HomeMy WebLinkAbout2016 Annual Financial Report
IN GOD
WE
TRUST
Bhsx ne Khunmh`+ Lhbghf`m
Ehm`mbh`kQdonqs
!
vhsg Rtookdldms`k Hmenql`shnm
!
Mnudladq 2/+1/
City of Livonia, Michigan
Management’sDiscussionandAnalysis
Overview of the Financial Statements
The City of Livonia, Michigan’s (the “City”) 2016 annual report consists of four parts: (1)
management’s discussion and analysis, (2) basic financial statements, (3) required supplemental
information, and (4) other supplemental information that presents combining statements for
nonmajor governmental funds, proprietary funds, and fiduciary funds. The basic financial
statements include two kinds of statements that present different views of the City. The first
two statements are government-wide financial statements that are intended to provide longer-
term information about the City’s overall financial status. The remaining statements are fund
financial statements that focus on individual parts of the City’s government, reporting the City’s
operations in more detail than the government-wide financial statements.
Government-wide Financial Statements
The government-wide financial statements report information about the City as a whole using
accounting methods similar to those used by private sector companies. The statement of net
position includes all of the City’s assets, liabilities, deferred inflows, and deferred outflows. All of
the current year’s revenue and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.
The two government-wide statements report the City’s net position and how they have
changed. Net position, the difference between the City’s assets/deferred outflows and
liabilities/deferred inflows, is one way to measure the City’s financial health or position.
The government-wide financial statements of the City are divided into three categories:
Government Activities - Most of the City’s basic services are included here, such as the
police, fire, public works, parks departments, and general administration. Property taxes,
state-shared revenue, and charges for services provide most of the funding for these
activities.
Business-type Activities - The City charges fees to customers to cover the costs of certain
services it provides.The City’s water and sewer system, golf course operations, and
nonfederal senior housing are treated as business-type activities.
Component Units - The City includes three other entities in its report, the Plymouth Road
Development Authority, the Economic Development Corporation, and the Livonia
Brownfield Redevelopment Authority. Although legally separate, these “component units”
are important because the City is financially accountable for them, including debt, which is
issued on behalf of the authorities by the City.
4
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most
significant funds -not the City as a whole. Funds are accounting tools that the City uses to keep
track of specific sources of funding and spending for particular purposes. Some funds are
required by state law and bond covenants. Other funds are established to control and manage
money for particular purposes.
The City has three kinds of funds:
Governmental Funds - Most of the City’s basic services are included in governmental
funds, which focus on how cash and other financial assets that can be converted to cash, flow
in and out, and the balance left at year end that is available for spending. The governmental
fund statements provide a detailed short-term view that helps you determine if there are
more or fewer financial resources available to spend in the near future to finance the City’s
programs.
Proprietary Funds - Services that are intended to be entirely self-supporting by customer
fees are generally reported in proprietary funds. Proprietary fund statements, like
government-wide statements, provide both short- and long-term financial information.
Fiduciary Funds - The City is responsible for ensuring that the assets in these funds are
used for their intended purposes. We exclude these activities from the government-wide
financial statements because the City cannot use these assets to finance its operations.
5
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
The City as a Whole
In a condensed format, the table below shows a comparison of the net position as of November
30, 2016 to the prior year.
Summary Condensed Statement of Net Position (in millions of dollars)
Governmental ActivitiesBusiness-type ActivitiesTotal
201620152016201520162015
Assets
Current and other assets$ 69.0$ 72.4$ 33.5$ 29.1$ 102.5$ 101.5
Capital assets 192.7 187.7 87.2 83.9 279.9 271.6
Total assets 261.7 260.1 120.7 113.0 382.4 373.1
Deferred Outflows of Resources
Bond refunding loss being amortized 0.5 - 0.1 0.1 0.6 0.1
Deferred outflows related to pensions 9.3 9.8 0.6 0.7 9.9 10.5
Total deferred outflows 9.8 9.8 0.7 0.8 10.5 10.6
Liabilities
Current liabilities 6.8 6.9 6.0 5.2 12.8 12.1
Long-term liabilities 48.9 50.7 14.2 12.0 63.1 62.7
Total liabilities 55.7 57.6 20.2 17.2 75.9 74.8
Net Position
Net investment in capital assets 161.0 154.0 73.7 72.6 234.7 226.6
Restricted 30.6 27.9 1.3 1.4 31.9 29.3
Unrestricted 24.2 30.4 26.2 22.6 50.4 53.0
Total net position$ 215.8$ 212.3$ 101.2$ 96.6$ 317.0$ 308.9
City of Livonia - Net Position
The City’s assets/deferred outflows exceed its liabilities at the end of the fiscal year by $317.0
million (net position). However, a major portion (74 percent) of the City’s net position
represents its investments in capital assets (i.e., land, roads, infrastructure, buildings, and
equipment) less any related debt used to acquire or construct these assets. The City uses these
physical assets to provide services to its citizens. These assets are illiquid and not available for
future spending.
Unrestricted net position of the City’s governmental activities decreased from $30.4 million at
November 30, 2015 to $24.2 million at the end of this year. The amount represents the part of
net position that can be used to finance day-to-day operations without constraints established by
debt covenants, enabling legislation, or other legal requirements.
Furthermore, the City is able to report positive balances in all three categories of net position,
both for the City as a whole, as well as for its separate governmental and business-type activities.
6
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
The following table shows the changes in net position during the current year and as compared
to the prior year:
Summary Condensed Statement of Changes in Net Position (in millions of dollars)
Governmental ActivitiesBusiness-type ActivitiesTotal
201620152016201520162015
Revenue
Program revenue:
Charges for services$ 18.0 $ 18.1 $ 41.6 $ 37.0 $ 59.6 $ 55.1
Operating grants and contributions
8.4 8.8 - - 8.4 8.8
Capital grants and contributions
1.5 1.6 1.7 3.4 3.2 5.0
General revenue:
Property taxes 54.7 54.0 - - 54.7 54.0
State-shared revenue 12.5 9.0 - - 12.5 9.0
Rental income and fees 2.6 2.7 - - 2.6 2.7
Interest 0.2 0.1 0.1 0.1 0.3 0.2
Transfer and miscellaneous (0.9) 0.2 1.1 - 0.2 0.2
Total revenue 97.0 94.5 44.5 40.5 141.5 135.0
Program Expenses
General government 11.5 10.3 - - 11.5 10.3
Public safety 43.0 40.3 - - 43.0 40.3
Public works 25.0 24.5 - - 25.0 24.5
Community and economic development 1.5 1.1 - - 1.5 1.1
Recreation and culture 11.1 12.4 - - 11.1 12.4
Interest on long-term debt 1.4 1.5 - - 1.4 1.5
Water and sewer - - 37.2 34.6 37.2 34.6
Golf course - - 1.7 1.8 1.7 1.8
Housing - - 1.0 1.2 1.0 1.2
Total expenses 93.5 90.1 39.9 37.6 133.4 127.7
3.5 4.4 4.6 2.9 8.1 7.3
Change in Net Position
Net Position - Beginning of year
212.3 185.7 96.6 92.3 308.9 278.0
Impact of GASB Statement No. 68* - 22.2 - 1.4 - 23.6
Net Position - End of year
$ 215.8$ 212.3$ 101.2$ 96.6$ 317.0$ 308.9
* The implementation of GASB Statement No. 68 required an adjustment to beginning of year net position in
2015.
Governmental Activities
In reviewing governmental activities in the above table, it can be noted that revenue increased
by $2.5 million and expenses decreased by $3.4 million. The change in revenue is primarily
attributable to reimbursement of lost personal property revenue from the Local Community
Stabilization Authority (LCSA). The significant factors impacting expenses were increased public
safety spending on personnel and equipment and increased costs for medical expenses.
7
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
Business-type Activities
The City has three business-type activities. These include the water and sewer system, the
operating fund for the Fox Creek, Idyl Wyld, and Whispering Willows golf courses, and
nonfederal senior housing at Silver Village and Newburgh Village.
The following table shows the operating income (loss) before contributions, transfers, and
interest for each of these activities in the current and prior year:
(In thousands of dollars)
Water and SewerGolf CoursesHousing
201620152016201520162015
Operating Revenue$ 38,435 $ 33,851 $ 1,782 $ 1,747 $ 1,404 $ 1,388
Operating Expenses (36,925) (34,192) (1,731) (1,790) (1,034) (1,169)
Operating Income (Loss) $ 1,510$ (341)$ 51$ (43)$ 370$ 219
The operating income (loss) of the Water and Sewer Fund increased between 2015and 2016.
Units of water sold increased by 4 percent, and rates increased by 8 percent, resulting in a
current year net operating income vs. loss in the prior year. The golf course operating loss also
transitioned to a net operating income based on increased rounds and expenditure controls.
Capital Assets and Debt Distribution
At the end of fiscal year 2016, the City has $503.8 million invested, before depreciation, in a
wide range of capital assets, including land, buildings, infrastructure, public safety equipment,
computer equipment, and water and sewer lines.
Debt of $32.2 million related to the construction of the above-mentioned capital assets is
reported as a liability in the governmental activities in the statement of net position.
Debt related to the water and sewer system totaling $13.6 million is recorded as a liability in the
business-type activities in the statement of net position. This debt represents construction of and
improvements to existing water and sewer lines.
Significant additions to capital assets during fiscal year 2016 include $9.4 million invested in the
construction of infrastructure and improvements to roads, $1.9 million invested in equipment
and vehicles, and $7.5 million in water and sewer system infrastructure. Significant disposals of
capital assets during fiscal year 2016 included the disposal of vehicles and equipment with a total
cost of $1.9million.
8
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
The City’s Funds
The fund financial statements begin on page 15 and provide detailed information on the most
significant governmental funds -not the City as a whole. Funds are created to help manage
money for special purposes, as well as to show accountability for certain activities, such as
special property tax millages. The City’s major governmental funds for 2016 include the General
Fund and Refuse Disposal Fund.
The City’s governmental funds reported a combined fund balance of $43.2 million. This is an
increase of approximately $0.5 million for the year. The increase was caused primarily by
spending constraint in the General Fund and capital improvement projects which began in 2016
but will not be completed until 2017.
General Fund Budgetary Highlights
Over the course of the year, the City administration and City Council monitor and amend the
budget, primarily to prevent expenditures in excess of budget, as required by the State of
Michigan Budget Act. The final amended budget included the same total revenue as the original
adopted budget. The amended budget expenditures were $2.1 million more than the original
budget. The budget was amended to allow for the purchase of a vacant building adjacent to the
DPW yard which will be used to replace the existing water and sewer building at a much lower
cost than a new building. The budget was also amended for medical expenses that were higher
than originally projected.
Actual General Fund revenue was approximately $833,000 above the final budget. The biggest
factors in the actual revenue exceeding budget were from better than anticipated property taxes
($237,000) and building permits ($586,000).
Actual General Fund expenditures were approximately $1,067,000 below the final budget.
Nearly all departments held expenditures below the final budget.
Current Economic Conditions
The City continues to maintain positive fund balances in each of its funds. However, concerns
arise when considering the revenue and expenses that the City is facing in upcoming years.
The majority of the City’s revenue base is constrained by factors outside the City’s control.
Property taxes, state-shared revenue, and interest income total 75 percent of the City’s total
governmental activities revenue. Revenue is beginning to slowly increase after many years of
reductions. Property assessments are projected to increase in fiscal year 2017. State-shared
revenue is projected to increase slightly in fiscal year 2017.
On the expense side, we expect that normal inflationary increases as well as employee wage and
benefit increases will offset the small revenue increases. We are committed to living within our
means, although the result may be diminished programs and service response capabilities.
9
City of Livonia, Michigan
Management’sDiscussionandAnalysis(Continued)
Contacting the City’s Financial Management
The financial report is designed to provide our citizens, taxpayers, customers, 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 this report or need additional financial
information, contact the director of finance at the City of Livonia, 33000 Civic Center Drive,
Livonia, Michigan 48154.
10
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund
Year Ended November 30, 2016
Variance with
Original BudgetFinal BudgetActual Final Budget
Revenue
Property Taxes $ 31,244,392 $ 31,244,392$ 31,481,752 $ 237,360
Licenses and Permits
Business 154,300 154,300 153,950 (350)
1,959,750 1,959,750 2,545,608 585,858
Nonbusiness
Total licenses and permits
2,114,050 2,114,050 2,699,558 585,508
Intergovernmental Revenue
State and local 8,659,946 8,659,946 8,415,059 (244,887)
128,200 128,200 150,038 21,838
Federal
Total intergovernmental revenue
8,788,146 8,788,146 8,565,097 (223,049)
Charges for Services 4,150,603 4,150,603 4,346,195 195,592
Interest and Rents 2,764,860 2,764,860 2,574,716 (190,144)
Fines and Forfeitures 4,312,000 4,312,000 4,415,510 103,510
Miscellaneous Revenue
Sale of fixed assets 50,000 50,000 96,360 46,360
1,754,409 1,754,409 1,832,049 77,640
Other miscellaneous
Total miscellaneous revenue 1,804,409 1,804,409 1,928,409 124,000
Total revenue$ 55,178,460$ 55,178,460$ 56,011,237$ 832,777
Expenditures
General Government
Legislative:
City Council$ 333,260 $ 333,260$ 322,919 $ 10,341
City Clerk 560,669 560,669 548,761 11,908
283,621 283,621 205,565 78,056
Elections
Total legislative 1,177,550 1,177,550 1,077,245 100,305
Judicial 3,036,386 3,036,386 3,010,727 25,659
Executive - Mayor's office 446,628 459,092 459,092 -
Human resources:
Labor relations 93,000 93,000 47,036 45,964
641,831 641,831 595,452 46,379
Civil service
Total human resources 734,831 734,831 642,488 92,343
67
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2016
Variance with
Original BudgetFinal BudgetActual Final Budget
Expenditures (Continued)
General Government (Continued)
Financial administration:
Accounting$ 210,404 $ 228,404$ 226,476 $ 1,928
Assessing 510,785 492,785 468,657 24,128
Finance 366,714 366,714 364,083 2,631
Independent audit 34,293 34,293 33,651 642
Board of review 4,068 4,068 3,300 768
Treasurer 557,290 557,290 460,043 97,247
796,779 796,779 738,525 58,254
Information systems
Total financial administration 2,480,333 2,480,333 2,294,735 185,598
Other activities:
Legal 594,016 629,990 628,582 1,408
Utilities and supplies 554,447 581,447 540,518 40,929
44,000 41,500 40,717 783
Dues and subscriptions
Total other activities 1,192,463 1,252,937 1,209,817 43,120
Total general government 9,068,191 9,141,129 8,694,104 447,025
Public Safety
Police:
Traffic bureau 1,119,299 1,133,299 1,080,848 52,451
Administration 2,456,913 2,217,079 2,204,834 12,245
Data processing 1,072,398 959,398 768,077 191,321
Detective bureau 2,577,912 2,690,446 2,688,890 1,556
Automotive service 585,000 635,000 449,809 185,191
Communications/Records bureau 709,484 720,234 719,709 525
Crossing guards 61,034 61,034 58,090 2,944
School liaison 383,400 383,400 378,755 4,645
Office of emergency preparedness 204,178 212,928 151,651 61,277
Reserve police 298,231 311,731 311,064 667
Patrol bureau 11,559,783 11,702,583 11,682,897 19,686
1,915,243 1,915,743 1,900,013 15,730
Intelligence bureau
Total police 22,942,875 22,942,875 22,394,637
548,238
Fire:
Administration 892,388 910,096 908,937 1,159
Firefighting 12,671,211 12,655,503 12,640,802 14,701
536,978 534,978 534,265 713
Fire prevention
Total fire 14,100,577 14,100,577 14,084,004 16,573
68
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2016
Variance with
Original BudgetFinal BudgetActual Final Budget
Expenditures (Continued)
Public Safety (Continued)
Protective inspection:
$ 375
Building Code Board of Appeals$ 1,436 $ 1,436$ 1,061
1,167,299 1,167,099 1,066,882 100,217
Inspection
Total protective inspection 1,168,735 1,168,535 1,067,943 100,592
2,034 2,234 2,167 67
Other protective - Traffic commission
665,470
Total public safety 38,214,221 38,214,221 37,548,751
Public Works
Public services - Highways, streets, and
maintenance:
Engineering 5,227 5,227 3,947 1,280
Parks maintenance 1,356,366 1,356,486 1,347,716 8,770
Administration 10,096 829,965 815,215 14,750
Equipment maintenance 149,773 158,412 135,459 22,953
Building maintenance 1,211,139 1,202,535 1,189,796 12,739
Street lighting 300,502 300,502 299,440 1,062
456,839 456,859 445,805 11,054
Maintenance - Streets
72,608
Total public works 3,489,942 4,309,986 4,237,378
Parks and Recreation and Cultural
Parks and recreation:
Administration 406,520 413,520 413,056 464
Recreation facilities 35,027 29,036 28,942 94
96,020 95,011 94,290 721
Recreation athletics
Total parks and recreation 537,567 537,567 536,288 1,279
Cultural:
537,720 522,720 505,501 17,219
Senior services
782,384 797,384 772,724 24,660
Greenmead and cultural
Total cultural 1,320,104 1,320,104 1,278,225 41,879
Total parks and recreation and cultural 1,857,671 1,857,671 1,814,513 43,158
Community and Economic Development
City Planning Commission 588,512 585,512 584,552 960
49,006 52,006 49,374 2,632
Zoning Board of Appeals
Total community and economic
development
637,518 637,518 633,926 3,592
1,898,775 3,139,633 3,304,759 (165,126)
Employee Benefits, Insurance, and Other
$ 55,166,318$ 57,300,158$ 56,233,431$ 1,066,727
Total expenditures
69
City of Livonia, Michigan
ScheduleofExpendituresofFederalAwards
Year Ended November 30, 2016
Pass-through Total Amount
CFDA Entity Identifying Provided to Federal
Federal Agency/Pass-through Agency/Program TitleNumberNumberSubrecipientsExpenditures
U.S. Department of Agriculture - Food Distribution Cluster - Passed
through the Wayne Metropolitan Community Services Agency -
Emergency Food Assistance Program (Food Commodities)
10.569N/AN/A$ 65,590
U.S. Department of Housing and Urban Development:
Community Development Block Grant - Entitlement Grants Cluster:
Program year 2016
14.218B05 MC-26-0016 1,980 214,727
14.218B05 MC-26-0015 31,410 546,149
Program year 2015
Total CDBG Entitlement Grants 33,390 760,876
Passed through the Michigan State Housing Development Authority -
HOME Investment Partnership Program - Program year 2003
14.239M-2002-5068N/A 896
Passed through Wayne County - HOME Investment Partnership
Program - Home Consortium Funds14.239N/AN/A 81,779
Total U.S. Department of Housing and Urban
Development
843,551
U.S. Department of Justice:
Bulletproof Vest Partnership Program
16.6072015 BUBXN/A 9,925
Federal Equitable Sharing Program
16.922N/AN/A 110,389
U.S. Marshals - Detroit Fugitive Apprehension Taskforce
16.unknownN/AN/A 19,142
Passed through Wayne County:
2014 Edward Byrne Memorial Justice Assistance Grant
16.738DJ-BX-0503N/A 2,056
16.738H4084-MI-DJN/A 9,543
2013 Edward Byrne Memorial Justice Assistance Grant
Total JAG Program 11,599
Total U.S. Department of Justice 151,055
See Notes to Schedule of Expenditures
of Federal Awards. 6
City of Livonia, Michigan
ScheduleofExpendituresofFederalAwards(Continued)
Year Ended November 30, 2016
Pass-through Total Amount
CFDA Entity Identifying Provided to Federal
Federal Agency/Pass-through Agency/Program TitleNumberNumberSubrecipientsExpenditures
U.S. Department of Transportation:
Highway Planning & Construction Cluster - Passed through the Michigan
Department of Transportation - Highway Planning and
20.205HK0090N/A$ 29,521
Construction - Levan-Schoolcraft to North of 5 Mile
Federal Transit Cluster - Passed through the Southeast Michigan
Council of Governments - Livonia Community Transit Grant20.500N/AN/A 3,629
Highway Safety Cluster - Passed through the Michigan Office of
Highway Safety - State and Community Highway Safety -
20.600PT-13-17N/A 22,676
Belt Enforcement
55,826
Total U.S. Department of Transportation
U.S. Environmental Protection Agency - Passed through the Michigan
Department of Environmental Quality - Drinking Water State Revolving
Fund Cluster - Capitalization Grants for Drinking Water State Revolving
Funds
66.4687356-01N/A 905,130
U.S. Department of Homeland Security - Passed through the Michigan
Department of State Police:
2015 Emergency Management Performance Grant
97.042N/AN/A 660
97.042N/AN/A 41,527
2016 Emergency Management Performance Grant
42,187
Total U.S. Department of Homeland Security
$ 2,063,339
Total federal awards
See Notes to Schedule of Expenditures
of Federal Awards. 7