awards. Revenue available for appropriation was below the final budgeted amount by $(195,148). Transfers in were budgeted for $1,362,208 but;only $1,179,643 was actually transferred. The actual charges to appropriations (expenditures) were below the final budget amounts by $581,855. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3h- CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At December 31, 2014, the City had $149,866,547, net of accumulated depreciation of $118,938,147, invested in a broad range of capital assets, including buildings, machinery and equipment, roads and bridges. This amount represents a net increase (including additions of $18,807,554,depreciation expense of $7,956,254, and net book value of disposed assets of $20,206) or$10,831,094, or 8%over 2013. Most of the increase was due to additions in construction in progress for improvements to the Commons project, water plant and transportation infrastructure. Figure 6 Capital Assets, Net of Depreciation Governmental Activities and Total Government Dollar Change Percent Change 2013 2014 2013-2014 2013-2014 Land $13,719,491 $13,739,191 $ 19,700 0% Construction in progress 8,524,321 13,319,163 4,794,842 56% Buildings and improvements 27,170,086 25,719,720 (1,450,366)-5% Equipment 7,951,182 7,309,313 (641,869)-8% Infrastructure 81,670,373 89,779,160 8,108,787 10% Totals $139,035,453 $149,866,547 $ 10,831,094 8% Debt Administration Debt (bonds, BANs, and lease obligations payable), considered a liability of Governmental Activities, increased overall by $14,741,276. Accrued compensated absences increased by $91,884, while the liability for other postemployment benefits increased $15,519,743, bringing total debt and long-term liabilities to $219,130,777 as of December 31, 2014, as shown in Figure 7. Of the amount of bonds, BANs, and capital leases outstanding, $77,342,741 is subject to the constitutional debt limit and represented 73%of the City’s statutory debt limit. The City’s bond rating was assigned an Aa2 by Moody’s. More detailed information about the City’s liabilities is presented in Notes 3-B-2 and 3 to the financial statements. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3i- Figure 7 Outstanding Debt and Long-term Liabilities at Year Ending Governmental Activities and Total Government Dollar Change Percent Change 2013 2014 2013 -2014 2013 -2014 BANs $31,487,732$50,275,293$ 18,787,56160% Serial Bonds 64,753,40161,044,557 (3,708,844)-6% Compensated absences 2,484,0672,575,951 91,884 4% Other postemployment benefits payable 87,025,462102,545,205 15,519,74318% Lease obligation payable 3,027,2122,689,771 (337,441)-11% Totals $188,777,874 $219,130,777 $ 30,352,903 16% ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City considered many factors when developing and adopting the budget for fiscal year ended December 31, 2015. Two of these factors were State and local economies. The unemployment rate in Tompkins County continues to be the lowest in the State. However, the City is expected to face a difficult and uncertain economic environment for the next few years. In addition, New York State retirement costs continue to be high, with lower rates forecast for the next few years.Also, higher health care costs, a high debt load and related debt service costs, higher labor costs, uncertain sales tax collections, and level state aid payments are all factors that will strain future budgets. The one positive sign for the future is that projects inside the City slated for development continue to be active. While it will take time for these projects to construct,future development and related property tax in the City looks strong. The following is a summary of currently known facts, decisions, or conditions expected to have a significant effect on the City’s financial position: Sales Tax: Commercial development in the City is higher, with several projects expected to start construction during 2015 and 2016. In 2015, we budgeted a 2.3% increase in sales tax revenue based on the expected increase in development. Trying to pinpoint the sales tax revenue amount is difficult due to the continued uncertain economic climate and changes in the City's development. The 2014 revenue was 2% overthe budget. Sales tax revenue in the future will remain uncertain. Taxable Assessments: We will continue to see increasing assessments for the next few years as a result of increased development. 2015 taxable assessments will increase by 6.16%. Our tax rate for 2015 will lower by 1.75% to $12.89. Building Permits: In 2015, we budgeted a level $700,000 in building permit revenues. This amount was based on several larger development projects starting in 2015 and our previous history of revenue collection in this area. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3j- Cornell University Contribution: The City and Cornell University signed an amended memorandum of understanding in November 2003. Cornell University contributions are now increased by the Consumer Price In dex (CPI). The CPI is estimated to be approximately 0% for 2015. The total 2014 contribution amount increased by 1.50% due to a positive CPI. Employee Pension Rates: The State has informed the City that 2015 pension costs will be $4,907,539. The City has budgeted fully and not bonded any of this cost. This rate represents a $(404,659) decrease from 2014 contribution levels. Pension rates are expected to remain high for the next few years. Overall, the City expects current staffing levels to be maintained with labor costs slowly increasing. The State has estimated lower rates in the near future. Health Insurance Costs: Health insurance costs continue to increase. The estimated premium cost for health insurance is expected to increase by 5.0% in 2015. This cost will be partially offset by employee contributions. The 2015 budgeted health insurance costs will exceed $10.4 million. We continue to participate in a health consortium which will, hopefully, stabilize our premium rates in the near future. We continue to look at various opportunities to make changes to our current health plan in hopes of finding cost savings and cost control measures. Debt Service Costs: The debt load for the City continues to be high. Our outstanding debt, including installment debt, at December 31, 2015 was $134,004,473. In 2014, the City added another $8 million in debt for the Water Treatment Rebuild project, the Commons Improvement project, and the Wastewater Treatment project. The Commons project is expected to be completed in 2015, the water plant in 2017, and the wastewater plant in 2017. We have leveraged large amounts of State and Federal aid for the Commons, wastewater, bridge and street projects to keep the City costs share as low as possible. The City needed to bond for highway, water, and sewer improvements in the Southwest Area. These large scale infrastructure improvements of approximately $10 million, will have a significant impact on the City budget for the next 13 years. In addition, a $13.2 million rebuild of the Green Street Parking Garage was issued as debt in 2006 and 2009. Lastly, many of the City's facilities are in need of significant updates and renovations. A concentrated effort to reduce the overall debt load is ongoing. However, with many infrastructure improvements necessary in the City and the need to limit tax rates, reducing debt will be a challenge. Cayuga Parking Garage: Under a complicated agreement, the City is obligated to pay the deficit of operations related to the Cayuga Parking Garage. The total coverage cost was $19 million. The 2015 payment will be $1,011,000. We expect this payment to become constant over time at approximately $950,000. CITY OF ITHACA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014 -3k - Tax Exempt Property: The City has an exceptionally high tax exempt property rate, primarily related to Cornell University. Since 1991, the tax exempt property rate in the City ranged from 56% and 72%; for 2015 the percentage of tax exempt property inside the City was 59.20%. As a result of the high rate, the remaining tax base must pick up a majority of the overall City operating costs. The City continues to discuss this problem with both Cornell University and New York State to find some mitigation to the problem. This on-going issue leaves our rate high. State Revenue Aid: New York State cut the City’s state general revenue aid in the early 1990’s by over $1 million. Since that time the City has struggled to recover financially. In addition, aid payments to the City remained fairly constant until 2005 when general revenue aid started increasing. Although the State promised increase aid to municipalities for several more years, the State’s current weak financial position has made it impossible for the State to keep that promise. State aid began decreasing in 2009 and is expected to remain flat or decrease over the next several years. In 2015, State general revenue aid will be $2,610,000. This amount is about the same as our State aid in 1991. After considering inflation, we think our payment should be $4.9 million. We believethe State needs to adjust the aid formulato account for tax exempt property. City Surplus Property: The City has inventoried its property and has determined several pieces of vacant property can be sold over the next three years. In 2012, the City budgeted $125,000 for the sale of land. In 2013, the City budgeted $232,000; in 2014, we budgeted $197,000. During this period, we collected $352,000 in revenue from the sale of property. In 2015, we budgeted $400,000 in sale of property, mainly from the sale of land for a hotel inside the City. While it has taken longer than anticipated to sell these properties, we expect to meet budget in 2015. The above items were all taken into account when adopting the General Fund Budget for the fiscal year ending December 31, 2015. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about the report or need any additional financial information, contact Steven P. Thayer, City Controller, First Floor, City Hall, 108 East Green Street, Ithaca, New York 14850. Governmental Activities ASSETS Current Assets: Cash and cash equivalents $46,017,532 Restricted cash and cash equivalents 560,018 Investments 1,802,647 Taxes receivable, net 927,452 Due from state and federal governments 6,540,145 Due from other governments 1,055,684 Other receivables, net 3,005,688 Loans receivable, short-term portion 500,000 Inventories 778,036 Prepaid expenses 1,292,464 Total Current Assets 62,479,666 Noncurrent Assets: Restricted cash and cash equivalents 8,796,434 Loans receivable, long-term portion 6,278,112 Equity interest in joint ventures 12,940,645 Capital Assets: Land and construction in progress 27,058,354 Depreciable capital assets, net 122,808,193 Total Noncurrent Assets 177,881,738 Total Assets 240,361,404 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources:919,596 Deferred charge on refunding Total Deferred Outflows of Resources 919,596 See Independent Auditor's Report and Notes to Financial Statements. - 4 - CITY OF ITHACA STATEMENT OF NET POSITION DECEMBER 31, 2014 Governmental Activities LIABILITIES Current Liabilities: Accounts payable $4,612,271 Accrued liabilities 9,905 Due to other governments 762,115 Bond Anticipation Notes payable 50,275,293 Unearned revenue 209,488 Accrued interest payable 1,267,383 Other 520,709 Current Portion of Long-term Liabilities: Bonds payable 4,793,146 Lease obligations payable 345,090 Compensated absences 119,922 Total Current Liabilities 62,915,322 Long-term Liabilities: Bonds payable 56,251,411 Lease obligations payable 2,344,681 Other postemployment benefits payable 102,545,205 Compensated absences 2,456,029 Total Long-term Liabilities 163,597,326 Total Liabilities 226,512,648 NET POSITION Net investment in capital assets 60,391,316 Restricted, nonexpendable, for home and community services 49,278 Restricted, expendable, for home and community services 8,784,912 Restricted, expendable, for capital 6,740,356 Restricted, expendable, for culture and recreation 19,921 Restricted, expendable, for debt 3,612,714 Unrestricted (deficit)(64,830,145) Total Net Position $14,768,352 See Independent Auditor's Report and Notes to Financial Statements STATEMENT OF NET POSITION - 4a - CITY OF ITHACA DECEMBER 31, 2014 Revenue and Changes in Operating Capital Net Position Charges for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities Governmental Activities: General governmental support $9,853,689 $246,268 $575,795 $$(9,031,626) Public safety 29,108,980 4,656,675 922,245 (23,530,060) Transportation 11,738,493 2,320,328 5,731,415 (3,686,750) Economic assistance and opportunity 61,000 (61,000) Culture and recreation 11,405,983 1,751,791 347,303 (9,306,889) Home and community services 13,496,066 11,703,820 972,495 955,559 135,808 Interest on long-term debt 3,663,531 (3,663,531) Total Governmental Activities $79,327,742 $20,678,882 $2,817,838 $6,686,974 (49,144,048) GENERAL REVENUES Real property taxes 20,515,747 Real property tax items 797,917 Nonproperty tax items 14,740,925 Use of money and property 317,564 Sale of property and compensation for loss 197,620 Miscellaneous local sources 992,396 State sources 3,220,841 (1,441,892) Total General Revenues and Contributions 39,341,118 Change in Net Position (9,802,930) Net Position - Beginning, as restated 24,571,282 Net Position - Ending $14,768,352 See Independent Auditor's Report and Notes to Financial Statements. Change in equity interest in joint ventures CITY OF ITHACA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 - 5 - Net (Expense) FUNCTIONS/PROGRAMS Program Revenues General Water Sewer Special Grant Fund Fund Fund Fund ASSETS Assets: Cash and cash equivalents - Unrestricted $3,782,111 $316,372 $579,400 $1,043,344 Temporary investments 1,706,657 53,195 42,795 Taxes receivable, net 927,452 Due from other funds 500,784 38,603 Due from state and federal governments 926,763 10,000 Due from other governments 968,733 86,951 Other receivables, net 399,645 957,383 1,220,540 7,359 Inventory 197,290 494,604 86,142 Prepaid expenses 1,075,446 81,389 122,107 Cash and cash equivalents - Restricted 487,581 3,803,578 2,449,197 2,003,800 Loans receivable, net 6,778,112 Total Assets $10,972,462 $5,755,124 $4,587,132 $9,832,615 LIABILITIES Liabilities: Accounts payable $461,325 $32,172 $29,379 $260,798 Accrued liabilities 9,905 Due to other funds 478,321 149,069 688,043 Due to other governments 474,442 12,000 Bond Anticipation Notes payable 780,000 Compensated absences 119,922 Unearned revenue 209,488 Other liabilities 486,169 34,895 92 Total Liabilities 2,229,667 216,136 729,514 1,050,703 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 923,527 6,778,112 FUND BALANCES Fund Balances: Nonspendable 1,272,736 575,993 208,249 Restricted 487,581 3,803,578 2,449,197 2,003,800 Assigned 2,767,667 1,159,417 1,200,172 Unassigned 3,291,284 Total Fund Balances (Deficit)7,819,268 5,538,988 3,857,618 2,003,800 Total Liabilities, Deferred Inflows of Resources and Fund Balances $10,972,462 $5,755,124 $4,587,132 $9,832,615 See Independent Auditor's Report and Notes to Financial Statements CITY OF ITHACA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2014 Major Funds - 6 - Special Revenue Funds Major Funds Total Capital Non-Major Total Projects Governmental Governmental Funds Funds $40,068,228 $228,077 $46,017,532 1,802,647 927,452 861,060 3,512,387 4,912,834 5,603,382 6,540,145 1,055,684 420,761 3,005,688 778,036 13,522 1,292,464 612,296 9,356,452 6,778,112 $46,532,670 $4,787,043 $82,467,046 $3,354,693 $473,904 $4,612,271 9,905 3,524,159 73,242 4,912,834 275,673 762,115 49,103,887 49,883,887 119,922 209,488 (447)520,709 55,982,739 822,372 61,031,131 7,701,639 62,800 2,119,778 3,635,635 12,379,791 626,086 5,753,342 (9,450,069) (359,850) (6,518,635) (9,450,069) 3,964,671 13,734,276 $46,532,670 $4,787,043 $82,467,046 - 6a - Fund Total Governmental Fund Balances $13,734,276 Capital assets $268,804,694 Accumulated depreciation (118,938,147) 149,866,547 12,940,645 7,701,639 Accrued interest payable $(1,267,383) Premium on BANs (391,406) Deferred charge on refunding 919,596 Other postemployment benefits payable (102,545,205) Compensated absences (2,456,029)(105,740,427) (61,044,557) (2,689,771) Net Position of Governmental Activities $14,768,352 See Independent Auditor's Report and Notes to Financial Statements Bonds payable are notdue andpayable in the current period and,therefore,are not reported in the funds. - 7 - Lease obligations payable are notdue andpayable in the current period and, therefore, are not reported in the funds. Amounts reported for Governmental Activities in the Statement of Net Position are different because: Capital assets,net of accumulated depreciation,used in Governmental Activities are not financial resources and, therefore, are not reported in the funds. Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. CITY OF ITHACA RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF POSITION DECEMBER 31, 2014 Certain accrued expenses reported in the Statement of Net Position donot require the use of current financial resources and,therefore,are not reported as liabilities or deferred outflows in Governmental Funds. Equity interests in joint ventures are not reported in the fund financial statements because they donot represent current resources.These are the investments in the City's joint ventures. General Water Sewer Special Grant Fund Fund Fund Fund REVENUES Real property taxes $20,515,747 $$$ Real property tax items 797,917 Nonproperty tax items 13,880,274 Departmental income 4,081,541 4,344,618 5,811,904 Intergovernmental charges 3,884,948 173 16,345 Use of money and property 304,793 5,297 3,915 2,456 Licenses and permits 951,807 Fines and forfeitures 1,086,057 Sale of property and compensation for loss 497,456 9,228 3,679 Miscellaneous local sources 1,305,433 935,378 Interfund revenues 282,294 State sources 3,446,149 10,000 Federal sources 371,022 938,694 Total Revenues 51,405,438 4,369,316 5,835,843 1,876,528 EXPENDITURES Current: General governmental support 5,412,959 165,133 205,881 Public safety 13,410,005 Transportation 5,276,969 Economic assistance and opportunity 61,000 Culture and recreation 5,415,224 Home and community services 1,707,358 2,117,517 2,959,773 1,669,194 Employee benefits 15,254,314 906,224 1,317,920 Debt Service: Principal 4,087,741 394,353 584,041 Interest 2,377,391 379,184 353,106 Capital outlay Total Expenditures 53,002,961 3,962,411 5,420,721 1,669,194 Excess of (Expenditures) Revenues (1,597,523) 406,905 415,122 207,334 OTHER FINANCING SOURCES (USES) Interfund transfers in 1,179,643 12,500 26,500 Interfund transfers (out)(11,000) (306,000) (360,000) Premiums on obligations BANs redeemed from appropriations 30,000 Proceeds of obligations Payments to escrow agent Total Other Financing Sources (Uses)1,168,643 (293,500) (333,500) 30,000 Net Changes in Fund Balances (428,880) 113,405 81,622 237,334 Fund Balances, Beginning 8,248,148 5,425,583 3,775,996 1,766,466 Fund Balances, Ending $7,819,268 $5,538,988 $3,857,618 $2,003,800 See Independent Auditor's Report and Notes to Financial Statements CITY OF ITHACA GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Major Funds - 8 - Special Revenue Funds Major Funds Total Capital Non-Major Total Projects Governmental Governmental Funds Funds $$$20,515,747 797,917 860,651 14,740,925 501,489 14,739,552 3,901,466 1,103 317,564 951,807 1,086,057 510,363 401,130 2,641,941 282,294 806,497 4,262,646 5,487,418 6,797,134 6,695,045 1,363,243 71,545,413 95,885 5,879,858 13,410,005 321,846 5,598,815 61,000 5,415,224 2,037 419,665 8,875,544 214,708 17,693,166 8,455 5,074,590 241,193 3,350,874 15,699,705 15,699,705 15,701,742 1,301,752 81,058,781 (9,006,697) 61,491 (9,513,368) 11,000 1,229,643 (552,643)(1,229,643) 1,524,988 1,524,988 247,338 277,338 9,945,000 9,945,000 (10,982,698)(10,982,698) (294,305) 487,290 764,628 (9,301,002) 548,781 (8,748,740) (149,067) 3,415,890 22,483,016 $(9,450,069) $3,964,671 $13,734,276 Fund - 8a - Net Change in Fund Balances - Total Governmental Funds $(8,748,740) $18,807,554 (7,956,254) (20,206) 10,831,094 1,170,930 (1,441,892) $(9,945,000) 10,982,698 (277,338) (1,524,988) 5,074,590 4,309,962 $(584,426) (91,884) (15,519,743) on refunding of serial bonds 34,100 237,669 (15,924,284) Change in Net Position of Governmental Activities $(9,802,930) See Independent Auditor's Report and Notes to Financial Statements Amortization of premium and deferred amounts Premium on debt issued BANs redeemed from appropriations Principal payments Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in Governmental Funds. Change in compensated absences Change in accrued interest payable Change in other postemployment benefits payable - 9 - Governmental Funds report capital outlay as expenditures.However,in the Statement of Activities,the costof those assets is allocated over their estimated useful lives as depreciation expense.This is the amount by which capital outlay exceeded depreciation expense in the current period.In the Statement of Activities,only the gain or loss on the sale of capital assets is reported,whereas,in the Governmental Funds,the proceeds from the sale of capital assets increase financial resources.Thenet effect is a loss on sale of capital assets on the Government- wide Statement of Activities vs.proceeds from the sale of capital assets on the Governmental Fund financial statements. Capital outlay Net book value of disposed assets Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Equity interests in joint ventures are not reported in the fund financial statements because they donot represent current resources.This is the change in the investments in the City's joint ventures. Bond proceeds provide current financial resources to Governmental Funds,but issuing debt increases long-term liabilities in the Statement of Net Position.Repayment of debt principal is an expenditure in the Governmental Funds,but the repayment reduces long-term liabilities in the Statement of Net Position.This is the amount by which the issuance of new debt and BANs redeemed exceeded repayment of debt principal. Depreciation expense Amortization of premium on Bond Anticipation Notes Payments to escrow agent CITY OF ITHACA RECONCILIATION OF GOVERNMENTAL FUNDS STATEMENT OF REVENUES EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 Proceeds of debt Amounts reported for Governmental Activities in the Statement of Activities are different because: Agency Fund ASSETS Cash and cash equivalents - Unrestricted $892,998 Total Assets $892,998 LIABILITIES Agency liabilities $892,998 Total Liabilities $892,998 See Independent Auditor's Report and Notes to Financial Statements - 10 - CITY OF ITHACA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUND DECEMBER 31, 2014 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -11 - Note 1 Summary of Significant Accounting Policies The financial statements of the City of Ithaca (the City)have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The City’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements. The GASB is the accepted standard setting body for establishing governmental accounting and financial reporting principles. A.Financial Reporting Entity The City,which was established in 1888,is governed by its Charter, General City Law and other general laws of the State of New York and various local laws. The Common Council is the legislative body responsible for overall operations; the Mayor serves as chief executive officer, and the Controller serves as the chief fiscal officer. The following basic services are provided: public safety (police and fire), highways and streets, sanitation, health, culture and recreation, public improvements, planning and zoning, and general administration. All Governmental Activities and functions performed for the City are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial reporting entity consists of the following, as defined by GASB Statement No.14, “The Financial Reporting Entity,”as amended by GASB Statement No.39, “Determining Whether Certain Organizations are Component Units”and GASB Statement No.61, “The Financial Reporting Entity: Omnibus -an Amendment of GASB Statements Nos.14 and 34. a.The primary government, which is the City, b.Organizations for which the primary government is financially accountable, and; c.Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The decision to include a potential component unit in the City's reporting entity is based on several criteria set forth in GASB Statement No.14, as amended by GASB Statement Nos.39, and 61 including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following has been included in the City's reporting entity. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -12 - Note 1 Summary of Significant Accounting Policies -Continued 1.Blended Component Unit Based on the foregoing criteria and the significant factors presented below, the Ithaca Urban Renewal Agency (IURA) is included in the reporting entity and is reflected as such as blended component unit in the financial statements, reported as a special revenue fund. The IURA is a public benefit corporation established in 1965 as an urban renewal agency. The Agency has a corporate identity separate from the City and is independently funded, but works in close conjunction with the City to revitalize urban neighborhoods and strengthen the local economy. The Agency is composed of the Mayor and four members appointed by the Mayor with the concurring approval of the Common Council. The Director of Planning and Development for the City of Ithaca serves as the Executive Director of the Agency. Through a variety of means, including site acquisition and disposition, the Agency works to implement the Urban Renewal Plan that seeks to stabilize neighborhoods and enhance the vitality of the downtown and community. Through the City, the Agency applies for and receives various grants to address community development needs. On an annual basis, the Agency manages the City’s HUD Entitlement Grant award of Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) funds to undertake activities in the areas of housing, community facilities, public services, and economic development that benefit Ithaca’s low and moderate-income neighborhoods and households, or eliminate blighting conditions.In addition, the Agency administers various economic development loan programs, the Cherry Street Industrial Park, and leases to facilitate private/public real estate projects. Separate financial statements for the IURA can be obtained by contacting the IURA at 108 East Green Street, Ithaca. NY 14850. 2.Joint Ventures a.Ithaca Area Waste Water Treatment Facility In 1981 the City, Town of Ithaca and Town of Dryden executed an agreement whereby the parties agreed to jointly own and operate a sewage treatment plant and related facilities. Board members of each municipality jointly act as the governing body for the joint venture. The Facility is intended to be self-sustaining. However, any shortfall is to be provided by equal share contributions from the participants. See Note 4for additional disclosure regarding this joint venture. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -13 - Note 1 Summary of Significant Accounting Policies -Continued b.Tompkins Consolidated Area Transit (TCAT) Tompkins Consolidated Area Transit (TCAT) was formed under a consolidation agreement between the City, Tompkins County, and Cornell University effective April 1, 1998. The agreement shall remain in force until October 9, 2021. TCAT began operations on January 1, 1999, with its purpose to provide public transportation in Tompkins County and surrounding areas. As of January 1, 2005, TCAT was reorganized as a 501(c)(3). However, the structure of the Board, and the interest of each party was not changed. TCAT is governed by a Board of Directors consisting of nine voting members with three members being appointed by each participant in the venture. The General Manager of TCAT is a non-voting ex- officio member of the Board. In addition, the nine voting members of the Board select five additional non-voting, ex-officio members. Interest of each part y in surpluses, losses, property, and in debt acquired by TCAT shall be shared equall y. Each part y makes an annual contribution of equal amounts to the venture. See Note 4 for additional disclosure regarding this joint venture. 3.Related Organizations Although the following organizations, functions, or activities are related to the City, they are not included in the City's reporting entity because the City does not meet the criteria for manifestation of oversight as defined by the GASB. a.Ithaca Housing Authority The Ithaca Housing Authority (Authority)was created pursuant to Section 447 of the Public Housing Law. Its general purpose is to provide housing for low-income residents of the City. Members of the Board are appointed by the Mayor. Specific reasons for excluding the Authority from the City's reporting entity are as follows: The Authorit y's Board of Commissioners control employment of personnel; the City cannot significantly influence the Authorit y's operations; the City has no budgetary authority; the Authority controls surpluses and deficits; the City has no responsibility for the Authority's debt; and the Authority's Board of Commissioners controls fiscal management. b.Ithaca City School District Essentially, the primary function of the Ithaca City School District (School District) is to provide education for pupils. Services such as transportation of pupils, administration, finance, and plant maintenance support the primary function. Specific reasons for excluding the School District from the City's reporting entity are as follows: The City cannot significantly influence the School District's operations; the City has no budgetary authority; the School District controls surpluses and deficits; the City has no responsibility for the School District's debt; and the School District's Board of Education controls fiscal management. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -14- Note 1 Summary of Significant Accounting Policies -Continued B.BasicFinancial Statements The City's basic financial statements include both Government-wide (reporting the City as a whole) and Governmental Fund financial statements (reporting the City's Major Funds.) Both the Government-wide and Governmental Fund financial statements categorize primary activities as either governmental or business-type. The City's general governmental support, education, public safety, health, transportation, highways and streets, economic assistance and opportunity, culture and recreation, and home and community services are classified as Governmental Activities. 1.Government-wide Financial Statements The Government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of activities for the primary government. Government-wide financial statements do not include the activities reported in the Fiduciary Funds. This Government-wide focus is more on the sustainability of the City as an entit y and the change in the City's net position resulting from the current year's activities. In the Government-wide Statement of Net Position, the Governmental Activities columns are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City's net position is reported in three parts -net investment in capital assets,restricted and unrestricted. The Statement of Activities reports both the gross and net cost for each of the City's functions or programs. Gross expenses are direct expenses, including depreciation, that are specifically associated with a service, program or department and, therefore,are clearly identifiable to a particular function. These expenses are offset by program revenues -charges paid by the recipient of the goods or services offered by the program, grants, and contributions -that are restricted to meeting the program or capital requirements of a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the City, with certain limited exceptions. The net cost represents the extent to which each function or program is self-financing or draws from the general revenues of the City. The City does not allocate indirect costs. Indirect costs are reported in the function entitled “general government.” CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -15- Note 1 Summary of Significant Accounting Policies -Continued 2.Governmental Fund Financial Statements The financial transactions of the City are reported in individual funds in the Governmental Fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures or expenses. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. The City records its transactions in the funds described below: a.Governmental Funds Governmental Funds are those through which most governmental functions are financed. The acquisition, use, and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Funds. The measurement focus of the Governmental Funds is based upon determination of financial position and changes in financial position. The following are the City’s Governmental Funds: 1)Major Funds General Fund -Principal operating fund; includes all operations not required to be recorded in other funds. Capital Projects Fund -Accounts for financial resources to be used for the acquisition, construction, or renovation of major capital facilities, or equipment. a)Special Revenue Funds Water Fund -Accounts for revenues derived from charges for water consumption and the application of such revenues toward related operating expenses and debt retirement. Sewer Fund -Accounts for revenues derived from charges for sewer usage and benefited assessments, and the application of such revenues toward related operating expenses and debt retirement. Special Grant Fund -Accounts for Community Development Block Grant activities. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -16- Note 1 Summary of Significant Accounting Policies -Continued 2)Non-Major Funds a)Special Revenue Funds Refuse and Garbage Fund -Accounts for revenues derived from charges for garbage,refuse, and recycling consumption, and the application of such revenues toward related operating expenses. Sidewalk Im provement District Fund -accounts for revenues derived from propert y assessments for sidewalk improvement. Urban Renewal Agency Fund -Accounts for money advanced for the Center Ithaca Project. Miscellaneous Fund -Accounts for assets held in the capacity of a trustee for assets to benefit the City’s parks program. b)Debt Service Fund -Accounts for current payments of principal and interest on general obligation debt and for financial resources accumulated in a reserve for payment of future principal and interest on long-term indebtedness. c)Permanent Fund -Reports all trust arrangements under which principal and income benefit individuals, private organizations, or other governments. The City uses this fund to report funds provided for cemetery maintenance. 3)Fiduciary Fund Types Fiduciary Fund Types are used to account for assets held by the local government in a trustee or custodial capacity. The following is the City’s Fiduciary Fund: Agency Fund -Accounts for money and/or property received and held in the capacit y of trustee,custodian or agent. C.Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -17- Note 1 Summary of Significant Accounting Policies -Continued 1.Accrual Basis -The Government-wide financial statements and Fiduciary Fund financial statements are presented on an “economic resources”measurement focus and the accrual basis of accounting. Accordingl y,all of the City’s assets, deferred outflows, liabilities, and deferred inflows, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when incurred. 2.Modified Accrual Basis -Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues that are accrued include real property taxes, state and federal aid, sales tax, and certain user charges. The City considers property tax receivables collected within 60 days after year end to be available and recognizes them as revenues of the current year. All other revenues deemed collectible within one year after year end are recognized as revenues in the current year. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred. The cost of capital assets is recognized as an expenditure when received. Exceptions to this general rule are that 1) principal and interest on indebtedness are not recognized as an expenditure until due, and 2) compensated absences, such as vacation and sick leave, which vests or accumulates, are charged as an expenditure when paid. D.Unearned Revenues The City reports unearned revenues on its Statement of Net Position and its Balance Sheet. On the Statement of Net Position, unearned revenue arises when resources are received by the City before it has legal claim to them, as when grant monies are received prior to incurrence of qualifying expenditures. In subsequent periods, when the City has legal claim to resources, the liability for unearned revenue is removed and revenue is recognized. E.Deferred Outflows and Inflows of Resources In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide Statement of Net Position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -18- Note 1 Summary of Significant Accounting Policies -Continued In addition to liabilities, the Statement of Net Position and the Balance Sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of deferred inflow, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental fund Balance Sheet. The governmental fund reports unavailable revenues from loans receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. F.Inventory Inventory is valued at cost utilizing the first-in, first-out method for the General, Water, and Sewer Funds. G.Property Taxes Real property taxes are levied annually by the City no later than December 31, and become a lien on January 1. City taxes are collected in two installments, the first due in January and the second due in June. The City collects county taxes from January 1, through May 31. Collected County taxes are remitted to the County on a monthly basis. Unpaid County taxes are enforced pursuant to Article II of Real Property Tax Law. The County retains all right, title, and interest in any unpaid County taxes. Unpaid City taxes and unpaid school taxes plus advertising costs and accrued penalties are foreclosed two years after lien date pursuant to Article II of Real Property Tax Law. Should both the County and the City have liens on a particular property, either may foreclose. The foreclosure is subject to the other’s lien. The City and the County, based on the tax liens each hold, share proceeds from the sale of the property. H.Receivables Property tax receivables are stated net of estimated allowances for uncollectible amounts. Amounts due from state and federal governments represent amounts owed to the City to reimburse it for expenditures incurred pursuant to state and federally funded programs. Other receivables represent amounts owed to the City including sewer rents, water rents, rehabilitation loans, and assessments. No provision has been made for uncollectible accounts reported as other receivables, as it is believed that such amounts would be immaterial. All receivables net of estimated allowances for uncollectible amounts are expected to be collected within the subsequent fiscal year. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -19- Note 1 Summary of Significant Accounting Policies -Continued I.Cash and Cash Equivalents For financial statement purposes, all highly liquid investments with initial maturities of three months or less are considered cash equivalents. J.Capital Assets All capital assets are valued at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements, and other capital outlays that significantl y extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line basis over the estimated useful lives of the assets. Governmental capital assets purchased or acquired with an original cost of over $5,000 for buildings and infrastructure assets and $2,500 for machinery and equipment, and having a useful life of greater than one year are capitalized. The estimated useful lives for governmental capital assets are as follows: Buildings and improvements 10 -45 years Machinery and equipment 5-25 years Infrastructure 10 -60 years No interest on construction in progress has been capitalized. K.Insurance The City assumes the liability for most risk including, but not limited to, property damage and personal injury liability. Judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. L.Vacation and Sick Leave and Compensatory Absences City employees are granted vacation, sick leave, and other leave benefits as defined in agreements between the City and the representative units. The City recognizes a liability for vacation leave and other compensated absences with similar characteristics and additional salary-related payments as the benefits are earned by the employees, based on the rendering of past service and the probability the employees will be compensated for the benefits through paid time off or some other means. This includes vacation leave and other compensated absences with similar characteristics earned but not used during the current or prior periods and for which employees can receive compensation in a future period. Amounts do not include leave expected to lapse and do include leave that (new) employees will (eventually) qualify for. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -20 - Note 1 Summary of Significant Accounting Policies -Continued In addition, the City recognizes a liability for vesting sick leave and other compensated absences with similar characteristics and additional salary-related payments as employees earn benefits and to the extent it's probable that the City will compensate the employees for the benefits through cash payments (which may be conditioned on the employees' termination or retirement), rather than be taken as absences due to illness or other contingencies. A portion of the compensated absence liability recognized is attributable to the value of sick leave converted into payment for employees' share of postemployment health care insurance premiums. The liability for compensated absences is calculated at rates in effect as of the balance sheet date and is recorded in the Governmental Funds inasmuch as it will be funded from current financial resources. The Statement of Net Position records this current portion, as well as amounts to be paid from future financial resources. M.Other Postretirement Benefits In addition to providing pension benefits, the City provides health insurance coverage and survivor benefits for retired employees and their survivors in accordance with employment contracts. Substantially all of the City's employees may become eligible for these benefits if they reach normal retirement age while working for the City. Health care benefits and survivors benefits are provided through an insurance company whose premiums are based on the benefits paid during the ye ar. The City recognizes the cost of providing benefits by recording its share of insurance premiums as an expenditure in the year paid. The actual contribution (versus expected contribution)paid on behalf of 241 retirees for the year was $4,389,379 and recorded as an expenditure in the General Fund. For additional information, see Note 3.B.4. N.Use of Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. O.Restricted Resources When an expense is incurred for purposes for which both restricted and unrestricted resources are available, it is the City’s policy to apply restricted funds before unrestricted funds, unless otherwise prohibited by legal requirements. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -21 - Note 1 Summary of Significant Accounting Policies -Continued Certain assets are classified on the Balance Sheet as restricted because their use is limited. The proceeds of bond and note sales can only be used for the stated purpose of the borrowing. Property taxes collected for debt service payments are legally restricted for that purpose. Community Development Block Grant Funds must be used only for approved programs. Cemetery perpetual care funds cannot be expended. However, the interest earnings can be spent for cemetery maintenance functions. It is the City’s policy to spend the interest earnings each fiscal year. P.Equity Classifications 1.Government-wide Financial Statements Equity is classified as net position and displayed in three components: Net investment in capital assets -Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings attributable to the acquisition, construction, or improvement of those assets. Restricted -Consists of resources with constraints placed on the use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or 2) law through constitutional provisions or enabling legislation. Unrestricted -Consists of all other resources that do not meet the definition of “restricted”or “net investment in capital assets.” 2.Governmental Fund Financial Statements Governmental Fund equity is classified as fund balance. Proprietary Fund equity is classified the same as in the Government-wide financial statements. Any capital gains or interest earned on reserve fund resources becomes part of the respective reserve fund. While a separate bank account is not necessary for each reserve fund, a separate identity for each reserve fund must be maintained. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -22- Note 1 Summary of Significant Accounting Policies -Continued Constraints are broken into five classifications: nonspendable, restricted, committed, assigned, and unassigned. These classifications serve to inform readers of the financial statements of the extent to which the government is bound to honor any constraints on specific purposes for which resources in a fund can be spent. Nonspendable Consists of assets inherently nonspendable in the current period either because of their form or because they must be maintained intact; including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and endowments principal. Restricted Consists of amounts subject to legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments and enforced externally; or through constitutional provisions or enabling legislation. Most of the City’s legally adopted reserves are reported here. Committed Consists of amounts subject to a purpose constraint imposed by formal action of the government’s highest level of decision-making authority prior to the end of the fiscal year, which requires the same level of formal action to remove said constraint. Assigned Consists of amounts subject to a purpose constraint representing an intended use established by the government’s highest level of decision-making authority, or their designated body or official. The purpose of the assignment must be narrower than the purpose of the General Fund. In funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. Unassigned Represents the residual classification of the government’s General Fund, and could report a surplus or deficit. In funds other than the General Fund, the unassigned classification should only be used to report a deficit balance resulting from overspending amounts restricted, committed, or assigned for specific purposes. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -23 - Note 1 Summary of Significant Accounting Policies -Continued The City has not adopted any resolutions to commit fund balance. Currently, fund balance is assigned by the City Controller for encumbrances and designations and the Common Council, by resolution, approves fund balance appropriations for next year’s budget. The City has not formally adopted a policy defining the order in which to apply expenditures against fund balances. However, the City’s policy is to apply expenditures against non-spendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and unassigned fund balance. Q.Interfund Activity Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate,and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Note 2 Stewardship, Compliance, Accountability A.Deficit Fund Balances The Refuse and Garbage Fund had a deficit fund balance of $(348,686)due to the current and previous years’ excess of expenditures over revenue. The City continues to review the trash tag fee structure, yard waste expense and route changes to find increasing revenue sources and cost efficiencies to balance the Solid Waste Fund. The General Fund will continue to provide funds necessary to balance the budget in the future. The current deficit reflects an increase of $109,068. The Capital Fund had a deficit fund balance of $(9,450,069)due to the issuance of short term debt to fund capital improvements. This deficit will be eliminated when short-term debt is converted to long-term debt. Note 3 Detailed Notes A.Assets 1.Cash and Investments The City's investment policies are governed by state statutes. In addition, the City has its own written investment policy. City monies must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. The Controller is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -24- Note 3 Detailed Notes -Continued Collateral is required for demand and time deposits and certificates of deposit not covered by federal deposit insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the state and its municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the state and that underlying securities must be obligations of the federal government. Underlying securities must have a market value of at least the cost of the repurchase agreement. Deposits and investments are valued at cost or cost plus interest.Total financial institution (bank) balances at December 31, 2014, per the banks, were $61,731,839, which were insured,and collateral, where required, was held by the City's agent in the City's name. Cash restricted for General, Water, and Sewer Fund reserves are $487,581,$3,803,578, and $2,449,197,respectively.Other restricted cash consists of$2,003,800 in the Special Grant Fund for community development projects, $49,278 in the Permanent Fund, $560,018in the Debt Service Fund, and $3,000 in the Miscellaneous Fund. Investments consisted of a one year certificate of deposit with a cost and fair value of $1,802,647at December 31, 2014. 2.Other Receivables Other receivables at December31, 2014 are as follows: Major Funds: General Fund: Accounts receivable $ 399,645 Total General Fund 399,645 Special Revenue Funds: Water Fund: Water rents receivable 736,210 Accounts receivable 221,173 Total Water Fund 957,383 Sewer Fund: Sewer rents receivable 1,129,296 Accounts receivable -Special assessments 91,244 Total Sewer Fund 1,220,540 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -25- Note 3 Detailed Notes -Continued Special Grant Fund: Accounts receivable -Reimbursements 7,359 Non-Major Funds: Special Revenue Funds: Urban Renewal Agency Fund -Due from developer398,079 Refuse and Garbage Fund -Fees 22,682 Total Other Receivables -Government Activities $3,005,688 3.Property Taxes At December 31, 2014, the total real property tax assets of $927,452 are offset by deferred tax revenue of $923,527 in the General Fund. In the Statement of Net Position,these assets are not deferred. 4.Sales Taxes and Collection The City, under the general authority of Article 29 of the Tax Law, imposes a 0.5%sales and compensating use tax. The County of Tompkins, by similar authority, also imposes a 0.5%sales tax within the City and a 3% sales tax in the towns outside the City. Both the City and County imposed tax are administered and collected by the State Tax Commission in the same manner as that relating to the State imposed 4%(June 1, 2005) sales and compensating use tax. Net collections, meaning monies collected after deducting expenses of administration and collections and amounts refunded or to be refunded, but inclusive of any applicable penalties and interest, are paid by the State to the City and the County, respectively. In 2014, direct payments from this source aggregated $13,432,961,were credited to the General Fund and used to finance general City expenses. Net collections of the 1.5% sales tax imposed within the City by the Count y are retained by the County, and, together with 0.5%of the tax levied in the towns outside of the City, or 2.0%, is applied to the reduction of taxes levied on a Countywide basis. The County of Tompkins increased the sales tax collected within the County to 8%. The City, under the 1% increased sales tax, imposes 0.25% of the 1% increase. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -26- Note 3 Detailed Notes -Continued 5.Property and Equipment A summary of changes in capital assets at December 31, 2014follows: Balance at 12/31/13 Additions Deletions Balance at 12/31/14 Governmental Activities Non-depreciable Capital Assets: Land $ 13,719,491$ 19,700$$ 13,739,191 Construction in progress 8,524,321 4,794,842 13,319,163 Total Non-depreciable Capital Assets 22,243,812 4,814,542 -0- 27,058,354 Depreciable Capital Assets: Buildings and improvements 63,872,883 1,114,725 64,987,608 Machinery and equipment 22,044,127 527,149 (528,604) 22,042,672 In frastructure 142,364,922 12,351,138 154,716,060 Total Depreciable Capital Assets 228,281,932 13,993,012 (528,604) 241,746,340 Total Historical Cost 250,525,744 18,807,554 (528,604) 268,804,694 Less Accumulated Depreciation: Buildings and improvements (36,702,797)(2,565,091)(39,267,888) Machinery and equipment (14,092,945)(1,148,812) 508,398 (14,733,359) In frastructure (60,694,549)(4,242,351)(64,936,900) Total Accumulated Depreciation (111,490,291)(7,956,254) 508,398 (118,938,147) Governmental Activities Capital Assets, Net $ 139,035,453$ 10,851,300$(20,206)$ 149,866,547 Depreciation expense was charged to functions as follows: Governmental Activities General governmental support $197,744 Public safety 777,988 Transportation 5,290,991 Culture and recreation 790,251 Home and community services 899,280 Total Governmental Activities Depreciation Expense$7,956,254 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -27- Note 3 Detailed Notes -Continued B.Liabilities 1.Pension Plans Plan Description -The City participates in the New York State and Local Employees' Retirement System (ERS), the New York State and Local Police and Fire Retirement System (PFRS), and the Public Employees' Group Life Insurance Plan (Systems). These are cost-sharing multiple-employer defined benefit public employee retirement systems. The Systems provide retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the Systems. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the Systems and for the custody and control of their funds. The Systems issue a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. The City is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: Year ERS PFRS 2014 $2,708,364$2,603,834 2013 2,480,432 2,959,440 2012 2,552,8482,644,002 The City's contributions made to the Systems were equal to 100% of the contributions required for each year. Included in the ERS contribution is $141,670, $128,101, and $129,873, attributable to the Ithaca Area Wastewater Treatment Facility for the years ended 2014, 2013 and 2012, respectively. The Systems are noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 and have fewer than ten years of credited service. These members contribute 3% of their salary. Those joining the System on or after January 1, 2010 and before April 1, 2012 are required to contribute 3% of their annual salary for their entire working career. Those joining the System on or after April 1, 2012 are required to contribute between 3% and 6%, dependent on salary, for their entire working career. Under the authority of the New York State Retirement and Social Security Law, the Comptroller shall certify annually the rates expressed as proportions of payroll of members which shall be used in computing the contributions required to be made by the employer to the Pension Accumulation Fund. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -28- Note 3 Detailed Notes -Continued The New York State Legislature has authorized local governments to make available retirement incentive programs. The City participates in early retirement programs when they are offered and has elected to pay the related cost over a five year amortization period, which includes interest at rates ranging from 8% to 8.5%. There is no remaining liability for these incentive programs at December 31, 2014. 2.Short-term Debt Liabilities for Bond Anticipation Notes are generally accounted for in the Capital Projects Fund to finance capital projects. Principal payments on BANs must be made annually. State law requires BANs issued for capital purposes be converted to long-term obligations within five ye ars after the original issue date. However, BANs issued for assessable improvement projects may be renewed for periods equivalent to the maximum life of the permanent financing, provided stipulated annual reductions of principal are made. a.Summary of Bond Anticipation Notes As of December 31, 2014,the Bond Anticipation Notes, including issue and maturity dates and interest rates, consisted of the following: Date of Final Interest Payable to Description of Issue Issue Maturity Rate Maturity Public Improvement 201420151.00%$28,128,725 Public Improvement 20142015.75%20,645,162 Public Improvement 201420152.15%330,000 IURA 201420151.70%780,000 Subtotal Bond Anticipation Notes 49,883,887 Add unamortized premium 391,405 Total Bond Anticipation Notes $50,275,293 IAWWTP Waste Water Improvement 201420151.00%$3,044,300 Waste Water Improvement 20142015.75%5,003,873 Total IAWWTP Bond Anticipation Notes $8,048,173 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -29- Note 3 Detailed Notes -Continued b.Housing and Urban Development Debt -BAN The Ithaca Urban Renewal Agency renewed a Neighborhood Housing Initiative Program BAN in the amount of $780,000 on April 18, 2014 at an interest rate of 1.70% per annum, with a maturity date of April 17, 2015. The BAN is issued to provide funding for the Agency’s Neighborhood Housing Initiative Program. The liability is recorded in the IURA’s financial statements.The City has guaranteed the payment of the note’s principal and interest. The principal and interest payments are reflected in the City’s financial statements. Under Article XVIII Section 4 of the State Constitution, the City is permitted to guarantee principal of and interest on the City Urban Renewal Agency’s bonds. The bonds do not count toward the City’s debt limit. Revenue Anticipation Notes (RANs) are typically issued to provide working capital. There were no RANs issued or redeemed during 2014. Interest on short-term debt for the year ended December 31, 2014 is as follows: Interest paid $ 381,812 Less: Interest accrued in the prior year (148,710) Plus: Interest accrued in the current year 257,348 Less: Amortization of BAN premium (237,669) Total Expense $ 252,781 See Note 3.B.3. for information concerning short-term debt activity for the year ending December 31, 2014. 3.Long-term Debt At December 31, 2014, the total outstanding indebtedness of the City, including the debt of the IAWWTP aggregated $125,873,991.Of this amount, $77,342,741 was subject to the constitutional debt limit and represented approximately 73% of its debt limit. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -30- Note 3 Detailed Notes -Continued a.Serial Bonds The City borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the capital assets. These long-term liabilities, which are full faith and credit debt of the local government, are recorded in the Statement of Net Position. The provision to be made in future budgets for capital indebtedness represents the amount exclusive of interest, authorized to be collected in future years from taxpayers and others, for the liquidation of the long-term liabilities. On June 5, 2012 the City issued $8,530,000 of general obligation bonds, with interest rates ranging between 2.00% and 4.00%, pursuant to a Refunding Bond Resolution duly adopted by the Council on October 5, 2011. The City issued the bonds to advance refund $8,720,000 of the $9,845,000 outstanding balance of the 2001 and 2004 serial bonds with interest rates of 3.25% to 4.50%. The City used the net proceeds along with other resources to purchase U.S. government securities. These securities were deposited in an irrevocable trust to provide for all future debt service on the refunded portion of the bonds. As a result, the $8,720,000 in bonds is considered defeased and the liability has been removed from the City’s financial statements. The present value of the total debt service savings to the City was $497,299 at the date of issuance. The outstanding principal of the defeased bonds was $6,640,000at December 31, 2014. On September 3, 2014,the City issued $9,945,000 of general obligation bonds, with interest rates ranging between 2.00% and 4.00%, pursuant to a Refunding Bond Resolution duly adopted by the Council on July 2, 2014. The City issued the bonds to advance refund $10,360,000 of the $12,175,000 outstanding balance of the 2007 serial bonds with interest rates of 4.00% to 4.25%. The City used the net proceeds along with other resources to purchase U.S. government securities. These securities were deposited in an irrevocable trust to provide for all future debt service on the refunded portion of the bonds. As a result, the $10,360,000 in bonds is considered defeased and the liability has been removed from the City’s financial statements. The present value of the total debt service savings to the City was $728,360 at the date of issuance. The outstanding principal of the defeased bonds was $10,360,000 at December 31, 2014. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -31- Note 3 Detailed Notes -Continued b.Other Long-term Debt and Liabilities In addition to the above long-term debt, the City had the following non-current liabilities: Compensated Absences -Represents the unfunded value of the liability for compensated absences and is liquidated in the General, Water, Sewer, and Refuse and Garbage Funds. Other Postemployment Benefits Payable -Represents the liability for future health insurance benefits. See Note 3.B.4 for more information. Lease Obligations Payable -Represents the amount outstanding on a capital lease for energy improvements. The gross amount of assets in the Statement of Net Position recorded under capital leases is $4,746,465, which is recorded under buildings and the associated accumulated amortization,which is reported in depreciation expense,of these assets, is $1,096,652. c.Changes in Indebtedness and Other Long-term Liabilities The following is a summary of changes in the City’s indebtedness and long-term liabilities for the period ended December 31, 2014: Description Balance 12/31/13 New Issues/ Additions Maturities/ Payments Balance 12/31/14 Due Within One Year General obligation and statutory installment bonds $ 64,168,320 $ 11,760,000 $ (16,518,843)$ 59,409,477 $ 4,606,510 Add premium 585,0811,133,582 (83,583)1,635,080 186,636 Total Bonds 64,753,40112,893,582(16,602,426)61,044,557 4,793,146 BANs 31,250,03349,351,225(30,717,401)49,883,887 49,883,887 Add unamortized premium 237,669391,406(237,669)391,406 391,406 Total BANs 31,487,73249,742,631(30,955,070)50,275,293 50,275,293 Lease obligations payable 3,027,212 (337,441)2,689,771 345,090 Liability for other postemployment benefits 87,025,46218,646,100(3,126,357)102,545,205 -0- Compensated absences 2,484,06791,884 2,575,951 119,922 Total $ 188,777,874 $ 81,374,197 $ (51,021,294)$ 219,130,777 $55,533,451 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -32- Note 3 Detailed Notes -Continued d.Summary of Serial Bonds As of December 31, 2014, the Serial Bonds, including issue and maturity dates and interest rates, consisted of the following: Date of Final Interest Payable to Description of Issue Issue Maturity Rate Maturity 1998 EFC Bonds 199820175.05%$260,000 1998 EFC Bonds 199820175.05%60,000 2000 Water Treatment Improvement 200020205.50%395,000 2001 Statutory Installment Bond 200120174.64%232,160 2008 Public Improvement 200820234.00%3,880,000 2008 Parking Garage 200820326.63%3,330,000 2009 Parking Garage 200920245.63%830,000 2010 Public Improvement 201020345.00%7,070,000 2010 Public Improvement 201020274.00%8,419,700 2012 Refunding Bonds 201220152.00%6,420,000 2013 Public Improvement 201320373.00%13,759,430 2013 Public Improvement 201320232.00%165,000 2013 Public Improvement 201320353.00%2,828,187 2014 Refunding Bonds 200720254.13%11,760,000 Subtotal Bonds 59,409,477 Add unamortized premium 1,635,080 Total Bonds $61,044,557 IAWWTP Phosphorous Removal Improvements 200520353.349%$1,685,000 Plant Improvements 201020273.00%1,085,000 Energy Upgrades 201320373.00%2,950,570 Plant Improvements 201320353.00%121,813 IAWWTP Total Bonds $5,842,683 Additions and deletions to compensated absences are shown net,as it is impractical to determine these amounts separately. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -33- Note 3 Detailed Notes -Continued e.Debt Maturity Schedule The following table summarizes the City's future debt service requirements as of December 31, 2014: Year Ending Bonds Bonds and BANs December 31,Principal Interest Principal Interest 2015 $4,606,510 $2,292,256 $54,490,397$2,811,249 2016 4,235,190 2,226,158 4,235,190 2,226,158 2017 4,383,904 2,062,114 4,383,904 2,062,114 2018 4,352,313 1,892,917 4,352,3131,892,917 2019 3,641,230 1,739,252 3,641,230 1,739,252 2020-2024 17,597,330 6,431,834 17,597,330 6,431,834 2025-2029 10,401,960 3,243,339 10,401,960 3,243,339 2030-2034 7,648,410 1,357,608 7,648,410 1,357,608 2035-2037 2,542,630 154,994 2,542,630 154,994 Total $ 59,409,477 $ 21,400,472$109,293,364$21,919,465 The following is a statement of installment purchase debt with corresponding maturity schedules. Description By Fund Date of Issue Interest Maturity Date Outstanding General Fund: Building improvements 20074.03%8/30/22 $833,809 Building improvements 20070.03%8/30/17 291,272 Sewer Fund: Building improvements 20074.03%8/30/22 12,454 Building improvements 20070.03%8/30/17 4,350 Water meter replacement 20094.91%11/20/23 1,000,140 Water Fund: Building improvements 20074.03%8/30/22 6,825 Building improvements 20070.03%8/30/17 2,384 Water meter replacement 20094.91%11/20/23 538,537 Total Installment Purchase Debt $2,689,771 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -34 - Note 3 Detailed Notes -Continued The following table summarizes the City’s future lease obligation requirements as of December 31, 2014: Year Ending Capital Lease December 31,Principal Interest 2015 $345,090 $66,899 2016 352,994 58,732 2017 361,161 50,299 2018 270,205 41,608 2019 278,897 74,787 2020-2023 1,081,424 74,801 Total $ 2,689,771 $ 367,127 The following table summarizes the future debt service requirements of the Wastewater Treatment Plant joint venture, less interest subsidies, as of December 31, 2014: Year Ending Bonds December 31,Principal Interest 2015 $222,390 $172,413 2016 227,140 166,636 2017 237,026 160,119 2018 242,687 153,350 2019 248,770 146,363 2020-2024 1,372,670 609,409 2025-2029 1,403,040 381,397 2030-2034 1,271,590 203,283 2035-2037 617,370 40,074 Total $5,842,683$2,033,044 Interest on long-term debt for the year ended December 31, 2014is as follows: Interest paid $ 2,969,062 Less: Interest accrued in the prior year (534,247) Plus: Interest accrued in the current year 1,010,035 Plus: Amortization of deferred amounts 49,483 Less: Amortization of premium (83,583) Total Expense $ 3,410,750 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -35- Note 3 Detailed Notes -Continued 4.Postemployment Benefits Other Than Pensions An actuarial valuation of the Plan was performed as of January 1, 2012 using the projected unit cost method. Plan Description. The Plan is a single-employer, defined benefit healthcare plan administered by the City. The Plan consists of a self insured minimum premium traditional indemnity plan, a self insured PPO plan, and a community rated Medicare supplemental plan to eligible retirees and dependents. The Plan provides medical, prescription drug, dental, and vision benefits to eligible retirees, spouses, and their covered dependents. Benefit provisions are established through negotiations between the City and bargaining units and are renegotiated each three-year period. The City assigns the authority to establish and amend benefit provisions to the City Council for non-bargaining unit employees. The Plan does not issue a stand-alone financial report. The contribution requirements of Plan members and the City are established and may be amended by the City Council. The City Council has negotiated several collective bargaining agreements, which include obligations of Plan members and the City. The required contribution is based on projected pay-as-you-go financing requirements. For the year ended December 31, 2014, the City had expected employer contributions of $2,875,635 to the Plan for current premiums. Plan members receiving benefits may be required to contribute to the Plan depending on their collective bargaining unit. The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No.45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and accumulate sufficient total accruals for all postretirement benefits when due. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -36- Note 3 Detailed Notes -Continued The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City’s net OPEB obligation to the City’s Plan: Annual required contribution $ 20,653,277 Interest on net OPEB obligation 3,481,019 Adjustment to annual required contribution (5,488,196) Total Annual OBEB Cost (expense) 18,646,100 Contributions made (expected)(3,126,357) In crease in Net OPEB Obligation 15,519,743 Net OPEB Obligation -January 1, 2014 87,025,462 Net OPEB Obligation -December 31, 2014 $ 102,545,205 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for 2014, 2013 and 2012 are as follows: Fiscal Year Ended Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 12/31/2014$ 18,646,10016.8%$102,545,205 12/31/2013 $ 18,317,04115.7%$87,025,462 12/31/2012 $ 17,382,09914.9%$71,581,056 Funded Status and Funding Progress -As of December 31, 2014, the Plan was not funded. Actuarial accrued liability for benefits was $185,062,873; there are no assets legally segregated for the Plan. The covered payroll (annual payroll of active employees covered by the Plan) was $25,343,216 and the ratio of the Unfunded Actuarial Accrued Liability (UAAL) to the covered payroll was 730.2%. Actuarial valuations of an ongoing Plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding funded status of the Plan and annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -37- Note 3 Detailed Notes -Continued Actuarial Methods and Assumptions -Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the employer and the Plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2014, Actuarial Valuation Report, the projected unit credit method was used. The actuarial value of assets was determined as the accumulation of prior accruals, less benefits paid. Actuarial assumptions included an annual discount rate of 4%. Additional actuarial assumptions included an annual medical cost trend rate of 6.5%, decreased by decrements to a trend rate of 4.2% in 2084, using the SOA Long- Run Medical Cost Trend Model. C.Interfund Receivables and Payables During the course of normal operations, the City has numerous transactions between funds including expenditures and transfers of resources, primarily to provide services, which are routine annual events for the budget and accounting process. Interfund receivables and payables at December 31, 2014 were as follows: InterfundInterfundInterfundInterfund Receivables Payables Revenue Expense General Fund $ 500,784$478,321$1,179,643$11,000 Water Fund 38,603149,06912,500306,000 Sewer Fund 688,04326,500360,000 Capital Projects Fund 861,0603,524,15911,000552,643 Non-Major Funds 3,512,38773,242 Total $ 4,912,834$4,912,834$1,229,643$1,229,643 CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -38- Note 3 Detailed Notes -Continued D.Fund Equity 1.Fund Balances a.Fund Balance Detail At December 31, 2014, fund balance in the governmental funds was comprised of the following: General Fund Water Fund Sewer Fund Special Grant Fund Capital Fund Non- Major Funds Nonspendable Prepaid expenses $1,075,446$81,389$122,107$$$13,522 Inventory 197,290494,60486,142 Permanent Fund balance 49,278 Total Nonspendable Fund Balance $1,272,736$575,993$208,249$-0-$-0-$62,800 Restricted Capital reserves $487,581$3,803,578$2,449,197$$$ Unspent grant funds 2,003,800 Miscellaneous 22,921 Debt 3,612,714 Total Restricted Fund Balance $487,581$3,803,578$2,449,197$2,003,800$-0-$3,635,635 Assigned Appropriated for next year’s budget $393,177$$$$$ Encumbered for: General government 221,021 Public safety 188,996 Transportation 57,199 Culture and recreation 9,663 Home and community services 90,9542,158 Assigned for insurance 1,706,65753,19542,795 Assigned for workers’ compensation 100,000 Remaining fund balance: Transportation 501,086 Home and community services 1,104,0641,157,377 125,000 Total Assigned Fund Balance $2,767,667$1,159,417$1,200,172$-0-$-0-$626,086 Unassigned Unassigned Fund Balance (Deficit)$3,291,284$-0-$-0-$-0-$(9,450,069)$(359,850) CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -39- Note 3 Detailed Notes -Continued b.Reconciliation between Restricted Fund Balance and Restricted Net Position Restricted fund balances and restricted net position differ because loans receivable in the Special Grant Fund are deferred in the fund financial statements, and reported as restricted in the Statement of Net Assets. Additionally, fund balance in the Permanent Fund is reported as restricted, nonexpendable in the Statement of Net Position and nonspendable in the fund financial statements Restricted fund balance in the fund financial statements $12,379,791 Add loans receivable in the Special Grant Fund 6,778,112 Add Permanent Fund balance 49,278 Restricted net position in the government-wide financial statements $19,207,181 2.Miscellaneous Fund Equity Fund equity for the Miscellaneous Fund includes funds established for the following purposes: Purpose: Cemetery maintenance $3,000 Stewart Park landscaping 17,796 Stewart Park carousel 1,240 Dewysocki memorial 283 Rick Gray memorial 585 Moore 17 Total $ 22,921 Note 4 Joint Ventures The following is the activity undertaken jointly with another municipality. Except for their equity interest in the joint venture, this activity is excluded from the financial statements of the participating municipalities. Separate financial statements are issued for this joint venture and may be obtained from their administrative office. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -40- Note 4 Joint Ventures -Continued A.Tompkins Consolidated Area Transit (TCAT) TCAT was formed under a consolidation agreement between the City, Tompkins County, and Cornell University effective April 1, 1998. The agreement shall remain in force until October 9, 2021. TCAT began operations on January 1, 1999, with its purpose to provide public transportation in Tompkins County and surrounding areas. As of January 1, 2005, TCAT was reorganized as a 501(c)(3). However, the structure of the Board, and the interest of each party was not changed. Significant provisions of the agreement are as follows: 1.TCAT is governed by a Board of Directors consisting of nine voting members with three members being appointed by each participant in the venture. The General Manager of TCAT is a non-voting ex-officio member of the Board. In addition, the nine voting members of the Board select five additional non-voting, ex-officio members. 2.Interest of each party in surpluses, losses, property, and in debt acquired by TCAT shall be shared equally. 3.Each party makes an annual contribution of equal amounts to the venture. The City’s contribution for 2014 was $829,432. For 2015,the contribution will be $829,432. 4.The financial statements of TCAT are audited annually and may be obtained from their administrative office. The following is an audited summary of financial information included in financial statements for the joint venture as of December 31, 2014: Year Ending 12/31/14 Total assets $ 16,983,262 Total liabilities 5,728,476 Joint venture equity11,254,786 Total revenues 13,850,846 Total expenses 14,709,771 B.Ithaca Area Wastewater Treatment Plant The following is an activity undertaken jointly with other municipalities. The financial statements of the Ithaca Area Wastewater Treatment Plant may be obtained from their administrative office. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -41- Note 4 Joint Ventures -Continued The City and Towns of Ithaca and Dryden jointly own the Ithaca Area Wastewater Treatment Plant. The venture operates under the terms of an agreement dated 1981. The agreement is for a period of 25 years. An updated agreement was signed in 2003 and remains in effect until 2035, the year debt associated with phosphorous removal is paid off. Significant provisions of the agreement are as follows: 1.The Boards of each municipality jointly act as the governing body for the joint venture. 2.Debt for capital cost is issued by each participant in the following ratios: City of Ithaca 57.14% Town of Ithaca 40.88% Town of Dryden 1.98% Debt issued by the City for the joint venture is shown in Notes 3.B.2 and 3. 3.The governing body has established charges at rates intended to be self-sustaining to cover all operating costs and debt service. Any shortfall in revenues produced by such charges is to be provided by equal share contributions from the participants. The following is an audited summary of financial information included in the basic financial statements issued for the joint venture: Year Ending 12/31/14 Total assets $ 33,067,615 Total liabilities 16,985,974 Joint venture equity 16,081,641 Total revenues 3,213,594 Total expenditures 5,272,517 Note 5 Public Entity Risk Pool A.Risk Financing The City participates in a workers' compensation insurance plan (Plan) sponsored by the Tompkins County Self-Insurance Risk Pool. The Plan's objectives are to formulate, develop, and administer a program of insurance to obtain lower costs for that coverage, and to develop a comprehensive loss control program. Plan members are subject to a supplemental assessment in the event of deficiencies. If the Plan's assets were to be exhausted, members would be responsible for the Plan's liabilities. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -42- Note 5 Public Entity Risk Pool -Continued The Plan establishes a liability for both reported and unreported insured events, which includes estimates of both future payments of losses and related claim adjustment expenses. However, because actual claims costs depend on complex factors, the process used in computing claims liabilities does not necessarily result in an exact amount. Such claims are based on the ultimate cost of claims (including future claim adjustment expenses) that have been reported but not settled, and claims that have been incurred but not reported. Adjustments to claims liabilities are charged or credited to expense in the periods in which they are made. During the year ended December 31, 2014, the City incurred premiums or contribution expenditures totaling $975,935. Note 6 Summary of Significant Commitments and Contingencies A.General Information The City is exposed to various risks of loss related to, but not limited to, torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omissions; natural disasters. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. B.Judgments and Claims The City and/or its agencies are named in several lawsuits, some of which are for substantial amounts. Most of these claims are either adequately covered by insurance or, in the opinion of City officials, will not result in material judgments against the City or will not be pursued and, therefore, are not expected to have a material effect on the basic financial statements. There is one claim outstanding that could result in a material judgment against the City. However, the amount and probability of the claim cannot be determined at this time; therefore, no amount has been accrued in the financial statements. C.State and Federally Assisted Programs The City receives many different state and federal grants to be used for specific purposes. These grants are generally conditioned on compliance with certain statutory, regulatory and/or contractual requirements. The City makes every effort to comply with all applicable requirements. However, because these grants are audited from time to time, it is possible that the City will be required, upon audit, to repay portions of the grant monies received and recorded as revenue in a prior year. City officials do not anticipate material grant-in- aid disallowances, and no provision, therefore, is reflected in the basic financial statements. D.Other Contingencies As described in Note 4, the City is a partner in TCAT, a joint venture,and shares equally in surpluses or losses. The City may, in the future, be required to provide additional resources to finance its share of any operating deficits of TCAT. However, that amount, if any, for the year ended December 31, 2014 is undeterminable as of this report date. CITY OF ITHACA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 -43- Note 7 Letter of Credit Under its third party agreement for workers’ compensation, the City is required to maintain a $525,000 letter of credit as collateral for payment of workers’ compensation obligations. At December 31, 2014, the City had not utilized this letter of credit. Note 8 Subsequent Events On February 19, 2015 the City issued $35,388,228 of BAN’s,due February 19, 2016. The proceeds of the notes, along with $421,267 in available monies,will refund in full $25,649,035 BAN’s outstanding which mature on February 19, 2015 and provide $10,160,460 in new monies for various public improvement projects. On February 19, 2015,the City issued $910,000 of federally-taxable BAN’s,due February 19, 2016. The proceeds of the notes will refund in full $330,000 BAN’s outstanding which mature on February 19, 2015 and provide $580,000 in new monies for the Seneca Street Parking Garage. On July 31, 2015, the City issued $34,938,306 of BAN’s due July 29, 2016. The proceeds of the notes,along with the $526,282 in available funds,will refund in full $31,173,025 BAN’s outstanding which mature on July 31, 2015 and provide $4,291,563 in new monies for various public improvement projects. On February 19, 2016, the City issued $18,943,221 of serial bonds with various years of maturity;February 15, 2017-2046. The proceeds of the Bonds, along with $718,909 in available funds, will redeem a $19,662,130 portion of the $35,388,228 BAN’s outstanding which mature on February19, 2016. On February 19,2016, the City issued $20,306,900 of BAN’s due February 17, 2016. The proceeds of the notes, along with $187,275 in available monies, will redeem $207,241 of the $910,000 BAN’s maturing February 19, 2016 and redeem $15,550,377 of the $35,388,228 BAN’s outstanding which mature on February 19, 2016 and provide $4,553,940 in new monies for various public improvement projects. On February 19, 2016, the City issued $700,000 of federally taxable BAN’s, due February 17, 2017. The proceeds of the notes, along with $2,759 in available funds, will redeem in full $702,759 BANs outstanding which mature on February 19, 2016 for various public improvement projects. Note 9 Restatement of Prior Year Statement of Net Position During the ye ar, the It haca Area Wastewater Treatment Facilit y restated capital assets by decreasing capital assets, net of accumulated depreciation by $(36,462). Therefore, the City’s equity interest in joint ventures decreased $(20,834)as of December 31, 2013. Original Final Variance Budget Budget Actual Encumbrances Fav./(Unfav.) REVENUES Real property taxes $20,520,104 $20,520,104 $20,515,747 $$(4,357) Real property tax items 737,500 737,500 797,917 60,417 Nonproperty tax items 13,624,000 13,624,000 13,880,274 256,274 Departmental income 4,482,805 4,672,775 4,081,541 (591,234) Intergovernmental charges 4,047,679 4,074,179 3,884,948 (189,231) Use of money and property 375,000 375,000 304,793 (70,207) Licenses and permits 779,050 779,050 951,807 172,757 Fines and forfeitures 1,170,000 1,170,000 1,086,057 (83,943) Sale of property and compensation for loss 375,500 376,199 497,456 121,257 Miscellaneous local sources 1,334,053 1,368,288 1,305,433 (62,855) Interfund revenues 282,294 282,294 282,294 -0- State sources 3,195,259 3,197,769 3,446,149 248,380 Federal sources 15,000 423,428 371,022 (52,406) Total Revenues 50,938,244 51,600,586 51,405,438 -0-(195,148) EXPENDITURES Current: General governmental support 4,844,099 5,634,606 5,412,959 221,021 626 Public safety 13,258,933 13,623,207 13,410,005 188,996 24,206 Transportation 4,958,658 5,334,269 5,276,969 57,199 101 Economic assistance and opportunity 61,000 61,000 61,000 -0- Culture and recreation 5,267,536 5,511,037 5,415,224 9,663 86,150 Home and community services 1,840,129 1,798,313 1,707,358 90,954 1 Employee benefits 16,224,202 15,486,820 15,254,314 232,506 Debt Service: Principal and Interest 6,467,917 6,466,558 6,465,132 1,426 Total Expenditures 52,922,474 53,915,810 53,002,961 567,833 345,016 Excess of (Expenditures) (1,984,230) (2,315,224) (1,597,523) (567,833) 149,868 OTHER FINANCING SOURCES (USES) Interfund transfers in 1,362,208 1,362,208 1,179,643 (182,565) Interfund transfers (out)(11,000) (11,000) Total Other Financing Sources 1,362,208 1,362,208 1,168,643 -0-(193,565) Excess of (Expenditures) and Other (Uses) Over Revenues and Other Financing Sources (622,022) (953,016) (428,880)$(567,833) $(43,697) Appropriated Fund Balances 622,022 953,016 Net Change in Fund Balance $-0-$-0-(428,880) Fund Balance, Beginning 8,248,148 Fund Balance, Ending $7,819,268 See Independent Auditor's Report and Notes to Required Supplementary Information. - 44 - CITY OF ITHACA BUDGETARY COMPARISON SCHEDULE GENERAL FUND - NON-GAAP BUDGET BASIS FOR THE YEAR ENDED DECEMBER 31, 2014 Original Final Variance Budget Budget Actual Encumbrances Fav./(Unfav.) REVENUES Departmental income $4,173,193 $4,173,193 $4,344,618 $$171,425 Intergovernmental charges 1,500 173 (1,327) Use of money and property 1,500 1,500 5,297 3,797 Sale of property and compensation for loss 4,200 4,200 9,228 5,028 State sources 10,000 10,000 Total Revenues 4,178,893 4,180,393 4,369,316 -0-188,923 EXPENDITURES Current: General governmental support 210,253 165,157 165,133 24 Home and community services 2,259,536 2,229,342 2,117,517 2,158 109,667 Employee benefits 965,186 903,487 906,224 (2,737) Debt Service: Principal and interest 773,918 773,538 773,537 1 Total Expenditures 4,208,893 4,071,524 3,962,411 2,158 106,955 Excess of (Expenditures) Revenues (30,000) 108,869 406,905 (2,158) 295,878 OTHER FINANCING SOURCES (USES) Interfund transfers in 30,000 30,000 12,500 -0- Interfund transfers (out)(180,000)(306,000) (126,000) Total Other Financing Sources (Uses)30,000 (150,000) (293,500) -0-(126,000) Excess of (Expenditures) and Other (Uses) Over Revenues and Other Financing Sources -0-(41,131) 113,405 $(2,158) $169,878 Appropriated Fund Balances -0-41,131 Net Change in Fund Balance $-0-$-0-113,405 Fund Balance, Beginning 5,425,583 Fund Balance, Ending $5,538,988 See Independent Auditor's Report and Notes to Required Supplementary Information. BUDGETED MAJOR SPECIAL REVENUE FUNDS - NON-GAAP BUDGET BASIS FOR THE YEAR ENDED DECEMBER 31, 2014 Water Fund - 45 - CITY OF ITHACA BUDGETARY COMPARISON SCHEDULE Original Final Variance Budget Budget Actual Encumbrances Fav./(Unfav.) REVENUES Departmental income $5,964,216 $5,964,216 $5,811,904 $$(152,312) Intergovernmental charges 80,000 16,345 (63,655) Use of money and property 1,000 1,000 3,915 2,915 Sale of property and compensation for loss 3,500 3,500 3,679 179 Total Revenues 5,968,716 6,048,716 5,835,843 -0-(212,873) EXPENDITURES Current: General governmental support 246,454 246,454 205,881 40,573 Home and community services 3,448,683 3,085,828 2,959,773 126,055 Employee benefits 1,383,319 1,379,336 1,317,920 61,416 Debt Service: Principal and interest 940,260 941,323 937,147 4,176 Total Expenditures 6,018,716 5,652,941 5,420,721 -0-232,220 Excess of Revenues (Expenditures) (50,000) 395,775 415,122 -0-19,347 OTHER FINANCING SOURCES (USES) Interfund transfers in 50,000 50,000 26,500 -0- Interfund transfers (out)(370,000)(360,000) 10,000 Total Other Financing Sources (Uses)50,000 (320,000) (333,500) -0-10,000 Excess of (Expenditures) and Other (Uses) Over Revenues and Other Financing Sources -0-75,775 81,622 $-0-$29,347 Appropriated Fund Balances -0-(75,775) Net Change in Fund Balance $-0-$-0-81,622 Fund Balance, Beginning 3,775,996 Fund Balance, Ending $3,857,618 See Independent Auditor's Report and Notes to Required Supplementary Information. ` CITY OF ITHACA Sewer Fund BUDGETARY COMPARISON SCHEDULE BUDGETED MAJOR SPECIAL REVENUE FUNDS - NON-GAAP BUDGET BASIS FOR THE YEAR ENDED DECEMBER 31, 2014 - 46 - Actuarial UAAL as a Actuarial Actuarial Accrued Unfunded Percentage Year Valuation Value of Liability (AAL) -AAL Funded Covered of Covered Ended Date Assets Entry Age (UAAL)Ratio Payroll Payroll 12/31/2014 1/1/2014 $-0-$185,062,873 $185,062,873 0.0%$25,343,216 730.2% 12/31/2013 1/1/2012 $-0-$183,260,021 $183,260,021 0.0%$24,627,256 744.1% 12/31/2012 1/1/2012 $-0-$171,191,232 $171,191,232 0.0%$24,806,755 690.1% 12/31/2011 1/1/2010 $-0-$169,138,833 $169,138,833 0.0%$24,731,799 683.9% 12/31/2010 1/1/2010 $-0-$157,341,377 $157,341,377 0.0%$23,644,783 665.4% 12/31/2009 1/1/2008 $-0-$156,222,425 $156,222,425 0.0%$23,343,418 669.2% 12/31/2008 1/1/2008 $-0-$143,189,980 $143,189,980 0.0%$22,588,908 633.9% See Independent Auditor's Report and Notes to Required Supplementary Information. CITY OF ITHACA SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED DECEMBER 31, 2014 - 47 - CITY OF ITHACA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2014 -48- Note 1 Budgeting Policies The budget policies are as follows: 1.No later than September 1, the budget officer submits a tentative budget to the Common Council for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and the proposed means of financing for all funds. 2.After public hearings are conducted to obtain taxpayer comments, no later than December 31, the governing board adopts the budget. 3.All modifications of the budget must be approved by the governing board. (However, the Controller is authorized to transfer certain budgeted amounts within departments.) Note 2 Budget Basis of Accounting Except as indicated below, budgets are adopted annually on a basis consistent with accounting principles generally accepted in the United States of America. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. Encumbrances are not considered a disbursement in the financial plan or an expenditure in GAAP based financial statements. Encumbrances reserve a portion of the applicable appropriation for purchase orders, contracts, and other commitments not expended at year end, thereby ensuing that appropriations are not exceeded. An annual legal budget is not adopted for the Special Grant Fund, which is one of the Special Revenue Funds. Budgetary controls for the Special Grant Fund are established in accordance with the applicable grant agreements. The Special Grant Fund also covers a period other than the City’s fiscal year. Note 3 Reconciliation of the General Fund Budget Basis to GAAP No adjustment is necessary to convert the General Fund’s excess of revenues and other sources over expenditures and other uses on the GAAP basis to the budget basis. Encumbrances, if present, are presented in a separate column and are not included in the actual results at December 31, 2014. Note 4 Schedule of Funding Progress The Schedule of Funding Progress, presented as required supplementary information presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Urban Sidewalk Refuse and Renewal Improvement Garbage Agency Miscellaneous District Fund Fund Fund Fund ASSETS Assets: Cash and cash equivalents - Unrestricted $$$19,921 $208,156 Due from other funds 23,900 435,791 Other receivables, net 22,682 398,079 Prepaid expenses 11,164 2,358 Cash and cash equivalents - Restricted 3,000 Total Assets $57,746 $398,079 $22,921 $646,305 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $359,298 $$$114,606 Due to other funds 44,987 28,255 Due to other governments 2,594 273,079 Other liabilities (447) Total Liabilities 406,432 273,079 -0-142,861 Fund Balances: Nonspendable 11,164 2,358 Restricted 22,921 Assigned 125,000 501,086 Unassigned (359,850) Total Fund Balances (Deficit)(348,686) 125,000 22,921 503,444 Total Liabilities and Fund Balances $57,746 $398,079 $22,921 $646,305 See Independent Auditor's Report. - 49 - CITY OF ITHACA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2014 Special Revenue Funds Total Debt Non-Major Service Permanent Governmental Fund Fund Funds $$$228,077 3,052,696 3,512,387 420,761 13,522 560,018 49,278 612,296 $3,612,714 $49,278 $4,787,043 $$$473,904 73,242 275,673 (447) -0--0-822,372 49,278 62,800 3,612,714 3,635,635 626,086 (359,850) 3,612,714 49,278 3,964,671 $3,612,714 $49,278 $4,787,043 - 49a - Urban Sidewalk Refuse and Renewal Improvement Garbage Agency Miscellaneous District Fund Fund Fund Fund REVENUES Nonproperty tax items $$$$860,651 Departmental income 501,489 Use of money and property 17 20 339 Total Revenues 501,506 -0-20 860,990 EXPENDITURES Current: General governmental support Transportation 321,846 Home and community services 419,587 Employee benefits 179,008 35,700 Debt Service: Principal 8,455 Interest 3,524 Total Expenditures 610,574 -0--0-357,546 Excess of Revenues (Expenditures) (109,068) -0-20 503,444 OTHER FINANCING SOURCES (USES) Proceeds of long-term debt Premiums on obligations Payments to escrow agent Total Other Financing Sources -0--0--0- Excess of (Expenditures) and Other (Uses) Over Revenues and Other Financing Sources (109,068) -0-20 503,444 Fund Balances, (Deficit) Beginning (239,618) 125,000 22,901 Fund Balances, (Deficit) Ending $(348,686) $125,000 $22,921 $503,444 See Independent Auditor's Report. AND CHANGES IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 CITY OF ITHACA - 50 - Special Revenue Funds COMBINING STATEMENT OF REVENUES, EXPENDITURES, Total Debt Non-Major Service Permanent Governmental Fund Fund Funds $$$860,651 501,489 649 78 1,103 649 78 1,363,243 95,885 95,885 321,846 78 419,665 214,708 8,455 237,669 241,193 333,554 78 1,301,752 (332,905) -0-61,491 9,945,000 9,945,000 1,524,988 1,524,988 (10,982,698)(10,982,698) 487,290 -0-487,290 154,385 -0-548,781 3,458,329 49,278 3,415,890 $3,612,714 $49,278 $3,964,671 - 50a - INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Common Council City of Ithaca Ithaca, New York We have audited in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Ithaca (the City), as of and for the year ended December 31, 2014, which collectively comprise the City's basic financial statements and have issued our report thereon dated March 17, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Ithaca’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we id entified certain deficiencies in internal control that we consider to be a material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as 10-001 to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. - 51 - Insero & Co. CPA s, LLP Rochester | Ithaca | Corning | Cortland | Watkins Glen | (800) 232-9547 | www.inserocpa.com - 52 - Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed one instance of noncompliance or other matter that is required to be reported under Government Auditing Standards, which is described in the accompanying Schedule of Findings and Questioned Costs as item 03-001. City of Ithaca’s Response to Findings The City’s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. The City’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Common Council City of Ithaca Ithaca, New York Compliance Report on Compliance for Each Major Federal Program We have audited the City of Ithaca’s (the City) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2014. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2014. - 53 - Insero & Co. CPA s, LLP Rochester | Ithaca | Corning | Cortland | Watkins Glen | (800) 232-9547 | www.inserocpa.com - 54 - Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on a major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet is important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A- 133. Accordingly, this report is not suitable for any other purpose. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 Federal Grantor/Pass - Through Grantor Federal Pass - Through Program Title CFDA #Grantor #Expenditures U.S. Department of Housing and Urban Development Community Development Block Grant: Entitlement Grant 14.218 N/A $383,873 Home Investment Partnerships Program: Entitlement Grant 14.239 N/A 569,924 Total U.S. Department of Housing and Urban Development 953,797 U.S. Department of Justice Equitable Sharing Funds (Drug Seizure)16.xxx N/A 28,123 U.S. Department of Transportation Passed Through NYS Department of Transportation: Highway Planning and Construction 20.205 D033345 781,726 Highway Planning and Construction 20.205 D033968 35,013 Highway Planning and Construction 20.205 D033368 161,832 Total Highway Planning and Construction Cluster 978,571 Passed Through Tompkins County, New York: State of Good Repair Grants Program 20.525 NY-04-0101 4,500,000 Total U.S. Department of Tansportation 5,478,571 Environmental Protection Agency Passed Through NYS Department of Environmental Conservation: Brownfields Assessment and Cleanup Cooperative 66.818 C304.177 63,851 Agreements - ARRA U.S. Department of Homeland Security Passed Through NYS Department of Transportation: Flood Mitigation Assistance 97.029 (1)23,081 Passed Through NYS Division of Homeland Services and Emergency Services: Homeland Security Grant Program 97.067 (1)119,574 Total U.S. Department of Homeland Security 142,655 U.S. Department of Health & Human Services Passed Through Tompkins County: Temporary Assistance to Needy Families 93.558 (1)138,091 Total Expenditures of Federal Awards $6,805,088 (1) Unable to obtain See Independent Auditor's Report and Notes to Schedule of Expenditures of Federal Awards. CITY OF ITHACA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2014 - 55 - CITY OF ITHACA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2014 -56- Note 1 Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs administered by the City, an entity as defined in Note1 to the City’s basic financial statements. Federal awards received directly from federal agencies, as well as federal awards passed through from other government agencies, are included on the Schedule of Expenditures of Federal Awards. Note 2 Basis of Accounting The basis of accounting varies by federal program consistent with the underlying regulations pertaining to each program. The amounts reported as federal expenditures generally were obtained from the appropriate federal financial reports for the applicable program and periods. The amounts reported in these federal financial reports are prepared from records maintained for each program. These records are periodically reconciled to the general ledger which is the source of the financial statements. CITY OF ITHACA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2014 -57- Section I Summary of Auditor’s Results: Financial Statements Type of auditor’s report issued:Unmodified Internal control over financial reporting: Material weakness(es) identified? X yes no Significant deficiency(ies)identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? X yes no Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Significant deficiency(ies)identified that are not considered to be material weakness(es)? yes X none reported Type of auditor’s report issued on compliance for major programs:Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? yes X no Identification of major programs: CFDA Number(s)Name of Federal Program or Cluster 14.239 Home Investment Partnerships Program: Entitlement Grant 20.525 State of Good Repair Grants Program Dollar threshold used to distinguish between type A and type B programs $300,000 Auditee qualified as low-risk auditee: yes X no CITY OF ITHACA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2014 -58- Section II Financial Statement Findings: 03-001Noncompliance with OMB Circular A-133 Late Filing of Single Audit Reporting Package Condition/Criteria: Under the Single Audit Act of 1996 and OMB Circular A-133, the City was required to file the Single Audit reporting package by the end of the 9th month following the end of the fiscal year. This deadline was not met on a timely basis for the ye ars ended December31, 2003 through 2014. Cause: The City experienced difficulties in obtaining the information necessary to implement GASB Statement No.34, for the years ending December 31, 2003 and 2004, resulting in late completion of financial statements for those years. In subsequent years, the City has endeavored to reestablish a current time line for financial reporting. Recommendation: We recommend the requirements of OMB Circular A-133 and 2 C.F.R. 200 titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)be adhered to by striving to have all information required for the audit available on a timely basis. This will help to insure timely audit report issuance and compliance with the filing deadline. Corrective Action Plan: The completion of the reporting package for the year ending December 31, 2015 is scheduled to be completed in accordance with filing deadlines prescribed by OMB Circular A-133 and Uniform Guidance. Questioned Costs: Undeterminable CITY OF ITHACA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2014 -59- 10-001 Capital Project Accounting Condition/Criteria: Currently, City personnel account for the Capital Fund in spreadsheets and do not enter information in the City’s financial software system. This creates opportunities for errors to occur and not be detected by management in a timely manner. During a prior year audit, we noted discrepancies which resulted in a restatement to the beginning fund balance in the Capital Fund and beginning net position in the government-wide financial statements. Cause: The City’s financial software system does not have the capability to account for the numerous capital projects in process. Recommendation: We recommend City personnel convert the current accounting process to incorporate the Capital Fund as a whole into its financial software system and continue to account for each project in spreadsheets, while pursuing a system that will provide the functionality desired to appropriately track Capital Fund activity. Corrective Action Plan: The City has authorized the installation of the capital project accounting module of MUNIS, which will be completed during the 2016 fiscal year. Questioned Costs: Undeterminable Section III Federal Award Findings and Questioned Costs: None - 2 - Recommendation: We recommend the requirements of OMB Circular A-133 and 2 C.F.R. 200 titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) be adhered to by striving to have all information required for the audit available on a timely basis. This will help insure timely audit report issuance and compliance with the filing deadline. MATERIAL WEAKNESS Capital Project Accounting Finding: Currently, City personnel account for the Capital Fund in spreadsheets and do not enter information in the City’s financial software system. This creates opportunities for errors to occur and not be detected by management in a timely manner. The City’s financial software system does not have the capability to account for the numerous capital projects in process. The City authorized the installation of the capital project accounting module of MUNIS, which was to be completed during the 2013 fiscal year. However, the new module has not yet been implemented. Recommendation: We recommended City personnel convert the current accounting process to incorporate the Capital Fund as a whole into its financial software system and continue to account for each project in spreadsheets, while pursuing a system that will provide the functionality desired to appropriately track Capital Fund activity. Current Status: The City is in process of setting up the chart of accounts for Capital Projects in MUNIS. Full implementation of the module is expected during the 2016 fiscal year. OTHER MATTERS Recurring Comments Fixed Asset Accounting Finding: Currently, City personnel account for fixed assets in spreadsheets rather than the City's financial software system. This creates greater opportunities for error. Inquiry with management revealed an upgrade to MUNIS is planned, which will include the fixed asset module. Recommendation: We recommend converting the current accounting process to incorporate fixed assets in the financial software system as soon as feasible. Physical Inventory of Capital Assets Finding: The City has not had a formal physical inventory of capital assets in recent years. The current list was created using lists provided by each department from the last physical inventory. A current physical inventory is necessary to ensure records only include assets currently in use. Discussions with City management revealed a committee of the City Council has been formed to work on this issue. Recommendation: We continue to recommend the City perform a physical inventory of all capital assets and update records as necessary. Current Status: No change from previous year. - 3 - Purchasing Policy Finding: During our prior year audit, City policy was not always followed when making purchases, specifically the use of purchase orders. The City requires purchase orders for purchases of $250 or more, however, 4 of 16 disbursements tested which required purchase orders did not have them. During our current year audit, however, purchase orders were present for all items tested. During the current and prior year audits, we noted the Purchasing Policy had not been updated to reflect the higher bidding thresholds under General Municipal Law. Inquiry of management revealed the Purchasing Policy is in the process of being updated; however, the process has proven to be a lengthy one. Having an outdated policy that does not meet the needs of the City and, therefore, is not enforced could send a message to staff that it is not important to follow other City policies. Recommendation: We recommend the Purchasing Policy be updated as soon as practicable and the updated policy adhered to by all departments. Held Checks Finding: During the current and prior year audits, a significant number of checks from various City accounts were written, but not sent to vendors in a timely manner. As a result, these bank accounts showed a large negative book balance. This practice has the effect of understating both cash and accounts payable balances. Through inquiry of City personnel, we determined the condition was related to the audit process at year end. Additionally, blank checks are held in the vault to be backdated if necessary and subsequently destroyed if not used. Recommendation: We continue to recommend procedures be developed and implemented stating checks only be written when funds are available and with the intention of sending payments timely. City staff has begun meeting to develop such procedures. We also recommend discontinuing the practice of holding blank checks in the vault for the purpose of backdating them. Current Status: No change from previous year. This communication is intended solely for the information and use of management, the Common Council, and others within the City of Ithaca, and is not intended to be and should not be used by anyone other than these specified parties. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York March 17, 2016 10. PLANNING AND ECONOMIC DEVELOPMENT COMMITTEE: 10.1 Brindley Street Bridge Replacement – Lead Agency Resolution WHEREAS, the existing Brindley Street Bridge (“the Bridge”) is a single span, single-lane multiple steel girder bridge carrying Brindley Street over the Cayuga Inlet; and WHEREAS, Brindley Street Bridge Replacement Project (“the Project”) involves the replacement of the Brindley Street Bridge with a two lane structure with additional accommodations for bicyclists and pedestrians including necessary approach and intersection improvement; and WHEREAS, two possible alternatives for the replacement of this bridge are being considered: Bridge Alternative 1, which includes replacement of the bridge in its existing alignment and Bridge Alternative 2, which would include the construction of new roadway and bridge on a relocated horizontal alignment that would connect Taber Street with the West State/Martin Luther King, Jr. Street/Taughannock Boulevard intersection; and WHEREAS, the alternatives for reconstruction of the Brindley Street Bridge were presented to the City Planning and Development Board on September 23, 2014; and WHEREAS, the Planning and Development Board prepared a memo in support of Bridge Alternative 2, which would realign the bridge with Taughannock Boulevard, stating that this would improve a problematic intersection; and WHEREAS, the alternatives for reconstruction of the Brindley Street Bridge were presented to the City Board of Public Works on September 22, 2014; and WHEREAS, on October 6, 2014, the Board of Public Works voted on a resolution in support of Bridge Alternative 2, which would realign the bridge with Taughannock Boulevard; and WHEREAS, on February 8, 2016, the Board of Public Works voted on a resolution that declared the Board’s intent to act as a lead agency for environmental review of the project focused on Alternative 2; now, therefore be it RESOLVED, That the Common Council hereby accepts the recommendation of both the Board of Public Works and Planning and Development Board to proceed with developing a detail design for Brindley Street Bridge Alternative 2; and, be it further RESOLVED, That the Common Council hereby concurs with Board of Public Works on its intention to act as a lead agency for the environmental review of the project focused on Alternative 2; and, be it further RESOLVED, That, contingent upon environmental review outcome, the Common Council hereby authorizes the Superintendent of Public Works to proceed with the design of Brindley Street Bridge replacement on a relocated horizontal alignment and new roadway construction (Bridge Alternative 2). 10.2 Six-Mile Creek Watershed Conservation Easement – Resolution WHEREAS, the City of Ithaca has received an application from the Finger Lakes Land Trust (FLLT) to support the acquisition of approximately 125 acres of land within the Six Mile Creek Watershed located at 471 Midline Road in the Town of Dryden (“the Petkov Property”); and WHEREAS, the application meets the four criteria established in the Common Council Resolution “City Watershed Conservation Easements Processes” passed on March 4, 2015; and WHEREAS, the Superintendent of Public Works and Assistant Superintendent of Public Works—Water and Sewer have reviewed the application and believe that the property is of high value for protection of the watershed; and WHEREAS, the Board of Public Works passed a February 22, 2016 resolution supporting the provision of $40,000 toward acquisition of the Petkov Property by the FLLT; now, therefore be it RESOLVED, That the Common Council authorizes the Mayor, on advice of the City Attorney, to enter into a funding agreement with the FLLT by which the City provides $25,000 to the FLLT and the FLLT contractually commits to the preservation in perpetuity of the Petkov Property, thus protecting the water quality of the watershed flowing into the City’s water filtration plant; and, be it further RESOLVED, That the Common Council authorizes funding in support of the same to be drawn from the Water Fund, Watershed Accounts; F8321-5700 $20,000 (2015) and F8321-5435 $5,000 (2016). BACK-UP ITEM 10.2 TO: Common Council, Board of Public Works FROM: JoAnn Cornish, Director of Planning and Development DATE: February 18, 2016 RE: Request to Contribute to the Purchase of 125-Acre Parcel in the Town of Dryden as part of the City’s Six Mile Creek Watershed Protection Funding Commitment The City has received a request from Andrew Zepp, Director of the Finger Lakes Land Trust (FLLT), to contribute the existing balance of the City’s watershed protection funding, in the amount of $40,000, to help in the purchase of a 125-acre parcel in the Town of Dryden as part of the City’s Six Mile Creek watershed protection funding commitment. The FLLT is proposing to purchase the property and to manage the site in perpetuity as a nature preserve and plans to launch a $300,000 fundraising campaign for the project. They are also pursuing a grant of $40,000 from the County’s capital reserve fund in addition to seeking $220,000 in private funding. The 125-acre parcel borders existing protected land and encompasses more than 900 feet of frontage on Six Mile Creek, more than two miles of frontage on tributaries to the creek, 12 acres of wetland, a county-designated Unique Natural Area, and more than 100 acres of mature forest. It is adjacent to the Roy H. Park Nature Preserve – Baldwin Tract, acquired by the Finger Lakes Land Trust, that together span 138 acres with more than 4,000 feet of frontage on Six-Mile Creek (separated from the 125-acres by only one parcel). In addition, the 125-acre parcel is adjacent to approximately 400 acres of a Cornell Natural Area. Since the late 1980’s, the City has provided funding for purchasing specific parcels and/or easements along Six Mile Creek that were chosen to complement the land already owned by the City. Parcels were identified primarily to protect the City's water supply and as an added bonus, for their proximity to the South Hill Recreation Way. Several of the desired parcels have frontage on major roads, (Route 79 and Coddington Road). The thought was for the City to purchase parcels between these two roads (as they became available), subdivide the parcels, sell the frontage piece, and maintain the rear parcels as part of the watershed acquisitions. (Thus getting the biggest “bang for our buck”). CITY OF ITHACA 108 E. Green Street — 3rd Floor Ithaca, New York 14850-5690 DEPARTMENT OF PLANNING, BUILDING, ZONING & ECONOMIC DEVELOPMENT JoAnn Cornish, Director of Planning and Development Phone: 607-274-6550 Fax: 607-274-6559 Email: dgrunder@cityofithaca.org The proceeds from the sale of the frontages would cover some of the costs the City had incurred when it purchased the property or was to be put in reserve to pay for other properties as they became available. The 125-acre property proposed for purchase is nearly 8 miles from the City’s holdings in Six Mile Creek. While it is part of the Six Mile Creek watershed, it is not a parcel we have identified for acquisition. In addition, it is neither a fee title purchase nor a conservation easement, but a contribution to property that will not be owned by the City but by the FLLT. Additionally, since the land is a key tract bordering Six Mile Creek that has been identified by the County Planning Department as one of the highest priority parcels for protection, and is adjacent to over 500 acres of FLLT and Cornell Natural Areas lands, the likelihood of funding by outside sources seems promising while the likelihood of development on the parcel does not. In the adopted resolution, the sixth Resolved states: “that the Board of Public Works deliberate upon, and thereafter approve or deny, each application for funding of transaction costs of a conservation easement, and if approved specify the dollar amount, not to exceed $15,000 per application, authorized for use on the application-specific project to be drawn from the Council-budgeted funds available to this program at that time, abiding the following minimum criteria, all of which must be satisfied in support of any approved application: 1. The property owner(s) of the property impacted by the pending application is/are willing participant(s) in the project. The Land Trust has negotiated an agreement to purchase 125 acres from the Petkov family for $250,000, leaving them with 15 acres along with their single family home. This is less than the proposed acquisition’s appraised value of $288,000. 2. An outside funding match to City's contribution to the application-specific project is preferred, but not required. A $300,000 fundraising campaign has been launched by the FLLT to cover the purchase price, associated transaction costs, and a contribution to the organization’s Stewardship Fund to provide for long term management and monitoring. While it is anticipated that the majority of the funds for the project will come from private individuals, the Land Trust is also seeking grants from the City of Ithaca ($40,000 and from Tompkins County’s Capital Reserve Fund for Natural, Scenic and Recreational Resource Protection ($40,000). 3. Another party will be responsible for property management and stewardship of any conservation easement created under this program. This is not a conservation easement nor a fee title purchase, but a donation to the FLLT, who will own and retain the property as a nature preserve – to be managed in conjunction with its nearby Roy H. Park Preserve. 4. The project is located in the City watershed and the conservation of the project is deemed by the Board of Public Works, on the advice of relevant City staff, to be beneficial to long-term water quality for the City's water supply. The property is located in the Six Mile Creek Watershed and will be beneficial to long-term water quality for the City’s water supply. After evaluation of this request, and in accordance with the criteria specified above, it is my recommendation that the City match the contribution of the County, recently approved, in the amount of $25,000 to contribute to the sale price of the subject property. This will leave some funds in reserve should we have an opportunity to purchase one of the parcels identified by the City as a priority acquisition. Below is a map showing the properties proposed for acquisition in both the City and the Town in order of priority. SIX MILE CREEK CORRIDOR PROTECTION PROJECT FINGER LAKES LAND TRUST The Finger Lakes Land Trust seeks an allocation of $40,000 from the City of Ithaca’s Six Mile Creek Watershed Protection Fund to support the acquisition of approximately 125 acres of environmentally sensitive watershed lands located on Midline Road in the Town of Dryden. The proposed acquisition features more than 900 feet of frontage on Six Mile Creek and more than two miles of frontage on perennial tributaries to the creek. The tract also features 12 acres of wetlands that filter runoff as well as several springs that contribute clean water to the creek. Due to these attributes, this property plays an important role in helping to maintain the quality of Ithaca’s drinking water supply. The proposed acquisition is also located within a growing network of conserved lands that includes the Land Trust’s Roy H. Park Preserve, Cornell University’s Old 600 Natural Area, Hammond Hill State Forest, and Yellow Barn State Forest. The site encompasses the entirety of county Unique Natural Area #118 – the Dryden-Slaterville Fir Tree Swamp as well as a portion of county Unique Natural Area #117 – the Slaterville Wildflower Preserve. It is also located within a “Natural Resource Focus Area” identified in Tompkins County’s comprehensive plan. The Land Trust has negotiated an agreement to purchase 125 acres from the Petkov family for $250,000 – leaving them with 15 acres along with their single family home. This is less than the proposed acquisition’s appraised value of $288,000. The Land Trust intends to retain the property as a nature preserve – to be managed in conjunction with its nearby Roy H. Park Preserve. A $300,000 fundraising campaign has been launched to cover the purchase price, associated transaction costs, and a contribution to the organization’s Stewardship Fund to provide for long term management and monitoring. While it is anticipated that the majority of funds for the project will come from private individuals, the Land Trust is also seeking grants from the City of Ithaca and from Tompkins County’s Capital Reserve Fund for Natural, Scenic and Recreational Resource Protection. Acquisition of this land will and its management as a nature preserve will provide the highest degree of protection for Six Mile Creek and the City of Ithaca’s drinking water supply. Completion of this project will ensure that this pristine property will continue to provide clean water while filtering runoff and retaining storm water during times of high runoff. The purchase contract calls for a closing in mid-April. At this time, the Land Trust will need to provide half of the total purchase price. The second half will be due in December 2016. The Finger Lakes Land Trust is a non-profit conservation organization that works cooperatively with landowners and local communities to conserve those lands that are vital to the integrity of the region. Since it was established in 1989, the Land Trust has protected more than 18,000 acres of significant open space, including more than 1,000 acres within the Six Mile Creek Watershed. The organization today owns and manages 36 conservation areas that are open to the public and holds more than 100 conservation easements on land that remains in private ownership. Additional information may be found at www.fllt.org. S i x M i l e C r e e k S i x M i l e C r e e k Mid l i n e R d [0 1,000500 Feet Map prepared by Karen Edelstein, Finger Lakes Land Trust 15 December 2015 Petkov, potential acquisition Petkov property, excluded Streams Cornell Natural Area FLLT preserves to m p k i n s _ 2 0 1 2 Property of Marilyn and Theodore Petkov Portion of parcel #76.-1-24.114, 126 acres 471 Midline Rd Town of Dryden, Tompkins County, NY April 2012 natural color aerial orthoimagery £¤79 £¤38 £¤13£¤366 £¤392 Town of Dryden Town of Caroline Town of Richford Town of Harford Town of Virgil [Map prepared by Karen Edelstein, Finger Lakes Land Trust 15 December 2015 Petkov property to m p k i n s _ 2 0 1 2 Property of Marilyn and Theodore Petkov Conservation context 471 Midline Rd Town of Dryden, Tompkins County, NY Petkov, potential acquisition Cornell Natural Area FLLT preserves FLLT CEs State land Six Mile Creek watershed 0 21 Miles 10.2 City Watershed Conservation Easements Processes – Resolution WHEREAS, a conservation easement is asetof legalrestrictionsthat a propertyowner can voluntarily place on her or his ownland, limitinguse anddevelopment of the landforevermore; and WHEREAS, the City is currentlyconstructing at substantial expense a newwaterfiltration plant which is fed by a creek; and WHEREAS, the quality of thewater fed by saidcreek is substantiallydependent onthe quality of water providedupstream of theplant by the creek’s watershed, predominantly outsideCity limits; and WHEREAS, overdevelopment ofthe watershed in the long term would increasethe risk of water quality issues that couldprovecostly to remedy atthe plantitself; and WHEREAS, the CommonCouncilincluded in the FiscalYear2015 budget $20,000 in support of the initiativedetailedinthis resolution; and WHEREAS, the CommonCouncil desires to establish via this resolution morespecific procedures and guidelines for thedisbursement of thesefundsand any futurefunds similarly budgeted for the purpose of watershed conservationeasements; now, therefore be it RESOLVED, Thatas part ofthe annualbudgetproposal ofthe Department of PublicWorks for the Waterand SewerDivision, the Superintendent of PublicWorks, on consultation withthe Director of Planning, Building, ZoningandEconomic Development, makea recommendation as to what amount, if any, is recommended for inclusion intheir annualbudget for purposes ofthis program; and be it further RESOLVED, That any fundssobudgeted be evaluated for expenditure on transactioncosts necessary tothe creation of conservationeasementsaccording to the proceduresand requirements setout in thisresolution, and such other procedures and requirements not in conflict with this resolution establishedby the Director of Planning, Building, Zoningand Economic Development and theSuperintendent of Public Works; and, be it further RESOLVED, That applications for expenditure of thesefunds on particularconservation easementprojects maybe submittedby any member of thepublic, thoughmostcommonlyby the Finger LakesLandTrust, tothe Director of Planning, Building, ZoningandEconomic Developmentorher/his designee; and, be it further RESOLVED, That the Director of Planning, Building, Zoning and Economic Development or her/his designee shall evaluate each applicationaccording to the minimumcriteriaspecified in this resolution, amongothers, and if saidminimum criteria aresatisfied, shall circulate the application tothe Superintendent of PublicWorks or his/her designee (expectedgenerally to includeeither or both ofthe City WatershedCoordinatorandthe City EnvironmentalEngineer), who in turnshall: add theapplication toan upcomingagenda ofthe Board of PublicWorks occurringnot soonerthan30 days in thefuture, and email or mail notice ofthe application toall members of the City’s CommonCounciland to the Clerk of the Town or Villagein whichthecontemplatedconservation easement would be created; and, be it further RESOLVED, That the Director of Planning, Building, Zoning and Economic Development, the Superintendent of PublicWorks, and/or each of their designees make a recommendation to the Board of PublicWorksas to their recommended action on the applicationunderconsideration; and, be it further RESOLVED, That the Board of Public Worksdeliberate upon, and thereafter approve or deny, each application for funding of transaction costs of a conservationeasement, and if approved specify the dollaramount, notto exceed $15,000perapplication, authorizedfor useonthe application-specific project tobe drawn from the Council-budgetedfundsavailable to this program at that time, abiding the following minimumcriteria, allof which must be satisfied in support of anyapproved application: 1. The property owner(s) ofthe propertyimpacted by the pendingapplication is/are willing participant(s) in the project; 2. An outside funding match to City's contribution tothe application-specificproject is preferred, but notrequired; 3. Anotherparty willbe responsible for propertymanagementandstewardship of any conservationeasementcreatedunder this program; 4. Theproject is locatedin the watershed of SixMileCreekupstream of the current location ofthe sixty-foot dam, andthe conservation of theproject is deemed by the Board of PublicWorks, onthe advice of relevant Citystaff, to be beneficial tolong-term waterquality for theCity's watersupply; And, be it further RESOLVED, Thatapplicationsmay be submittedseeking funding support of this program for fee-title purchases (rather than easements) in support of conservation of the City watershed, but that suchapplicationsshall, after being considered by the Board of PublicWorksasspecifiedin this resolution, require avote of CommonCouncilbefore any approval ofthe applicationshall be effective. Six Mile Creek Watershed Conservation Easement—Resolution, as unanimously passed at 2/22/16 BPW WHEREAS, the City of Ithaca has received an application from the Finger Lakes Land Trust to support the acquisition of approximately 125 acres of land within the Six Mile Creek Watershed located at 471 Midline Road in the Town of Dryden (known as the Petkov Property), and WHEREAS, the application meets the four criteria established in the Common Council Resolution “City Watershed Conservation Easements Processes” passed on March 4, 2015, and WHEREAS, the Superintendent of Public Works and Assistant Superintendent of Public Works—Water and Sewer have reviewed the application and believe that the property is of high value for protection of the watershed, now therefore be it RESOLVED, that the Board of Public Works supports a grant of $40,000 toward acquisition of the Petkov Property by the Finger Lakes Land Trust, and be it further RESOLVED, that the Board of Public Works directs the Superintendent of Public Works to place the application on the upcoming agenda of the Planning and Economic Development Committee. 1 Aaron Lavine From:Aaron Lavine Sent:Friday, February 19, 2016 3:11 PM To:Kathy Servoss; Board of Public Works Cc:JoAnn Cornish Subject:RE: Six Mile Creek Conservation Easement Thank you, JoAnn, for this constructive input. For BPW’s reference, I want to add two minor clarifications: 1. As you note, the March 2015 authorizing resolution for this program ends by setting out a procedure for considering “fee-title purchases (rather than easements)”. While the resolution could have been clearer, I believe it was authorizing the sort of fee-title purchase now before us: a fee-title purchase by an entity (here, the Land Trust) that will preserve the parcel of land in perpetuity, just as the City wouldn’t take title to conservation easements purchased under this program either, but would also entrust those to titling in the Land Trust’s name. 2. I can certainly see the logic in your suggestion that the City authorize $25,000 for this transaction rather than $40,000, and I really don’t think there’s a right and a wrong answer. I will note that to the extent that our motivation in picking a smaller number is to preserve funds for future watershed protection transactions, it’s worth keeping in mind that (so far) Council has funded this program at $20,000 per year out of the water fund. Thus, it’s a decent bet that some funding will be available to future transactions—which are in any event not available to us at this time—even if we devote the full $40,000 to this project now. Either way, these sums of money are a true drop in the proverbial bucket of $30+ million that we are spending on our new water plant, which will do us little good without high quality water for many decades to come. Thanks again, and have a good weekend. Ari Aaron (Ari) O. Lavine City Attorney, City of Ithaca 108 E. Green St. Ithaca, NY 14850 Tel: (607) 274-6504 Fax: (607) 274-6507 This e-mail contains information that may be privileged and confidential. If you are not the intended recipient, please delete this e-mail and notify us immediately by reply email, or at (607) 274-6504. From: Kathy Servoss Sent: Friday, February 19, 2016 2:25 PM To: Board of Public Works <BPW@cityofithaca.org> Subject: FW: Six Mile Creek Conservation Easement Additional information for the agenda. - Kathy Servoss Executive Assistant Supt. of Public Works, Engineering, & Parking City of Ithaca 108 E. Green St. 10.3 An Ordinance to Amend the City of Ithaca Municipal Code, Chapter 325, Entitled “Zoning,” Article IV, Section 325-12, in Order to Amend the Approval Process for the Planned Unit Development (PUD) ORDINANCE NO. 2016-____ BE IT ORDAINED AND ENACTED by the Common Council of the City of Ithaca that Chapter 325, Article IV, Section 325-12G.(12) be amended as follows: Section 1. Chapter 325 (“Zoning”), Article IV, section 325-12G.(12) is hereby amended to change the approval process for a Planned Unit Development Zone to allow the Common Council to approve a PUD for a multi phased project based on the final site plan approval of the first phase of the project and preliminary site plan approval of subsequent phases of the project, and shall read as follows: §325-12. G.(12) “Common Council consideration of the PUD. When and if the Planning and Development Board has completed its environmental review of the project to the extent required under SEQRA and CEQRO and has issued a contingent site plan approval or in the case of a multi-phase project has issued a preliminary contingent site plan approval of multiple phases along with a final contingent site plan approval of at least one phase, the project will return to the Common Council for final consideration of the adoption of the PUD, which at Council’s discretion may be authorized for one or all phases of a multi-phase project. Final Council approval, if any, shall be granted via ordinance.” Section 2. Severability. If any section, subsection, sentence, clause, phrase or portion of this ordinance is held to be invalid or unconstitutional by a court of competent jurisdiction, then that decision shall not affect the validity of the remaining portions of this ordinance. Section 3. Effective date. This ordinance shall take effect immediately and in accordance with law upon publication of notices as provided in the Ithaca City Charter. 14. MAYOR’S APPOINTMENTS: 14.1 Appointments to City of Ithaca Local Board of Assessment Review - Resolution RESOLVED, That Marjorie Olds, Linda Santos, and William Goldsmith be appointed to the Local Advisory Board of Assessment Review for the City of Ithaca for 2016. 14.2 Appointment to the Program Oversight Committee (POC) for the Community Housing Development Fund RESOLVED, That Ducson Nguyen be appointed to the Program Oversight Committee for the Community Housing Development Fund; and, be it further RESOLVED, That J.R. Clairborne’s appointment be modified to an alternate member to the Program Oversight Committee for the Community Housing Development Fund. 14.3 Appointment to Planning and Development Board – Resolution RESOLVED, That Matthew F. Johnston be appointed to the Planning and Development Board to replace C.J. Randall with a term to expire December 31, 2018. 14.4 Appointment to Shade Tree Advisory Committee – Resolution RESOLVED, That Beverly Brink Hillman be appointed to the Shade Tree Advisory Committee to fill a vacancy with a term to expire December 31, 2018.