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Home My WebLink About2012 CAFRCity of Renton 2012 Comprehensive Annual F*inanc*ial Report 1♦ N as 6,.N--. � ,40 4]POO City of Re to RENTON. AHEAD OF THE CURVE • Renton City Hall • 1055 South Grady Way 0 Renton, Washington 98057 • rentonwa.gov ♦ (Ji ''_ 1 + CITY OF RENTON 2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT For Year Ended December 31, 2012 Iwen Wang, Administrator Jamie Thomas, Fiscal Services Director Administrative Services Department City of Renton 1055 South Grady Way Renton, Washington 98057 (425) 430-6858 Website: www.rentonwa.gov TABLE OF CONTENTS DECEMBER 31, 2012 ITEM PAGE INTRODUCTORY SECTION Letterof Transmittal.....................................................................................................................................1-1 2011 Comprehensive Annual Financial Report Award.................................................................................1-6 Corporate Organization Structure & Reporting Relations............................................................................1-7 FINANCIAL SECTION Independent Auditor's Report.................................................................................................................... 2-1 Management Discussion and Analysis........................................................................................................3-1 Basic Financial Statements: Government -wide Financial Statements: Statementof Net Position......................................................................................................................4-1 Statementof Activities........................................................................................................................... 4-2 Fund Statements Government Fund Financial Statements: BalanceSheet..................................................................................................................................4-4 Reconciliation of Balance Sheet to the Statement of Net Position.................................................4-6 Statement of Revenues, Expenditures and Changes in Fund Balances...........................................4-7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Government Funds to the Statement of Activities........................................4-8 Proprietary Fund Financial Statements: Statementof Net Position............................................................................................................... 4-9 Statement of Revenues, Expenses, and Changes in Net Position.................................................4-11 Statementof Cash Flows...............................................................................................................4-12 Fiduciary Fund Statements: Statement of Fiduciary Net Position.............................................................................................4-14 Statement of Changes in Fiduciary Net Position...........................................................................4-15 Notes to Financial Statements: Note 1: Significant Accounting Policies...........................................................................................4-16 Note 2: Compliance and Accountability..........................................................................................4-26 Note 3: Deposits and Investments..................................................................................................4-29 Note4: Property Taxes....................................................................................................................4-31 Note 5: Capital Assets and Depreciation.........................................................................................4-32 Note6: Pensions..............................................................................................................................4-37 Note 7: Other Post Employment Benefits.......................................................................................4-50 Note8: Contingencies..................................................................................................................... 4-53 Note9: Risk Management...............................................................................................................4-53 Note 10: Interfund Transactions.......................................................................................................4-56 Note11: Net Position........................................................................................................................ 4-59 Note 12: Prior Period Adjustments...................................................................................................4-60 Note13: Long Term Debt.................................................................................................................. 4-60 Note 14: Deferred Charges in Proprietary Funds..............................................................................4-65 Note 15: Segment Information..........................................................................................................4-66 Note16: Joint Ventures.....................................................................................................................4-66 Note 17: Subsequent Events.............................................................................................................4-69 Required Supplementary Information Other than MD&A Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual GeneralFund..........................................................................................................................................5-1 TABLE OF CONTENTS DECEMBER 31, 2012 ITEM PAGE Actuarial Valuation of Firefighters' Pension Fund.................................................................................5-2 LEOFF I Retiree Medical Benefits - Schedule of Funding Progress......................................................... ... 5-3 Combining Statements Net Position by Component................................................................................................. Non -Major Fund Descriptions................................................................................................................6-1 Table 2: CombiningBalance Sheet...................................................................................................................... 6-5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances.............................6-11 Fund Balance of Government Funds.................................................................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Table 4: Budgetto Actual..................................................................................................................................6-17 Combining Statement of Net Assets, Non -Major Enterprise Funds....................................................6-30 General Government Tax Revenue by Source...................................................................... Combining Statement of Revenues, Expenses and Changes in Fund Net Assets, Revenue Capacity: Non -Major Enterprise Funds......................................................................................................... 6-32 Statement of Cash Flows, Non -Major Enterprise Funds......................................................................6-33 7-8 Combining Statement of Net Assets, Internal Service Funds..............................................................6-35 Assessed Value Taxable Property......................................................................................... Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets, Table 8: InternalService Funds................................................................................................................... 6-37 Combining Statement of Cash Flows, Internal Service Funds.............................................................. 6-38 Statement of Changes in Assets and Liabilities Agency Fund — Special Deposit.................................6-40 Table 10: STATISTICAL SECTION Statistical Section Description................................................................................................................7-1 Financial Trends: Table 1: Net Position by Component................................................................................................. 7-2 Table 2: Changes in Net Position........................................................................................................7-3 Table 3: Fund Balance of Government Funds.................................................................................... 7-5 Table 4: Changes in Fund Balance of Government Funds..................................................................7-6 Table 5: General Government Tax Revenue by Source...................................................................... 7-7 Revenue Capacity: Table 6: Principal Property Tax Payers............................................................................................... 7-8 Table 7: Assessed Value Taxable Property......................................................................................... 7-9 Table 8: Property Tax Rates Direct and Overlapping Governments................................................7-10 Table 9: Property Tax Levies and Collections................................................................................... 7-11 Table 10: Sales Tax Collections by Sector........................................................................................... 7-12 Debt Capacity: Table 11: Ratios of Outstanding Debt by Type................................................................................... 7-13 Table 12: Legal Debt Margin Information.......................................................................................... 7-14 Table 13: Ratios of General Bonded Debt Outstanding.....................................................................7-15 Table 14: Direct and Overlapping Governmental Activities Debt......................................................7-16 Table 15: Pledged -Revenue Coverage for Water and Sewer and Golf Course Revenue Bonds ........7-17 Demographic and Economic Information: Table 16: Demographic and Economic Statistics................................................................................7-19 Table 17: Principal Employers............................................................................................................ 7-20 Operating Information: Table 18: Full Time Equivalent City Government Employees by Function.........................................7-21 Table 19: Operating Indicators by Function.......................................................................................7-22 Table 20: Capital Assets Statistics by Function...................................................................................7-23 iv City of July 30, 2013 Honorable Denis Law, Mayor Members of the Renton City Council Residents of Renton City of Renton, Washington RE: THE 2012 COMPREHENSIVE ANNUAL FINANCIAL REPORT Mr. Mayor, Honorable Councilmembers, and Citizens of Renton: We are pleased to present the City's Comprehensive Annual Financial Report for the year ended December 31, 2012, The City maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded against loss or unauthorized used, and that financial records can be relied upon to produce accurate and fairly represented financial statements in accordance with generally accepted accounting principles, To the best of our knowledge and belief, the enclosed financial statements and all supporting schedules are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the City. The concept of reasonably assurance recognizes that the cost of a control should not exceed the benefits likely to be derived, and the evaluation of the relative costs and benefits of the control system requires estimates and judgments by management, These financial statements have been audited by the Washington State Auditor's Office. This independent audit was conducted in accordance with generally accepted auditing standards to provide an independent assessment of fair presentation of the City's financial position. In addition to the opinion on the City's financial statements, included in this report, the State Auditor's office also reviewed the City's internal controls and compliance to legal requirements involving the administration of federal grant programs as required by the Single Audit Act, and compliance with State Constitution, laws, and City ordinances and policies as required by RCW 43.09.260. A separately issued Single Audit Report is available directly from the State Auditor's website. A Management's Discussion and Analysis (MD&A) immediately follows the State Auditor's report provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. Introduction, 1-1 2012 Comprehensive Annual Financial Report City of Renton, Washington BUDGETARY CONTROLS The City of Renton maintains budgetary controls to ensure compliance with legal provisions embodied in the budget. All activities are appropriated through the budget process and published in the City's Budget document. The City Council must adopt an ordinance to increase or decrease total appropriations in a Fund. The Mayor has the authority to move appropriations within a Fund. A more thorough discussion of the City's accounting policies can be found under the Summary of Significant Accounting Policies in the Notes to the Financial Statements. PROFILE OF THE CITY Incorporated on September 6, 1901, Renton is a city in King County, Washington. Situated 11 miles southeast of downtown Seattle, 5 miles from SeaTac Airport, Renton straddles the southeast shore of Lake Washington, at the junction of key north -south and east -west transportation corridors. The City's early economy was based on coal mining, clay production, and timber export. Today, Renton is best known as the final assembly point for the Boeing 737 family of commercial airplanes, but it is also home to a growing number of well-known manufacturing, technology, service companies and government institutions, including Boeing, Paccar, Wizards of the Coast gaming, Ikea Home Furnishing, Valley Medical Center, Providence Health & Services, Seattle Branch of Federal Reserve Bank, and FAA Northwest Regional office. The City of Renton has a strong mayor form of government with an appointed Chief Administrative Officer. The Mayor is independently elected to a four-year term. The Mayor's job is to manage and implement the policies established by the seven -member City Council elected at large on a non-partisan basis. With a population of 93,910 in 2012, Renton is the 8th largest city in the state, and the 4th largest in King County. The City provides a full range of municipal services to an incorporated area of 23.79 square miles. These services include police, fire, street construction and maintenance, planning and zoning, parks and recreation, municipal court, and general administrative services. The City operates four utilities: water, sewer, surface water, and solid waste. These are operated very similar to a private business where the revenues from rates and other direct sources must pay for the operational, capital, and long-term debt costs. The City has its own water supplies and does not rely on purchased water to meet normal service demands. The City's sewage is treated by King County, but the City is responsible for transferring and maintaining the system to King County. The City bills Renton residents a monthly fee for the cost of sewer treatment performed by King County. The City also operates a golf course. All costs of the Maplewood Golf Course are paid from green fees, driving range fees, revenue from the restaurant vendor, and other miscellaneous revenue. The golf course has short-term operational costs, an active capital maintenance Introduction, 1-2 2012 Comprehensive Annual Financial Report City of Renton, Washington program, and annual debt service payments for the construction of the clubhouse and the driving range. The Renton Municipal Airport is used by small private plane operators, a floatplane company, and Boeing initiates its maiden 737 flights from this airport. The operational costs of the airport are paid from hanger rentals and tie -down fees. Much of the major capital projects are paid by fees or with Federal Aviation Administration grants. ECONOMIC CONDITION AND OUTLOOK While the Great Recession officially ended in June 2009, the ensuing recovery since has been painfully slow. Nationally, unemployment remains elevated at 8.1% and the real GDP grew only by 2.2% for 2012. The outlook is not much better for 2013. The Blue Chip consensus forecast calls for real GDP to grow by 2% in 2013, and 2.8% in 2014, before accelerating to the historical normal rate of 3% in 2015 and beyond. The below -par growth forecast in 2013 is primarily due to the expiration of the 2% reduction in payroll tax, the sequestration of federal spending, the increase in taxes on higher income households, sluggish exports triggered by lingering EU sovereign debt crisis, slower growth in Asia, and the expected slower rise in business inventories and investment in the near term. The Puget Sound region suffered a greater relative employment loss than the U.S. during the recession, but is now growing faster. Led by new hires at Boeing and Amazon, and an upturn in home building and construction jobs, regional employment grew at nearly twice the national rate in 2012. Overall, the region has gained back about 65% of the jobs lost during the recession and the unemployment rate has dropped to 6.9% at the end of 2012. Gains in personal income, combined with improved labor market and the increase in housing activity, have raised the growth rate of taxable retail sales to within 2% of their pre -recession peak. The job creation rate is projected to average 2.5% through 2015, stronger than the normal 1.6% annual rate; and population growth at 1.4% before drop to 1% annually. One key feature in 2012 that is different than the earlier stage of this recovery is the improvement in the home values and the housing market. The projection for housing start is a strong growth in 2013 and '14 at 25% and 10%, respectively to reach 25,500 units in 2015, before dropping back to a long- term average of 22,000 units per year. The recovery of Renton economy has outpaced both national and Puget Sound results in 2012 with an overall employment growth at 6% and taxable sales grew by 7.6%. The employment growth is partially attributable to the production ramp -up of 737 from 35 to 42 plans per month by mid -2014. In addition to employment growth, the production change will also require a reconfiguration of the current plant layout to add a second production line. This significant investment and the general recovery of housing sector is expected to provide a short term boost to the City's overall taxable sales in 2013 by an estimated 5% above the 3.5% base growth forecast. As of May 2013, the local unemployment, based on preliminary BLS household survey, was at 3.8%, near the prerecession low of 3.5%. Introduction, 1-3 2012 Comprehensive Annual Financial Report City of Renton, Washington The outlook for Renton remains strong between 2014 and 2016, a significant pickup in housing permits, and a low unemployment rate will support a healthy growth in taxable retail sales. The employment growth is expected to ease -off to average of 1.5% annually, once Boeing achieves its new production rate in 2014; the population growth continue to be strong at 1.8% per year given the affordable housing stock and the central location of Renton. Despite the relatively positive outlook, the recovery is still weak by historical standards. 2013-2014 BUDGET PRIORITIES The City adopted "Priority of Government" approach in its budget development, which emphasizes on delivering results that are most important to the community, and examines the entire budget every time, not just incremental changes form the last budget. As part of the budget process, the City prepares a six-year projection on general governmental resources and expenditures to ensure the sustainability of current budget decisions. The 2013-2014 budget continues these -practices and with particular focus on a meeting both operating demand and a sustainable basic capital needs. Sustainability To achieve the sustainability, the 2013-2014 Biennial Budget realigns government programs and services to the expected revenues in the projection horizon. It restructured the City's contribution towards employee medical benefits to increase the predictability and minimize overfunding the self-insurance program; at the same time it employee groups agreed to increase their share of contributions to the costs; it provided new funding through business license fee and utility tax increase to provide need capital funds to maintain and preserve existing City facilities. Capital Investment While new ongoing resources provided a basic level of capital needs, funding of large capital projects still required grants and substantial leveraging of external resources. The budget includes two largest street improvement projects that are funded almost entirely with grants. The $42 million Rainier Avenue improvement project, when completed will transform the old and overloaded street to a tree -lined boulevard with 8 -foot sidewalks. The $30 million Strander Blvd connection Improvement will provide additional east -west connection for freight and general commerce between Renton and neighboring cities. Partnership and Leveraging Local Resources With limited resources, the City has been actively working with regional and community partners to maximize the local resources. The 2013-14 Budget includes many examples of such partnership. The Maple Crest Inclusive Playground is a joint effort between the City, Renton School District, and various service organizations who all contributed funds to make this much needed amenity possible. The transfer of the operation and maintenance of CARCO Theater to Puget Sound Access, a local non-profit communications group, will allow the City to save operating cost while preserving ability to use the facility as needed. Introduction, 1-4 2012 Comprehensive Annual Financial Report OTHER INFORMATION Awards and Acknowledgements City of Renton, Washington The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Renton for its comprehensive annual financial report for the fiscal year ended December 31, 2011. The City has a long history of achieving this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The dedicated staff of the Finance Division work hard each day to ensure that the City's financial transactions are processed accurately and records are maintained orderly and in conformance with policies and procedures. Special thanks is due to Tina Hemphill, Senior Financial Analyst, who served as the CAFR project lead over the past four years and also serves as audit liaison for the preparation of 2012 CAFR. Further appreciation is extended to the City Council and City Management for their support in conducing financial operations of the City in a sound and progressive manner, and in conformance with internal and external requirements. Respectively, Jamie Thomas Tina Hemphill Fiscal Services Director Senior Financial Analyst Introduction, 1-5 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Renton Washington For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2011 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. t'1 GOr fFj lt1110 STATES aAND C UTION � J President r f Executive Director CITY COUNCIL Randy Corman, President Rich Zwicker, Marcie Palmer, Ed Prince, Don Persson, Greg Taylor, Terri Briere 425-430-6500 COMMUNITY SERVICES Terry Higashiyama, Administrator 425-430-6600 Facilities Peter Renner, Director Parks Planning & Natural Resources Leslie Betlach, Director Recreation Tim Williams, Director Human Services Karen Bergsvik, Manager Renton History Museum Elizabeth Stewart, Manager Neighborhoods, Resources, and Events Bonnie Rerecich, Manager Parks & Golf Course Kelly Beymer, Director L RENTON CITIZENS MAYOR MUNICIPAL COURT JUDGE Denis Law Terry Jurado 425-430-6500 425-430-6550 CHIEF ADMINISTRATIVE OFFICER Jay Covington 425-430-6500 PUBLIC WORKS Gregg Zimmerman, Administrator 425-430-7394 Maintenance Services Michael Stenhouse, Director Transportation Systems Doug Jacobson, Deputy PW Administrator Utility Systems Lys Hornsby, Director COMMUNITY AND ECONOMIC DEVELOPMENT Chip Vincent, Administrator 425-430-6580 Economic Development Cliff Long, Director Development Services Neil Watts, Director Planning CITY ATTORNEY Larry Warren, Administrator 425-255-8678 Mayor's Office Communications Preeti Shridhar, Deputy Public Affairs Administrator Field Operations Bureau Patrol Services Patrol Operations POLICE FIRE AND EMERGENCY SERVICES HUMAN RESOURCES & RISK ADMINISTRATIVE SERVICES Kevin Milosevich, Chief Mark Peterson, Chief/Administrator MANAGEMENT Iwen Wang, Administrator 425-430-7503 425-430-7051 Nancy Carlson, Administrator 425-430-6858 425-430-7650 Support Operations Bureau Response Operations Greg Hartman, Deputy Fire Human Resources Cathryn Laird, Manager Finance Jamie Thomas, Director Chief Special Operations Risk Management Safety and Support Services Gary Lamb, Manager InformationTechnology Erik Wallgren, Deputy Fire Chief Mehdi Sadri, Director Investigations Benefits _F Maria Boggs, Manager Administrative Community Risk Reduction TCity Clerk /Cable Manager Services David Pargas, Asst. Fire Marshal Bonnie Walton, City Clerk Staff Services Emergency Management Deborah Needham, Director Field Operations Bureau Patrol Services Patrol Operations 2012 Comprehensive Annual Financial Report This page intentionally left blank. City of Renton, Washington Introduction, 1-8 1 Y rri Washington • • Troy Kelley INDEPENDENT AUDITOR'S REPORT July 30, 2013 Council City of Renton Renton, Washington REPORT ON FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Renton, King County, Washington, as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • TDD Relay (800) 833-6388 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Renton, King County, Washington, as of December 31, 2012, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis As described in Note 1, during the year ended December 31, 2012, the City has implemented the Governmental Accounting Standards Board Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3-1 through 3-13, budgetary comparison information on page 5-1, information on pension trust fund information on page 5-2 and postemployment benefits other than pensions on page 5-3 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 6-1 through 6-40 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Com. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated July 30, 2013, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, I � '� \,\ / / < �', /� TROY KELLEY STATE AUDITOR 2012 Comprehensive Annual Financial Report City of Renton, Washington MANAGEMENT'S DISCUSSION AND ANALYSIS The City of Renton's discussion and analysis provides a narrative overview of the City's financial activities for the fiscal year ended December 31, 2012. The intent of the discussion and analysis is to review the City's financial performance as a whole. This Management's Discussion and Analysis (MD&A) combined with the Transmittal Letter, the Financial Statements, and the Notes to the Financial Statements represent the complete 2012 financial activities for the City of Renton. These are all intended to help the reader understand the City's significant financial issues while providing an overview of the City's financial records. The information in this financial report also identifies any material deviations from the financial plan and the adopted annual budget and will isolate and identify individual fund issues or concerns. FINANCIAL HIGHLIGHTS • As of December 31, 2012, the City's total assets exceed liabilities by $744.2 million. This financial net position is an improvement of $50.4 million over 2011. This increase consists of $43 million in restricted net position and $7.7 in unrestricted net position. Unrestricted net position is the portion of city resources that does not have externally imposed conditions and disposition is generally at the discretion of the City Council. • Two-thirds of the $744.2 million net position, or $487.7 million, is related to governmental activities; of this, $435.0 million are restricted monies that are invested in infrastructure or fixed assets that are not spendable or are committed for current capital and other activities. $52.7 million are "unrestricted" which is a slight decline ($0.5 million) from the 2011 level and includes amounts the City set aside for a self-insurance plans reserve, employee benefit reserves and working capital to meet cash flow needs of all general governmental purposes. • The net position for business type activities totaled $256.5 million, an increase of $16.0 million from 2011. $224.9 million represents the City's investments in capital assets net of related debt. An unrestricted balance of $31.6 million remains and includes amounts set aside for future capital projects as well as cash flow to meet day-to-day operating requirements of the utilities and other enterprise funds. • The City's total outstanding long-term debt as of December 31, 2012, was $131.4 million. Of this amount, $ 83.6 million is general obligation debt backed by the full faith and credit of the City. $38.0 million are revenue bonds and state Public Works Trust Fund loans backed by the revenues of the Waterworks Utility. The remaining $9.7 million is for accrued employee leave balances and LEOFF 1 Retiree Benefits. Management's Discussion and Analysis, 3-1 2012 Comprehensive Annual Financial Report FINANCIAL INFORMATION City of Renton, Washington The City's Government -wide Financial Statements were prepared on the full accrual basis of accounting in conformity with Generally Accepted Accounting Principles (GAAP). The City's Fund Financial Statements for its major and non -major governmental funds were prepared on the modified accrual basis of accounting in conformity with GAAP. The City's major and non -major enterprise funds, internal service funds, and pension funds were accounted for on the full accrual basis of accounting in conformity with GAAP The City of Renton, along with all cities, counties, and other governmental entities in Washington, must comply with the Budgeting, Accounting, and Reporting System (BARS) as prescribed by the Washington State Auditor's Office (SAO). The SAO audits the financial records of all cities and other governmental units within the State. In addition to examining financial statements, the SAO also performs compliance audits and reviews internal control procedures. The City of Renton has a financial system that is consistent with BARS and has strong administrative and management controls that are designed to provide: 1. Reasonable assurance that transactions are executed in accordance to management policies and approval authorities; 2. Reasonable assurance that transactions are recorded and reported in accordance to GAAP; 3. Accountability for control of assets and obligations; and 4. Assurance that sufficient reporting and review exists to provide complete information for analysis and comparability of data. The City maintains strong budgetary controls in order to ensure compliance with legal provisions embodied in the appropriated budget as approved by the City Council. The City Council must authorize any budget increase or decrease to any fund. STRUCTURE OF THE FINANCIAL STATEMENTS This discussion and analysis provides an introduction and overview to the City of Renton's basic financial statements. The basic financial statements are comprised of three components: 1. Government -wide Financial Statements; 2. Fund Financial Statements; and 3. Notes to the Financial Statements. GOVERNMENT -WIDE FINANCIAL STATEMENTS While the fund financial statements present the City's financial data as a collection of separate financial units, the government -wide finance statements present the entire City's finances as a single integrated unit. The government -wide financial statements use separate columns to distinguish governmental activities, principally supported by taxes and intergovernmental revenues, from business -type activities that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of the City include a full range of local government services provided to the public such as police and fire protection; road Management's Discussion and Analysis, 3-2 2012 Comprehensive Annual Financial Report City of Renton, Washington maintenance and construction; community planning and economic development; parks and recreational opportunities; and other community services. All internal service activities are reported under governmental activities. The business -type activities of the City include waterworks (water, sewer, and surface water), solid waste management and services, a golf course, and an airport. Fiduciary resources, by definition, are not available to support the City's programs, therefore are excluded from Government -wide financial statements. 1. The Statement of Net Position presents information on all of the City's assets and liabilities with the difference between the two reported as net position. This statement combines and consolidates governmental funds' current financial resources (short-term available resources) with capital assets and long-term obligations, which is primarily debt. The Statement of Net Position serves a purpose similar to that of the Balance Sheet of a private -sector business. Over time, increases or decreases in net position may serve as one indicator of whether the financial position of the City is improving or deteriorating. Other indicators to consider when evaluating the financial position of the City includes changes to the property tax base, general economic conditions as demonstrated through business licenses fees or sales tax revenue, and the condition of the City's infrastructure (roads, drainage systems, bridges, and water infrastructure). 2. The Statement of Activities focuses upon both the gross and net cost of various activities that are provided by the government's general tax and other revenues. This is intended to summarize and simplify the user's analysis of cost to various governmental services and/or subsidies to business -type activities. By separating program revenue from general revenue, users of the financial statements can identify the extent to which each program relies on taxes for funding. The governmental activities reflect the City's basic functions: General Government, Judicial, Security of Person and Property, Physical Environment, Mental and Physical Health, and Culture and Recreation. Property, sales, and utility taxes finance the majority of these functions. All changes in net position are reported using the accrual basis of accounting, which is similar to the accounting used in the private sector. The accrual basis of accounting requires that revenues are reported when earned and expenses are reported when incurred, no matter when the revenue will actually be received or the obligation will be paid. For example, property taxes are shown as a receivable and revenue even though some amount of these taxes will not be available to the City for several years. Unpaid vendor obligations are illustrated as an accounts payable obligation as of December 31. 3. Fund Financial Statements The City uses fund structure to ensure and demonstrate fiscal integrity and compliance with finance -related legal requirements. A fund is a group of related accounts used to maintain control over resources that have been segregated for specific activities and objectives. There are three types of funds: governmental, proprietary, and fiduciary. These statements focus on major government funds and proprietary funds separately. Management's Discussion and Analysis, 3-3 2012 Comprehensive Annual Financial Report City of Renton, Washington A Major Fund has three elements as defined by GASB 34: • Total assets, liabilities, revenues, or expenditures of that individual governmental or enterprise funds are at least ten percent (10%) of the corresponding total (assets, liabilities, etc.) for all funds of that category or type (i.e., governmental, proprietary, or fiduciary); and • Total assets, liabilities, revenues, or expenditures/expenses of the individual government fund or enterprise funds are at least five percent (5%) of the corresponding total for all governmental and enterprise funds combined; or • Any other governmental or enterprise fund that governing officials believe is particularly important. Governmental Funds present most of a government's tax -supported activities. The Proprietary Funds present the government's business -type activities where all or part of the activities' costs are supported by fees and charges that are paid directly by those who benefit from the activities. Fiduciary Funds present resources held by the government as a trustee or agent for parties outside of the government. The resources of Fiduciary Funds cannot be used to support the government's other programs. Governmental Funds The Governmental Fund Balance Sheet and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances present separate columns of financial data for the General Fund, Municipal Facilities CIP Fund and Capital Improvement Fund. These comprise the City's major governmental funds. Data from the remaining governmental funds are combined and presented in a single column in the fund statements. Individual fund data for each of the non -major governmental funds is provided in the form of combining statements. Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government -wide Financial Statements. The focus of Governmental Fund Financial Statements is on near-term inflows and outflows of available financial resources and on balances of resources available at the end of the fiscal year. Such information is useful in evaluating whether there are more or less financial resources that can used in the near future to finance City services. Because the focus of Governmental Fund Financial Statements is a narrower view than that of the Government -wide Financial Statements, it is useful to compare similar information in order to gain a better understanding of the long-term impact of the government's near- term financing decisions. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to the governmental activities column in the government -wide statements to facilitate this comparison. The City maintains budgetary controls over its governmental funds. Budgetary controls Management's Discussion and Analysis, 3-4 2012 Comprehensive Annual Financial Report City of Renton, Washington ensure compliance with legal provisions embodied in the annual appropriated budget. Governmental fund budgets are established in accordance with state law and are adopted on a fund level. General fund budget variances are specifically addressed later in this discussion and analysis. Proprietary Funds These types of funds consist of two types: Enterprise and Internal Service. Each of these are, and have always been, operated as a business activity. Enterprise Funds are used to report the same functions as business -type activities in the Government -wide Financial Statements. Internal Service Funds are used to report activities that provide supplies and services to various City departments and to allocate the associated costs of providing these services to the various functions. The revenues and expenses of Internal Service Funds that are duplicated in other funds are eliminated in the government -wide statements. Because the remaining balances primarily benefit governmental, rather than business -type, activities they have been included within Governmental Activities in the Government -wide Statements. The City of Renton has two major Enterprise Funds: Waterworks Utility (water, wastewater, and storm water) and Solid Waste. The Proprietary Statement of Net Position and the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Equity present separate columns of financial data for the Waterworks Utility and Solid Waste. Information from the remaining Enterprise Funds are combined and presented in a single, aggregated column in the fund statements. Internal Service Funds are reported separately in this section. Proprietary Fund Statements provide the same type of information as the Government - wide Financial Statements, only in more detail, since both apply the accrual basis of accounting. In comparing the total assets and total liabilities between the two statements, only slight differences will be noticed. One notable difference is that the "due from other funds" (asset) and the "due to other funds" (liability) in the Proprietary Fund Statements are combined in a single line called "internal balances" in the asset section of the Government -wide Statement of Net Position. Fiduciary Funds Fiduciary Funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the Government -wide Financial Statements because the resources of those funds are not available to support the City's own operations. All of the City's fiduciary activities are reported in a separate Fiduciary Statement of Net Position and a Statement of Revenues, Expenses, and Changes in Fiduciary Net Position. 4. NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the information provided and are an integral part of the Government -wide and Fund Financial Statements. Management's Discussion and Analysis, 3-5 2012 Comprehensive Annual Financial Report City of Renton, Washington Combining statements for non -major Governmental and Enterprise Funds, as well as Internal Service Funds, are presented immediately following the required supplementary information. REQUIRED SUPPLEMENTAL INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information (RSI) on budgetary comparisons for major governmental funds as well as the City's funding progress for the Firemen's Pension Trust Fund and Other Post -Employment Benefits (LEOFF 1 Retiree Medical). COMBINING STATEMENTS The combining statements for other government funds, internal service funds, and fiduciary funds are presented immediately following the required supplementary information. STATISTICAL INFORMATION This section includes unaudited trends and demographic information. GOVERNMENT -WIDE FINANCIAL ANALYSIS Statement of Net Position The change in net position is an indicator of a government's financial situation. Table 1 below shows the condensed Government -wide Net Position as of December 31, 2012, with comparison to 2011. The City's overall financial position improved in 2012 over 2011 by $50.4 million, $34.4 in governmental activities and $16.0 million associated with business -type activities. The increase in governmental net position is entirely attributable to an increase in capital assets such as land and improvements to infrastructure, with non -capital net -assets decreasing by just under $1 million. Net position for business -type activities increased by $16.0 million; $7.8 million of which was related to capital assets, $2.9 million restricted for debt service purpose, and $5.4 million were unrestricted resources for planned future capital projects. Management's Discussion and Analysis, 3-6 TABLE 1 CONDENSED STATEMENT OF NET POSITION Governmental Activities Business -type Activities Total 2012 2011 2012 2011 2012 2011 Current assets $ 92,738,107 $ 90,005,599 $ 32,575,404 $ 26,980,830 $ 125,313,511 $ 116,986,429 Capital and other assets 502,051,823 475,711,915 266,306,655 259,065,394 768,358,478 734,777,309 TOTAL ASSETS 594,789,930 565,717,514 298,882,059 286,046,224 893,671,989 851,763,738 Current liabilities $ 14,483,938 12,949,403 $ 3,276,701 3,532,129 $ 17,760,639 16,481,532 Other liabilities 92,611,066 99,449,845 39,110,485 42,069,463 131,721,551 141,519,308 TOTAL LIABILITIES 107,095,004 112,399,248 42,387,186 45,601,592 149,482,190 158,000,840 NET POSITION: Invested in capital assets, net of related debt $ 425,581,342 373,641,842 $ 224,893,271 217,103,722 $ 650,474,613 590,745,564 Restricted 7,953,634 26,432,127 2,909,578 - 10,863,212 26,432,127 Unrestricted 54,159,950 53,244,297 28,692,024 23,340,910 82,851,974 76,585,207 TOTAL NET POSITION $ 487,694,926 $ 453,318,266 $ 256,494,873 $ 240,444,632 $ 744,189,799 $ 693,762,898 Management's Discussion and Analysis, 3-6 2012 Comprehensive Annual Financial Report City of Renton, Washington Nearly 90% of the City's net position is investments in capital assets (e.g., streets, water and sewer systems, drainage systems, buildings, parks and open spaces) less any related debt used to acquire these assets. The City's capital assets are used to provide services to citizens. It should be noted that, although the investments in capital assets are reported net of related debt, resources needed to repay this debt must be provided from other sources since the capital assets, with limited exception, cannot be liquidate to reduce these liabilities. The substantial increase in governmental capital assets (net of related debt) in 2012 is primarily due to the addition of capital grant funded improvements. The business -type activities increase in capital assets (net of related debt) were also related to grant funded capital improvement projects ($7.8 million for surface water systems). Interfund loan debt is not included in the calculation of net investments in capital assets. Statement of Activities and Change in Net Position able z Is the citywlOe conaensea summary Statement Oi Activities ana Lriange In Net Position Expenses: TABLE 2 General government CONDENSED STATEMENT OF ACTIVITIES 9,859,550 4,268,321 Governmental Activities Business -type Activities Total 2,610,481 2012 2011 2012 2011 2012 2011 Revenues: 52,627,849 Physical environment 2,643,930 2,151,322 Program revenues: 2,151,322 Transportation 13,571,691 25,376,308 Charges for services $ 16,327,227 $ 15,534,490 $ 66,785,318 $ 62,328,294 $ 83,112,545 $ 77,862,784 Operating grants and contributions 12,794,132 15,540,897 165,164 465,468 12,959,296 16,006,365 Capital grants and contributions 33,529,033 12,135,982 7,668,558 2,473,309 41,197,591 14,609,291 Taxes and other general revenues: 11,955,737 Interest on long-term debt 3,087,269 2,165,960 - - Property taxes 33,932,290 33,309,975 - - 33,932,290 33,309,975 Sales taxes 23,653,706 22,008,777 23,653,706 22,008,777 Other Taxes 21,929,128 20,984,369 21,929,128 20,984,369 Other general revenue 1,768,728 1,594,288 149,971 188,325 1,918,699 1,782,613 Total revenues 143,934,244 121,108,778 74,769,011 65,455,396 218,703,255 186,564,174 Expenses: General government 9,859,550 4,268,321 9,859,550 4,268,321 Judicial 2,610,481 2,563,989 2,610,481 2,563,989 Public safety 58,152,773 52,627,849 58,152,773 52,627,849 Physical environment 2,643,930 2,151,322 2,643,930 2,151,322 Transportation 13,571,691 25,376,308 13,571,691 25,376,308 Economic environment 6,330,233 6,491,151 6,330,233 6,491,151 Health and human services 827,802 819,138 827,802 819,138 Culture and recreation 13,011,327 11,955,737 13,011,327 11,955,737 Interest on long-term debt 3,087,269 2,165,960 - - 3,087,269 2,165,960 Waterworks utility - - 39,419,864 37,148,813 39,419,864 37,148,813 Airport 2,251,434 2,026,804 2,251,434 2,026,804 Solid waste utility 14,780,647 14,434,201 14,780,647 14,434,201 Golf course - - 2,139,847 2,099,936 2,139,847 2,099,936 Total expenses 110,095,056 108,419,775 58,591,792 55,709,754 168,686,848 164,129,529 Increase in net assets before transfers 33,839,188 12,689,003 16,177,219 9,745,642 50,016,407 22,434,645 Transfers 233,961 37,454 (233,961) (37,454) - - Increase in net assets 34,073,149 12,726,457 15,943,258 9,708,188 50,016,407 22,434,645 Net assets - beginning 453,318,266 440,591,809 240,444,632 231,802,937 693,762,898 672,394,746 Prior period adjustments 303,511 - 106,983 (1,066,493) 410,494 (1,066,493) Net assets - ending $ 487,694,926 $ 453,318,266 $ 256,494,873 $ 240,444,632 $ 744,189,799 $ 693,762,898 Management's Discussion and Analysis, 3-7 2012 Comprehensive Annual Financial Report City of Renton, Washington Citywide revenue grew by $32.1 million or 17.23%. Over 80% or $26.6 million of this increase was in project -related capital grants. Without capital grants, the revenue grew by $5.6 million or 3.0%. Tax revenues grew by $3.3 million or 1.8%; program revenue, such as user fees, grew by $5.2 million, primarily from rate increases in business type activities. Operating grants and contributions decreased by $3.0 million. Combined citywide service expenses totaled $168.9 million for 2012. That is $4.6 million or 2.8% higher than 2011. Governmental activities increased by $1.7 million or 1.5% while business activities increased by $2.9 million or 5.2%. The resulting change in net position without prior period adjustments increased in 2012 by $50.0 million, $34.1 million from governmental activities and $15.9 million from business -type activities. As discussed above, this increase is primarily an increase in fixed assets funded by capital grants. Governmental Activities Analysis Governmental activities cost a total of $110.1 million in 2012 against operating revenue (excluding capital grants and contributions) of $110.4 million. $81.1 million or 74% of all governmental activities were funded by taxes. $29 million or 26% were supported by program revenues such as permit fees, fines and forfeitures, recreation fees, facility rental fees. Chart 1 portrays the cost of each of the City's governmental programs along with each program's generated revenue (fees and intergovernmental revenues specifically related to that program). The program revenues for Transportation Systems include capital grants for large-scale projects such as Rainier Ave improvements. Chart 2 depicts the sources of revenue that funds governmental activities. Approximately fifty-six percent (56%) is from various taxes and general resources. Charges for services, grants and interest earnings generate forty- four percent (44%) of total revenue for general governmental activities. Chart 1 Expenses and Program Revenues -Governmental Activities $70.0 560.0 $50.0 0 $40.0 $30.0 $20.0 $10.0 $0.0 General Judicial Public Safety Physical Transportation Economic Health and Culture and Government Environment Environment m Huan Recreation Services ■ Expenses ■ Program Revenues Chart 2: Revenues by Source - Governmental Activities ler General evenues 1% Chargesfor Services 11% Operating Grants and mtributions 9% Management's Discussion and Analysis, 3-8 2012 Comprehensive Annual Financial Report Business -Type Activities Analysis Charts 3 and 4 present the same information for business -type activities as previously illustrated for governmental activities. Chart 3 shows the expense of each of the City's business -type programs along with each programs' revenue (fees and intergovernmental revenues specifically related to that program). The Waterworks Utility generated $47.3 million in various fees for City of Renton, Washington Chart 3 Expenses and Program Revenues- Business -Type Activities $60 $50 U) $40 0 $30 $20 $10 $0 Waterworks Utility Airport Solid Waste Utility Golf Course ❑ Expenses ■ Program Revenues services and other sources and had $39.4 million in operating and debt service expenses resulting in a $7.9 million increase in net position from operations. In addition, the utility received $6.8 million in capital grants and facilities contributed by developers for a combined increase in net position of $14.7 million. The operating balance is necessary for planned system infrastructure replacements. The Solid Waste Utility generated $15.1 million in total revenue and incurred $14.8 million in program expenses, resulting in a positive increase in net position of $0.3 million. The Airport generated a total of $2.4 million in revenue and $2.2 million in expenses 2012, consistent with 2011. The Golf Course generated a total of $2.1 million in green fees, driving range charges, and other user fees. The total expenses for the Golf Course were $2.1 million. The Golf Course had an operating loss of $3,000 for the year, an improvement from the $85,000 loss in 2011. Business -type activities are supported primarily from charges for services. In the City of Renton, $66.8 million was generated from charges for services in the business -type activities. These comprise 90% of the total financial support for these activities. Grant revenues increased by $7.7 million largely due to a surface water improvement grant for $6.8 million and a Federal Aviation Administration grant for approximately $900,000 for airport improvements. Chart 4: Revenues by Source Business -Type Activities Capital Grants and 7 Contributions 10% Charges for Management's Discussion and Analysis, 3-9 2012 Comprehensive Annual Financial Report City of Renton, Washington FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS Governmental Funds The governmental fund statements provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's ability to meet financing requirements in the near term. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the fiscal year, the City's General Fund had a fund balance of $18.7 million, which is an increase of $2.9 million from a year ago. The increase is partially due to higher tax revenues from improving economic conditions, and partially from budget -savings. Approximately $691,000 of this is restricted for specific programs. Another $16.6 million is unrestricted but assigned to meet the 12% targeted operating reserve and for commitments in future periods. The remaining $1.4 million is unrestricted and unassigned fund balance. The Municipal Facilities Capital Improvement Project (CIP) fund includes the library development funds as well as general governmental major maintenance fund. The $22.9 million in fund balance are either restricted or committed to capital purposes and will continue to decrease as projects move forward. The Capital Improvement fund accounts for the many transportation -related projects in the City. All fund balance is committed to projects. Proprietary Funds Analysis The fund financial statements for the proprietary funds are presented in more detail, but essentially provide the same type of information found within the business -type activities in the Government -wide Financial Statements. The factors concerning the finances of the Waterworks Utility and the Solid Waste Utility funds have been addressed in the discussion of business -type activities. The proprietary fund statements also include a column for internal services fund activities in aggregate. These activities are consolidated with general governmental activities in the government -wide statements; therefore, the $23.0 million unrestricted net position are included in the governmental activities net position. GENERAL FUND BUDGETARY HIGHLIGHTS The City uses a biennial budget process that adopts two one-year budgets at one time. 2012 is the second year of the 2011-12 biennium. The original 2012 adopted budget was $99.3 million and the final adjusted budget was $106.7 million. The increase of $7.4 million was due to multiple factors: $2.3 million was used for the early redemption of 2002 LTGO bonds; $1.8 million was added for the annual debt service payment for the new 2011 Library Development Bond issue; the General Fund provided a temporary, interest bearing interfund loan of $1.7 million to the Golf Course to allow the Golf Course to pay off its revenue bond balances; the City received a Staffing for Adequate Fire Management's Discussion and Analysis, 3-10 2012 Comprehensive Annual Financial Report City of Renton, Washington & Emergency Response (SAFER) grant for a two-year period providing for the rehiring/retention of nine firefighter positions — the 2012 increase totaled approximately $1.0 million. The remainder of the increase was related to various operating grants, contributions and intergovernmental funding adding approximately $600,000 to the 2012 budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Renton's investment in capital assets, including construction in progress, for governmental and business -type activities amounts to $724.5 million as of December 31, 2012 as shown in the following table. TABLE 3 CAPITAL ASSETS (Net of Depreciation/Amortization) The increase of $33.2 million in 2012 is made up of a number of large capital projects such as the new libraries, Rainier Avenue, Strander Boulevard, Lake Washington Trail, and various storm water and wastewater improvement projects. The increases in the categories of Land and Land Improvements for $10.6 million and Construction in Progress $25.6 million for a combined total of $36.2 million are offset by the decrease in building, equipment, and intangible values due to depreciation. More detail about the City's Capital Assets can be found in Note 5 to the financial statements. Debt Administration The City's total outstanding debt at December 31, 2012, was $120.0 million as shown in Table 4. This was a $12.4 million reduction from the prior year which can be attributed to a $6.2 million reduction in General Obligation Debt, a $2.8 million reduction to intergovernmental debt, a $2.4 million reduction in Water/Sewer Revenue bonds, and a $0.9 million reduction in Public Works Trust Fund Loans. Management's Discussion and Analysis, 3-11 Governmental Activities Business -Type Activities Total 2012 2011 2012 2011 2012 2011 Land and Land Improvements $ 191,294,494 $ 182,417,081 $ 7,943,225 $ 6,165,321 $ 199,237,719 $ 188,582,402 Buildings and Structures 62,180,126 64,658,927 10,744,152 11,192,993 72,924,278 75,851,920 Other Improvements 140,587,042 142,756,922 231,688,960 230,654,790 372,276,002 373,411,712 Machinery and Equipment 10,794,514 9,512,108 544,519 640,493 11,339,034 10,152,601 Intangible Assets 432,386 647,589 823,531 827,827 1,255,917 1,475,416 Construction in Progress 56,257,272 32,803,660 11,180,617 8,992,098 67,437,889 41,795,758 Total $ 461,545,836 $ 432,796,287 $ 262,925,004 $ 258,473,522 $ 724,470,839 $ 691,269,809 The increase of $33.2 million in 2012 is made up of a number of large capital projects such as the new libraries, Rainier Avenue, Strander Boulevard, Lake Washington Trail, and various storm water and wastewater improvement projects. The increases in the categories of Land and Land Improvements for $10.6 million and Construction in Progress $25.6 million for a combined total of $36.2 million are offset by the decrease in building, equipment, and intangible values due to depreciation. More detail about the City's Capital Assets can be found in Note 5 to the financial statements. Debt Administration The City's total outstanding debt at December 31, 2012, was $120.0 million as shown in Table 4. This was a $12.4 million reduction from the prior year which can be attributed to a $6.2 million reduction in General Obligation Debt, a $2.8 million reduction to intergovernmental debt, a $2.4 million reduction in Water/Sewer Revenue bonds, and a $0.9 million reduction in Public Works Trust Fund Loans. Management's Discussion and Analysis, 3-11 2012 Comprehensive Annual Financial Report City of Renton, Washington The City was able to reduce aggregate debt service payments by refunding the 2004 Water Sewer Revenue Bonds in 2012 and early redemption of the 2002 Limited Tax General Obligation Bonds. On July 1, 2013, the City issued a 15 -year Qualified Energy Conservation Bond in an amount of $3.2 million to convert its streetlights to LED lights. The estimated annual energy saving is approximately $275,000 a year and the annual debt service cost net of rebate from the IRS will average $215,000 annually. The City does not have other capital financing planned in the near future. More detailed information about the City's long-term debt can be found in Note 13 to the financial statements. FUTURE YEAR'S BUDGETARY IMPACTS For the 2013-2014 biennium, the adopted total revenue is $462.6 million against total expenditures of $457.3 million. The revenue is a 4.7% increase over the 2011-2012 biennial budget and expenditures are 2.7% above the 2011-2012 adopted budget. During the 2011-2012 biennial budget process, the City formed a Community Budget Advisory Group comprised of local residents, business owners, and community leaders. They were able to provide the City with a number of valuable recommendations in prioritizing city services and in managing personnel costs. Though certain sectors of Renton's economy have started to improve since 2011, the assessed value for 2013 property taxes declined another 7%. For the first time in decades, the city's property tax collection in 2013 will be less than the year before by 4.5%. This combined with the expiration of public safety grants that funded 15 police officers and firefighters; a one-year elimination of state liquor excise tax, as well as increased cost pressures (increased retirement contributions, increased healthcare costs, and deferred maintenance on City buildings) required that the City further reduce its General Fund expenditures. To balance this projected gap, City Administration used a three -prong approach to help develop a sustainable and balanced budget. This approach included reducing (1) 25.2 FTE positions over the biennium, (2) freezing the City's contribution to the City's employee medical plan for one year, and (3) increasing revenue through increased business license fees, increased interfund utility taxes, and adding a basic life support (BLS) transportation fee. The expenditure reductions are designed to re -balance the city's operations to a sustainable level. The business license fee and utility tax revenue adjustments are to provide basic capital funding that will allow the City to preserve its governmental assets. The BLS transport fee is designated to retain three of the nine firefighters funded by the SAFER grant. Management's Discussion and Analysis, 3-12 TABLE 4 LONG-TERM DEBT Governmental Activities Business -Type Activities Total 2012 2011 2012 2011 2012 2011 General Obligation Bonds $ 44,335,000 $ 50,290,000 $ - $ - $ 44,335,000 $ 50,290,000 Revenue Bonds - - 32,595,000 34,925,000 32,595,000 34,925,000 Other Long -Term Debt 36,891,722 38,053,639 5,538,929 6,443,218 42,430,652 44,496,857 Unamortized Premium (Discount) 2,408,675 2,703,407 (102,198) 1,581 Total $ 83,635,398 $ 91,047,046 $ 38,133,929 $ 41,368,218 $ 119,360,652 $ 129,711,857 The City was able to reduce aggregate debt service payments by refunding the 2004 Water Sewer Revenue Bonds in 2012 and early redemption of the 2002 Limited Tax General Obligation Bonds. On July 1, 2013, the City issued a 15 -year Qualified Energy Conservation Bond in an amount of $3.2 million to convert its streetlights to LED lights. The estimated annual energy saving is approximately $275,000 a year and the annual debt service cost net of rebate from the IRS will average $215,000 annually. The City does not have other capital financing planned in the near future. More detailed information about the City's long-term debt can be found in Note 13 to the financial statements. FUTURE YEAR'S BUDGETARY IMPACTS For the 2013-2014 biennium, the adopted total revenue is $462.6 million against total expenditures of $457.3 million. The revenue is a 4.7% increase over the 2011-2012 biennial budget and expenditures are 2.7% above the 2011-2012 adopted budget. During the 2011-2012 biennial budget process, the City formed a Community Budget Advisory Group comprised of local residents, business owners, and community leaders. They were able to provide the City with a number of valuable recommendations in prioritizing city services and in managing personnel costs. Though certain sectors of Renton's economy have started to improve since 2011, the assessed value for 2013 property taxes declined another 7%. For the first time in decades, the city's property tax collection in 2013 will be less than the year before by 4.5%. This combined with the expiration of public safety grants that funded 15 police officers and firefighters; a one-year elimination of state liquor excise tax, as well as increased cost pressures (increased retirement contributions, increased healthcare costs, and deferred maintenance on City buildings) required that the City further reduce its General Fund expenditures. To balance this projected gap, City Administration used a three -prong approach to help develop a sustainable and balanced budget. This approach included reducing (1) 25.2 FTE positions over the biennium, (2) freezing the City's contribution to the City's employee medical plan for one year, and (3) increasing revenue through increased business license fees, increased interfund utility taxes, and adding a basic life support (BLS) transportation fee. The expenditure reductions are designed to re -balance the city's operations to a sustainable level. The business license fee and utility tax revenue adjustments are to provide basic capital funding that will allow the City to preserve its governmental assets. The BLS transport fee is designated to retain three of the nine firefighters funded by the SAFER grant. Management's Discussion and Analysis, 3-12 2012 Comprehensive Annual Financial Report City of Renton, Washington The city has been very responsible and responsive in balancing the services the community needs with the changing mixture and level of resources. However, to thrive and remain financially secure in the long term, the City must continue to expand our economy and pursue progressive economic development strategies. Some of the past successes have helped the City during the Great Recession. • The Landing is a master planning development area on land previously owned by Boeing. The development has added more than 900 residential units and 600,000 square feet of retail. Restaurants and stores at the Landing continue to enjoy double-digit sales growth over the previous year. Several new tenants have come in during 2012 including Cost Plus World Market and Top Pot Doughnuts. Completed during the recession, the residential units are fully occupied and the commercial spaces are nearly 90% leased. • The Sunset Area Community Revitalization Plan continues to make progress with the completion of the Glenwood Townhomes and design completion of the new Renton Highlands Library. The revitalization program will create market -rate affordable housing, retail investment, and improve community livability through: street upgrades; new parks and open space; a new public library; a new early childhood learning center; capacity for 2,300 new living units and 1.25 million square feet of service/retail space over the next 20 years. • Boeing is investing $250 million in its Renton Plant to expand its production line to allow production increase from 31 to 42 planes per month by mid -2014 and has announced it will produce the 737 Max in Renton. This increase in production is expected to add 2,400 new Boeing and other aerospace jobs to Renton. For more information regarding the City's budget please refer to the city's website for 2013-2014 adopted budget as well as monthly sales tax and budgetary financial reports. REQUESTS FOR FINANCIAL INFORMATION This financial report is designed to provide our citizens, creditors, investors, and others interested in the City's finances with a general overview of the City's finances and to show the City's accountability for financial resources it receives. If you have any questions about this report or need additional information, please contact Iwen Wang, Administrative Services Administrator, 1055 South Grady Way, Renton, WA 98057 or visit our web site at www.rentonwa.gov. Management's Discussion and Analysis, 3-13 2012 Comprehensive Annual Financial Report This page intentionally left blank. City of Renton, Washington Management's Discussion and Analysis, 3-14 2012 Comprehensive Annual Financial Report STATEMENT OF NET POSITION December 31, 2012 City of Renton, Washington LIABILITIES Accounts payable and other liabilities 12,378,717 PRIMARY GOVERNMENT 15,527,089 Interest payable GOVERNMENTAL BUSINESS -TYPE 328,886 Unearned revenue ACTIVITIES ACTIVITIES TOTAL ASSETS Cash and cash equivalents $ 52,677,584 $ 17,563,679 $ 70,241,263 Cash with fiscal agent 224,837 - 224,837 Investments at fair value 17,172,181 6,677,013 23,849,194 Receivables (net of allowance - - - for uncollectibles) 21,274,588 8,820,930 30,095,518 Internal balances 1,175,274 (1,175,274) - Inventories - 330,458 330,458 Prepayments 213,643 358,598 572,241 Other non-current assets 40,505,987 472,073 40,978,060 Restricted assets: 389,005 389,005 Cash and cash equivalents - 2,909,578 2,909,578 Capital assets not being depreciated: 265,790 265,790 Land 191,294,495 7,943,225 199,237,720 Construction in progress 56,257,272 11,180,617 67,437,889 Capital assets,net of 1,159,999 2,909,578 4,069,577 accumulated depreciation: 5,433,616 - 5,433,616 Buildings 62,180,126 10,744,152 72,924,278 Infrastructure 140,587,042 231,688,961 372,276,003 Machinery and equipment 10,794,515 544,519 11,339,034 Intangibles 432,386 823,530 1,255,916 Total assets 594,789,930 298,882,059 893,671,989 DEFERRED OUTFLOWS OF RESOURCES Total deferred outflows of resources - - - LIABILITIES Accounts payable and other liabilities 12,378,717 3,148,372 15,527,089 Interest payable 200,557 128,329 328,886 Unearned revenue 1,904,664 353,362 2,258,026 Non-current liabilities: Due within one year 7,726,477 2,342,625 10,069,102 Due in more than one year 84,884,589 36,414,498 121,299,087 Total liabilities 107,095,004 42,387,186 149,482,190 DEFERRED INFLOWS OF RESOURCES - - - Total deferred inflows of resources - - - NET POSITION Net investment in capital assets 425,581,342 224,893,271 650,474,613 Restricted for: Judicial 33,167 - 33,167 Public safety 389,005 389,005 Health and Human Services 90,103 90,103 Transportation 265,790 265,790 Economic environment 144,682 144,682 Culture and recreation 437,273 - 437,273 Debt service 1,159,999 2,909,578 4,069,577 Capital 5,433,616 - 5,433,616 Unrestricted 54,159,950 28,692,024 82,851,974 Total net position $ 487,694,926 $ 256,494,873 $ 744,189,799 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-1 2012 Comprehensive Annual Financial Report STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 Page 1 of 2 City of Renton, Washington Total general revenues and transfers Change in net position Net position - beginning Prior Period Adjustment Net position - ending The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-2 PROGRAM REVENUES OPERATING CHARGES FOR GRANTS AND CAPITAL GRANTS FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS & CONTRIBUTIONS Primary government: Governmental activities: General government $ 9,859,550 $ 2,586,799 $ 1,302,735 $ 8,799 Judicial 2,610,481 3,493,071 44,457 - Public safety 58,152,773 650,129 9,066,435 162,144 Physical environment 2,643,930 1,326,517 - 167,350 Transportation 13,571,691 3,329,054 1,999,254 32,953,673 Economic environment 6,330,233 3,130,530 315,522 - Health and human services 827,802 - - - Culture and recreation 13,011,327 1,811,127 65,729 237,067 Interest on long-term debt 3,087,269 - - - Total governmental activities 110,095,056 16,327,227 12,794,132 33,529,033 Business -type activities: Waterworks utility 39,419,864 47,314,389 18,197 6,788,184 Airport 2,251,434 2,436,543 7,814 880,374 Solid waste utility 14,780,647 14,905,934 133,875 - Golf course 2,139,847 2,128,452 5,278 - Total business -type activities 58,591,792 66,785,318 165,164 7,668,558 Total primary government 168,686,848 83,112,545 12,959,296 41,197,591 General revenues: Taxes: Property taxes Retail sales taxes Business taxes Excise taxes Penalties and interest Interest and investment earnings Gain on Sales of Assets Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning Prior Period Adjustment Net position - ending The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-2 2012 Comprehensive Annual Financial Report STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 Page 2 of 2 NET (EXPENSE) REVENUE AND CHANGES IN NET POSITION PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE ACTIVITIES ACTIVITIES TOTAL $ (5,961,217) 927,047 (48,274,065) (1,150,063) 24, 710, 290 (2,884,181) (827,802) (10,897,404) (3,087,269) (47,444,664) $ (5,961,217) 927,047 (48,274,065) (1,150,063) 24,710,290 (2,884,181) (827,802) (10,897,404) (3,087,269) (47,444,664) 14, 700, 906 14, 700, 906 1,073,297 1,073,297 259,162 259,162 (6,117) (6,117) 16, 027, 248 16, 027, 248 City of Renton, Washington FUNCTIONS/PROGRAMS Primary government: Governmental activities: General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Interest on long-term debt Total governmental activities Business -type activities: Waterworks utility Airport Solid waste utility Golf course Total business -type activities (47,444,664) 16,027,248 (31,417,416) Total primary government General revenues: Taxes: 33,932,290 - 33,932,290 Property taxes 23,653,706 23,653,706 Retail sales taxes 17,632,759 17,632,759 Business taxes 4,286,883 4,286,883 Excise taxes 9,486 - 9,486 Penalties and interest 589,616 105,129 694,745 Interest and investment earnings 157,483 - 157,483 Gain on Sales of Assets 1,021,629 44,842 1,066,471 Miscellaneous 233,961 (233,961) - Transfers 81,517,813 (83,990) 81,433,823 Total general revenues and transfers 34,073,149 15,943,258 50,016,407 Change in net position 453,318,266 240,444,632 693,762,898 Net position - beginning 303,511 106,983 410,494 Prior Period Adjustment $ 487,694,926 $ 256,494,873 $ 744,189,799 Net position - ending The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-3 2012 Comprehensive Annual Financial Report ASSETS Cash & cash equivalents Cash with fiscal agent Deposit with fiscal agent Investments Receivables (net of allowances) Taxes Customer accounts Accrued interest & penalty Special assessments Interfund loans receivable Due from other funds Due from other governmental units TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012 Page 1 of 2 MUNICIPAL FACILITIES CAPITAL GENERAL CIP IMPROVEMENT City of Renton, Washington OTHER TOTAL GOVERNMENTAL GOVERNMENTAL FUNDS FUNDS $ 11,435,445 $ 17,170,379 $ $ 3,890,371 $ 32,496,195 224,837 - - 224,837 3,721,741 5,599,834 1,268,781 10,590,356 2,262,963 - - 2,262,963 4,192,301 - 586,118 1,500 4,779,919 28,817 33,006 3,496 13,159 78,478 - - - 16,534 16,534 461,810 - - 461,810 136,367 26,482 - - 162,849 5,162,769 165,545 6,799,055 1,931,517 14,058,886 ' 7 C17 ncn 6 ']'] nnC 1Ac It 7 900 ccn e � I' 1 ocl 6 cc 197 097 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-4 2012 Comprehensive Annual Financial Report LIABILITIES AND FUND BALANCES Liabilities Accounts payable Taxes payable Retainage payable Due to other funds Due to other governmental units Matured interest payable Interfund loans payable Custodial accounts Unearned revenue Accrued employee wages and leave payable Total liabilities DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Restricted Committed Capital purposes Assigned Capital purposes Special revenue funds Operating reserves and carryforwards Unassigned General fund Total fund balances TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES City of Renton, Washington BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012 Page 2 of 2 MUNICIPAL OTHER TOTAL FACILITIES CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL CIP IMPROVEMENT FUNDS FUNDS $ 605,019 102,359 $ 3,266,495 $ 49,776 26 - - 35,806 134,967 36,742 902 64,973 115 - - - 1,816,814 7,431 - 3,612,456 1,027,970 394,868 - 4,243,630 143 3,612,456 - 8,942,606 139,093 4,501,979 11,185 $ 3,985,058 - 49,802 - 170,773 198 102,815 - 115 7,431 1,027,970 - 394,868 1,816,814 6,060,587 - 3,612,456 1,828,197 15,411,875 690,655 19,270,931 - 4,459,757 24,421,343 - 3,199,122 2,886,690 - 6,085,812 386,100 - 51,879 437,979 - - 782,029 782,029 16,566,659 - 16,566,659 1,427,130 - - 1,427,130 18,684,444 22,856,153 2,886,690 5,293,665 49,720,952 $ 27,627,050 $ 22,995,246 $ 7,388,669 $ 7,121,862 $ 65,132,827 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-5 2012 Comprehensive Annual Financial Report RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION December 31, 2012 FUND BALANCES - TOTAL GOVERNMENTAL FUNDS Amounts reported for governmental activities in the statement of net position are different because: Other non-current assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Investment in Join Venture -SCORE Investment in Join Venture -Valley Communications Unamortized Debt Issuance Costs Net Pension Obligation -overfunded Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Land Construction in progress Buildings (net of accumulated depreciation) Infrastructure (net of accumulated depreciation) Machinery and equipment (net of accumulated depreciation) Intangible assets (net of accumulated amortization) Other long-term assets are not available to pay for current period expenditures, and, therefore are reported as unavailable revenue in the funds Property Tax Revenue Municipal Court Revenue Photo Enforcement Revenue Other Certain liabilities are not due and payable in the current period and therefore are not reported in the governmental funds. Interest payable Bonds Payable Compensated absences Internal service funds are used by management to charge the costs of certain activities, such as equipment rental, self-insurance, information technology and facility services to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets. NET POSITION OF GOVERNMENTAL ACTIVITIES City of Renton, Washington 49,720,952 31,944,844 5,709,434 333,367 2,501,810 40,489,455 191,294,495 55,605,576 62,100,297 140,414,913 1,698,486 169,151 451,282,919 494,773 1,231,074 2,334,473 95,603 4,155,923 (193,126) (83,635,398) (8,632,674) (92,461,198) 34,506,875 487,694,926 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4--6 2012 Comprehensive Annual Financial Report City of Renton, Washington STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 1 of 1 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Interfund revenues Contributions Investment earnings Miscellaneous revenues TOTAL REVENUES EXPENDITURES Current: General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Capital outlay Debt service: Principal payments Interest and fiscal charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfer in Transfer (out) Sale of capital assets TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY 1 FUND BALANCE DECEMBER 31 MUNICIPAL OTHER TOTAL FACILITIES CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL CIP IMPROVEMENT FUNDS FUNDS $ 71,537,019 $ 1,129,343 $ - $ 7,212,105 $ 79,878,467 3,002,481 - 1,790,311 50,654 4,843,446 10,982,766 339,783 20,497,099 1,610,430 33,430,078 4,280,901 200 - 215,938 4,497,039 3,053,938 - - 3,053,938 3,324,852 50,282 - - 3,375,134 120,207 226,778 1,076,399 65,000 1,488,384 383,909 78,379 7,023 25,207 494,518 942,680 301 17 - 942,998 97,628,753 1,825,066 23,370,849 9,179,334 132,004,002 8,223,191 148,298 - - 8,371,489 2,610,481 - 2,610,481 54,378,422 54,378,422 2,608,369 - 2,608,369 8,376,509 - 1,761,241 - 10,137,750 5,804,336 50,000 - 428,928 6,283,264 523,577 - - 523,577 10,471,784 1,045,412 - 20,254 11,537,450 26,506 886,961 24,061,564 14,746 24,989,777 - - - 7,116,917 7,116,917 - - 13,993 3,354,910 3,368,903 93,023,175 2,130,671 25,836,798 10,935,755 131,926,399 (2,465,949) 77,603 4,605,578 (305,605) (1,756,421) 204,000 265,000 1,053,315 2,660,870 4,183,185 (2,085,347) (30,813) (7,064) (1,990,241) (4,113,465) 211,437 - 163,602 375,039 11 CGG Girl) 72A 947 1 rlAG 7C1 42A 729 AAA 7Ca L,7JJ,000 1/1,.+-Loj 11,417,070) (7L L,17V) JL L, J OL 15,748,776 22,927,571 4,306,388 6,215,855 49,198,590 $ 18,684,444 $ 22,856,153 $ 2,886,690 $ 5,293,665 $ 49,720,952 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-7 2012 Comprehensive Annual Financial Report City of Renton, Washington RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES For the Year Ended December 31, 2012 NET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 522,362 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current period plus extraordinary gains on capital assets from the sale of land and equipment. Capital expenditures 24,979,213 Depreciation expense (9,313,662) Sale of capital assets (217,556) 15,447,995 Donations of property and infrastructure from developers are not reported in the governmental funds. However, in the statement of activities, the fair market value of those assets is recognized as revenue. 11,380,175 Revenues in the statement of activities that do not provide current financial resources are not reported as revenue in the funds. Unearned revenue increased by this amount. 58,840 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 5,917,383 Increase (decrease) in other non-current assets which include the Net Pension Asset and Investments in Joint Ventures which are not reported in governmental funds. Equity interest -SCORE (2,114,084) Equity interest -Valley Communications 65,681 Net Pension Asset -overfunded 567,429 (1,480,974) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of the internal service funds are reported with governmental activities. CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 2,227,368 $ 34,073,149 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-8 2012 Comprehensive Annual Financial Report ASSETS Current assets: Cash & cash equivalents Investments at fair value Receivables (net of allowances): Customer accounts Special assessments Interest - investments Due from other funds Interfund loan receivable Due from other governmental units Inventory of materials and supplies Prepayments Total current assets Noncurrent assets: Restricted cash & cash equivalents Special assessments -non-current Advances to other funds Capital assets (net) Intangible assets (net) Deferred charges and other assets Total noncurrent assets TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2012 Page 1 of 2 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS WATERWORKS SOLID UTILITY WASTE OTHER TOTAL ENTERPRISE ENTERPRISE FUNDS FUNDS City of Renton, Washington GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUNDS $ 13,115,499 1,740,902 $ 2,707,278 $ 17,563,679 $ 20,181,389 5,226,313 567,766 882,934 6,677,013 6,581,827 5,579,598 1,664,918 95,545 7,340,061 47,833 92,629 - - 92,629 - 33,561 4,056 5,677 43,294 46,422 25,937 2,218 - 28,155 13,178 98,208 - - 98,208 511,666 708,064 104,987 531,901 1,344,952 83 262,978 - 67,480 330,458 160,642 - 358,598 - 358,598 53,000 25,142,787 4,443,445 4,290,815 33,877,047 27,596,040 2,909,578 - - 2,909,578 - 85,925 85,925 - 101,646 - 101,646 1,204,401 240,863,870 21,237,604 262,101,474 9,999,682 823,530 - 823,530 263,235 386,148 - 386,148 - 245,170,697 - 21,237,604 266,408,301 11,467,318 $ 270,313,484 $ 4,443,445 $ 25,528,419 $ 300,285,348 $ 39,063,358 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-9 2012 Comprehensive Annual Financial Report LIABILITIES Current liabilities: Accounts payable Claims incurred but not reported Retainage payable Due to other funds Interfund loans payable Due to other governments Accrued interest payable Accrued employee wages and benefits payable Accrued taxes payable Custodial accounts Unearned revenue Revenue bonds payable Total current liabilities Long-term liabilities: Revenue bonds payable Unamortized premium on revenue bonds Unamortized discount on revenue bonds Deferred amount on revenue bond refunding Interfund loans payable Accrued employee wages and benefits payable Public works trust fund loan payable Total long-term liabilities TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted -Waterworks utility debt Unrestricted TOTAL NET POSITION STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2012 Page 2 of 2 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS OTHER TOTAL WATERWORKS SOLID ENTERPRISE ENTERPRISE UTILITY WASTE FUNDS FUNDS City of Renton, Washington GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUNDS $ 630,140 $ 1,147,269 $ 516,437 $ 2,293,846 $ 1,044,012 - - - - 2,754,118 95,621 - 95,621 4,550 51,304 2,218 - 53,522 47,845 - - 473,024 473,024 - 878,648 4,574 - 883,222 124,427 - 3,903 128,330 - 402,947 22,385 100,368 525,700 362,877 76,019 61,651 74,793 212,463 87 17,970 - 172,177 190,147 - 204,374 148,989 353,363 1,290,000 - - 1,290,000 - 3,771,450 1,238,097 1,489,691 6,499,238 4,213,489 31,305,000 - - 31,305,000 - 1,014,981 1,014,981 (12,496) (12,496) (1,104,682) - (1,104,682) - - 876,738 876,738 - 448,120 17,147 86,147 551,414 342,994 4,660,282 - - 4,660,282 - 36,311,205 17,147 962,885 37,291,237 342,994 40,082,655 1,255,244 2,452,576 43,790,475 4,556,483 203,655,667 21,237,604 224,893,271 10,262,917 2,909,578 - 2,909,578 - 23,665,584 3,188,201 1,838,239 28,692,024 24,243,958 $ 230,230,829 $ 3,188,201 $ 23,075,843 $ 256,494,873 $ 34,506,875 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-10 2012 Comprehensive Annual Financial Report City of Renton, Washington STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2012 OPERATING REVENUES: Charges for services Interdepartmental services Other services TOTAL OPERATING REVENUES OPERATING EXPENSES: Operations and maintenance Administrative and general Taxes Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES(EXPENSES): Intergovernmental revenues Investment earnings Gain (loss) on sale of capital assets Other non-operating revenues (expenses) Interest expense Amortization of debt discount and expense NON-OPERATING REVENUE NET OF EXPENSE INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS Capital contributions Transfers in Transfers out CHANGE IN NET POSITION NET POSITION, JANUARY 1 Prior Year Adjustment NET POSITION, JANUARY 1 RESTATED NET POSITION, DECEMBER 31 BUSINESS -TYPE ACTIVITIES 14,825,876 $ ENTERPRISE FUNDS GOVERNMENTAL OTHER TOTAL ACTIVITIES WATERWORKS SOLID ENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITY WASTE FUNDS FUNDS FUNDS $ 45,624,741 $ 14,825,876 $ 4,564,995 $ 65,015,612 $ 15,744,205 1,152,443 5,624 - 1,158,067 - 564,976 74,432 - 639,408 13,264,339 47,342,160 14,905,932 4,564,995 66,813,087 29,008,544 22,675,008 12,300,303 2,985,028 37,960,339 25,401,229 4,550,949 376,658 512,530 5,440,137 652,261 3,871,845 2,103,686 13,078 5,988,609 4,658 7,018,925 - 837,761 7,856,686 1,691,035 38,116,727 14,780,647 4,348,397 57,245,771 27,749,183 9,225,433 125,285 216,598 9,567,316 1,259,361 18,197 133,875 13,092 165,164 46,313 84,517 8,742 11,871 105,130 95,101 - - - - (587) 8,701 6,696 1,675 17,072 773,808 (1,211,107) - (42,884) (1,253,991) - (92,030) - (92,030) - (1,191,722) 149,313 (16,246) (1,058,655) 914,635 8,033,711 274,598 200,352 2,173,996 8,508,661 6,788,184 - 880,374 7,668,558 8,799 - - - 313,573 (125,094) - (108,867) (233,961) (269,000) 14,696,801 274,598 971,859 15,943,258 2,227,368 215,408,719 2,913,603 22,122,310 240,444,632 32,354,507 125,309 - (18,326) 106,983 (75,000) 215,534,028 2,913,603 22,103,984 240,551,615 32,279,507 $ 230,230,829 $ 3,188,201 $ 23,075,843 $ 256,494,873 $ 34,506,875 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-11 2012 Comprehensive Annual Financial Report CASH FLOWS FROM OPERATING ACTIVITIES: Cash received for services Cash received from other funds for services Cash paid to suppliers for goods & services Cash paid to other funds for goods & services Cash paid to employees Other operating receipts Other non-operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to/from other funds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Acquisition & construction of capital assets Capital contributions Capital grants Principal payments on debt Interest payments on debt NET CASH PROVIDED (USED) BY CAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of investments Payments for investments Interest on investments NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS CASH & CASH EQUIVALENTS, JANUARY 1 TOTAL CASH, RESTRICTED CASH,& CASH EQUIVALENTS, DECEMBER 31 City of Renton, Washington STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012 Page 1 of 2 WATERWORKS UTILITY $ 46,022,880 $ 2,695,135 (31,441,442) (1,480,619) 32,993 8,701 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS OTHER TOTAL SOLID ENTERPRISE ENTERPRISE WASTE FUNDS FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUNDS 14,804,841 $ 4,576,110 $ 65,403,831 $ - 35,807 - 2,730,942 29,037,259 (14,772,155) (3,154,693) (49,368,290) (23,613,753) 2,218 - (1,478,401) - 3,118 2,381 38,492 50,835 (134,027) (415,392) (549,419) (2,455,814) (31,723) (23,022) 15,837,648 (60,198) (125,094) (125,094) $ 976,683 16,754,133 3,018,527 (108,867) (233,961) 44,573 (108,867) (233,961) 44,573 (4,661,972) 129,344 (4,532,628) (3,308,904) - - - 8,799 18,197 18,197 - (3,208,647) (461,463) (3,670,110) (1,322,502) (686) (1,323,188) (9,174,924) (332,805) (9,507,729) (3,300,105) 208,132 - - 208,132 - - 307,162 248,850 556,012 3,388,094 72,232 11,628 5,940 89,800 139,174 280,364 318,790 254,790 853,944 3,527,268 6,817,994 258,592 789,801 7,866,387 3,290,263 9,207,083 1,482, 310 1,917,477 12,606,870 16,891,126 $ 16,025,077 $ 1,740,902 $ 2,707,278 $ 20,473,257 $ 20,181,389 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-12 2012 Comprehensive Annual Financial Report RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation & amortization of deferred charges Other non-operating revenue (Increase) decrease in accounts receivable (Increase) decrease in due from other funds/governmental units (Increase) decrease in inventory & prepaid items Increase(decrease)in vouchers retainage payable Increase(decrease)in due to other funds/governmental units increase(decrease)in payables & other short-term liabilities Increase(decrease)in customer deposits Increase(decrease)in deferred revenues Increase(decrease)in accrued employee leave benefits Total adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES City of Renton, Washington STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012 Page 2 of 2 BUSINESS -TYPE ACTIVITIES GOVERNMENTAL ENTERPRISE FUNDS ACTIVITIES OTHER TOTAL INTERNAL WATERWORKS SOLID ENTERPRISE ENTERPRISE SERVICE UTILITY WASTE FUNDS FUNDS FUNDS $ 9,225,433 $ 125,285 $ 216,598 $ 9,567,316 $ 1,259,361 7,018,925 - 837,761 7,856,686 1,691,035 8,701 140,571 (18,631) 130,641 819,534 (166,837) (101,091) 5,259 (262,669) (14,408) 1,539,371 38,658 (428,484) 1,149,545 (1,630,910) 95 (358,598) (8,055) (366,558) 24,758 (96,246) - 362,734 266,488 399,701 (1,477,298) 6,792 - (1,470,506) - (283,943) 85,067 1,079 (197,797) 443,379 - - 5,410 5,410 - 36,454 - 631 37,085 - 32,993 3,118 2,381 38,492 26,077 6,612,215 (185,483) 760,085 7,186,817 1,759,166 $ 15,837,648 $ (60,198) $ 976,683 $ 16,754,133 $ 3,018,527 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Prior Period Adjustment $ 125,309 $ $ (18,326) $ 106,983 $ (75,000) Contributions of capital assets 6,788,184 880,374 7,668,558 Net amort. bond prem. discount & bond issue costs 92,030 - 92,030 - Depreciation 7,018,925 837,761 7,856,686 1,691,035 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-13 2012 Comprehensive Annual Financial Report City of Renton, Washington STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS December 31, 2012 ASSETS Cash and cash equivalents Investments, at fair value: Federal National Mortgage Association US Treasury Strips Certificates of deposit Receivables (net of allowances) Interest on investments TOTAL ASSETS LIABILITIES Deposits TOTAL LIABILITIES NET POSITION Net position held in trust for pension benefits and other purposes PENSION TRUST AGENCY FIREFIGHTER'S SPECIAL PENSION DEPOSITS $ 1,686,053 $ 587,913 271,123 - 4,001,333 437,118 3,108,961 - 9,504,588 587,913 $ 9,504,588 $ 587,913 587,913 The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-14 2012 Comprehensive Annual Financial Report STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIREMEN'S PENSION FUND For the Year Ended December 31, 2012 DEDUCTIONS: Benefits 225,506 Administrative expenses 893 TOTAL DEDUCTIONS 226.399 Change in net position 183,265 NET POSITION - JANUARY 1 9,321,323 Prior Period Adjustment - NET POSITION - DECEMBER 31 $ 9,504,588 City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-15 PENSION TRUST FIREMEN'S PENSION ADDITIONS: Other contributions: Fire insurance premiums transferred in $ 119,668 Investment earnings: Investment interest 347,672 Net increase / (decrease) in the fair value of investments (57,676) Total Investment earnings 289,996 TOTAL ADDITIONS 409,664 DEDUCTIONS: Benefits 225,506 Administrative expenses 893 TOTAL DEDUCTIONS 226.399 Change in net position 183,265 NET POSITION - JANUARY 1 9,321,323 Prior Period Adjustment - NET POSITION - DECEMBER 31 $ 9,504,588 City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-15 2012 Comprehensive Annual Financial Report City of Renton, Washington NOTES TO THE FINANCIAL STATEMENTS January 1, 2012 through December 31, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Renton was incorporated on September 6, 1901, and operates under the laws of the State of Washington applicable to a Non -Charter code city with a Mayor/Council form of government. A full-time Mayor and seven part-time Council members serve the City, all elected at large to four-year terms. The City provides the full range of municipal services authorized by state statues, together with a Municipal Airport, a Waterworks Utility, a Solid Waste Utility, and a Municipal Golf Course. The financial statements of the City have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Effective for fiscal year 2012 reporting, the City implemented the following new accounting and reporting standards issued by the Governmental Accounting Standards Board (GASB): GASB Statement No. 62- Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements, The objective of this statement is to incorporate into the GASB's authoritative literature certain accounting and financial reporting guidance that is included in the pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements. This statement also supersedes Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting. GASB Statement No. 63 – Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. Concepts Statement 4 also identifies net position as the residual of all other elements presented in a statement of financial position. This Statement amends the net asset reporting requirements in Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows Basic Financial Statements, 4-16 2012 Comprehensive Annual Financial Report City of Renton, Washington of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. A. REPORTING ENTITY As required by GAAP the City's financial statements present the City of Renton — the primary government. The City of Renton's Mayor appoints the Governing Board for the Renton Housing Authority, which is not considered a component unit of the City. The City is under no obligation to subsidize, nor does it exercise any other prerequisite for inclusion. The City of Renton has no component units (either blended or discretely presented) included in these statements. B. BASIC FINANCIAL STATEMENTS — GASB 34 PRESENTATION The City's basic financial statements include both government -wide (reporting the City as a whole) and fund financial statements (reporting the City's major funds). Both the government - wide and fund financial statements categorize primary activities as either government or business -type. GOVERNMENT -WIDE STATEMENTS In the Government -wide Statement of Net Position, both the governmental and business -type activities columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual, economic resource basis, which recognized all long-term assets and receivables as well as long-term debt and obligations. The City's net position is reported in three parts — investment in capital assets, net of related debt; restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. The Government -wide Statement of Activities reports both the gross and net cost of each of the City's functions and business -type activities (general government, judicial, public safety, physical environment, transportation, economic environment, health and human services, culture and recreation, waterworks utility, airport, solid waste utility, and golf course). General government revenues (property taxes, retail sales and use taxes, business taxes, excise taxes, and other taxes) also support the functions. The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants and contributions. Program revenues must be directly associated with the function or a business - type activity. Operating grants include operating specific and discretionary (either operating or capital) grants while the capital grants column reflects capital specific grants. General revenues normally cover the net cost, by function or business -type activity. The Government -wide focus is more on the sustainability of the City as an entity and the change in the City's net position resulting from the current year's activities. Basic Financial Statements, 4-17 2012 Comprehensive Annual Financial Report City of Renton, Washington The City's fiduciary funds are presented in the fund financial statements. Since the assets are being held for the benefit of a third party and cannot be used for obligations of the City, they are not included in the Government -wide statements. FUND FINANCIAL STATEMENTS In the fund financial statements, the financial transactions are recorded in individual funds, each accounted for by a separate set of self -balancing accounts that comprise assets, liabilities, reserves, fund equity, revenues, and expenditures or expenses. The presentation is by major funds in either the governmental or business -type categories. GASB Statement 34 sets forth the minimum criteria for the determination of a major fund. The non -major funds are combined in the fund financial statements and are detailed in the combining section. The governmental major fund statements in the fund financial statement are presented on current financial resources and modified accrual basis of accounting. Since governmental fund statements are presented on a different measurement focus and basis of accounting than the Government -wide statements' governmental column, reconciliation is presented at the end of the statement, which briefly explains the adjustments necessary to transform the fund statements into the Government -wide presentation. Internal service funds of a government are presented in summary form as part of the proprietary fund financial statements. Since the principal users of the internal services are the City's governmental activities, financial statements for internal service funds are consolidated into the governmental column when presented at the governmental level. These services are reflected in the appropriate functional activity (general government, judicial, public safety, physical environment, transportation, economic environment, health and human services, culture and recreation). Interfund fund activity has been eliminated from the Government -wide financial statements. Exceptions are payments in lieu of taxes, external type transactions within the internal service funds (revenue and expenses for interest or services provided to other governmental organizations), and other charges for utilities. Elimination of these charges would distort the direct cost and program revenues for these functions. The following describes each fund as presented in the fund financial statements. MAJOR FUNDS GOVERNMENTAL FUNDS GENERAL FUND The General Fund is the primary operating fund of the city. It is used to account for the resources and disbursements of ordinary City operations that are not required to be accounted for in another fund. These include the costs of legislative and executive departments, court services, finance and legal departments, development services, police and fire departments, Basic Financial Statements, 4-18 2012 Comprehensive Annual Financial Report City of Renton, Washington human resources and technical services, community services, parks, economic development, streets, property management for City owned leased facilities, library and museum, fire memorial, and fire department's health and wellness programs. The major sources of revenue are property taxes, utility taxes, and sales taxes. Licenses and permits, charges for services, and fines and forfeits provide additional support. Community development block grant activities are accounted for within this fund, which is federally funded. MUNICIPAL FACILITIES CIP FUND The Municipal Facilities CIP fund accounts for facility improvements and renovations, property acquisitions for parks and City space needs, parks development and equipment, and major capital requirements. Resources include general and special revenue taxes, grants, and Council - approved general obligation bonds. CAPITAL IMPROVEMENT FUND This fund supports the City of Renton transportation projects and projects linked with various State and Federal funding programs. Many of the projects are dependent on grants, formation of LIDs, and mitigation revenue. ENTERPRISE FUNDS WATERWORKS UTILITY FUND The Waterworks Utility Fund accounts for all operation and capital improvement programs for water, wastewater, and storm water services within the City. The activities primarily supported by user fees include: administration, billings and collections, debt service, engineering and operation, maintenance and repairs. The primary resources for the capital improvement programs are revenue bond proceeds, grants (as available), and utility connection charges. SOLID WASTE FUND Solid waste, recycling, and yard waste collection services for the City are accounted for in this fund, supported entirely by service fees. The expenses include payment to the City's garbage contractor and other service charges. NON -MAJOR FUNDS SPECIAL REVENUE FUNDS ARTERIAL STREET FUND The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of one percent in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. Basic Financial Statements, 4-19 2012 Comprehensive Annual Financial Report City of Renton, Washington PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. 1% FOR ART FUND The City of Renton established this fund to account for one percent of construction project actual costs to be used for the selection, acquisition and/or installation of works of art to be placed in, on, or about City public facilities. CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City's internal departments. DEBT SERVICE FUNDS GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUND This debt service fund accounts for the following outstanding debt issues: • 2006 limited tax general obligation bonds which provided funding for the construction of South Lake Washington infrastructure improvements. • 2009 intergovernmental debt related to the Fire District #40 asset transfer as a result of the Benson Hill annexation. • 2010 intergovernmental refunding debt which refunded a portion of the 2000 intergovernmental debt for the construction of a new facility for Valley Communications Center. • 2010 limited tax general obligation refunding bonds which refunded a portion of the 2001 limited tax general obligation bonds for the construction of a downtown parking facility. • 2011 limited tax general obligation bonds which funded the development and construction of 2 new libraries. Basic Financial Statements, 4-20 2012 Comprehensive Annual Financial Report CAPITAL PROJECT FUNDS City of Renton, Washington COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds which provide for the design, construction, labor wages and benefits, and equipment required to implement the project. 40111a14:2R1,1:11110111.1 AIRPORT FUND Provides accounting for revenues and expenses, which provides administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger -Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. The fund accounts for the operation, maintenance, debt service, and capital improvements of the facility. OTHER FUND TYPES INTERNAL SERVICE FUNDS EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment, except for fire apparatus and replacement of police patrol vehicles. In addition, this fund accounts for the City's information technology, facilities and communications costs. All costs, including depreciation, are factors in calculating the rates that are charged to each user department. Basic Financial Statements, 4-21 2012 Comprehensive Annual Financial Report City of Renton, Washington INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker's compensation, unemployment compensation, and the health care program. The Insurance Fund pays expenses and rates are charged to departments based on use and/or coverage requirements. FIDUCIARY FUNDS Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. The City has one Pension Trust Fund and one Agency Fund. PENSION TRUST FUND FIREMEN'S PENSION FUND The Firemen's Pension Fund accounts for the payment of administrative costs and benefits for retired firefighters and their beneficiaries, who were employed prior to March 1, 1970. Primary revenues sources are general property tax allocations in accordance with actuarial calculations, the fire premium tax, and investment income. AGENCY FUND SPECIAL DEPOSIT FUND The Special Deposit Fund was established for the purpose of holding or retaining cash deposits or other securities pending fulfillment of certain conditions and/or requirements by the depositor. Refunds are made when all obligations have been met and only upon authorization from the transmitting department. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING Basis of Accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurement made regardless of the measurement focus applied: 1. Accrual Both governmental and business -type activities in the Government -wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Substantially all governmental fund revenues are accrued. Property taxes are billed and collected within the same period in which taxes are levied. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported as non-operating revenue based on GASB Statement 33. In applying GASB Statement 33 to grant revenues, the Basic Financial Statements, 4-22 2012 Comprehensive Annual Financial Report City of Renton, Washington provider recognizes liabilities and expenses and the recipient recognizes receivables and revenue when the eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met, are reported as advances by the provider and deferred revenue by the recipient. 2. Modified Accrual The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual: i.e., both measurable and available. "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenue reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. D. ASSETS, LIABILITIES, AND NET POSITION 1. Cash and Cash Equivalents The City has defined cash and cash equivalents as cash on hand, demand deposits, and all highly liquid investments (including restricted assets) with maturity of three months or less when purchased. These amounts are classified on the balance sheet or in the statement of net position as cash and cash equivalents or investments in the various funds. The interest on these investments is prorated to the applicable funds. Included in this category are all funds invested in the Local Government Investment Pool and Municipal Investor Account. Excluded from this category are cash balances held by Fiscal Agents since the City does not have discretionary use of these funds. 2. Investments (refer to Note 313.) 3. Receivables and Payables — Amounts owed/payable to/by the City at year-end. Taxes receivable consists of property taxes and related interest and penalties (refer to Note 4). Accrued interest receivable consists of amounts earned on investments, notes, and contracts. Accrued interest payable consists of amounts owed on notes, loans, and contracts. Customer accounts receivable/payable consists of amounts owed from/to private individuals or organizations for goods and services. If the transactions are with another governmental unit, it is accounted for within "due from/to other governments." Special assessments are recorded when levied and are liens against the property benefited. Special assessments receivable consist of current and delinquent assessments and related interest and penalties. Deferred assessments consist of special assessments not due within one year. Basic Financial Statements, 4-23 2012 Comprehensive Annual Financial Report City of Renton, Washington Receivables have been reported net of estimated uncollectible accounts. Because property taxes, special assessments, and utility billings are considered liens on property, no estimated uncollectible amounts are established. Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund loans receivable/payable. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as internal balances. (Refer to Note 10). Noncurrent portions of long-term interfund loans receivable are equally offset by a fund balance amount which indicates that they do not constitute "available spendable resources" since they are not a component of net position. Current portions of long-term interfund loans receivable are considered "available spendable resources" and are subject to elimination upon consolidation. In the Government -wide financial statements, and proprietary fund types in the fund financial statements, long-term liabilities are reported in applicable governmental activities, business - type activities, or proprietary fund type statement of net position. Unamortized Premium — the unamortized portion of the excess of bonds proceeds over their face value (excluding accrued interest and issuance costs). Deferred Amount on Refunding — the difference between the carrying amount of redeemed and/or defeased debt and its reacquisition price. This amount is deferred and amortized over the remaining life of the debt, or the life of the new debt, whichever is shorter. 4. Inventories and prepaid items All City inventories are maintained on a consumption basis of accounting where items are purchased for inventory and charged to the budgetary accounts as the items are consumed. Any material inventories at year-end are included in the balance sheet of the appropriate fund. All inventories are carried at cost on the first in, first out — FIFO basis, with the exception of the Public Works Maintenance shops inventory. The value of this inventory is calculated using the average cost method. Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items in both the Government -wide and fund statements. 5. Capital Assets and Depreciation (refer to Note 5). 6. Unearned Revenues This account includes amounts recognized as receivables but not revenues in the governmental funds because the revenue recognition criterion has not been met. Basic Financial Statements, 4-24 2012 Comprehensive Annual Financial Report City of Renton, Washington 7. Custodial Accounts This account reflects the liability for net monetary assets being held by the City in its agency capacity. 8. Compensated Absences The City accrues accumulated unpaid vacation and other leave and associated employee - related costs when earned (or estimated to be earned) by the employee. The non-current portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and Government - wide presentations. 9. Fund Balance Fund balance is presented in the governmental fund financial statements and represents the difference between assets and liabilities reported within the governmental fund. Fund Balance is classified into the following categories: Nonspendable — items that cannot be spent due to form; inventories, prepaid amounts, long- term loan receivables, or amounts that must be maintained intact legally. Restricted — amounts constrained for specific purposes imposed by external parties or imposed through the judicial process and enabling legislation. Committed — amounts constrained by the City Council. The Council can, by ordinance or resolution, establish, modify, or rescind constraints on committed fund balances. Assigned — constraints imposed by the City Council for amounts intended for specific purposes. In governmental funds, excluding the General Fund, assigned fund balance is intended to be used, at a minimum, for the purpose of that fund. In the General Fund a maximum of 12% and minimum of 8% is assigned per the City's financial policies and adopted by the City Council in the biennial budget ordinance. Unassigned — any remaining fund balance in the general fund not classified as nonspendable, restricted, committed or assigned. When multiple categories of fund balance are available for incurred expenditures, the City will consider the most restricted category of fund balance available first. 10. Net Position (refer to Note 11). E. REVENUES, EXPENDITURES, AND EXPENSES 1. Program Revenues Program revenues include charges for services to customers for goods and services provided, operating grants and contributions, and non-operating grants and contributions within the Basic Financial Statements, 4-25 2012 Comprehensive Annual Financial Report City of Renton, Washington Government -wide Statement of Activities. Charges for services include business licenses, construction permits, and weapon permits. 2. General Revenues Property taxes, retail taxes, business taxes, excise taxes, and associated penalties and interest, and interest and investment earnings are classified as general revenues within the Government -wide Statement of Activities. 3. Interfund Transfers Permanent reallocations of resources between funds are classified as interfund transfers. For purposes of the Government -wide Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. 4. Expenditures/Expenses Expenses in the Government -wide Statement of Activities are reported by function as a governmental activity (general government, judicial, public safety, physical environment, transportation, economic environment, health and human services, culture and recreation), interest on long-term debt, or business -type activity (waterworks utility, airport, solid waste utility, or golf course). In the fund financial statements, expenditures of governmental funds are classified by: function, debt service principal and interest payments, or purchases of capital items. Proprietary expenditures are classified as operating or non-operating. In 2010, operating expenses were consolidated to Operations and maintenance, Administrative and general, Taxes and Depreciation. The other categories reported previously (Benefit payments, Professional services, and Insurance) were assigned to Operations and maintenance and Administrative and general as appropriate. 5. Operating and Non-operating Revenues and Expenses Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services in connection to the proprietary fund's principle ongoing operations. All revenue and expenses not related to capital and related financing, non -capital financing, or investing activities are included. Those revenues and expenses not meeting this definition are non-operating revenues and expenses. NOTE 2. COMPLIANCE AND ACCOUNTABILITY The City of Renton budgets its funds under Generally Accepted Accounting Principles (GAAP) at the fund level. Annual appropriated budgets are adopted for governmental funds on a biennial basis. Budgets for proprietary funds are "management budgets" and are not legally required to be reported. Included in the Required Supplemental and Combining sections of the CAFR are Schedules of Revenues, Expenditures, and Changes in Fund Balances (Budget to Actual) reporting the Actual Budgetary GAAP Basis verses Actual GAAP Basis of Accounting for all legally adopted budgets. There have been no material violations of finance -related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City. Basic Financial Statements, 4-26 2012 Comprehensive Annual Financial Report City of Renton, Washington A. PROCEDURES FOR ADOPTING THE ORIGINAL BUDGET The City of Renton's biennial budget procedures are mandated by the Chapter 35A.33 of the Revised Code of Washington (RCW). The steps in the budget process are as follows: 1. Prior to November 1, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council; estimates provided by the City departments during the preceding months; balanced by revenue estimates made by the Mayor. 2. The City Council conducts public hearings on the proposed budget in November and December. 3. The Council makes their adjustments to the proposed budget and adopts, by ordinance, a final balanced budget no later than December 31. 4. The final operating budget, as adopted, is published and distributed within the first four months of the following year. B. AMENDING THE BUDGET The budget, as adopted, constitutes the legal authority for expenditures. Budgets are adopted on the GAAP basis of accounting. Any comparisons between budget and actual revenues and expenditures are reported under the GAAP basis. The biennial budget is adopted with budgetary control at the fund level, so expenditures may not legally exceed appropriations at that level of detail. Transfers or revisions within funds are allowed, but only the City Council has the legal authority to increase or decrease a given fund's annual budget. This is accomplished by City ordinance. The budget was amended five times during 2011 and 2012. Original budgeted inflows as compared to the final budgeted inflows are as follows: Basic Financial Statements, 4-27 2012 Comprehensive Annual Financial Report City of Renton, Washington Fund Original Budgeted Inflows Final Budgeted Inflows Increase (Decrease) Budgeted Inflows General Fund $ 95,303,230 $ 97,205,695 $ 1,902,466 Arterial Street Fund 630,000 600,000 (30,000) Hotel/Motel Tax Fund 265,000 265,000 - 1%for Art Fund 15,000 21,813 6,813 Cable Communications Development Fund 85,000 85,000 - General Government Miscellaneous Debt Service Fund 5,731,373 9,871,084 4,139,711 Community Development Impact Mitigation Fund 60,000 60,000 - Fire Impact Mitigation Fund 100,000 263,602 163,602 Transportation Impact Mitigation Fund 150,000 30,000 (120,000) Municipal Facilities CIP Fund 8,560,000 3,893,599 (4,666,401) General Government Capital Improvement Fund 9,711,400 23,568,336 13,856,936 South Lake Washington Infrastructure Project Fund - 40,000 40,000 Airport Fund 5,137,171 8,399,200 3,262,029 Solid Waste Utility Fund 15,004,692 15,021,811 17,119 Golf Course Fund 2,583,545 2,533,545 (50,000) Waterworks Utility Fund 47,588,644 62,748,465 15,159,821 Equipment Repair and Replacement/ Information Technology/ Facilities / Communications Fund 12,497,360 12,726,795 229,435 Insurance Fund 17,437,501 17,437,501 - Firemen's Pension 300,000 300,000 - TOTAL $ 221,159,916 $ 255,071,446 $ 33,911,531 irlglnal buagetea outtlows as comparea to the tlnal buagetea outtlows are as tollows: Increase Original Final (Decrease) Budgeted Budgeted Budgeted General Fund $ 94,493,188 $ 97,596,600 $ 3,103,413 Arterial Street Fund 630,000 600,000 (30,000) Hotel/Motel Tax Fund 265,000 447,050 182,050 Paths and Trails Reserve Fund - 3,314 3,314 1% for Art Fund 50,000 50,000 - Cable Communications Development Fund 85,674 235,674 150,000 General Government Miscellaneous Debt Service Fund 5,731,373 9,871,084 4,139,711 Community Development Impact Mitigation Fund - 400,000 400,000 Fire Impact Mitigation Fund 536,926 936,926 400,000 Transportation Impact Mitigation Fund 400,000 450,000 50,000 Municipal Facilities CIP Fund 8,970,000 26,072,253 17,102,253 General Government Capital Improvement Fund 9,761,400 26,945,419 17,184,019 South Lake Washington Infrastructure Project Fund - 92,024 92,024 Airport Fund 6,118,049 10,125,047 4,006,998 Solid Waste Utility Fund 14,972,362 15,486,501 514,139 Golf Course Fund 2,642,204 2,637,204 (5,000) Waterworks Utility Fund 45,221,126 66,838,018 21,616,892 Equipment Repair and Replacement/ IT/ Facilities / Communications Fund 12,314,832 15,444,123 3,129,291 Insurance Fund 17,189,391 19,109,458 1,920,067 Firemen's Pension 550,475 550,475 - TOTAL $ 219,932,000 $ 293,891,170 $ 73,959,170 Basic Financial Statements, 4-28 2012 Comprehensive Annual Financial Report City of Renton, Washington At year-end 2012, the City of Renton noted the General Government Miscellaneous Debt Service Fund exceeded its final adopted budget by $600,743. NOTE 3. DEPOSITS AND INVESTMENTS A. Deposits The City's deposits and certificates of deposit are insured by the Federal Depository Insurance Corporation (FDIC) and the State of Washington Public Deposit Protection Commission (WPDPC) Act of 1969. The City's deposits with the Local Government Investment Pool (LGIP) are managed by the Washington State Office of the Treasurer. The LGIP is comparable to a Rule 2a7 -pool recognized by the Securities and Exchange Commission. A 2a7 -like -pool is an external investment pool that is not registered with the SEC as an investment company but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC -registered mutual funds to use amortized cost, which approximates fair value, to report net assets and compute share prices. Reconciliation to Statements of Net Position Governmental Fiduciary Total Cash $ 60,328,971 $ 2,273,966 $ 62,602,937 Restricted Cash 2,909,578 - 2,909,578 Cash Equivalents (LGIP) 9,912,292 - 9,912,292 Total Cash & Cash Equivalents 73,150,841 2,273,966 75,424,808 Investments 23,849,194 4,709,574 28,558,768 Total Investments 23,849,194 4,709,574 28,558,768 Total Cash & Investments $ 97,000,035 $ 6,983,541 $ 103,983,576 B. Investments The City invests excess and inactive funds in accordance with the City's Investment Policy (last updated and approved on February 23, 2009), which complies with the guidelines within Chapter 35A.40.050 of the Revised Code of Washington (RCW). This allows for investment of excess cash and inactive cash, directs that the responsibility for determining available cash for investment is placed upon the department administering the funds, and allows for pooling of the cash provided that the allocation of income is proportionate to the investment of each fund. Currently, the City invests in obligations of the U.S. Government, U.S. agency issues, and Certificates of Deposit with Washington State banks and savings and loan institutions as allowed by RCW. Investments are shown on the entity -wide Statement of Net Position at fair value. Investments are reported within Cash and Investments of Governmental Activities and within Cash and Cash Equivalents or Investments of Business -type Activities. Basic Financial Statements, 4-29 2012 Comprehensive Annual Financial Report City of Renton, Washington Custodial Credit Risk. Custodial credit risk for investments is the risk that, in the event of the failure of the counter party to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. All security transactions, including collateral for repurchase agreements, entered into by the City are conducted on a delivery -versus -payment (DVP) basis and are held in our safekeeping trust account with Bank of New York with terms negotiated by the State of Washington. C. Investment Schedule As of December 31, 2012, the City of Renton had the following investments: Credit risk. Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Of the bonds held by the City, 44% are rated "Aaa" by Moody's Investors Service and "AAA" by Standard & Poor and 55% are rated "Aaa" by Moody's Investors Service and "AA+" by Standard & Poor. All certificates of deposit are insured by the FDIC up to $250,000 and, additionally, are 100% collateralized in the multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (WPDPC). The City's Investment Policy directs that the standard of prudence for investment activities shall be the Prudent Investor Standard that states: "Investments shall be made with judgment and care, under circumstances then prevailing, which person of prudence, discretion, and intelligence would use in the management of their own affairs, not for speculation, but for investment purposes, considering the probable safety of their capital as well as the probable income to be derived." Interest Rate Risk. Interest rate risk is the risk that changes in interest rates over time, adversely affecting the fair value of an investment. The City's portfolio is managed within the parameters established by the Investment Policy, which limits the weighted average maturity of the portfolio to five years. The City's FNMA bonds have call provisions with call dates falling in the first six months of 2013. 6 months - 1-3 Weighted Security Type Security Type Cost Fair Value Ave Maturity Moody's S&P Certificates of Deposit (within WPDPC) 19,394,197 19,394,197 1.15 unrated unrated FNMA 4,997,500 5,004,875 0.56 Aaa AA+ FNMA ZERO COUPON 99,556 158,363 0.32 unrated unrated US TREASURY ZERO COUPON 2,217,524 4,001,333 6.95 Aaa AAA TOTAL INVESTMENTS $ 26,708,777 $ 28,558,768 28,558,768 Credit risk. Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Of the bonds held by the City, 44% are rated "Aaa" by Moody's Investors Service and "AAA" by Standard & Poor and 55% are rated "Aaa" by Moody's Investors Service and "AA+" by Standard & Poor. All certificates of deposit are insured by the FDIC up to $250,000 and, additionally, are 100% collateralized in the multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (WPDPC). The City's Investment Policy directs that the standard of prudence for investment activities shall be the Prudent Investor Standard that states: "Investments shall be made with judgment and care, under circumstances then prevailing, which person of prudence, discretion, and intelligence would use in the management of their own affairs, not for speculation, but for investment purposes, considering the probable safety of their capital as well as the probable income to be derived." Interest Rate Risk. Interest rate risk is the risk that changes in interest rates over time, adversely affecting the fair value of an investment. The City's portfolio is managed within the parameters established by the Investment Policy, which limits the weighted average maturity of the portfolio to five years. The City's FNMA bonds have call provisions with call dates falling in the first six months of 2013. Basic Financial Statements, 4-30 6 months - 1-3 3+ Security Type 1 year years years Totals Certificates of Deposit (within WPDPC) $ 5,600,192 $ 11,778,606 $ 2,015,400 $ 19,394,197 FNMA - 2,504,050 2,500,825 5,004,875 FNMA ZERO COUPON - - 158,363 158,363 US TREASURY ZERO COUPON 202,809 447,584 3,350,939.98 4,001,333 TOTAL INVESTMENTS $ 5,803,001 $ 14,730,240 $ 8,025,528 $ 28,558,768 Basic Financial Statements, 4-30 2012 Comprehensive Annual Financial Report City of Renton, Washington Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The City diversifies its investment instruments to avoid incurring unreasonable risk inherent with the over -investment of instruments and issuers using the following target distribution as a guide during normal economic times. The City has certificate of deposits equal to 18% of its total investments with Umpqua Bank and 17% with Columbia Bank. As stated earlier these are 100% collateralized and guaranteed by the State of Washington Public Deposit Protection Commission. The remaining individual issuers are less than 5% of total investments or are otherwise excluded from this disclosure due to the low risk nature of the investment. Instrument Issuer Maximum's per Policy Maximum Maximum U.S. Treasuries 100% 100% U.S. Agencies 75% 50% Certificates of Deposit (within WPDPC) 75% 20% Local Governmental Investment Pool (LGIP) 75% 75% Commercial Paper 25% 5% NOTE 4. PROPERTY TAXES The King County Finance Director acts as an agent to collect property taxes levied in the county for all taxing authorities. Taxes are levied annually, January 1, on property value listed as of the prior August 31. Assessed values are established by the King County Assessor at 100 percent of fair market value. A revaluation of all property is required every two years; however, King County has the ability to revalue annually. Property taxes levied by the King County Assessor and collected by the King County Finance Director become a lien on the first day of the levy year and may be paid in two equal installments if the total amount exceeds $30. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12 percent and are subject to additional penalties if not paid as scheduled. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. At year-end, property taxes are recorded as a receivable with the portion not expected to be collected within 60 days offset by unearned revenue. During the year, property tax revenues are recognized when cash is received. The tax rate for general City operations is limited to $3.10 per $1,000 of assessed value (RCW 84.52.043). This reflects a reduction of $0.50 per $1,000 as a result of the annexation to the King County Library System. In addition to this amount, up to $0.225 (22.5 cents) per $1,000 may be designated for contribution to the Firemen's Pension Fund. If a report by a qualified actuary on the condition of the Firemen's Pension Fund establishes that this amount (or portion of) is not necessary to maintain the actuarial soundness of the fund, the amount can be used for any other municipal purpose (RCW 41.16.060). Basic Financial Statements, 4-31 2012 Comprehensive Annual Financial Report City of Renton, Washington The tax rate limit may be reduced for any of the following reasons: 1. The Levy Limit: the levy limit calculation applies to a taxing district's budget, and not to increases in the assessed value or tax bill of individual properties. Initiative 747 which restricted individual taxing districts from collecting, in any year, more than a one percent increase in their regular, non -voted, levy over the highest levy amount since 1985 was overturned by the courts. However during 2007, the state legislature reinstated this limit with the passage of HB2416. New construction, annexations, and excess levies approved by the voters are not included in the levy limit calculation. If the assessed valuation increases by more than one percent due to revaluation, the levy rate will be decreased. 2. The One Percent Constitution Limit: The Washington State Constitution limits the regular (non -voted) combined property tax rate applied to an individual's property to one percent ($10 per $1,000) on the market valuation. Voters may approve special levies that are added to this figure. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the one percent limit. 3. The City may voluntarily levy taxes below the legal limit. Special levies approved by the voters are not subject to the above limitations. There is currently no excess levy for General Obligation Bond debt. The City's regular levy per the King County Assessor's 2012 Annual Report is $3.1000. NOTE S. CAPITAL ASSETS AND DEPRECIATION A. GENERAL POLICIES Major expenditures for capital assets, including capital leases and major repairs that increase the useful life, are capitalized. The capitalization threshold applied to the City's assets is $5,000. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. All capital assets are valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets/or the original historical cost when transferred between proprietary and governmental funds.) Intangible assets, either purchased or internally developed, with a cost of $5,000 or more that are identifiable by meeting one of the following conditions: • The asset is capable of being separate or divided and sold, transferred, licensed, rented, exchanged; or • The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable. Basic Financial Statements, 4-32 2012 Comprehensive Annual Financial Report City of Renton, Washington The City has acquired certain assets with funding provided by federal financial assistance programs. Depending on the terms of the agreements involved, the federal government could retain an interest in these assets. However, the City has sufficient legal interest to accomplish the purposes for which the assets were acquired, and has included such assets within the applicable statements. The City capitalizes art and historical treasures. Art and historical treasures are expected to be maintained or enhanced over time and thus, are not depreciated. B. GOVERNMENTAL CAPITAL ASSETS Governmental long-lived assets of the City purchased, leased, or constructed are recorded as expenditures in the governmental funds and are capitalized, net of depreciation, in the Government -wide statements. The infrastructure component of GASB 34 for assets acquired after January 1, 1980 was implemented retroactively in 2004. Donated capital assets are capitalized at estimated fair value of the item at the date of the donation. C. PROPRIETARY FUND CAPITAL ASSETS Capital assets of proprietary funds are capitalized in their respective statement of net position, net of depreciation. Any gain on the sale of capital assets is recorded in the Statement of Activities as General revenues, Miscellaneous. D. DEPRECIATION AND AMORTIZATION Depreciation on all depreciable assets is provided on the straight-line basis over the following useful lives: Estimated Type of Asset Service Life Buildings and structures, except utility plant 10-50 years Other improvements 10-80 years Utility plant 25-75 years Machinery and equipment 3-40 years Infrastructure 25-50 vears Amortization on all intangible assets is provided on the straight-line basis over the following useful lives: Basic Financial Statements, 4-33 Estimated Type of Asset Service Life Computer Software 3-15 years Land Use Rights 3-12 years Patents, Trademarks, Copyrights 3-50 years Other Intangibles with definite useful lives 3-12 years Basic Financial Statements, 4-33 2012 Comprehensive Annual Financial Report City of Renton, Washington Depreciation and Amortization Expense was charged to functions/programs of the primary ;UveiiiiiieiiL db iuiiuwa. Governmental Activities General Government Public Safety Physical Environment Transportation Economic Development Culture and Recreation Health and Human Services Internal Service Funds (General Governmental) Total -Governmental Activities Business -Type Activities Waterworks Airport Golf Course Total -Business -Type Activities Depreciation Amortization Total $ 3,011,926 $ 22,804 $ 3,034,729 981,386 116,690 1,098,076 - 35,561 35,561 3,419,948 2,979 3,422,927 43,989 - 43,989 1,369,743 4,411 1,374,155 304,225 - 304,225 1,535,475 155,559 1,691,034 $ 10,666,692 $ 338,003 $ 11,004,695 7,014,629 $ 4,296 $ 7,018,925 542,897 - $ 542,897 294,864 - $ 294,864 $ 7,852,390 $ 4,296 $ 7,856,686 Basic Financial Statements, 4-34 2012 Comprehensive Annual Financial Report E. SUMMARY OF CHANGES Capital asset activity for the year ended December 31, 2012 was as follows: City of Renton, Washington Primary Government Adjusted Beginning Prior Period Beginning Ending Balance Adiustment Balance Increases Decreases Balance Governmental activities : Capital assets, not being depreciated: Land and land improvements $ 182,417,081 $ (34,044) $ 182,383,037 $ 8,926,490 $ 15,032 $ 191,294,494 Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and structures Other improvements Machineryand equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and structures Other improvements Machineryand equipment Total accumulated depreciation Total capital assets, being depreciated, net _ Intangible Assets: Intangible assets, being amortized Less accumulated amortization Total intangible asset, being amortized, net Total Intangible assets _ Governmental activities capital assets, net $ Business -type activities: Capital assets, not being depreciated: 95,800,251 - 95,800,251 102,966 220,224 95,682,992 202,077,404 533,633 202,611,037 3,379,219 - 205,990,256 31.944.027 - 31.944.027 3.490.552 314.932 35.119.647 31,141,324 59,320,482 22,431,919 - 1,927 31,141,324 59,322,409 22,431,919 2,534,051 6,080,804 2,051,837 172,509 - 158,624 33,502,866 65,403,214 24,325,132 12,893,725 1,927 112,895,652 10,666,692 331,133 123,231,212 16,927,957 531,706 217,459,663 (3,693,956) 204,024 213,561,683 4,936,342 4,288,753 - 4,936,342 4,288,753 122,800 338,003 - 5,059,142 4,626,756 647,589 647,589 (215,203) 432,386 647,589 647,589 (215,203) 432,386 32,796,287 $ 303,510 S 433,099,797 $ 29,817,532 $ 1,371,494 $ 461,545,836 Land and land improvements $ 6,165,321 $ Construction in progress 8,992,098 Total capital assets, not being depreciated 15,157,419 Capital assets, being depreciated: 95,974 Buildings and structures 17,195,908 Other improvements 334,894,058 Machineryand equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and structures Other improvements Machineryand equipment Total accumulated depreciation Total capital assets, being depreciated, net Intangible Assets: Intangible assets, not being amortized Intangible assets, being amortized Less accumulated amortization Total intangible asset, being amortized, net Total Intangible assets _ Business -type activities capital assets, net $ 6,002,915 104,239,267 70,088 1 $ 6,165,321 $ 1,777,905 $ - $ 7,943,225 $ 8,711,188 6,033,992 3,564,563 11,180,617 14.876.509 7.811.897 3.564.563 19.123.842 - 17,195,908 - - 17,195,908 389,417 335,283,475 7,953,851 66,790 343,170,536 - F ?nsu gnu - - F gnu 7n5Z - 6,002,915 448,841 - 6,451,756 1,523 104,240,790 7,307,575 66,790 111,481,576 - 5,568,215 95,974 - 5,664,189 1,523 115,811,920 7,852,390 66,790 123,597,521 387,894 242,876,171 101,461 - 242,977,631 811,000 811,000 70,088 - 70,088 53,261 4,296 57,557 16,827 (4,296) 12,531 827,827 (4,296) 823,531 106,984 $ 258,580,507 $ 7,909,061 $ 3,564,563 $ 262,925,004 Basic Financial Statements, 4-35 2012 Comprehensive Annual Financial Report City of Renton, Washington At the end of 2012, a total of 48 projects comprise the Construction in Progress. Upon completion, the projects will be capitalized in the Government -wide statements in their appropriate categories and in the fund statements for proprietary funds, if applicable. Construction commitments as of December 31. 2012. are as follows: Business -Type Activities Projects: Construction Remaining Governmental Activities Projects: in progress Commitment MAY CREEK/HAWKS LANDING ACQUISITION 532,930 44,217 ENERGOV PERMITSOFTWARE AND IMPLEMENTATION 445,379 50,000 GARDEN AVE N WIDENING 2,243,363 763,892 HIGHLANDS LIBRARY 242,505 9,884,426 HIGHLANDSTO LANDING 349,923 21,517 NE 31STSTCULVERT 11,407 144,423 NE 3RD/NE4TH CORRIDOR 1,551,397 1,818,986 PAPERLESS IMAGING SYSTEM 71,930 7,000 RAINIER AV GRDY WYTO 2ND 33,527,693 5,847,068 RAINIER AVE PUBLIC ARTWORK 15,650 34,350 RECORDS MGMTSYSTEM-LASERFICHE CITYWIDE 18,037 100,000 STRANDER BLVD -SW 27TH STCONNECT 16,934,724 7,318,317 2013 KENWORTH T-470 5YD DUMP D127 116,350 - CEDAR RIVER LIBRARY 65,558 8,975,813 CITY WIDE SECURITY SYSTEM UPGRADES 129,330 6,225 LANDING WATER QUALITYGRATES 1,096 - Total governmental activities $ 56,257,272 $ 38,016,236 Business -Type Activities Projects: PRESIDENT PARK WATER MAIN PROJECT 57,855 - AUTOMATIC METER READING CONVERSION 654,659 1,293,192 EMERGENCY RESPONSE PROJECT 8,372 - HIGHLANDS435 RESERVOIR REPLACEMENT 2,767 - EASTRENTON LIFTSTATION ELIMINATION 344,995 45,511 ELLIOTSPAWNING CHANNEL 06 FEMA REPAIR 523,057 - EMERGENCY POWER TO PUMP STATION 183,374 20,418 GROUNDWATER UNDER INFLUENCECT 146,256 76,543 HARDIE AVE UNDERPASS STORM SYSTEM IMPROVEMENT 347,042 695,816 LAKE AVE S - RAINIER AVE S STORM IMPROVEMENTS 2,144,105 - MISCSEWER PROJECTS/LIBERTY HIGH LIFTSTATION 80,005 - LK WA BLVD -HAWKS LAND WATER IMPROVEMENTS 301,011 - LK WA BLV -HAWKS LAND STORM SYSTEM IMPROVEMENTS 906,744 - LK WASH BEACH LS ELI M/REHAB 623,192 - MAPLEWOOD EQUIPMENTACCESS & H2S MITIGATION 22,192 14,360 PRESI DENT PARK SEWER REPLACEMENT 540,541 - EARLI NGTON SEWER REPLACEMENT 666,570 - RAINIERAVES ROAD & UTILITIES IMPROVEMENT 814,284 698,284 RENTON AEROSPACE TRAINING CENTER 96,849 636,670 LIND AVE LIFTSTATION REHAB 87,949 25,685 SE 5TH STREET MAIN REPLACEMENT 384,343 - TAXI WAY BRAVO REHAB 834,827 2,729,231 AIRPORT LIFT STATION REHAB 77,760 46,936 MISTY COVE LIFTSTATION REPLACEMENT 29,511 89,402 WESTVIEW LIFTSTATION REHAB 303,846 - LIBERTY LIFTSTATION REHAB 381,577 82,796 STEVENS AVE NW 183,820 - HARRINGTON AVE NE GREEN CONNECTIONS 100,380 - RAI N ER AVE STORM WATER RETROFIT P ROJ ECT 276,776 3 50, 750 SUNSETTERRACE REGIONAL STORMWATER FACILITY 3,324 - NE 10TH ST& ANACORTES AVE NE DETENTION 2,134 - WATER QUALITY MONITORING 50,498 Total business -type activities $ 11,180,617 $ 6,805,595 Basic Financial Statements, 4-36 2012 Comprehensive Annual Financial Report NOTE 6. PENSION PLANS City of Renton, Washington With the exception of firefighters employed prior to March 1, 1970, substantially all City's full- time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing multiple -employer public employee defined benefit and defined contribution retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380; or it may be downloaded from the DRS website at www.drs.wa.gov. The City is the administrator of the Firefighter Pension Plan for all firefighters employed prior to March 1, 1970. The Firefighter Pension Plan is included within the City of Renton's statements as a pension trust fund. There is no separate GAAP -based audited report. A schedule of employer contributions, prepared by Healthcare Actuaries, is included in the Required Supplemental Information section. Additional information from the actuarial report prepared for the Firefighter Pension Plan, by Healthcare Actuaries, may be obtained by contacting the City of Renton, Finance Division, 1055 South Grady Way, Renton, WA 98057. The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers and No. 50, Pension Disclosures, and Amendment of GASB No. 25 and No. 27. Public Employees' Retirement System (PERS) Plans 1, 2, and 3 Plan Description PERS is a cost-sharing multiple -employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component. Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in a judicial retirement system); employees of legislative committees; community and technical colleges, college and university employees not participating in national higher education retirement programs; judges of district and municipal courts; and employees of local governments. PERS participants, who joined the PERS system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977; and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercise an option to transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees, have the irrevocable option Basic Financial Statements, 4-37 2012 Comprehensive Annual Financial Report City of Renton, Washington of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live. PERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS retirement benefit provisions are established in state statute and may be amended only by the State Legislature. PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with 25 years of service. The annual benefit is two percent of the average final compensation (AFC) per year of service, capped at 60 percent. (The AFC is based on the greatest compensation during any 24 eligible consecutive compensation months.) Plan 1 members who retire from inactive status prior to the age of 65 may receive actuarially reduced benefits. The benefit is actuarially reduced to reflect the choice of a survivor option. A cost -of -living allowance (COLA) is granted at age 66 based on years of service credit times the COLA amount, increased by three percent annually. Plan 1 members may also elect to receive an additional COLA amount that provides an automatic annual adjustment based on the Consumer Price Index. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 2 members are vested after completion of five years of eligible service. Plan 2 members may retire at age 65 with five years of service with an allowance of two percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60 -month period.) Plan 2 members who retire prior to the age of 65 receive reduced benefits. If retirement is at 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and a cost -of -living allowance is granted (based on the Consumer Price Index), capped at three percent annually. PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member contributions finance a defined contribution component. The defined benefit portion provides a benefit calculation at one percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60 - month period.) Effective June 7, 2006, Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years if twelve months were earned after age 44; or after five service credit years earned in PERS 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested Plan 3 members are eligible to retire with full benefits at age 65, or at age 55 with 10 years of service. Plan 3 members who retire prior to age 65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the Basic Financial Statements, 4-38 2012 Comprehensive Annual Financial Report City of Renton, Washington choice of a survivor option. There is no cap on years of service credit; and Plan 3 provides the same cost -of -living allowance as Plan 2. The defined contribution portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits Board. Judicial Benefit Multiplier Beginning January 1, 2007 through December 31, 2007 judicial members of PERS were given the choice to participate in the Judicial Benefit Program (JBM). Justices and judges in PERS 1 and 2 may make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5% multiplier. The benefit would be capped at 75% of AFC. Judges in PERS Plan 3 can elect a 1.6% of pay per year of service benefit, capped at 37.5% of average compensation. Members who choose to participate in JBM will accrue service credit at a higher multiplier beginning with the date of their election, be subject to the benefit cap of 75% of AFC, pay higher contributions, stop contributing to the Judicial Retirement Account (JRA), and be given the option to increase the multiplier on past judicial service. Members who do not choose to participate will: continue to accrue service credit at the regular multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate. Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who have not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the JBM program would: return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute to JRA; and not have the option to increase the multiplier for past judicial service. Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2011: Retirees and beneficiaries receiving benefits 79,363 Terminated plan members entitled to but not yet receiving benefits 29,925 Active plan members vested 105,578 Active plan members non -vested 46,839 Tota 1 261,705 Following is a summary of the number of government employers participating in PERS as of June 30, 2012. Basic Financial Statements, 4-39 2012 Comprehensive Annual Financial Report Number of Participating Employers City of Renton, Washington Tota 1 455 220 635 968 2,278 Funding Policy Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan 2 employer and employee contributions rates, and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at six percent for state agencies and local government unit employees, and 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS 3, employer contributions finance the defined benefit portion of the plan, and member contributions finance the defined contribution portion. The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are graduated rates dependent on the employee's age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31, 2012, were as follows: Members not participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* 7.21% 7.21% 7.21% Em DIovee 6.00% 4.64% *** * The employer rates include the employer administrative expense fee currently set at 0.16%. ** Plan 3 defined benefit portion only. *** Variable from 5% to 15% based on rate selected bythe member. Basic Financial Statements, 4-40 State School Counties/ Other Political Total Plan Agencies Districts Municipalities Subdivisions Members PERS 1 129 220 155 174 678 PERS 2 169 - 274 494 937 PERS 3 157 206 300 663 Tota 1 455 220 635 968 2,278 Funding Policy Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan 2 employer and employee contributions rates, and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at six percent for state agencies and local government unit employees, and 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS 3, employer contributions finance the defined benefit portion of the plan, and member contributions finance the defined contribution portion. The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are graduated rates dependent on the employee's age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31, 2012, were as follows: Members not participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* 7.21% 7.21% 7.21% Em DIovee 6.00% 4.64% *** * The employer rates include the employer administrative expense fee currently set at 0.16%. ** Plan 3 defined benefit portion only. *** Variable from 5% to 15% based on rate selected bythe member. Basic Financial Statements, 4-40 2012 Comprehensive Annual Financial Report Members participating in JBM: Contributor PERS Plan 1 City of Renton, Washington PERS Plan 2 PERS Plan 3 Employer -State Agency* 9.71% 9.71% 9.71%** Employer -Local Govt.* 7.21% 7.21% 7.21%** Employee -State Agency 9.76% 9.10% 7.50%*** Employee-Locat Govt. 12.26% 11.60% 7.50%*** * The employer rates include the employer administrative expense fee currently set at 0.16%. ** Plan 3 defined benefit portion only. *** Minimum rate. Both the City and the employees made the required contributions. The City's required contributions for years ended December 31, were as follows: Yea r PERS PI an 1 PERS PI an 2 PERS PI an 3 2012 $ 42,163 $ 1,773,371 $ 313,631 2011 44,457 1,496,892 261,528 2010 47,133 1,318,045 225,748 Law Enforcement Officers' and Firefighters' Retirement System (LEOFF) Plans 1 and 2 Plan Description LEOFF is a cost-sharing multiple -employer retirement system comprised of two separate defined benefit plans. LEOFF participants who joined the system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977, are Plan 2 members. Membership in the system includes all full-time, fully compensated; local law enforcement officers, firefighters and as of July 24, 2005, those emergency medical technicians who were given the option and chose LEOFF Plan 2 membership. LEOFF membership is comprised primarily of non -state employees, with the Department of Fish and Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an exception. Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy changes to the Legislature for the LEOFF Plan 2 retirement plan. LEOFF defined benefit retirement benefits are financed from a combination of investment earnings, employer and employee contributions, and a special funding situation in which the state pays through state legislative appropriations. LEOFF retirement benefit provisions are established in state statute and may be amended by the State Legislature. LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final average salary (FAS) is as follows: Basic Financial Statements, 4-41 2012 Comprehensive Annual Financial Report City of Renton, Washington Percent of Final Term of Service Average Salary 20 or more years 2.0% 10 but less than 20 years 1.5% 5 but less than 10 vears 1.0% The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. A cost -of -living allowance is granted (indexed to the Consumer Price Index). LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 50 with 20 years of service, or at age 53 with five years of service, with an allowance of two percent of the FAS per year of service. The FAS is based on the highest consecutive 60 months. Plan 2 members who retire prior to age 53 receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect the choice of a survivor option. If the member has at least 20 years of service credit and is age 50, the reduction is three percent for each year prior to age 53. There is no cap on years of service credit; and a cost -of -living allowance is granted (indexed to the Consumer Price Index), capped at three percent annually. Membership in LEOFF consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2011: Retirees and beneficiaries receiving benefits 9,947 Terminated plan members entitled to but notyet receiving benefits 656 Active plan members vested 13,942 Active plan members non -vested 3,113 Tota 1 27,658 Following is a summary of the number of government employers participating in LEOFF as of June 30, 2012. Number of Participating Emolovers State School Counties/ Other Pol itica I Total Plan Agencies Districts Municipalities Subdivisions Members LEOFF 1 - 42 12 54 LEOFF 2 8 212 153 373 Total 8 254 165 427 Funding Policy Starting on July 1, 2000, LEOFF Plan 1 employers and employees will contribute zero percent as long as the plan remains fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2 employer and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. All employers are required to contribute at the level required by state law. The Legislature, by Basic Financial Statements, 4-42 2012 Comprehensive Annual Financial Report City of Renton, Washington means of a special funding arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service cost of LEOFF Plan 2 in accordance with the requirements of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a change in statute. The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31, 2012, were as follows: Contributor LEOFF Plan 1 LEOFF Plan 2 Employer* 0.16% 5.24% Employee 0.00% 8.46% * The employer rates include the employeradmin- istrative expense fee currently set at 0.16%. Both the City and the employees made the required contributions. The City's required contributions for years ended December 31, were as follows: Year LEOFF Plan 1 LEOFF Plan 2 2012 $ 395 $ 1,364,670 2011 494 1,334,049 2010 394 1,278,378 Public Safety Employee's Retirement System (PSERS) Plan 2 Plan Description PSERS is a cost-sharing multiple -employer retirement system comprised of a single defined benefit plan, PSERS Plan 2. PSERS was created by the 2004 legislature and became effective July 1, 2006. PSERS Plan 2 membership includes full-time employees of a covered employer on or before July 1, 2006, who met at least one of the PSERS eligibility criteria, and elected membership during the election period of July 1, 2006 to September 30, 2006; and those full-time employees, hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. A "covered employer" is one that participates in PSERS. Covered employers include: State of Washington agencies: Department of Corrections, Department of Natural Resources, Parks and Recreation Commission, Gambling Commission, Washington State Patrol, Liquor Control Board; Washington state counties; and Washington state cities except for Seattle, Tacoma and Spokane. Basic Financial Statements, 4-43 2012 Comprehensive Annual Financial Report City of Renton, Washington To be eligible for PSERS, an employee must work on a full-time basis and: • have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce that criminal laws of Washington, and carry a firearm as part of the job; or • have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; or • function as a limited authority Washington peace officer, as defined in RCW 10.93.020; or • have primary responsibility to supervise eligible members who meet the above criteria. PSERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PSERS retirement benefit provisions are established in state statue and may be amended only by the State Legislature. PSERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 65 with five years of service, or at the age of 60 with at least ten years of PSERS service credit, with an allowance of two percent of the average final compensation (AFC) per year of service. The AFC is the monthly average of the member's 60 consecutive highest-paid service credit months, excluding any severance pay such as lump -sum payments for deferred sick leave, vacation or annual leave. Plan 2 retirees who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. There is no cap on years of service credit; and a cost -of -living allowance is granted (based on the Consumer Price Index), capped at three percent annually. Membership is PSERS consisted of the following as of the latest actuarial valuation date for the plan of June 30, 2011: Retirees and beneficiaries receiving benefits 15 Terminated plan members entitled to but notyet receiving benefits 1 Active plan members vested 167 Active plan members non -vested 4,020 Tota 1 4,203 Following is a summary of the number of government employers participating in PSERS as of June 30, 2012. Number of Participating Employers State School Counties/ Other Pol itica I Total Plan Agencies Districts Municipalities Subdivisions Members PSERS 10 65 1 76 Funding Policy Each biennium, the state Pension Funding Council adopts PSERS Plan 2 employer and employee contribution rates. The employer and employee contribution rates for Plan 2 are developed by Basic Financial Statements, 4-44 2012 Comprehensive Annual Financial Report City of Renton, Washington the Office of the State Actuary to fully fund Plan 2. All employers are required to contribute at the level established by the Legislature. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.37 and 41.45 RCW. The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2012 were as follows: Contributor PSERS Plan 2 Employer* 8.87% Emglovee 6.36% * The employer rates include the employer administrative expense fee currently set at 0.16%. Both the City and the employees made the required contributions. The City's required contributions for years ended December 31, were as follows: Year PSERS Plan 2 2012 $ 16,854 2011 21,518 2010 64,909 Firefighter's Pension Summary of Significant Accounting Policies Investments are reported at fair value. Plan Description The Firefighter's Pension Plan (Plan) is a closed, single -employer defined benefit pension plan administered by the City of Renton through the firefighter's pension board. The plan provides pensions for firefighters that were employed prior to March 1, 1970, when the LEOFF retirement system was established. The firefighters' pension board consists of five members: the Mayor who serve as chair the board, the chairperson of the Council Finance Committee, and three members elected by secret ballot of the retired firefighters. Benefits. All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement (LEOFF) System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Basic Financial Statements, 4-45 2012 Comprehensive Annual Financial Report City of Renton, Washington All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to current salary of rank from which the firefighter retired or increase proportionate to the increase in the Seattle -area consumer price index, with the change computed annually. Regardless of the change in the consumer price index, such increase shall be at least two percent each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. The latter applies to all other types of monthly benefits. At December 31, 2012 FPF membership consisted of the following: Retirees and beneficiaries receiving benefits 28 Retirees and beneficiaries currently receiving full retirement through LEOFF 4 Total 32 Monthly pension amounts as of December 2012 are: $17,233 paid by the city and $120,695 paid by LEOFF. Contributions. As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This stature requires that each municipality levy up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. I nvactmantc Investment Policy. The pension fund holds laddered treasury -strip investments with annual maturities to meet cash-flow requirements. The City is currently assessing options to deploy the growing cash balance. Rote of Return. For the year ended December 31, 2012, the annual money -weighted rate of return on pension plan investments, net of pension plan investment expense, was 3.13%. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2012, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation: 2.75% Salary increases: 3.00% Investment rate of return: 4.00% Basic Financial Statements, 4-46 2012 Comprehensive Annual Financial Report City of Renton, Washington Mortality rates were based on the RP -2000 Healthy Annuitant Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvement based on 50% of Scale AA. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed. We used the weighted expected returns of the City's portfolio of cash, US Treasuries (to be held to maturity), and receivables to develop the long-term expected rate of return. Discount rate. The discount rate used to measure the total pension liability was 4.00%. The projection of cash flows used to determine the discount rate assumed City contributions were equal to revenue received from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the City, calculated using the discount rate of 4.0%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is one percentage point lower, 3.0%, or one percentage point higher, 5.0%, than the current rate: Current Discount City's net pension liability 1% Decrease Rate 1% Increase $ 3,039,213 $ 2,787,814 $ 2,569,559 An actuarial valuation is done every two years and was completed as of January 1, 2013. The Actuarial Valuation of Firefighters' Pension Fund table is reported in the Required Supplemental Information section, and a recap of the Schedule of Funding Progress for the last five valuations is as follows: $ in thousands * The reduction in Actuarial Accrued Liability in 2011 is made up of 10% decrease in demographic experience (higher mortality rate) and a 25% decrease in actual benefit amounts compared to expectations. Changesin economic assumptions had minimal impact on the liabilities. Basic Financial Statements, 4-47 Unfunded Valuation Actuarial Actuarial Actuarial UAALas a Date Value of Accrued Accrued Funded Covered Percentage of January1 Assets Liabilities Liabilities Ratio Payroll Covered Payroll 2005 7,777 6,254 (1,523) 124% n/a 2007 7,847 6,364 (1,483) 123% n/a 2009 8,941 6,517 (2,424) 137% n/a 2011 8,940 3,914 * (4,576) 217% n/a 2013 9,501 2,788 ** (6,713) 341% n/a * The reduction in Actuarial Accrued Liability in 2011 is made up of 10% decrease in demographic experience (higher mortality rate) and a 25% decrease in actual benefit amounts compared to expectations. Changesin economic assumptions had minimal impact on the liabilities. Basic Financial Statements, 4-47 2012 Comprehensive Annual Financial Report City of Renton, Washington The following Annual Pension Cost and Net Pension Obligation table presents the Annual Required Contribution (ARC) as of December 31, 2012. The Annual Required Contribution (ARC) is the sum of the Normal Cost for the year plus amortization of the Unfunded Actuarial Accrued Liability (UAAL). The Normal Cost is the portion of the Actuarial Present Value (APV) of benefits attributable to current year services rendered, and Actuarial Accrued Liability (AAL) is the APV of future benefit costs, including projected benefit cost increase caused by projected future pay increases, attributable to prior services. The Unfunded Actuarial Accrued Liability (UAAL) is the portion of Actuarial Accrued Liability minus the actuarial value of the Plan's assets. Since all members have already retired, the Plan has no Normal Cost. The UAAL is amortized over a closed 30 -year period beginning January 1, 2000 using the level dollar amortization method. Calculation of Annual Required Pension Contribution and Net Pension Obligation Fiscal Year Ending 12/31/2010 12/31/2011 12/31/2012 Annual required contribution (ARC) I Annual Normal Cost $ $ $ 2. +Amortization ofUAALBeginningofYear* (166,142) (335,034) (509,887) 3. + I nterest on UAAL to End of Year* (6,646) (13,401) (20,395) 4. = ARC at End of Year [1+2+3] $ (172,788) $ (348,435) $ (530,282) 5. +Intereston Net Pension Obligation (51,780) (61,382) (77,375) 6. - Adjustment to ARC (91,589) (112,345) (159,003) 7 =Annual pension cost (APC) [4+5-6] (132,979) (297,472) (448,654) 8 - EmployerContributions** 107,068 102,354 118,775 9. =Change in Net Pension Obligation [7-8] (240,047) (399,826) (567,429) to. +Net Pension Obligation at Beginning of Yea (1,294,508) (1,534,555) (1,934,381) tt = Net Pension Obligation at End of Year [9+1 (1,534,555) (1,934,381) (2,501,810) * Assumed interest/discount rate of 4.0%, amortized with level dollar method. ** Employer contributions for pensions are total contributions to the fund net of disbursements for medical and administrative expenses. Basic Financial Statements, 4-48 2012 Comprehensive Annual Financial Report City of Renton, Washington Annual Development of Pension Cost (1 of 2) Annual Total Fiscal Year Ending ARCatEOY Interest on NPO ARC Adjustment Pension Cost Employer Contributions Change in NPO Obligation (NPO) [1] [2] [3=pyr7/9] [4=1+2-3] [5] [6=4-5] 12/31/2006 $ (113,541) $ (33,604) (44,035) $ (103,110) $ 59,068 $ (162,178) 12/31/2007 (109,968) (38,658) (54,591) (94,035) 59,777 (153,812) 12/31/2008 (109,968) (46,349) (67,070) (89,247) 66,055 (155,302) 12/31/2009 (172,788) (43,291) (74,178) (141,901) 70,327 (212,228) 12/31/2010 (172,788) (51,780) (91,589) (132,979) 107,068 (240,047) 12/31/2011 (348,435) (61,382) (112,345) (297,472) 102,354 (399,826) 12/31/2012 (530,282) (77,375) (159,003) (448,654) 118,775 (567,429) Annual Development of Pension Cost (2 of 2) Fiscal Year NPO Amort. Amort. Of Ending Ending Balance (Gain)/Loss Factor** (Gain)/Loss Balance [7=6+pryr7] [8=1-5] [9] [10=pyr11/9] [11=7] 12/31/2006 $ (773,166) $ (172,609) 13.87500 $ (44,035) $ (773,166) 12/31/2007 (926,978) (169,745) 14.16300 (54,591) (926,978) 12/31/2008 (1,082,280) (176,023) 13.82120 (67,069) (1,082,280) 12/31/2009 (1,294,508) (243,115) 14.59030 (74,178) (1,294,508) 12/31/2010 (1,534,555) (279,856) 14.13390 (91,589) (1,534,555) 12/31/2011 (1,934,381) (450,789) 13.65930 (112,345) (1,934,381) 12/31/2012 (2,501,810) (649,057) 12.16567 (159,003) (2,501,810) ** Level Dollar amportazation method. Three year trend information is recapped as follows: Employees are not required to make contributions under this Plan. The employer contributions to the Plan for 2012 include $119,668 from fire insurance premiums and $347,672 in investment income from Plan assets. Benefits and refunds of the Plan are recognized when due and payable in accordance with the terms of the Plan. For 2012, $225,506 was paid for pension benefit payments and $566 for medical payments. The Net Pension Obligation decreased by $567,429 to ($2,501,810) and is included as a non- current asset in the City of Renton's Government -wide Statement of Net Position. Basic Financial Statements, 4-49 Annual Contribution as a Net Pension Fiscal Year Ending Pension Cost (APC) Percentage of APC Obligation (NPO) December 31, 2010 (132,979) N/A (1,534,555) December 31, 2011 (297,472) N/A (1,934,381) December 31, 2012 (448,654) N/A (2,501,810) Employees are not required to make contributions under this Plan. The employer contributions to the Plan for 2012 include $119,668 from fire insurance premiums and $347,672 in investment income from Plan assets. Benefits and refunds of the Plan are recognized when due and payable in accordance with the terms of the Plan. For 2012, $225,506 was paid for pension benefit payments and $566 for medical payments. The Net Pension Obligation decreased by $567,429 to ($2,501,810) and is included as a non- current asset in the City of Renton's Government -wide Statement of Net Position. Basic Financial Statements, 4-49 2012 Comprehensive Annual Financial Report City of Renton, Washington NOTE 7. OTHER POST EMPLOYMENT BENEFITS During the year ended December 31, 2008, the City elected to adopt the provisions of GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB No. 45), which required the City to accrue other postemployment benefits (OPEB) expense related to its postretirement healthcare plan based on a computed annual required contribution (ARC) that includes the current period's service cost and an amount to amortize unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as-you-go" basis, the City, under GASB No. 45, has recorded a liability of $3,744,023 for the difference between the actuarially calculated ARC and the contributions made since the adoption of GASB No. 45. This liability is included in noncurrent liabilities in the accompanying December 31, 2012 Government -wide Statement of Net Position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess of revenue over expenses before capital contributions and the City's increase in net OPEB obligation for the year ended December 31, 2012 by $618,529. Plan Description The City of Renton's LEOFF Plan 1 (the Health Plan) is a single -employer defined benefit healthcare plan administered by the City. The Health Plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for LEOFF Plan 1 retirees. Dependent spouses and children are not covered. The Health Plan's actuary is Healthcare Actuaries. The Health Plan does not issue a separate standalone financial report. Funding Policy The City does not require retiree contributions. All benefits are paid in full by the City. For the fiscal year ended December 31, 2012, the City contributed $1,254,795 to the Health Plan. There were no retiree contributions. Annual OPEB Cost and Net OPEB Obligation The basis for the City's annual other postemployment benefit (OPEB) cost (expense) is the annual required contribution (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed ten years. The following displays the components of the City's annual OPEB cost, the estimated amount contributed to the Health Plan, and changes in the City's net OPEB obligation to the Health Plan. Basic Financial Statements, 4-50 2012 Comprehensive Annual Financial Report Annual required contribution (ARC) Annual Normal Cost Amortization of UAAL Interest to End of Year ARC at end of year I nterest on Net OPEB Obligation Adj ustment to ARC Annual OPEB cost Employer Contributions Change in Net OPEB Obligation City of Renton, Washington Fiscal Year Ending 12/31/2010 12/31/2011 12/31/2012 $ 54,262 $ 54,262 $ - 1,679,491 1,704,544 1,972,502 $ 1,733,753 $ 1,758,806 $ 1,972,502 $ 62,627 $ 78,799 $ 46,882 (93,961) (120,635) (146,060) 1,702,419 1,716,970 1,873,324 (983,868) (875,699) (1,254,795) 718,551 841,271 618,529 Net OPEB Obligation -beginning of year $ 1,565,672 $ 2,284,223 $ 3,125,494 Net OPEB Obligation -end of year $ 2,284,223 $ 3,125,494 $ 3,744,023 * Unfunded Actuarial Accrued Liability (UAAL) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Health Plan, and the net OPEB obligation for 2012 and the two preceding years were as follows: Funded Status and Funding Progress The funded status of the Health Plan as of December 31, 2012: Actuarial accrued liability (AAL) - Unit Credit Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets =AAL) Covered payroll UAAL as a percentage of covered payrol I $ 41,633,198 $ 41,633,198 0.0% 304,951 13652.42% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Actuarially determined amounts regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Net Assets of $6,360,269 is reported as unrestricted in Basic Financial Statements, 4-51 Percentage of Annual Employer OPEB Cost Net OPEB Year OPEB Cost Contribution Contributed Obligation 2010 $ 1,702,419 $ 983,868 57.79% $ 2,284,223 2011 1,716,970 875,699 51.00% 3,125,494 2012 1,873,324 1,254,795 66.98% 3,744,023 Funded Status and Funding Progress The funded status of the Health Plan as of December 31, 2012: Actuarial accrued liability (AAL) - Unit Credit Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets =AAL) Covered payroll UAAL as a percentage of covered payrol I $ 41,633,198 $ 41,633,198 0.0% 304,951 13652.42% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Actuarially determined amounts regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Net Assets of $6,360,269 is reported as unrestricted in Basic Financial Statements, 4-51 2012 Comprehensive Annual Financial Report City of Renton, Washington the insurance fund, however the City intends to utilize net position for the purpose of funding a portion of the UAAL. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of Health Plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The December 31, 2012 valuation used the unit credit actuarial cost methods. The actuarial assumptions included a 1.5% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 10.0% for pre -Medicare expenses, to an ultimate rate of 4.2% after 72 years. The Medicare trend assumption is 6.5%, to an ultimate rate of 4.2% after 8 years. The dental trend assumption is 5.5%, to an ultimate rate of 4.0% after 4 years. The Medicare premium trend rate is 8.5% for all years, except for the first year, which has a 0% trend rate. The long-term care trend rate is 5.0% for all years. The trend for the Excise Tax threshold is 0% until 2018, when a trend rate of 4.24% is used. The trend for all future years is 3.24%. All trend rates include a 3.0% inflation assumption. The UAAL at transition is being amortized as a level dollar amount on a closed basis. The remaining amortization period at December 31, 2012 was 25.0 years. The UAAL is recalculated each year and amortized as a level dollar amount over 26 years. Trend Rates Year Pre- Medicare Medicare Dental Vision Part Premiums Long -Term Care Excise Tax Threshold 2014 10.0% 6.5% 5.5% 4.0% 8.5% 5.0% 0.00% 2015 9.5% 6.5% 5.0% 4.0% 8.5% 5.0% 0.00% 2016 9.0% 6.0% 4.5% 4.0% 8.5% 5.0% 0.00% 2017 8.5% 6.0% 4.0% 4.0% 8.5% 5.0% 0.00% 2018 8.0% 5.5% 4.0% 4.0% 8.5% 5.0% 4.24% 2019 7.5% 5.0% 4.0% 4.0% 8.5% 5.0% 3.24% 2020 7.0% 4.5% 4.0% 4.0% 8.5% 5.0% 3.24% 2021 6.4% 4.2% 4.0% 4.0% 8.5% 5.0% 3.24% 2022-2084 ... ... 4.0% 4.0% 8.5% 5.0% 3.24% 2085+ 4.2% 4.2% 4.0% 4.0% 8.5% 5.0% 3.24% Note: The rend rates include assumed inflation of 3.0% for all future years. Basic Financial Statements, 4-52 2012 Comprehensive Annual Financial Report NOTE 8. CONTINGENCIES City of Renton, Washington Litigation The City has recorded in its financial statements all material liabilities, including an estimate for situations that are not yet resolved but where, based on available information, management believes it is probable that the City will have to make payment. In the opinion of management, the City's insurance policies and/or self-insurance reserves are adequate to pay all known or pending claims. Contingencies under Grant Provisions The City participates in a number of federal and state assisted programs. These grants are subject to audit by the grantors of their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. The City's management believes that such disallowances, if any, will be immaterial. Bond Indentures The City is in compliance with all significant bond indentures and restrictions. Leases The City also leases office facilities for the City Attorney's office. The total annual cost is $90,000 per year with the lease term ended December 31, 2011. The City has extended the lease terms through mid -2013, with monthly payments of $7,500. Beginning mid -2013, the City Attorney's Office will move into a City -owned building and the current lease will be terminated. Construction Commitments Refer to Note 5. NOTE 9. RISK MANAGEMENT The City of Renton is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City of Renton protects itself against unforeseen losses by utilizing a three -pronged risk management approach. First, the City self -funds first level losses through its Insurance Fund. Second, excess insurance is purchased to cover medium and large losses. Third, the City reserves the right to utilize the provisions of Chapter 35A.31.060 RCW to fund catastrophic or uninsured losses. This State statute allows cities to levy a non -voted property tax increase to pay for uninsured claims. An analysis of the self-insurance retention levels, limits of insurance, and claims administrator for the major types of coverage are as follows: Basic Financial Statements, 4-53 2012 Comprehensive Annual Financial Report City of Renton, Washington Airport liability — Expires Risk $100,000,000 Ace Property & 1/01/2013 Retention Casualty Type of Coverage Occurrence Aggregate Amount Carrier Property — Expires $25,000 $500,000,000 (per WA Cities Ins 01/01/2013 $450,000 occurrence subject to Authority Expires 1/01/2013 annual aggregate & Excess Employee health — $175,000 sub -limits) Symetra Liability— Expires $250,000 $20,000,000 WA Cities Ins 01/01/2013 (per occurrence) Authority Auto Physical Damage — ACV or Replacement WA Cities Ins Expires 01/01/2013 $25,000 Cost; per Occurrence Authority Public Officials (E&0) — $250,000 $15,000,000 WA Cities Ins Expires 01/01/2013 Authority Equipment breakdown— $5,000* $50,000,000 Zurich Expires 1/01/2013 Crime—Expires 12/31/2013 $10,000 $2,500,000 National Union Fire Airport liability — Expires 0 $100,000,000 Ace Property & 1/01/2013 Casualty Underground storage tank— $2,500 $1,000,000 Colony Expires 1/01/2013 Excess Workers' comp — $450,000 Statutory Safety National Expires 1/01/2013 Excess Employee health — $175,000 N/A Symetra Expires 1/01/2013 * There is a 4 -hour utility interruption clause, prior to the deductible becoming applicable For policy term January 1, 2012 to January 1, 2013, there were no reductions in insurance coverage and an increase in premiums; however, settlements for the last three years have not exceeded insurance coverage. The City of Renton is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self- insuring, and/or jointly contracting for risk management services. WCIA has a total of 153 members. New members initially contract for a three-year term and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self-insured layer, and $16 million per occurrence in the re -insured excess layer. The excess layer is insured by the purchase of Basic Financial Statements, 4-54 2012 Comprehensive Annual Financial Report City of Renton, Washington reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, and inland marine are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members' deductible to $750,000 for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis; as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. These revenues directly offset portions of the membership's annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. The City's Risk Management Program is administered by the Human Resources and Risk Management Administrator, with claims being processed by the independent claims administrators noted above. As of December 31, 2012, the City had accrued the following amounts for outstanding claims: Total Claims Payable Coverage 12/31/2012 Property &liability $ 537,571 Workers' compensation 827,147 Employee health 1,389,400 TOTAL $ 2,754,118 Basic Financial Statements, 4-55 2012 Comprehensive Annual Financial Report City of Renton, Washington NOTE 10. INTERFUND TRANSACTIONS Interfund transactions are classified as follows: 1. Services Provided — Transactions that would be treated as revenues, expenditures, or expenses if they involve external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Renton. 2. Transfers — Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the Government -wide financial statements. 3. Contributions — Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers remaining balances when funds are closed are classified non-operating revenue. 4. Loans— Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund loans receivable/payable. Any residual balances outstanding between the governmental activities and business -type activities are reported in the government - wide financial statements as internal balances. Basic Financial Statements, 4-56 Property & Workers' Employee 2012 Liability Compensation Health Totals IBNR claims at beginning of the year $ 641,640 $ 613,655 $ 1,186,900 $ 2,442,195 Currentyearand changes in estimates 946,936 1,362,079 11,898,851 14,207,866 Claims payments (1,051,005) (1,148,587) (11,696,351) (13,895,943) IBNR claims at end of the year $ 537,571 $ 827,147 $ 1,389,400 $ 2,754,118 Property & Workers' Employee 2011 Liability Compensation Health Totals IBNR claims at beginning of the year $ 697,531 $ 696,880 $ 1,899,079 $ 3,293,490 Currentyearand changes in estimates 1,375,182 664,764 8,961,050 11,000,996 Claims payments (1,431,073) (747,989) (9,673,229) (11,852,291) IBNR claims at end of the year $ 641,640 $ 613,655 $ 1,186,900 $ 2,442,195 NOTE 10. INTERFUND TRANSACTIONS Interfund transactions are classified as follows: 1. Services Provided — Transactions that would be treated as revenues, expenditures, or expenses if they involve external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Renton. 2. Transfers — Transactions to support the operations of other funds are recorded as "Transfers" and classified with "Other Financing Sources or Uses" in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the Government -wide financial statements. 3. Contributions — Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers remaining balances when funds are closed are classified non-operating revenue. 4. Loans— Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund loans receivable/payable. Any residual balances outstanding between the governmental activities and business -type activities are reported in the government - wide financial statements as internal balances. Basic Financial Statements, 4-56 2012 Comprehensive Annual Financial Report City of Renton, Washington The following is a summary of interfund balances at the fund level, as of December 31, 2012, for the purpose of reclassifying revenue/expenditures between funds: At the government -wide level, the following interfund balances occurred for the purpose of reclassifying revenue/expenditures between governmental -type and business -type activities: Fund Due From Other Funds Due From General Fund Due To Fund Municipal Facilities Fund Other Funds - Other Funds General Fund $ 136,367 $ 36,742 Municipal Facilities Fund 25,937 26,482 Equipment Repairand Replacement 902 Capital Improvement Fund TOTAL - $ 81,677 65,171 Subtotal Governmental Funds $ 162,848 $ 102,815 Waterworks Utility Fund 25,937 51,304 Solid Waste 2,218 2,218 Subtotal Enterprise Funds $ 28,155 $ 53,522 Equipment Repairand Replacement 12,276 3,388 Information Technology - 44,457 Facilities 902 - Subtotal Internal Service Funds $ 13,177 $ 47,845 TOTAL $ 204,181 $ 204,181 At the government -wide level, the following interfund balances occurred for the purpose of reclassifying revenue/expenditures between governmental -type and business -type activities: Fund Due From Other Funds Due To Other Funds General Fund $ 26,334 $ 25,172 Municipal Facilities Fund 26,482 - Ai rport - - Solid Waste 2,218 2,218 Waterworks Utility Fund 25,937 51,304 Equipment Repairand Replacement 706 2,983 TOTAL $ 81,677 $ 81,677 The following is a summary of interfund loans made for capital improvement purposes, at the fund level, as of December 31, 2012: Fund Interfund Loans Receivable Interfund Loans Payable General Fund Capital Improvement Fund $ 461,810 - $ - 1,027,970 Subtotal Governmental Funds 461,810 1,027,970 Airport Fund Golf Course Fund Waterworks Utility Fund - - 199,855 199,855 1,149,907 - Subtotal Enterprise Funds 199,855 1,349,762 Insurance Fund 1,716,067 - Subtotal Internal Service Funds 1,716,067 - TOTAL $ 2,377,732 $ 2,377,732 Basic Financial Statements, 4-57 2012 Comprehensive Annual Financial Report City of Renton, Washington At the government -wide level, only one interfund loan occurred for capital improvement: The following is a summary of interfund transfers that took place during 2012 at the fund level: Interfund Loans Interfund Loans Fund Receivable Payable Golf Course Fund $ 204,000 $ 1,149,907 Insurance Fund $ 1,149,907 600,000 TOTAL 1 $ 1,149,907 $ 1,149,907 The following is a summary of interfund transfers that took place during 2012 at the fund level: Basic Financial Statements, 4-58 Transfer Transfer Fund In Out General Fund $ 204,000 $ 2,085,347 Arterial Street Fund - 600,000 Paths and Trails Fund - 3,315 One PercentforArtFund 7,877 - General Debt Service Fund 2,652,993 - Fire Impact Mitigation Fund - 936,926 Transportation Impact Mitigation Fund - 450,000 Municipal Facilities CIP Fund 265,000 30,813 Capital Improvement Fund 1,053,315 7,064 Subtotal Governmental Funds 4,183,185 4,113,464 Ai port Fund - 107,449 Golf Course Fund - 1,418 Waterworks UtilityFund - 125,094 Subtotal Enterprise Funds - 233,961 Equipment Rental Fund 228,043 65,000 Insurance Fund - 204,000 Information Services Fund 73,590 - Facilities Fund 11,940 - Subtotal Internal Service Funds 313,573 269,000 Firemen's Pension Trust Fund 119,668 - TOTAL $ 4,616,425 $ 4,616,425 Basic Financial Statements, 4-58 2012 Comprehensive Annual Financial Report At the government -wide level, the following transfers occurred: City of Renton, Washington Fund Transfer In Transfer Out Airportfund - 107,449 Golf Course Fund - 1,418 Waterworks Utility Fund - 125,094 Equipment Rental Fund 228,043 - Information Services Fund 5,918 TOTAL I $ 233,961 $ 233,961 NOTE 11. NET POSITION The Government -wide and business type fund financial statements utilize a net position presentation. Net position is the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. Net position is categorized as investments in capital assets (net of related debt), restricted, and unrestricted. A. Investment in Capital Assets (net of related debt) is intended to reflect the portion of net position associated with non -liquid, capital assets less outstanding capital asset related debt. The net related debt is the debt less the outstanding liquid assets and any associated unamortized costs. B. Restricted net position is comprised of liquid assets which have third party (statutory, bond covenant, or granting agency) limitations on their use. The restricted component of net position is reduced by liabilities and deferred inflows related to those assets. The restricted component of net position of governmental activities may not equal to restricted fund balances in the governmental funds due to a different measurement focus and different basis of accounting. The City would typically use restricted net position first, as appropriated opportunities arise, but reserve the right to selectively defer the use thereof to a future project or replacement equipment acquisition. C. Unrestricted net position represents unrestricted liquid assets. Unrestricted Governmental Activities have committed and assigned designations that reflect the City Council and management's plans and commitments to expend resources for certain purposes in future periods. Funds with committed designations reflect amounts constrained by the City Council, either through formal budget adoption or other purposes formally approved by the Council. Amounts with assigned designations reflect all amounts remaining in governmental funds, other than the general fund, not classified as nonspendable, restricted or committed. Assigned amounts also include year-end encumbrances that have received approval from the City Council and re -appropriated in the following year's carry forward budget. The City's financial policies require a maximum amount of 12% and minimum of 8% fund balance to remain in the general fund for cash flow purposes. Basic Financial Statements, 4-59 2012 Comprehensive Annual Financial Report City of Renton, Washington NOTE 12. PRIOR PERIOD ADJUSTMENTS Governmental Activities Developer contributions from 2011 in the amount of $497,662 (net of depreciation) were not properly recorded as such and the related assets were not recorded in the full amount. A prior period adjustment was necessary in 2012 to properly record these capital assets. Additionally, prior period adjustments in the amount of $(194,151) were required to dispose of construction -in -progress assets improperly capitalized in prior years. Business -Type Activities Developer contributions from 2011 in the amount of $387,893 (net of depreciation) were not properly recorded as such and the related assets were not recorded in the full amount. A prior period adjustment was necessary in 2012 to properly record these capital assets. Additionally, prior period adjustments in the amount of $(280,910) were required to dispose of construction -in -progress assets improperly capitalized in prior years. NOTE 13. LONGTERM DEBT The City of Renton's long-term debt consists of General Obligation Debt, repaid mainly from general governmental revenue sources, Proprietary Debt, repaid from proprietary revenues and compensated absences/other post -employment benefits. These debts are accounted for in the following areas: 1) The outstanding general obligation debt is reported in the Government - wide financial statements; 2) The repayment, or debt service of the same, is recorded in the Debt Service Funds; and, 3) The proprietary debt liability and repayment of the same are reported in individual Proprietary Funds. Compensated absences and other post -employment benefits are generally liquidated mainly from the general fund and to a lesser extent, the internal service funds. Basic Financial Statements, 4-60 2012 Comprehensive Annual Financial Report Outstanding debt issues as of December 31, 2012 are as follows: City of Renton, Washington Type of Debt Interest Rates Issued Maturity Original Issued Date Date Amount GOVERNMENTAL DEBT: General Obligation Bonds: Limited: 2006 GO Bonds 4.25%-5.00% 08/08/2006 12/01/2028 17,980,000 2010 GO Refunding Bonds 3.00%-4.50% 05/11/2010 12/01/2021 6,170,000 2011 GO Library Bonds 2.00%-5.00% 08/02/2011 12/01/2022 16,715,000 2011 GO Refunding Bonds 2.00%-5.00% 09/21/2011 12/01/2017 9,425,000 SUBTOTAL LIMITED GO 50,290,000 Other Miscellaneous debt - Intergovernmental, Backed by full faith and credit of the City: 2009 FD 40 Loa n for a cq u i s i ti on of FS13 3.75% 03/01/2009 09/01/2028 6,798,085 2009 (A) SCORE Tax Exempt 4.00%-5.00% 11/04/2009 01/01/2022 2,953,800 2009 (B) SCORE BABS 3.00%-6.62% 11/04/2009 01/01/2039 28,090,800 2010 GO Valley Comm Refunding Bonds 3.00%-4.00% 04/05/2010 12/01/2015 1,065,000 SUBTOTAL MISCELLANEOUS 38,907,685 TOTAL GOVERNMENTAL -TYPE DEBT ISSUANCE 89,197,685 BUSINESS -TYPE DEBT: Revenue Bonds: 2003 Water/Sewer Refunding 3.20% 09/15/2003 06/01/2013 8,035,000 2004 Water/Sewer 4.33% 11/01/2004 12/01/2027 10,335,000 2007 Water/Sewer 4.00%-5.00% 11/06/2007 12/01/2022 1,430,000 2007 Water/Sewer Refunding (02) 4.00%-5.00% 11/06/2007 12/01/2022 8,320,000 2008 Water/Sewer (a) 4.17% 01/04/2008 12/01/2027 9,975,000 2008 Water/Sewer (b) 4.17% 01/04/2008 12/01/2016 2,035,000 2012 Water/Sewer Refunding 2.00%-3.00% 12/07/2012 12/01/2027 9,190,000 TOTAL REVENUE BONDS 49,320,000 Public Works Trust Fund Loans: Central Renton Sewer Replacement 1.00% 05/04/1993 07/01/2015 1,631,800 East Renton Interceptor 1.00% 06/07/1993 07/01/2013 2,542,704 Dayton Avenue NE 2.00% 05/12/1994 07/01/2014 96,958 NE 27th/Aberdeen Drainage Improvements 1.00% 05/15/1995 07/01/2015 731,000 East Kennydale Interceptor 2.00% 01/24/1998 07/01/2016 2,093,740 Honeycreek Interceptor 2.00% 12/04/1995 07/01/2016 1,840,568 Corrosion Control Treatment Facilities 1.00% 01/06/1997 07/01/2017 1,106,000 Maplewood Water Treatment Improvement 0.50% 01/22/2002 07/01/2021 567,831 Construct CT Pipeline for Wells 0.50% 11/05/2002 07/01/2022 814,527 Maplewood Water Treatment Improvement 0.50% 06/03/2004 07/01/2024 5,150,000 TOTAL PUBLIC WORKS TRUST FUND LOANS 16,575,128 TOTAL BUSINESS -TYPE DEBT ISSUANCE 65,895,128 TOTAL AMOUNT ISSUED ON OUTSTANDING DEBT AS OF DECEMBER 31, 2012 $ 155,092,813 Basic Financial Statements, 4-61 2012 Comprehensive Annual Financial Report Outstanding debt additions and retirements are summarized as follows: City of Renton, Washington Basic Financial Statements, 4-62 Beginning Balance Ending Balance Due Within One General Governmental Debt 01/01/2012 Additions Deductions 12/31/2012 Year Limited General Obligation Debt 2002 GO Bonds $ 2,515,000 $ $ 2,515,000 $ - $ - 2006 GO Bonds 15,770,000 610,000 15,160,000 640,000 2010 GO Refunding Bonds 6,025,000 5,000 6,020,000 5,000 2011 GO Library Bonds 16,715,000 1,375,000 15,340,000 1,420,000 2011 GO Refunding Bonds 9,265,000 1,450,000 7,815,000 1,480,000 Unamortized (discount)/premium/refunding 2,703,407 294,731 2,408,675 - Total Limited GO Bonds 52,993,407 6,249,731 46,743,675 3,545,000 Other Miscellaneous debt - Intergovernmental, Backed with full faith and credit of the City 2009 FD 40 Loan for acquisition of FS13 6,161,039 271,517 5,889,522 282,439 2009 (A) SCORE Tax Exempt 2,953,800 - 2,953,800 - 2009 (B) SCORE BABS 28,090,800 689,400 27,401,400 702,000 2010 GO Valley Comm. Refunding Bonds 848,000 201,000 647,000 215,000 Total Miscellaneous 38,053,639 1,161,917 36,891,722 1,199,439 Total General Obligation Debt 91,047,046 7,411,648 83,635,398 4,744,439 Other: Employee Leave Benefits (Comp. Absences) 5,277,306 2,962,404 3,008,064 5,231,645 2,982,038 Other post -employment benefits payable 3,125,494 1,873,324 1,254,795 3,744,023 - Total Governmental Obligation $ 99,449,846 $ 4,835,728 $11,674,508 $ 92,611,066 $ 7,726,477 Basic Financial Statements, 4-62 2012 Comprehensive Annual Financial Report City of Renton, Washington Outstanding debt additions and retirements are summarized as follows (continued): DEEP DISCOUNT DEBT As of December 31, 2012, the City of Renton has no deep discount debt outstanding. SPECIAL ASSESSMENT DEBT WITH GOVERNMENTAL COMMITMENT As of December 31, 2012, the City of Renton has no special assessment debt outstanding. DEBT LIMIT CAPACITIES State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5 percent without a vote of the people provided the indebtedness with a vote is 1 percent or less; 2.5 percent with a vote of the people; 5.0 percent with a vote of the people, provided the indebtedness in excess of 2.5 percent is for utilities; and Basic Financial Statements, 4-63 Beginning Balance Ending Balance Due Within One Business -Type Debt 01/01/2012 Additions Deductions 12/31/2012 Year Revenue Bonds: 1998 Water/Sewer Refunding Bond $ 1,045,000 $ $ 1,045,000 $ - $ 2002 Water/Sewer Bond 1,025,000 1,025,000 - - 2003 Water/Sewer Refunding Bond 805,000 390,000 415,000 415,000 2004 Water/Sewer Bond 10,335,000 9,045,000 1,290,000 205,000 2007 Water/Sewer Bond 1,430,000 - 1,430,000 - 2007 Water/Sewer Refunding Bond (02) 8,275,000 15,000 8,260,000 20,000 2008 Water/Sewer Bond (a) 9,975,000 - 9,975,000 - 2008 Water/Sewer Bond (b) 2,035,000 2,035,000 610,000 2012 Water/Sewer Refunding Bond - 9,190,000 9,190,000 40,000 Unamortized (discount)/premium/refunding 1,581 (137,450) (33,671) (102,198) - Total Revenue Bonds 34,926,581 9,052,550 11,486,329 32,492,802 1,290,000 Public Works Trust Fund Loans: Sierra Heights Sewer Improvements 25,641 - 25,641 - - Central Renton Sewer Replacement 279,001 87,483 191,518 87,483 East Renton Interceptor 269,140 134,570 134,570 134,570 Dayton Avenue NE 15,309 5,103 10,206 5,103 NE 27th/Aberdeen Drainage Improvement 170,359 42,590 127,769 42,590 East Kennydale Interceptor 584,276 116,855 467,422 116,855 Honeycreek Interceptor 484,360 96,872 387,488 96,872 Corrosion Control Treatment Facilities 296,141 49,357 246,785 49,357 Maplewood Water Improvement 303,009 30,301 272,709 30,301 Const. Cr Pipeline for Wells 471,568 42,870 428,699 42,870 Maplewood Water Improvements 3,544,412 272,647 3,271,765 272,647 Total Public Work Trust Fund Loan 6,443,218 - 904,289 5,538,929 878,648 Other: Employee Leave Benefits (Comp.Absences) 699,664 186,562 160,834 725,392 173,978 Total Business -Type Debt 42,069,463 9,239,112 12,551,452 38,757,123 2,342,625 GRAND TOTALS $ 141,519,309 $14,074,840 $ 24,225,960 $ 131,368,189 $ 10,069,102 DEEP DISCOUNT DEBT As of December 31, 2012, the City of Renton has no deep discount debt outstanding. SPECIAL ASSESSMENT DEBT WITH GOVERNMENTAL COMMITMENT As of December 31, 2012, the City of Renton has no special assessment debt outstanding. DEBT LIMIT CAPACITIES State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5 percent without a vote of the people provided the indebtedness with a vote is 1 percent or less; 2.5 percent with a vote of the people; 5.0 percent with a vote of the people, provided the indebtedness in excess of 2.5 percent is for utilities; and Basic Financial Statements, 4-63 2012 Comprehensive Annual Financial Report City of Renton, Washington 7.5 percent with a vote of the people provided the indebtedness in excess of 5.0 percent is for open space development and parks facilities. Table 12 in the Statistical Section shows the computation of legal debt margin for general and special purpose capacities for the City of Renton. ARBITRAGE The City engages an outside agency to calculate its' arbitrage rebate liability on outstanding tax- exempt bonds and certificates of participation under Section 148(f) of the Internal Revenue Code. No additional rebate was found due for any revenue or general obligation bonds for 2012. ISSUED/REFUNDED DEBT On December 7, 2012 the City issued $9,190,000 in tax-exempt Water and Sewer Revenue Refunding Bonds with an average interest rate of 2.65% to advance refund a portion, $9,045,000, of outstanding 2004 Water and Sewer Revenue Bonds. The net proceeds were used to purchase U.S. government securities which were deposited with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, this portion of the original bond is considered defeased. On December 1, 2012 the City redeemed and retired the outstanding $2,315,000 in 2002 Limited Tax General Obligation bonds. The early redemption will save the City approximately $650,000 in interest over the remaining ten years. On December 1, 2012 the City transferred $1,149,907 in Golf Course interfund loans and $566,160 in Capital Improvement Fund loans from the General Fund to the City's Health Insurance Fund. The interfund loans will be fully repaid on December 1, 2015 and May 30, 2016, respectively. The City defeases certain bond issues by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. The schedules of assets, liabilities, and net assets of the City's escrow accounts as of December 31, 2012 are provided in the following table. Basic Financial Statements, 4-64 2012 Comprehensive Annual Financial Report Cash with Trustee Investments with Trustee Estimated Interest Receivable Total Assets Liabilities Refunded Bonds Payable Total Liabilities Net Assets Earnings with Trustee Total Net Assets US Bank Corporate Trust (2012 Revenue Bonds) $ 2 9,904,340 9,904,342 9,904,340 9,904,340 2 $ 2 City of Renton, Washington ANNUAL DEBT SERVICE REQUIREMENTS The annual debt service requirements to maturity, including principal and interest, for long- term debt as of December 31, 2012, are as follows: AMOUNT AVAILABLE FOR DEBT SERVICE Fund balances that have been reserved for debt repayment are $1,159,999, reported other non -major governmental funds. OPERATING LEASES As of December 31, 2012, the City of Renton has no operating leases outstanding. NOTE 14 - DEFERRED CHARGES IN PROPRIETARY FUNDS As of December 31, 2012, the total amount of deferred charges and other assets reported in the proprietary funds is $386,148. 100% of this amount is reported in the Waterworks Utility Fund and is for debt issuance costs related to the 2003-2012 Revenue Bonds. This amount will be fully amortized by 2027. Basic Financial Statements, 4-65 Governmental Activities Business -Type Activities Year Principal Interest Principal Interest 2013 4,744,439 3,363,084 2,168,648 1,292,497 2014 4,866,530 3,227,809 2,403,612 1,243,751 2015 5,037,625 3,055,153 2,468,509 1,165,996 2016 4,992,416 2,888,667 2,453,901 1,083,517 2017 5,179,072 2,690,812 2,325,175 991,301 2018-2022 24,625,250 10,125,877 12,638,788 3,639,599 2023-2027 13,404,733 5,810,539 13,675,294 1,415,515 2028-2032 8,311,055 3,118,973 - - 2033-2037 8,206,200 1,488,076 2038+ 1,859,400 79,962 - - Totals 81,226,722 35,848,951 38,133,927 10,832,175 AMOUNT AVAILABLE FOR DEBT SERVICE Fund balances that have been reserved for debt repayment are $1,159,999, reported other non -major governmental funds. OPERATING LEASES As of December 31, 2012, the City of Renton has no operating leases outstanding. NOTE 14 - DEFERRED CHARGES IN PROPRIETARY FUNDS As of December 31, 2012, the total amount of deferred charges and other assets reported in the proprietary funds is $386,148. 100% of this amount is reported in the Waterworks Utility Fund and is for debt issuance costs related to the 2003-2012 Revenue Bonds. This amount will be fully amortized by 2027. Basic Financial Statements, 4-65 2012 Comprehensive Annual Financial Report NOTE 15. SEGMENT INFORMATION City of Renton, Washington An identifiable activity (or grouping of activities) required to be accounted for separately, which (a) is reported as or within an enterprise fund; (b) for which one or more revenue bonds are outstanding; and, (c) where the revenue stream is pledged for payment of, are required to disclose segment information. The City of Renton has no required segment information to disclose for 2012. NOTE 16. JOINT VENTURES A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The City participates in two joint ventures. VALLEY COMMUNICATIONS CENTER The Valley Communications Center (Valley Com) was established August 20, 1976, when an Interlocal Agreement was entered into by four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila. Federal Way was formally admitted in 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to Chapter 39.34 RCW. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies that include: King County Fire Districts 2, 17 (Black Diamond), 20, 26, 40, 43, 44, 47; City of Pacific Police and Fire Departments; City of Black Diamond Police Department; City of Des Moines Police Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Com and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The City of Renton reports its share of equity interest in the Governmental Activities column within the Government -wide financial statements under non-current assets. The following is condensed financial information as of December 31, 2012 related to Valley Communications Center: Basic Financial Statements, 4-66 2012 Comprehensive Annual Financial Report City of Renton, Washington Completed Financial Statements for Valley Com can be obtained from the Valley Communications Center, 23807 — 98th Avenue South, Kent, WA 98031. SOUTH CORRECTIONAL ENTITY (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Agreement. SCORE, a governmental administrative agency pursuant to RCW 39.34.030 (3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility will be provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755 and secured by the full faith and credit of the Cities of Auburn, Burien Federal Way, Renton, SeaTac, and Tukwila (the "Owner Cities"). The SCORE PDA issued $86 million in special obligation bonds in 2009 to carry out the facility development project Basic Financial Statements, 4-67 Valley Communications Center 2012 Owner Cities Equity Allocation Member City Percent of Equity 2011 Euit Balance 2012 Distribution 2012 Euit Balance Auburn 19.43% $ 4,723,727 $ 59,850 $ 4,783,577 Federal Way 22.00% 3,258,408 66,176 $ 3,324,584 Kent 27.57% 7,052,092 87,685 $ 7,139,777 Renton 21.39% 4,996,753 65,681 $ 5,062,434 Tukwila 9.61% 2,812,717 30,690 $ 2,843,407 Grand Totals 100.00% $ 22,843,697 $ 310,082 $ 23,153,779 Completed Financial Statements for Valley Com can be obtained from the Valley Communications Center, 23807 — 98th Avenue South, Kent, WA 98031. SOUTH CORRECTIONAL ENTITY (SCORE) The South Correctional Entity (SCORE) consolidated correctional facility was established February 25, 2009, when an Interlocal Agreement (the "Original Interlocal Agreement") was entered into by seven participating municipal governments, the "Member Cities" of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac and Tukwila, under the authority of the "Interlocal Cooperation Act" (RCW 39.34). This "Original Interlocal Agreement" was amended and restated October 1, 2009 and named the City of Des Moines as the "Host City" and the remaining Member Cities as "Owner Cities". This interlocal agreement is known as the "Formation Interlocal Agreement". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Agreement. SCORE, a governmental administrative agency pursuant to RCW 39.34.030 (3), has the power to acquire, construct, own, operate, maintain, equip, and improve a correctional facility known as the "SCORE Facility" and to provide correctional services and functions incidental thereto, for the purpose of detaining arrestees and sentenced offenders in the furtherance of public safety and emergencies within the jurisdiction of the Member Cities. The SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. Financing for the acquisition, construction, equipping, and improvement of the SCORE Facility will be provided by bonds issued by the South Correctional Entity Facility Public Development Authority (the "SCORE PDA"), a public development authority chartered by the City of Renton pursuant to RCW 35.21.730 through 35.21.755 and secured by the full faith and credit of the Cities of Auburn, Burien Federal Way, Renton, SeaTac, and Tukwila (the "Owner Cities"). The SCORE PDA issued $86 million in special obligation bonds in 2009 to carry out the facility development project Basic Financial Statements, 4-67 2012 Comprehensive Annual Financial Report City of Renton, Washington The following is a summary of the debt service requirements for the bond issue: The following is the debt service allocation to each Owner City: Debt Service Schedule Debt Service Allocation to Owner Cities Auburn 35% BABs Federal Way Year Principal Interest Subsidy Total 2013 $ 1,915,000 $ 5,126,998 $ (1,675,089) $ 5,366,909 2014 1,950,000 5,066,566 (1,654,975) 5,361,591 2015 1,990,000 4,995,069 (1,632,787) 5,352,282 2016 2,065,000 4,911,886 (1,632,787) 5,344,099 2017 2,145,000 4,820,241 (1,621,980) 5,343,261 2018-2022 11,990,000 22,399,915 (7,748,350) 26,641,565 2023-2027 14,485,000 18,727,798 (6,710,481) 26,502,317 2028-2032 17,725,000 13,590,870 (4,959,695) 26,356,175 2033-2037 21,855,000 7,082,263 (2,731,829) 26,205,434 2038-2039 10,115,000 676,321 (353,824) 10,437,497 Totals $ 86,235,000 $ 87,397,927 $ 30,721,797 $ 142,911,130 The following is the debt service allocation to each Owner City: The City of Renton reports its share of equity interest in the Governmental Activities column within the Government -wide financial statements under non-current assets. The following is condensed financial information as of December 31, 2012 related to SCORE: Basic Financial Statements, 4-68 Debt Service Allocation to Owner Cities Auburn Burien Federal Way Renton SeaTac Tukwila Year 31% 4% 18% 36% 3% 8% 2013 $ 1,663,742 $ 214,676 $ 966,044 $ 1,932,087 $ 161,007 $ 429,353 2014 1,662,093 214,464 965,086 1,930,173 160,848 428,927 2015 1,659,207 214,091 963,411 1,926,822 160,568 428,183 2016 1,656,671 213,764 961,938 1,923,876 160,323 427,528 2017 1,656,411 213,730 961,787 1,923,574 160,298 427,461 2018-2022 8,258,885 1,065,663 4,795,482 9,590,963 799,247 2,131,325 2023-2027 8,215,718 1,060,093 4,770,417 9,540,834 795,070 2,120,185 2028-2032 8,170,414 1,054,247 4,744,112 9,488,223 790,685 2,108,494 2033-2037 8,123,685 1,048,217 4,716,978 9,433,956 786,163 2,096,435 2038-2039 3,235,624 417,500 1,878,749 3,757,499 313,125 835,000 Totals $ 44,302,450 $ 5,716,445 $ 25,724,004 $ 51,448,007 $ 4,287,334 $ 11,432,891 The City of Renton reports its share of equity interest in the Governmental Activities column within the Government -wide financial statements under non-current assets. The following is condensed financial information as of December 31, 2012 related to SCORE: Basic Financial Statements, 4-68 2012 Comprehensive Annual Financial Report City of Renton, Washington Completed financial statements for SCORE and SCORE PDA can be obtained at SCORE, 20817 17th Avenue South, Des Moines, WA 98198. NOTE 17. SUBSEQUENT EVENTS There were no significant subsequent events that occurred after the end of the reporting period and before the issuance of the financial statements. Basic Financial Statements, 4-69 South Correctional Entity (SCORE) 2012 Owner Cities Equity Allocation Member City Percent of Equity 2011 Equity Balance 2012 Distribution 2012 Equity Balance Auburn 31.00% $ 3,189,320 $ (1,820,461) $ 1,368,859 Burien 4.00% 411,525 (234,898) $ 176,627 Federal Way 18.00% 1,851,863 (1,057,043) $ 794,820 Renton 36.00% 3,703,728 (2,114,084) $ 1,589,644 SeaTac 3.00% 308,643 (176,174) $ 132,469 Tukwila 8.00% 823,050 469,796 $ 353,254 Grand Totals 100.00% $ 10,288,129 $ 5,872,456 $ 4,415,673 Completed financial statements for SCORE and SCORE PDA can be obtained at SCORE, 20817 17th Avenue South, Des Moines, WA 98198. NOTE 17. SUBSEQUENT EVENTS There were no significant subsequent events that occurred after the end of the reporting period and before the issuance of the financial statements. Basic Financial Statements, 4-69 2012 Comprehensive Annual Financial Report This page intentionally left blank. City of Renton, Washington Basic Financial Statements, 4-70 2012 Comprehensive Annual Financial Report REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Interfund revenues Contributions Interest Miscellaneous revenues TOTAL REVENUES EXPENDITURES Current: General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Capital outlay Debt service: Principal payment Interest payment TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transferin Transfer (out) Sale of capital assets TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY I FUND BALANCE DECEMBER 31 REQUIRED SUPPLEMENTARY INFORMATON SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - GENERAL FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL AMOUNTS Di1-7-DACIC \/ADIAKIrc City of Renton, Washington BUDGETARY TO GAAP ACTUAL AMOUNTS DIFFERENCES GAAP BASIS OVER (UNDER) $ 77,571,259 $ 77,134,650 $ 78,474,928 $ 1,340,278 $ 71,537,019 $ 6,937,909 (1) 2,710,077 2,433,331 3,002,481 569,150 3,002,481 - 8,174,351 10,583,889 11,983,310 1,399,421 10,982,766 1,000,544 (1),(2) 3,235,991 3,207,475 3,657,158 449,683 4,280,901 (623,743) (2) 3,212,156 3,212,156 3,053,938 (158,218) 3,053,938 3,414,200 5,834,078 3,324,852 (2,509,226) 3,324,852 105,000 84,060 120,207 36,147 120,207 - (2) 477,730 175,235 390,676 215,441 383,909 6,767 (1),(2) 625,864 695,864 942,445 246,581 942,680 (235) (2) 99,526,628 103,360,738 104,949,995 1,589,257 97,628,753 7,321,242 9,984,197 10,052,668 7,640,988 (2,411,680) 8,223,191 (582,203) (2) 2,546,539 2,517,043 2,610,481 93,438 2,610,481 51,260,904 53,402,153 54,378,422 976,269 54,378,422 2,570,394 2,733,330 2,608,369 (124,961) 2,608,369 8,526,236 8,482,717 8,376,509 (106,208) 8,376,509 6,086,546 6,107,555 5,804,336 (303,219) 5,804,336 543,818 551,525 523,577 (27,948) 523,577 10,830,762 10,927,288 10,471,784 (455,504) 10,471,784 267,559 85,559 26,506 (59,053) 26,506 - (2) 2,743,517 5,058,517 7,116,917 2,058,400 - 7,116,917 (1) 2,987,856 4,812,567 3,354,910 (1,457,657) - 3,354,910 (1) 98,348,328 104,730,922 102,912,799 (1,818,123) 93,023,175 9,889,624 (1,370,184) (2,568,382) 1,178,300 2,037,196 3,407,380 4,605,578 536,926 2,856,993 2,856,993 - 204,000 2,652,993 (1) (1,000,000) (1,987,530) (2,085,347) 97,817 (2,085,347) - (2) 15,000 211,437 196,437 211,437 - (463,074) 884,463 983,083 294,254 (1,669,910) 2,652,993 715,226 (485,721) 3,020,279 3,701,634 2,935,668 84,611 9,338,707 16,294,029 16,294,029 - 15,748,776 545,253 (1), (2) $ 10,053,933 $ 15,808,308 $ 19,314,308 $ 3,506,000 $ 18,684,444 $ 629,864 (1), (2) NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION (1) General Governmental Debt Fund is included in the Actual Amounts Budgetary Basis column. (2) Lease City Property Fund is included in the Actual Amounts GAAP Basis column Required Supplementary Information, 5-1 2011 Comprehensive Annual Financial Report City of Renton, Washington * Negative Employer Contributions represent disbursements from the Fund for administrate and non -pension medical benefit expenses as allowed by RCW 41.26.150. Required Supplementary Information, 5-2 REQUIRED SUPPLEMENTARY INFORMATION FIREFIGHTERS' PENSION FUND SCHEDULE OF EMPLOYER CONTRIBUTION December 31, 2012 ANNUAL FIRE TOTAL REQUIRED PERCENTAGE EMPLOYER INSURANCE EMPLOYER CONTRIBUTION OF ARC YEAR ENDING 12/31 CONTRIBUTIONS* PREMIUMS CONTRIBUTIONS (ARC) CONTRIBUTED 2006 $ (18,753) $ 77,821 $ 59,068 $ (113,541) N/A 2007 (25,285) 85,062 59,777 (109,968) N/A 2008 (19,894) 85,949 66,055 (109,968) N/A 2009 (36,296) 106,623 70,327 (172,788) N/A 2010 (5,618) 112,686 107,068 (172,788) N/A 2011 (12,700) 115,054 102,354 (348,435) N/A 2012 (893) 119,668 118,775 (530,282) N/A * Negative Employer Contributions represent disbursements from the Fund for administrate and non -pension medical benefit expenses as allowed by RCW 41.26.150. Required Supplementary Information, 5-2 2012 Comprehensive Annual Financial Report City of Renton, Washington Required Supplementary Information, 5-3 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTION LEOFF 1 RETIREE MEDICAL BENEFITS December 31, 2012 SCHEDULE OF FUNDING PROGRESS YEAR ENDING Annual December 31, 2012 % of OPEB Net OPEB 12/31 UNFUNDED Contributions UAAL AS A Obligation ACTUARIAL ACTUARIAL ACTUARIAL $ 2,024,068 PERCENTAGE YEAR ENDING VALUE OF ACCRUED ACCRUED FUNDED COVERED OF COVERED 12/31 ASSETS LIABILITIES LIABILITIES RATIO PAYROLL PAYROLL 2008 $ $ 32,331,107 $ 32,331,107 0% $ 471,470 6857.51% 2009 27,985,358 27,985,358 0% 411,952 6793.35% 2010 - 27,835,211 27,835,211 0% 414,264 6719.20% 2011 - 27,835,211 27,835,211 0% 434,132 6411.70% 2012 - 41,633,198 41,633,198 0% 304,951 13652.42% Required Supplementary Information, 5-3 LEOFF 1 RETIREE MEDICAL BENEFITS SCHEDULE OF EMPLOYER CONTRIBUTION December 31, 2012 YEAR ENDING Annual Employer % of OPEB Net OPEB 12/31 OPEB Cost Contributions Cost Obligation 2008 $ 2,024,068 $ 1,266,192 63% $ 757,876 2009 1,912,147 1,104,351 58% 1,565,672 2010 1,702,419 983,868 58% 2,284,223 2011 1,716,970 875,699 51% 3,125,494 2012 1,873,324 1,254,795 67% 3,744,023 Required Supplementary Information, 5-3 2012 Comprehensive Annual Financial Report This page intentionally left blank. City of Renton, Washington Required Supplementary Information, 5-4 2012 Comprehensive Annual Financial Report Non -Major Governmental Funds Special Revenue Funds ARTERIAL STREET FUND City of Renton, Washington The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of 1% in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. 1% FOR ART FUND The City of Renton established this fund to account for one percent of construction project actual costs to be used for the selection, acquisition and/or installation of works of art to be placed in, on, or about City public facilities. CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City's internal departments. Combining Statements & Schedules, 6-1 2012 Comprehensive Annual Financial Report Debt Service Funds GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUND This debt service fund accounts for the following outstanding debt issues: City of Renton, Washington • 2001 limited tax general obligation refunding bonds which refunded a portion of the 1997 limited tax general obligation bonds for the purchase of Renton City Hall. • 2002 limited tax general obligation bonds which provided funding for the construction of a new fire station. • 2006 limited tax general obligation bonds which provided funding for the construction of South Lake Washington infrastructure improvements. • 2009 intergovernmental debt related to the Fire District #40 asset transfer as a result of the Benson Hill annexation. • 2010 intergovernmental refunding debt which refunded a portion of the 2000 intergovernmental debt for the construction of a new facility for Valley Communications Center. • 2010 limited tax general obligation refunding bonds which refunded a portion of the 2001 limited tax general obligation bonds for the construction of a downtown parking facility. • 2011 limited tax general obligation bonds which funded the development and construction of 2 new libraries. Combining Statements & Schedules, 6-2 2012 Comprehensive Annual Financial Report Capital Project Funds COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND City of Renton, Washington Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds which provide for the design, construction, labor wages and benefits, and equipment required to implement the project. Combining Statements & Schedules, 6-3 2012 Comprehensive Annual Financial Report Non -Major Proprietary Funds Enterprise Funds AIRPORT FUND City of Renton, Washington The Airport Fund accounts for revenues and expenses for administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger -Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. The fund accounts for the operation, maintenance, debt service, and capital improvements of the facility. Internal Service Funds EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment, except for fire apparatus and replacement of police patrol vehicles. In addition, this fund accounts for the City's information technology, facilities and communications costs. All costs, including depreciation, are factors in calculating the rates that are charged to each user department. INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker's compensation, unemployment compensation, and the health care program. Expenses are paid from the Insurance Fund and rates are charged to departments based on use and/or coverage requirements. Combining Statements & Schedules, 6-4 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 1 of 6 SPECIAL REVENUE FUNDS Combining Statements & Schedules, 6-5 ARTERIAL HOTEL/ PATHS & STREET MOTELTAX TRAILS ASSETS Cash & cash equivalents $ 126,729 $ 89,964 $ Investments 41,331 29,340 Receivables (net of allowances): Taxes - - Customer accounts - - Accrued interest & penalty 467 244 Due from other governmental units 97,263 33,416 TOTAL ASSETS 265,790 152,964 DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES - - LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable $ $ 8,282 $ Total liabilities 8,282 DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES - FUND BALANCES Restricted 265,790 144,682 Assigned - - Total fund balances 265,790 144,682 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 265,790 $ 152,964 $ Combining Statements & Schedules, 6-5 2012 Comprehensive Annual Financial Report COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 2 of 6 City of Renton, Washington SPECIAL REVENUE FUNDS 1% FOR CABLE COMM. SPRINGBROOK TOTAL ART & DEVELOPMENT WETLANDS SRF ASSETS Cash & cash equivalents $ 87,436 $ 195,291 $ 501,266 $ 1,000,686 Investments 28,516 63,691 163,480 326,358 Receivables (net of allowances): Taxes - - - - Customer accounts - 1,500 - 1,500 Accrued interest & penalty 199 410 1,132 2,452 Due from other governmental units - - - 130,679 TOTAL ASSETS 116,151 260,892 665,878 1,461,675 DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES - - - - LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable $ $ 2,000 $ $ 10,282 Total liabilities 2,000 10,282 DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Restricted - 258,892 - 669,364 Assigned 116,151 - 665,878 782,029 Total fund balances 116,151 258,892 665,878 1,451,393 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 116,151 $ 260,892 $ 665,878 $ 1,461,675 Combining Statements & Schedules, 6-6 2012 Comprehensive Annual Financial Report COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 3 of 6 ASSETS Cash & cash equivalents Investments Receivables (net of allowances): Accrued interest & penalty Due from other governmental units TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable Unearned revenue Total liabilities DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Restricted Total fund balances TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES City of Renton, Washington DEBT SERVICE FUNDS GENERAL TOTAL DEBT DSF $ 871,622 $ 871,622 284,265 284,265 4,458 4,458 1,800,838 1,800,838 2,961,183 2,961,183 $ 903 $ 903 1,800,280 1,800,280 1,801,183 1,801,183 1,160,000 1,160,000 1,160,000 1,160,000 $ 2,961,183 $ 2,961,183 Combining Statements & Schedules, 6-7 2012 Comprehensive Annual Financial Report COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 4 of 6 City of Renton, Washington CAPITAL PROJECT FUNDS C.D. IMPACT FIRE IMPACT TRANS. IMPACT MITIGATION MITIGATION MITIGATION ASSETS $ $ $ Cash & cash equivalents $ 1,159,582 $ 599,356 $ 219,923 Investments 378,179 195,470 71,724 Receivables (net of allowances): 16,534 DEFERRED INFLOWS OF RESOURCES Accrued interest & penalty 2,508 2,650 1,001 Special assessments - - 16,534 TOTAL ASSETS 11540,269 797,476 309,182 DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND FUND BALANCES Liabilities Due to other funds $ $ $ - Unearned revenue $ $ $ 16,534 Total liabilities 16,534 DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES - FUND BALANCES Restricted 1,540,269 797,476 292,648 Assigned - - - Total fund balances 1,540,269 797,476 292,648 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES $ 11540,269 $ 797,476 $ 309,182 Combining Statements & Schedules, 6-8 2012 Comprehensive Annual Financial Report COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 5 of 6 ASSETS Cash & cash equivalents Investments Receivables (net of allowances): Accrued interest & penalty Special assessments TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND FUND BALANCES Liabilities Due to other funds Unearned revenue Total liabilities DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Restricted Assigned Total fund balances TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES City of Renton, Washington CAPITAL PROJECT FUNDS SO LK WA INFRA- TOTAL STRUCTURE CPF $ 39,202 $ 2,018,063 12,785 658,158 90 6,249 - 16,534 52,077 2,699,004 $ 198 $ 198 $ - $ 16,534 198 16,732 - 2,630,393 51,879 51,879 51,879 2,682,272 $ 52,077 $ 2,699,004 Combining Statements & Schedules, 6-9 2012 Comprehensive Annual Financial Report ASSETS Cash & cash equivalents Investments Receivables (net of allowances): Customer accounts Accrued interest & penalty Special assessments Due from other governmental units TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND FUND BALANCES Liabilities Accounts payable Due to other funds Deferred revenue Total liabilities DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES FUND BALANCES Restricted Assigned Total fund balances TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS December 31, 2012 Page 6of6 TOTAL City of Renton, Washington TOTALOTHER TOTAL TOTAL GOVERNMENTAL $ 1,000,686 $ 871,622 $ 2,018,063 $ 3,890,371 326,358 284,265 658,158 1,268,781 1,500 - - 1,500 2,452 4,458 6,249 13,159 - - 16,534 16,534 130,679 1,800,838 - 1,931,517 1,461,675 2,961,183 2,699,004 7,121,862 $ 10,282 $ 903 $ - $ 11,185 - - 198 198 - 1,800,280 16,534 1,816,814 10,282 1,801,183 16,732 1,828,197 669,364 1,160,000 2,630,393 4,459,757 782,029 - 51,879 833,908 1,451,393 1,160,000 2,682,272 5,293,665 $ 1,461,675 $ 2,961,183 $ 2,699,004 $ 7,121,862 Combining Statements & Schedules, 6-10 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 1 of 6 SPECIAL REVENUE FUNDS NET CHANGE IN FUND BALANCE 10,816 (129,348) (3,315) FUND BALANCE JANUARY 1 254,974 274,030 3,315 FUND BALANCE DECEMBER 31 $ 265,790 $ 144,682 $ - Combining Statements & Schedules, 6-11 ARTERIAL HOTEL/ PATHS & STREET MOTEL TAX TRAILS REVENUES Taxes $ $ 234,196 $ Licenses and permits - Intergovernmental revenues 609,886 - Contributions - 65,000 Interest 930 384 TOTAL REVENUES 610,816 299,580 EXPENDITURES Current: Economic environment - 428,928 Culture & recreation - Capital outlay - TOTAL EXPENDITURES - 428,928 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 610,816 (129,348) OTHER FINANCING SOURCES (USES) Transfer in - Transfer (out) (600,000) (3,315) TOTAL OTHER FINANCE SOURCES (USES) (600,000) (3,315) NET CHANGE IN FUND BALANCE 10,816 (129,348) (3,315) FUND BALANCE JANUARY 1 254,974 274,030 3,315 FUND BALANCE DECEMBER 31 $ 265,790 $ 144,682 $ - Combining Statements & Schedules, 6-11 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 2 of 6 SPECIAL REVENUE FUNDS Combining Statements & Schedules, 6-12 1% FOR CABLE COMM. SPRINGBROOK TOTAL ART & DEVELOPMENT WETLANDS SRF REVENUES Taxes $ $ 40,000 $ $ 274,196 Licenses and permits 50,654 50,654 Intergovernmental revenues - 609,886 Contributions 65,000 Interest 405 8S4 2,320 4,893 TOTAL REVENUES 405 91,508 2,320 1,004,629 EXPENDITURES Current: Economic environment - - - 428,928 Culture & recreation 168 20,086 20,254 Capital outlay 13,650 - 13,650 TOTAL EXPENDITURES 13,818 20,086 - 462,832 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (13,413) 71,422 2,320 541,797 OTHER FINANCING SOURCES (USES) Transferin 7,877 - - 7,877 Transfer (out) - (603,315) TOTAL OTHER FINANCE SOURCES (USES) 7,877 - (595,438) NET CHANGE IN FUND BALANCE (5,536) 71,422 2,320 (53,641) FUND BALANCE JANUARY 1 121,687 187,470 663,558 1,505,034 FUND BALANCE DECEMBER 31 $ 116,151 $ 258,892 $ 665,878 $ 1,451,393 Combining Statements & Schedules, 6-12 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 3 of 6 REVENUES Taxes Intergovernmental revenues Interest TOTAL REVENUES EXPENDITURES Debt service: Principal payments Interest and fiscal charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfer in TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY 1 FUND BALANCE DECEMBER 31 DEBT SERVICE FUNDS GENERAL TOTAL DEBT DSF $ 6,937,909 $ 6,937,909 1,000,544 1,000,544 8,021 8,021 7,946,474 7,946,474 7,116,917 7,116,917 3,354,910 3,354,910 10,471,827 10,471,827 kc, 7c 7, J JJ) k/,:)c:),»>) 2,652,993 2,652,993 2,652,993 2,652,993 1L/,O'#U 1L/,O'#U 1,032,360 1,032,360 $ 1,160,000 $ 1,160,000 Combining Statements & Schedules, 6-13 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 4 of 6 CAPITAL PROJECT FUNDS NET CHANGE IN FUND BALANCE 65,214 (695,202) (365,288) FUND BALANCE JANUARY 1 1,475,055 1,492,678 657,936 FUND BALANCE DECEMBER 31 $ 1,540,269 $ 797,476 $ 292,648 Combining Statements & Schedules, 6-14 C.D. IMPACT FIRE IMPACT TRANS. IMPACT MITIGATION MITIGATION MITIGATION REVENUES Charges for services 60,002 72,926 83,010 Interest 5, 212 5,196 1,702 TOTAL REVENUES 65,214 78,122 84,712 EXPENDITURES Capital outlay - - - TOTAL EXPENDITURES - - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 65,214 78,122 84,712 OTHER FINANCING SOURCES (USES) Transfer (out) - (936,926) (450,000) Sale of capital assets 163,602 TOTAL OTHER FINANCE SOURCES (USES) (773,324) (450,000) NET CHANGE IN FUND BALANCE 65,214 (695,202) (365,288) FUND BALANCE JANUARY 1 1,475,055 1,492,678 657,936 FUND BALANCE DECEMBER 31 $ 1,540,269 $ 797,476 $ 292,648 Combining Statements & Schedules, 6-14 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 5 of 6 CAPITAL PROJECT FUNDS SO LK WA INFRA- TOTAL STRUCTURE CPF REVENUES Charges for services - 215,938 Interest 183 12,293 TOTAL REVENUES 183 228,231 EXPENDITURES Capital outlay 1,096 1,096 TOTAL EXPENDITURES 1,096 1,096 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (913) 227,135 OTHER FINANCING SOURCES (USES) Transfer (out) - (1,386,926) Sale of capital assets 163,602 TOTAL OTHER FINANCE SOURCES (USES) (1,223,324) NET CHANGE IN FUND BALANCE (913) (996,189) FUND BALANCE JANUARY 1 52,792 3,678,461 FUND BALANCE DECEMBER 31 $ 51,879 $ 2,682,272 Combining Statements & Schedules, 6-15 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Combining Statements & Schedules, 6-16 OTHER GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Page 6 of 6 TOTAL OTHER TOTAL TOTAL TOTAL GOVERNMENTAL SRF DSF CPF FUNDS REVENUES Taxes $ 274,196 $ 6,937,909 $ $ 7,212,105 Licenses and permits 50,654 - 50,654 Intergovernmental revenues 609,886 1,000,544 1,610,430 Charges for services - - 215,938 215,938 Contributions 65,000 - - 65,000 Interest 4,893 8,021 12,293 25,207 TOTAL REVENUES 1,004,629 7,946,474 228,231 9,179,334 EXPENDITURES Current: Physical environment 428,928 - - 428,928 Economic environment 20,254 20,254 Mental & physical health 13,650 - 13,650 Capital outlay - - 1,096 1,096 Debt service: - Principal payments 7,116,917 7,116,917 Interest and fiscal charges - 3,354,910 - 3,354,910 TOTAL EXPENDITURES 462,832 10,471,827 1,096 10,935,755 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 541,797 (2,525,353) 227,135 (1,756,421) OTHER FINANCING SOURCES (USES) Transfer in 7,877 2,652,993 - 2,660,870 Transfer (out) (603,315) - (1,386,926) (1,990,241) Sale of capital assets - 163,602 163,602 TOTAL OTHER FINANCE SOURCES (USES) (595,438) 2,652,993 (1,223,324) 834,231 NET CHANGE IN FUND BALANCE (53,641) (996,189) (922,190) 127,640 FUND BALANCE JANUARY 1 1,505,034 1,032,360 3,678,461 6,215,855 FUND BALANCE DECEMBER 31 $ 1,451,393 $ 1,160,000 $ 2,682,272 $ 5,293,665 Combining Statements & Schedules, 6-16 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - ARTERIAL STREET FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Intergovernmental revenues $ 627,000 $ 600,000 $ 609,886 $ 9,886 Interest 3,000 - 930 930 TOTAL REVENUES 630,000 600,000 610,816 10,816 EXPENDITURES TOTAL EXPENDITURES - - - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 630,000 600,000 610,816 10,816 OTHER FINANCING SOURCES (USES) Transfer (out) (630,000) (600,000) (600,000) - TOTAL OTHER FINANCE SOURCES (USES) (630,000) (600,000) (600,000) - NET CHANGE IN FUND BALANCE - - 10,816 10,816 FUND BALANCE JANUARY 1 200,687 254,974 254,974 - FUND BALANCE DECEMBER 31 $ 200,687 $ 254,974 $ 265,790 $ 10,816 Combining Statements & Schedules, 6-17 2012 Comprehensive Annual Financial Report SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - HOTEL/MOTEL TAX FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS City of Renton, Washington Combining Statements & Schedules, 6-18 ORIGINAL FINAL ACTUAL VARIANCE REVENUES Taxes $ 200,000 $ 200,000 $ 234,196 $ 34,196 Contributions 65,000 65,000 65,000 - Interest - - 384 384 TOTAL REVENUES 265,000 265,000 299,580 34,580 EXPENDITURES Current: Economic environment 265,000 447,050 428,928 (18,122) TOTAL EXPENDITURES 265,000 447,050 428,928 (18,122) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - (182,050) (129,348) 52,702 OTHER FINANCING SOURCES (USES) TOTAL OTHER FINANCE SOURCES (USES) - NET CHANGE IN FUND BALANCE - (182,050) (129,348) 52,702 FUND BALANCE JANUARY 1 247,828 274,030 274,030 - FUND BALANCE DECEMBER 31 $ 247,828 $ 91,980 $ 144,682 $ 52,702 Combining Statements & Schedules, 6-18 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - PATHS AND TRAILS FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES TOTAL REVENUES EXPENDITURES TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - OTHER FINANCING SOURCES (USES) Transfer (out) (3,314) (3,315) 1 TOTAL OTHER FINANCE SOURCES (USES) (3,314) (3,315) (1) NET CHANGE IN FUND BALANCE - (3,314) (3,315) (1) FUND BALANCE JANUARY 1 3,264 3,315 3,315 - FUND BALANCE DECEMBER 31 $ 3,264 $ 1 $ $ (1) Combining Statements & Schedules, 6-19 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - 1% FOR ART FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Interest $ $ $ 405 $ 405 TOTAL REVENUES 405 405 EXPENDITURES Culture and recreation 168 168 Capital outlay 50,000 50,000 13,650 (36,350) TOTAL EXPENDITURES 50,000 50,000 13,818 (36,182) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (50,000) (50,000) (13,413) 36,587 OTHER FINANCING SOURCES (USES) Transfer in 15,000 21,813 7,877 (13,936) TOTAL OTHER FINANCE SOURCES (USES) 15,000 21,813 7,877 (13,936) NET CHANGE IN FUND BALANCE (35,000) (28,187) 22,651 (5,536) FUND BALANCE JANUARY 1 93,796 121,687 121,687 - FUND BALANCE DECEMBER 31 $ 58,796 $ 93,500 $ 116,151 $ 22,651 Combining Statements & Schedules, 6-20 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - CABLE COMMUNICATIONS DEVELOPMENT FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Taxes $ 40,000 $ 40,000 $ 40,000 $ - Licenses and permits 45,000 45,000 50,654 5,654 Interest - - 854 854 TOTAL REVENUES 85,000 85,000 91,508 6,508 EXPENDITURES Current: Culture and recreation 45,674 95,674 20,086 (75,588) Capital outlay 40,000 140,000 - (140,000) TOTAL EXPENDITURES 85,674 235,674 20,086 (215,588) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (674) (150,674) 71,422 222,096 OTHER FINANCING SOURCES (USES) TOTAL OTHER FINANCE SOURCES (USES) - - - NET CHANGE IN FUND BALANCE (150,674) (674) 71,422 222,096 FUND BALANCE JANUARY 1 88,044 187,470 187,470 - FUND BALANCE DECEMBER 31 $ 87,370 $ 36,796 $ 258,892 $ 222,096 Combining Statements & Schedules, 6-21 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - SPRINGBROOK WETLANDS BANK FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Interest $ $ $ 2,320 $ 2,320 TOTAL REVENUES 2,320 2,320 EXPENDITURES TOTAL EXPENDITURES - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 2,320 2,320 OTHER FINANCING SOURCES (USES) TOTAL OTHER FINANCE SOURCES (USES) - - NET CHANGE IN FUND BALANCE 2,320 2,320 FUND BALANCE JANUARY 1 459,528 663,558 663,558 - FUND BALANCE DECEMBER 31 $ 459,528 $ 663,558 $ 665,878 $ 2,320 Combining Statements & Schedules, 6-22 2012 Comprehensive Annual Financial Report SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUND For the Year Ended December 31, 2012 REVENUES Taxes Intergovernmental revenues Interest TOTAL REVENUES EXPENDITURES Debt service: Principal payments Interest and fiscal charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY 1 FUND BALANCE DECEMBER 31 BUDGETED AMOUNTS ORIGINAL FINAL City of Renton, Washington ACTUAL VARIANCE $ 4,913,393 $ 6,937,037 $ 6,937,909 $ 872 281,054 281,054 1,000,544 719,490 - - 8,021 8,021 5,194,447 7,218,091 7,946,474 728,383 2,743,517 5,058,517 7,116,917 2,058,400 2,987,856 4,812,567 3,354,910 (1,457,657) 5,731,373 9,871,084 10,471,827 600,743 536,926 2,652,993 2,652,993 536,926 2,652,993 2,652,993 151,448 1,032,360 1,032,360 - $ 151,448 $ 1,032,360 $ 1,160,000 $ 127,640 Combining Statements & Schedules, 6-23 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND For the Year Ended December 31, 2012 REVENUES Charges for services Interest TOTAL REVENUES EXPENDITURES TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfer (out) TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY 1 FUND BALANCE DECEMBER 31 - 5,212 5,212 60.000 60.000 65.214 5.214 60,000 60,000 - (400,000) 65,214 5,214 - (400,000) 786,594 1,475,055 1,475,055 - $ 846,594 $ 1,135,055 $ 1,540,269 $ 405,214 Combining Statements & Schedules, 6-24 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - FIRE IMPACT MITIGATION FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Charges for services $ 100,000 $ 100,000 $ 72,926 $ (27,074) Interest - - 5,196 5,196 TOTAL REVENUES 100,000 100,000 78,122 (21,878) EXPENDITURES TOTAL EXPENDITURES - - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 100,000 100,000 78,122 (21,878) OTHER FINANCING SOURCES (USES) Transfer (out) (536,926) (936,926) (936,926) Sale of capital assets 163,602 163,602 TOTAL OTHER FINANCE SOURCES (USES) (536,926) (773,324) (773,324) NET CHANGE IN FUND BALANCE (436,926) (673,324) (695,202) (21,878) FUND BALANCE JANUARY 1 1,474,466 1,492,678 1,492,678 FUND BALANCE DECEMBER 31 $ 1,037,540 $ 819,354 $ 797,476 $ (21,878) Combining Statements & Schedules, 6-25 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - TRANSPORTATION IMPACT MITIGATION FUND For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Charges for services $ 140,000 $ 30,000 $ 83,010 $ 53,010 Interest 10,000 - 1,702 1,702 TOTAL REVENUES 150,000 30,000 84,712 54,712 EXPENDITURES TOTAL EXPENDITURES - - - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 150,000 30,000 84,712 54,712 OTHER FINANCING SOURCES (USES) Transfer (out) (400,000) (450,000) (450,000) - TOTAL OTHER FINANCE SOURCES (USES) (400,000) (450,000) (450,000) - NET CHANGE IN FUND BALANCE (250,000) (420,000) (365,288) 54,712 FUND BALANCE JANUARY 1 307,640 657,936 657,936 - FUND BALANCE DECEMBER 31 $ 57,640 $ 237,936 $ 292,648 $ 54,712 Combining Statements & Schedules, 6-26 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - MUNICIPAL FACILITIES CAPITAL IMPROVEMENT FUND For the Year Ended December 31, 2012 OTHER FINANCING SOURCES (USES) Proceeds of long-term debt BUDGETED AMOUNTS - - ORIGINAL FINAL ACTUAL VARIANCE REVENUES Transfer (out) - (813) (30,813) Taxes $ 560,000 $ 1,103,588 $ 1,129,343 $ 25,755 Intergovernmental revenues - 516,445 339,783 (176,662) Charges for services - 200 200 Interfund revenues 50,282 50,282 - Contributions 22,927,571 1,522,463 226,778 (1,295,685) Interest 22,856,153 $ 25,000 78,379 53,379 Miscellaneous revenues - - 301 301 TOTAL REVENUES 560,000 3,217,778 1,825,066 (1,392,712) EXPENDITURES Current: General government - - 148,298 148,298 Physical environment 970,750 - (970,750) Economic environment - 125,000 50,000 (75,000) Culture & recreation 72,000 72,000 1,045,412 973,412 Capital outlay 8,898,000 24,719,429 886,961 (23,832,468) Debt service: Interest payment - 184,261 - (184,261) TOTAL EXPENDITURES 8,970,000 26,071,440 2,130,671 (23,940,769) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (8,410,000) (22,853,662) (305,605) 22,548,057 OTHER FINANCING SOURCES (USES) Proceeds of long-term debt 7,000,000 - - Transfer in 1,000,000 675,821 265,000 (410,821) Transfer (out) - (813) (30,813) 30,000 TOTAL OTHER FINANCE SOURCES (USES) 8,000,000 675,008 234,187 (440,821) NET CHANGE IN FUND BALANCE (410,000) 22,107,236 (22,178,654) (71,418) FUND BALANCE JANUARY 1 1,805,170 22,927,571 22,927,571 - FUND BALANCE DECEMBER 31 $ 1,395,170 $ 748,917 $ 22,856,153 $ 22,107,236 Combining Statements & Schedules, 6-27 2012 Comprehensive Annual Financial Report SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL - GENERAL GOVERNMENT CAPITAL IMPROVEMENT FUND For the Year Ended December 31, 2012 REVENUES Licenses and permits Intergovernmental revenues Contributions Interest Miscellaneous revenues TOTAL REVENUES EXPENDITURES Current: Transportation Capital outlay Debt service: Principal payment Interest payment TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfer in Transfer (out) TOTAL OTHER FINANCE SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE JANUARY 1 FUND BALANCE DECEMBER 31 City of Renton, Washington BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE $ 1,670,000 $ 1,670,000 $ 1,790,311 $ 120,311 7,011,400 19,146,934 20,497,099 1,350,165 - 1,698,088 1,076,399 (621,689) - 7,023 7,023 - - 1,761,241 1,761,241 9,746,400 26,735,419 24,061,564 (2,673,855) - 134,250 - (134,250) - 15,750 13,993 (1,757) 9,746,400 26,885,419 25,836,798 (1,048,621) (4,370,397) 1,904,448 (2,465,949) (1,065,000) 1,030,000 1,053,314 1,053,315 1 (15,000) (60,000) (7,064) (52,936) 1,015,000 993,314 1,046,251 52,937 (50,000) (3,377,083) (1,419,698) 1,957,385 70,648 4,306,388 4,306,388 - $ 20,648 $ 929,305 $ 2,886,690 $ 1,957,385 Combining Statements & Schedules, 6-28 2012 Comprehensive Annual Financial Report City of Renton, Washington SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGETTOACTUAL - SOUTH LAKE WASHINGTON INFRASTRUCTURE For the Year Ended December 31, 2012 BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE REVENUES Interest $ $ $ 183 $ 183 TOTAL REVENUES - 183 183 EXPENDITURES Capital outlay 91,024 1,096 (89,928) TOTAL EXPENDITURES 91,024 1,096 (89,928) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (91,024) (913) 90,111 OTHER FINANCING SOURCES (USES) Transfer in 40,000 - (40,000) Transfer (out) (1,000) (1,000) TOTAL OTHER FINANCE SOURCES (USES) 39,000 - (39,000) NET CHANGE IN FUND BALANCE (52,024) (913) 51,111 FUND BALANCE JANUARY 1 38 52,792 52,792 - FUND BALANCE DECEMBER 31 $ 38 $ 768 $ 51,879 $ 51,111 Combining Statements & Schedules, 6-29 2012 Comprehensive Annual Financial Report COMBINING STATEMENT OF NET POSITION NON -MAJOR ENTERPRISE FUNDS December 31, 2012 Page 1 of 2 City of Renton, Washington TOTAL NON -MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDS ASSETS Current assets: Cash & cash equivalents $ 2,157,484 $ 549,794 $ 2,707,278 Investments at fair value 703,628 179,306 882,934 Receivables (net of allowances): Customer accounts 74,990 20,555 95,545 Interest - investments 3,986 1,691 5,677 Due from other governmental units 531,901 - 531,901 Inventory of materials and supplies - 67,480 67,480 Total current assets 3,471,989 818,826 4,290,815 Noncurrent assets: Capital assets (net) 13,048,057 8,189,547 21,237,604 TOTAL ASSETS $ 16,520,046 $ 9,008,373 $ 25,528,419 DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCE $ - $ - $ Combining Statements & Schedules, 6-30 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF NET POSITION NON -MAJOR ENTERPRISE FUNDS December 31, 2012 Page 2 of 2 Combining Statements & Schedules, 6-31 TOTAL NON -MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDS LIABILITIES Current liabilities: Accounts payable $ 506,486 $ 9,951 $ 516,437 Interfund loan payable 98,209 374,815 473,024 Accrued interest payable 1,749 2,154 3,903 Accrued wages payable 43,070 57,298 100,368 Accrued taxes payable 65,676 9,117 74,793 Custodial Accounts - 172,177 172,177 Total current liabilities 715,190 625,512 1,340,702 Long-term liabilities: Deferred revenue 148,989 - 148,989 Accrued employee wages and benefits payable 29,224 56,923 86,147 Interfund loan payable 101,646 775,092 876,738 Total long-term liabilities 279,859 832,015 1,111,874 TOTAL LIABILITIES 995,049 1,457,527 2,452,576 DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES - - - NET POSITION Net investment in capital assets 13,048,057 8,189,547 21,237,604 Unrestricted 2,476,940 (638,701) 1,838,239 TOTAL NET POSITION $ 15,524,997 $ 7,550,846 $ 23,075,843 Combining Statements & Schedules, 6-31 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NON - MAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2012 OPERATING REVENUES: Charges for services TOTAL OPERATING REVENUES OPERATING EXPENSES: Operations and maintenance Administrative and general Taxes Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES(EXPENSES): Intergovernmental revenues Interest revenues Other non-operating revenues(expenses) Interest expense NON-OPERATING REVENUE NET OF EXPENSES INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS Capital Contributions Operating transfers (out) CHANGE IN NET POSITION NET POSITION, JANUARY 1 Prior year adjustments NET POSITION, DECEMBER 31 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS TOTAL NON -MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDS $ 2,436,543 $ 2,128,452 $ 4,564,995 2,436,543 2,128,452 4,564,995 1,616,596 1,368,432 2,985,028 80,252 432,278 512,530 2,203 10,875 13,078 542,897 294,864 837,761 2,241,948 2,106,449 4,348,397 194,595 22,003 216,598 7,814 5,278 13,092 8,617 3,254 11,871 200 1,475 1,675 (9,486) (33,398) (42,884) 7,145 (23,391) (16,246) (1,388) 201,740 200,352 880,374 880,374 (107,449) (1,418) (108,867) 974,665 (2,806) 971,859 14,568,658 7,553,652 22,122,310 (18,326) - (18,326) $ 15,524,997 $ 7,550,846 $ 23,075,843 Combining Statements & Schedules, 6-32 2012 Comprehensive Annual Financial Report STATEMENT OF CASH FLOWS NON -MAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2012 Page 1 of 2 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received for services Cash paid to suppliers for goods & services Cash paid to employees Other operating receipts Other non-operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Acquisition & construction of capital assets Principal payments on debt Interest payments on debt NET CASH PROVIDED (USED) BY CAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Payments for investments Interest on investments NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES NET INCREASE(DECREASE)IN CASH & CASH EQUIVALENTS CASH & CASH EQUIVALENTS, JANUARY 1 CASH & CASH EQUIVALENTS, DECEMBER 31 City of Renton, Washington BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS TOTAL NON -MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDS $ 2,424,850 $ 2,151,260 $ 4,576,110 (1,326,038) (1,828,655) (3,154,693) 1,860 521 2,381 (420,670) 5,278 (415,392) 200 (31,923) (31,723) 680,202 296,481 976,683 (107,449) (1,418) (108,867) (107,449) (1,418) (108,867) 129,344 129,344 (94,888) (366,575) (461,463) - (686) (686) 34,456 (367,261) (332,805) 132,683 116,167 248,850 707 5,233 5,940 133,390 121,400 254,790 740,599 49,202 789,801 1,416,885 500,592 1,917,477 $ 2,157,484 $ 549,794 $ 2,707,278 Combining Statements & Schedules, 6-33 2012 Comprehensive Annual Financial Report RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation & amortization of deferred charges Other non-operating revenue (Increase) decrease in accounts receivable (Increase) decrease in due from other funds/governmental units (Increase) decrease in inventory & prepaid items Increase(decrease)in vouchers retainage payable Increase(decrease)in payables & other short-term liabilities Increase (decrease)in customer deposits Increase (decrease)in deferred revenues Increase (decrease)in accrued employee leave benefits Total adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Prior Period Adjustment Depreciation Contributions of capital assets City of Renton, Washington STATEMENT OF CASH FLOWS NON -MAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2012 Page 2 of 2 BUSINESS -TYPE ACTIVITIES ENTERPRISE FUNDS TOTAL NON -MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDS $ 194,595 $ 22,003 $ 216,598 542,897 294,864 837,761 8,014 (26,645) (18,631) (13,323) 18,582 5,259 (428,484) - (428,484) - (8,055) (8,055) 371,749 (9,015) 362,734 1,264 (185) 1,079 - 5,410 5,410 1,630 (999) 631 1,860 521 2,381 485,607 274,478 760,085 $ 680,202 $ 296,481 $ 976,683 $ (18,326) $ - $ (18,326) 542,897 294,864 837,761 880,374 - 880,374 Combining Statements & Schedules, 6-34 2012 Comprehensive Annual Financial Report COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2012 Page 1 of 2 ASSETS Current assets: Cash & cash equivalents Investments at fair value Receivables (net of allowances): Customer accounts Interest - investments Due from other funds Interfund loan receivable Due from other governmental units Inventory of materials and supplies Prepayments Total current assets City of Renton, Washington TOTAL EQUIPMENT INSURANCE INTERNAL RENTAL FUND SERVICE FUNDS $ 5,543,795 $ 14,637,594 $ 20,181,389 1,808,018 4,773,809 6,581,827 36,444 11,389 47,833 12,775 33,647 46,422 13,178 - 13,178 - 511,666 511,666 83 - 83 160,642 - 160,642 - 53,000 53,000 7,574,935 20,021,105 27,596,040 Noncurrent assets: Interfund loan receivable - 1,204,401 1,204,401 Capital assets (net) 9,999,682 - 9,999,682 Intangible assets (net) 263,235 - 263,235 Total noncurrent assets 10,262,917 1,204,401 11,467,318 TOTAL ASSETS $ 17,837,852 $ 21,225,506 $ 39,063,358 DEFERRED OUTFLOWS OF RESOURCES TOTAL DEFERRED OUTFLOWS OF RESOURCES $ - $ - $ Combining Statements & Schedules, 6-35 2012 Comprehensive Annual Financial Report COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2012 Page 2 of 2 LIABILITIES Current liabilities: Accounts payable Claims incurred but not reported Retainage payable Due to other funds Accrued employee benefits payable Accrued taxes payable Total current liabilities Long-term liabilities: Accrued employee wages and benefits payable Total long-term liabilities TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES TOTAL DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted Unrestricted TOTAL NET POSITION EQUIPMENT RENTAL $ 768,124 $ 4,550 47,845 337,426 87 1,158,032 City of Renton, Washington TOTAL INSURANCE INTERNAL FUND SERVICE FUNDS 275,888 $ 2,7S4,118 25,451 3,055,457 1,044,012 2,754,118 4,550 47,845 362,877 87 4,213,489 325,043 17, 951 342,994 325,043 17, 951 342,994 1,483,075 3,073,408 4,556,483 10,262,917 10,262,917 6,091,860 18,152,098 24,243,958 $ 16,354,777 $ 18,152,098 $ 34,506,875 Combining Statements & Schedules, 6-36 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2012 NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenues 2,676 43,637 TOTAL Interest revenues EQUIPMENT INSURANCE INTERNAL Gain (loss) on sale of capital assets RENTAL FUND SERVICE FUNDS OPERATING REVENUES: 7,649 766,159 773,808 Charges for services $ 12,801,558 $ 2,942,647 $ 15,744,205 Other operating revenues 108,722 13,155,617 13,264,339 TOTAL OPERATING REVENUES 12,910,280 16,098,264 29,008,544 OPERATING EXPENSES: 8,799 - 8,799 Operations and maintenance 10,694,730 14,706,499 25,401,229 Administrative and general 146,798 505,463 652,261 Taxes 2,105 2,553 4,658 Depreciation 1,691,035 - 1,691,035 TOTAL OPERATING EXPENSES 12,534,668 15,214,515 27,749,183 OPERATING INCOME (LOSS) 375,612 883,749 1,259,361 NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenues 2,676 43,637 46,313 Interest revenues 25,365 69,736 95,101 Gain (loss) on sale of capital assets (587) - (587) Other non-operating revenues (expenses) 7,649 766,159 773,808 NON-OPERATING REVENUE NET OF EXPENSE 35,103 879,532 914,635 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 410,715 1,763,281 2,173,996 Contributed capital 8,799 - 8,799 Transfers in 313,573 313,573 Transfers (out) (65,000) (204,000) (269,000) CHANGE IN NET POSITION 668,087 1,559,281 2,227,368 NET POSITION, JANUARY 1 15,761,690 16,592,817 32,354,507 Prior year adjustments (75,000) - (75,000) NET POSITION, DECEMBER 31 $ 16,354,777 $ 18,152,098 $ 34,506,875 Combining Statements & Schedules, 6-37 2012 Comprehensive Annual Financial Report COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2012 Page 1 of 2 EQUIPMENT RENTAL City of Renton, Washington TOTAL INSURANCE INTERNAL FUND SERVICE FUNDS CASH FLOWS FROM OPERATING ACTIVITIES: (3,308,904) 8,799 Cash received from other funds for services $ 12,938,922 $ 16,098,337 $ 29,037,259 Cash paid to suppliers for goods & services (10,351,404) (13,262,349) (23,613,753) Cash paid to employees 13,414 37,421 50,835 Other operating receipts 9,738 (2,465,552) (2,455,814) NET CASH PROVIDED (USED) BY 668,884 OPERATING ACTIVITIES 2,610,670 407,857 3,018.527 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to/from other funds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Acquisition & construction of capital assets Capital contributions NET CASH PROVIDED (USED) BY CAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Payments for investments Interest on investments NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES NET INCREASE(DECREASE)IN CASH & CASH EQUIVALENTS CASH & CASH EQUIVALENTS, JANUARY 1 CASH & CASH EQUIVALENTS, DECEMBER 31 248,573 (204,000) 44,573 248,573 (204,000) 44,573 (3,308,904) (3,308,904) 8,799 8,799 (3,300,105) (3,300,105) 1,069,379 2,318,715 3,388,094 40,367 98,807 139,174 1,109,746 2,417,522 3,527,268 668,884 2,621,379 3,290,263 4,874,911 12,016,215 16,891,126 $ 5,543,795 $ 14,637,594 $ 20,181,389 Combining Statements & Schedules, 6-38 2012 Comprehensive Annual Financial Report City of Renton, Washington COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2012 Page 2 of 2 TOTAL EQUIPMENT INSURANCE INTERNAL RENTAL FUND SERVICE FUNDS RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 375,612 $ 883,749 $ 1,259,361 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation & amortization of deferred charges 1,691,035 - 1,691,035 Other non-operating revenue 9,738 809,796 819,534 (Increase) decrease in accounts receivable (14,481) 73 (14,408) (Increase) decrease in due from other funds/governmental units 85,157 (1,716,067) (1,630,910) (Increase) decrease in inventory & prepaid items (16,224) 40,982 24,758 Increase(decrease)in vouchers retainage payable 399,701 - 399,701 Increase (decrease)in payables & other short-term liabilities 50,494 392,885 443,379 Increase (decrease)in accrued employee leave benefits 29,638 (3,561) 26,077 Total adjustments 2,235,058 (475,892) 1,759,166 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 2,610,670 $ 407,857 $ 3,018,527 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Prior Period Adjustment $ (75,000) $ $ (75,000) Depreciation & amortization $ 1,691,035 $ $ 1,691,035 Combining Statements & Schedules, 6-39 2012 Comprehensive Annual Financial Report STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND - SPECIAL DEPOSIT For the Year Ended December 31, 2012 Page 1 of 1 City of Renton, Washington BEGINNING ENDING BALANCE DEBITS CREDITS BALANCE ASSETS Cash $ 591,487 $ 263,367 $ 266,941 $ 587,913 TOTAL ASSETS $ 591,487 $ 263,367 $ 266,941 $ 587,913 LIABILITIES Vouchers & contracts payable $ 7,200 $ 256,060 $ 248,860 $ - Deposits payable 584,287 258,741 262,367 587,913 TOTAL LIABILITIES $ 591,487 $ 514,801 $ 511,227 $ 587,913 Combining Statements & Schedules, 6-40 2012 Comprehensive Annual Financial Report STATISTICAL SECTION December 31, 2012 City of Renton, Washington Presentations included in the Statistical Section of the Comprehensive Annual Financial Report (CAFR) provide users detailed information as a context for understanding what the information in the financial statements, note disclosures and the supporting schedules say about the government's overall financial health. The section is divided into five categories based on the following: FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. REVENUE CAPACITY These schedules present information to help the reader assess the government's most significant local revenue source — property tax. DEBT CAPACITY These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Statistical Section, 7-1 2012 Comprehensive Annual Financial Report Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net position Business -type activities Invested in capital assets, net of related debt Restricted Unrestricted Total business -type activities net position Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net position TABLE 1 NET POSITION BY COMPONENT LAST TEN FISCAL YEARS' (accrual basis of accounting) Fiscal Year City of Renton, Washington 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 $ 89,360,313 $ 195,282,055 $ 203,297,293 $ 209,964,556 $ 232,714,563 $ 353,197,782 $ 378,440,636 $ 383,016,494 $ 373,641,842 $ 425,581,342 6,816,559 21,460,395 28,578,305 42,261,663 32,648,993 33,294,987 20,882,824 11,664,101 26,432,127 7,953,634 41,699,232 25,746,196 29,272,573 29,340,290 32,075,613 34,160,010 35,033,629 45,911,214 53,244,297 54,159,950 $ 137,876,104 $ 242,488,646 $ 261,148,171 $ 281,566,509 $ 297,439,169 $ 420,652,779 $ 434,357,089 $ 440,591,809 $ 453,318,266 $ 487,694,926 $ 158,886,497 $ 163,891,546 $ 171,827,746 $ 181,515,939 $ 188,518,151 $ 202,255,997 $ 208,682,683 $ 214,001,083 $ 217,103,722 $ 224,893,271 3,048,210 3,555,690 3,555,690 3,555,690 3,586,667 4,171,525 4,029,537 58,747 - 2,909,578 15,886,887 21,612,156 21,541,563 19,357,695 17,973,237 17,430,207 18,209,611 17,743,107 23,340,910 28,692,024 $ 177,821,594 $ 189,059,392 $ 196,924,999 $ 204,429,324 $ 210,078,055 $ 223,857,729 $ 230,921,831 $ 231,802,937 $ 240,444,632 $ 256,494,873 $ 248,246,810 $ 359,173,601 $ 375,125,039 $ 391,480,495 $ 421,232,714 $ 555,453,779 $ 587,123,319 $ 597,017,577 $ 590,745,564 $ 650,474,613 9,864,769 25,016,085 32,133,995 45,817,353 36,235,660 37,466,512 24,912,361 11,722,848 26,432,127 10,863,212 57,586,119 47,358,352 50,814,136 48,697,985 50,048,850 51,590,217 53,243,240 63,654,321 76,585,207 82,851,974 $ 315,697,698 $ 431,548,038 $ 458,073,170 $ 485,995,833 $ 507,517,224 $ 644,510,508 $ 665,278,920 $ 672,394,746 $ 693,762,898 $ 744,189,799 Source : City of Renton Finance Division '2012 reflects prior period adjustments of $303,511 in Governmental Activities and $106,983 in Business Type Activities; a total prior period increase of $410,494 Statistical Section, 7-2 2012 Comprehensive Annual Financial Report EXPENSES Government activities: General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Interest on long-term debt Total governmental activities expenses Business -type activities: Waterworks utility Airport Solid waste utility Golf course Total Business -type activities net position Total Primary Government expenses PROGRAM REVENUES Governmental activities: Charges for services: General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type activities: Charges for services: Waterworks utility Airport Solid waste utility Golf course Total Business -type charges Operating grants and contributions Capital grants and contributions Total business -type activities program revenues Total primary government program revenues Net Governmental activities Business -type activities Total primary government net expense TABLE 2 CHANGES IN NET POSITION LAST TEN FISCAL YEARS' (accrual basis of accounting) Page 1 of 2 Fiscal Year Citv of Renton, Washinqton 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 24,365,244 $ 22,144,567 $ 21,137,856 $ 19,977,086 $ 29,112,970 $ 12,010,422 $ 18,808,404 $ 10,018,501 $ 4,268,321 $ 9,859,550 1,258,956 1,340,655 1,380,816 1,434,134 1,845,031 1,761,665 2,134,283 2,402,692 2,563,989 2,610,481 26,238,548 28,647,443 29,496,791 30,749,762 36,213,120 46,289,454 44,361,089 50,657,146 52,627,849 58,152,773 2,013,239 2,278,445 2,208,340 2,618,832 2,749,417 3,333,471 2,440,801 2,425,279 2,151,322 2,643,930 4,221,713 6,797,356 4,183,880 15,798,138 11,237,287 13,675,581 11,765,835 16,903,492 25,376,308 13,571,691 5,886,795 5,519,929 5,899,796 6,372,118 6,880,687 6,823,426 6,669,911 7,363,396 6,491,151 6,330,233 21,646 228,966 300,171 295,072 301,495 325,066 328,333 882,740 819,138 827,802 8,689,666 10,303,074 9,744,692 9,695,924 11,036,931 17,025,800 16,992,266 13,518,312 11,955,737 13,011,327 1,827,464 1,627,581 1,710,346 1,772,370 2,594,784 2,663,436 2,848,081 2,127,347 2,165,960 3,087,269 74,523,271 78,888,016 76,062,688 88,713,436 101,971,722 103,908,321 106,349,003 106,298,905 108,419,775 110,095,056 22,381,464 23,347,678 25,884,227 27,220,132 28,657,468 32,738,366 35,617,861 36,574,469 37,148,813 39,419,864 1,219,465 936,305 1,226,810 1,196,363 1,396,054 1,733,894 1,865,481 1,993,202 2,026,804 2,251,434 8,516,598 8,558,441 9,327,525 9,706,016 10,606,560 11,518,047 14,143,956 14,826,315 14,434,201 14,780,647 1,831,670 1,933,113 2,132,077 2,056,874 2,277,454 2,334,838 2,303,192 2,296,870 2,099,936 2,139,847 33,949,197 34,775,537 38,570,639 40,179,385 42,937,536 48,325,145 53,930,490 55,690,856 55,709,754 58,591,792 108,472,468 113,663,553 114,633,327 128,892,821 144,909,258 152,233,466 160, 279,493 161,989,761 164,129,529 168,686,848 16,716,472 15,579,366 17,525,244 21,852,465 23,163,645 5,614,638 2,864,232 2,363,280 2,756,613 2,586,799 1,287,901 1,531,773 697,883 831,485 1,169,581 2,420,913 5,176,402 3,706,436 3,565,216 3,493,071 929,780 200,149 247,235 517,151 591,586 550,773 643,970 761,835 641,483 650,129 759,700 837,027 894,750 400,798 999,484 864,581 951,940 1,233,424 1,015,323 1,326,517 1,519,383 1,916,862 1,660,698 1,628,154 1,432,215 2,165,538 3,178,543 3,111,259 3,275,596 3,329,054 4,969,475 4,236,596 4,516,899 4,368,399 7,857,186 4,236,983 1,965,125 2,419,488 2,486,396 3,130,530 1,460,879 1,507,387 1,558,458 1,742,071 1,649,960 1,739,055 2,377,290 2,299,635 1,793,863 1,811,127 3,732,443 6,213,791 4,979,601 4,596,836 5,265,737 9,570,931 11,029,657 10,520,151 15,540,897 12,794,132 1,094,764 1,745,718 1,227,503 5,909,870 4,940,471 18,109,124 16,091,934 9,102,331 12,135,982 33,529,033 32,470,797 33,768,669 33,308,271 41,847,229 47,069,865 45,272,536 44,279,093 35,517,839 43,211,369 62,650,392 25,778,754 27,102,797 27,569,448 27,036,324 32,078,690 31,110,061 33,278,345 35,545,308 43,003,494 47,314,389 733,115 804,500 901,603 909,425 965,809 1,086,064 1,254,732 2,039,477 2,294,383 2,436,543 8,394,478 8,832,837 9,393,366 9,837,915 10,094,752 10,192,718 14,234,026 15,383,667 15,015,434 14,905,934 2,170,911 2,176,980 2,165,413 2,272,415 2,264,098 2,262,841 2,134,394 2,095,751 2,014,983 2,128,452 37,077,258 38,917,114 40,029,830 40,056,079 45,403,349 44,651,684 50,901,497 55,064,203 62,328,294 66,785,318 222,193 112,616 196,974 77,688 243,537 264,784 46,267 125,819 465,468 165,164 6,600,471 6,583,241 5,101,699 6,317,203 1,761,802 6,888,975 7,556,701 1,056,961 2,473,309 7,668,558 43,899,922 45,612,971 45,328,503 46,450,970 47,408,688 51,805,443 58,504,465 56,246,983 65,267,071 74,619,040 $ 76,370,719 $ 79,381,640 $ 78,636,774 $ 88,298,199 $ 94,478,553 $ 97,077,979 $ 102,783,558 $ 91,764,822 $ 108,478,440 $ 137,269,432 $ (42,052,474) $ (45,119,347) $ (42,754,417) $ (46,866,207) $ (54,901,857) $ (58,635,785) $ (62,069,910) $ (70,781,066) $ (65,208,406) $ (47,444,664) 9,950,725 10,837,434 6,757,864 6,271,585 4,471,152 3,480,298 4,573,975 556,127 9,557,317 16,027,248 $ (32,101,749) $ (34,281,913) $ (35,996,553) $ (40,594,622) $ (50,430,705) $ (55,155,487) $ (57,495,935) $ (70,224,939) $ (55,651,089) $ (31,417,416) Statistical Section, 7-3 2012 Comprehensive Annual Financial Report GENERAL REVENUES AND OTHER CHANGES Governmental activities: Taxes Property taxes Retail sales taxes Business taxes Excise taxes Penalties and interest Investment earnings Gain on sale of capital assets Miscellaneous Transfers Total governmental activities Business -type activities: Investment earnings Miscellaneous Transfers Total business -type activities Total primary government CHANGES IN NET POSITION Governmental activities Business -type activities Total primary government Source : City of Renton Finance Division TABLE 2 CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Page 2 of 2 2003 2004 2005 2006 2007 Citv of Renton, Washington 2008 2009 2010 2011 2012 $ 19,520,575 $ 19,578,390 $ 21,523,818 $ 23,600,131 $ 23,106,578 $ 29,381,036 $ 32,300,319 $ 32,586,884 $ 33,309,975 $ 33,932,290 17,334,831 18,281,949 18,910,823 20,869,595 22,749,831 23,190,076 22,065,316 21,591,375 22,008,777 23,653,706 10,895,130 9,957,129 10,643,068 11,219,303 11,962,879 14,945,173 14,876,496 16,883,888 16,870,284 17,632,759 5,449,877 6,751,264 6,938,265 7,718,945 8,236,876 4,362,945 4,923,978 4,351,914 4,113,705 4,286,883 5,415 6,048 49 3,799 33,949 6,477 1,353 276 380 9,486 1,081,398 1,291,669 1,449,001 3,251,975 3,465,517 2,419,260 1,118,889 794,793 602,516 589,616 - - - - - - - - - 157,483 312,867 4,346,619 1,958,217 689,243 1,218,889 2,104,133 172,594 82,352 991,772 1,021,629 (40,000) (10,304) (9,300) (68,446) - 110,000 (100,000) (17,095) 37,454 233,961 54,560,093 60,202,764 61,413,941 67,284,545 70,774,519 76,519,100 75,358,945 76,274,387 77,934,863 81,517,813 242,055 270,605 458,797 881,486 1,041,576 1,120,342 396,957 224,974 117,090 105,129 369,513 119,455 639,646 282,808 135,986 85,493 1,207,689 172,663 71,235 44,842 40,000 10,304 9,300 68,446 - (110,000) 100,000 17,095 (37,454) (233,961) 651,568 400,364 1,107,743 1,232,740 1,177,562 1,095,835 1,704,646 414,732 150,871 (83,990) $ 55,211,661 $ 60,603,128 $ 62,521,684 $ 68,517,285 $ 71,952,081 $ 77,614,935 $ 77,063,591 $ 76,689,119 $ 78,085,734 $ 81,433,823 $ 12,507,619 $ 15,083,417 $ 18,659,524 $ 20,418,338 $ 15,872,662 $ 17,883,315 $ 13,289,035 $ 5,493,321 $ 12,726,457 $ 34,073,149 10,602,293 11,237,798 7,865,607 7,504,325 5,648,714 4,576,133 6,278,621 970,859 9,708,188 15,943,258 $ 23,109,912 $ 26,321,215 $ 26,525,131 $ 27,922,663 $ 21,521,376 $ 22,459,448 $ 19,567,656 $ 6,464,180 $ 22,434,645 $ 50,016,407 Statistical Section, 7-4 2012 Comprehensive Annual Financial Report $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 City of Renton, Washington TABLE 3 FUND BALANCE OF GOVERNMENT FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Ir General fund o All other governmental funds General fund Reserved Unreserved Nonspendablel Restricted' Committed' Assigned' Unassigned' Total general fund All other governmental funds Reserved Unreserved, reported in: Special revenue funds Debt service funds Capital project funds Nonspendable' Restricted' Committed' Assigned' Total all other governmental funds 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 83,000 $ 108,742 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 2,468,569 $ $ 6,758,364 8,603,003 9,189,871 10,737,097 16,474,384 13,509,097 13,478,727 12,020,420 - - - - - - - - 1,149,907 - 786,611 690,655 13,812,258 16, 566, 659 - 1,427,130 $ 6,841,364 $ 8,711,745 $ 9,197,871 $ 10,745,097 $ 16,482,384 $ 13,517,097 $ 13,486,727 $ 14,488,989 $ 15,748,776 $ 18,684,444 $ 880,000 $ 500,000 $ 240,000 $ 63,900 $ 975,000 $ 1,000,000 $ - $ 6,771,384 $ $ 3,985,917 3,238,246 2,929,692 4,243,189 2,616,596 2,806,667 2,106,370 2,073,227 1,916,243 1,486,894 2,752,445 3,068,587 1,392,915 1,270,936 367,652 - 22,628,512 26,202,437 27,890,457 42,152,437 29,057,397 29,217,384 18,408,802 8,701,843 - 19,152,913 23,730,688 7,468,491 6,085,812 6,828,410 1,220,008 $ 29,410,672 $ 31,427,577 $ 33,812,594 $ 49,528,113 $ 34,041,908 $ 34,294,987 $ 20,882,824 $ 17,546,454 $ 33,449,814 $ 31,036,508 Source : City of Renton Finance Division ' In 2011, implementation of GASB 54 requires new designations of fund balance; prior year data not available in presribed format Statistical Section, 7-5 2012 Comprehensive Annual Financial Report City of Renton, Washington TABLE 4 CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines Interfund revenues Special assessments Contributions Investment Earnings Miscellaneous Revenues Total revenues EXPENDITURES Current General government Judicial Public safety Physical environment Transportation Economic environment Health and human services Culture and recreation Capital outlay Debt service Principal payments Interest and fiscal charges Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfer (out) Proceeds of long-term debt Interfund loan proceeds Interfund loan repayments Refunding bonds issued GO Bonds issued Premium on general obligation debt Sale of capital assets Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balance Debt service as a percentage of non capital expenditures 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 53,722,322 $ 55,344,506 $ 58,794,081 $ 64,005,567 $ 66,698,876 $ 72,514,388 $ 71,545,700 $ 75,223,750 $ 76,266,688 $ 79,878,467 4,226,883 4,329,086 4,686,608 4,962,507 5,828,230 4,975,585 6,226,371 3,975,441 4,410,862 4,843,446 4,533,544 7,570,570 5,687,169 9,769,225 9,791,830 27,549,621 23,968,449 16,203,499 19,441,957 33,430,078 6,016,704 6,593,153 5,563,289 6,543,289 10,048,879 7,145,950 4,543,420 4,635,502 4,191,024 4,497,039 1,055,564 1,008,984 731,286 906,685 1,150,079 2,002,854 3,724,162 3,439,926 3,150,326 3,053,938 3,482,110 3,638,574 3,796,042 2,843,147 3,352,411 3,072,526 3,228,110 3,244,928 3,057,642 3,375,134 295,673 20,852 23,340 511,932 51,723 - 1,353 - - - 255,102 249,938 317,600 214,387 353,582 135,000 516,805 2,952,649 4,288,448 1,488,384 1,081,420 1,059,886 1,060,353 2,570,682 2,486,889 1,740,035 753,607 550,134 475,278 494,518 40,314 122,799 569,881 223,908 86,322 1,273,359 171,004 82,353 648,608 942,998 74,709,636 79,938,348 81,229,649 92,551,329 99,848,821 120,409,318 114,678,981 110,308,182 115,930,833 132,004,002 13,283,955 13,660,095 14,382,634 13,972,592 14,597,355 15,094,140 12,923,999 10,532,537 10,937,806 8,371,489 - - - - - 1,761,665 2,134,283 2,402,692 2,563,989 2,610,481 26,029,354 27,462,613 29,031,626 31,157,303 35,583,500 45,530,208 46,048,967 48,904,653 52,986,589 54,378,422 2,015,562 2,201,777 2,190,228 2,609,452 2,764,563 3,123,883 2,431,213 2,345,459 2,048,971 2,608,369 4,461,387 4,615,345 4,711,924 5,097,449 6,403,358 6,332,006 7,043,665 10,748,393 10,038,344 10,137,750 4,613,587 4,947,080 5,123,024 5,519,219 5,896,589 6,673,681 7,071,009 7,205,500 6,447,163 6,283,264 10,368 11,723 12,700 9,231 13,818 16,459 19,726 787,768 511,934 523,577 7,585,936 8,563,967 8,876,250 9,933,854 10,830,224 11,119,073 14,914,298 12,310,530 11,166,081 11,537,450 21,089,534 13,246,669 11,438,104 21,117,525 29,320,023 28,520,453 41,989,793 12,216,152 14,981,858 24,989,777 1,417,042 1,477,579 1,375,738 1,503,350 1,565,904 2,079,551 2,327,138 2,682,672 2,783,237 7,116,917 1,833,102 1,763,893 1,713,525 2,129,656 2,646,623 2,729,247 2,629,157 2,231,823 2,502,876 3,368,903 82,339,827 77,950,741 78,855,753 93,049,631 109,621,957 122,980,366 139,533,248 112,368,179 116,968,848 131,926,399 (7,630,191) 1,987,607 2,373,896 (498,302) (9,773,136) (2,571,048) (24,854,267) (2,059,997) (1,038,015) 77,603 3,511,700 6,563,978 5,476,360 2,962,895 5,782,988 4,053,607 15,059,649 2,545,659 3,886,650 4,183,185 (3,551,700) (7,764,278) (5,443,660) (3,705,341) (5,782,988) (4,200,607) (10,446,000) (2,822,330) (4,144,157) (4,113,465) 18,490,029 - - 6,798,085 6,170,000 9,425,000 - 16,715,000 443,484 2,268,169 - 171,249 117,328 464,547 13,464 24,218 20,643 - 500 375,039 - - - - - - (6,406,088) (9,950,000) - 131,249 (1,082,972) 497,247 17,761,047 24,218 (126,357) 11,411,734 (69,275) 18,201,162 444,759 $ (7,498,942) $ 904,635 $ 2,871,143 $ 17,262,745 $ (9,748,918) $ (2,697,405) $ (13,442,533) $ (2,129,272) $ 17,163,147 $ 522,362 5.31% 5.01% 4.58% 5.05% 5.25% 5.09% 5.08% 4.91% 5.18% 9.81% Source : City of Renton Finance Division Tables prior to 2010 used the titles "Security of persons and property" and "Mental and physical health" for functions now being referred to as "Public Safety" and "Health and Human Services", respectively. Statistical Section, 7-6 2012 Comprehensive Annual Financial Report $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 TABLE 5 GENERAL GOVERNMENT TAX REVENUE BY SOURCE LAST TEN FISCAL YEARS (modified accrual basis of accounting) City of Renton, Washington 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ® Property Tax ® Sales Tax U Admission/Utility Tax ® Excise Tax V Penalty, Interest, Delinquent Tax FISCAL YEAR PROPERTY TAX SALES TAX ADMISSION UTILITY TAX EXCISE TAX INTEREST DELINQUENT TAX 2003 19,587,986 17,334,831 10,895,131 5,449,877 5,415 2004 19,886,805 18,281,949 9,957,130 6,751,265 6,048 2005 21,826,229 18,910,822 10,643,068 6,938,264 49 2006 23,600,131 20,869,596 11,219,302 7,718,945 3,799 2007 23,106,578 22,749,831 11,962,879 8,236,876 33,949 2008 29,381,036 23,190,076 14,945,173 4,362,945 6,477 2009 32,300,319 22,065,316 14,876,496 4,923,978 1,353 2010 32,586,884 21,591,375 16,883,888 4,351,914 276 2011 33,309,975 22,008,777 16,870,284 4,113,705 380 2012 33,932,290 23,653,706 17,632,759 4,286,883 9,486 Source : City of Renton Finance Division TOTALTAX 53,273,240 54,883,197 58,318,433 63,411,773 66,090,113 71,885,707 74,167,462 75,414,337 76,303,121 79,515,124 Statistical Section, 7-7 2012 Comprehensive Annual Financial Report TABLE 6 PRINCIPAL PROPERTY TAX PAYERS City of Renton, Washington TAXPAYER 2012 TAXABLE' ASSESSED VALUE RANK % OF TOTAL TAXABLE ASSESSED VALUE 2003 TAXABLE ASSESSED VALUE RANK % OF TOTAL TAXABLE ASSESSED VALUE Boeing $ 787,764,072 1 7.28% $ 696,168,701 1 12.19% Puget Sound Energy-Elec/Gas 115,328,866 2 1.07% 75,681,009 3 1.33% Paccar 111,153,933 3 1.03% 80,571,510 2 1.41% Transwestern Harvest Lakeshore 89,239,423 4 0.83% Renton Properties LLC 49,743,700 5 0.46% 34,619,000 6 0.61% Fred Meyer Stores Inc. 44,105,400 6 0.41% 22,927,117 10 0.40% BRE-FMCA LLC c/o Bre Properties 40,131,000 7 0.37% ECI Two WTC LLC 38,450,400 8 0.36% Axis Grand Holdings 37,394,000 9 0.35% FP -FAA Seattle LLC 32,507,800 10 0.30% US West 49,161,865 4 0.86% AMB Property Corp 44,157,800 5 0.77% Avalon Bay Communities Inc 32,169,000 7 0.56% Pacific NW Group A 30,560,800 8 0.54% Rosche One Interests 23,554,000 9 0.41% All Others 9,469,639,923 87.56% 4,621,261,744 80.92% Total Assessed Valuation $ 10,815,458,517 100.00% $ 5,710,832,546 100.00% Source: 'King County Department of Assessments Statistical Section, 7-8 2012 Comprehensive Annual Financial Report TABLE 7 ASSESSED VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS City of Renton, Washington 6.000 5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 Note: 2008 and 1009 Adjustments to Base reflect the Benson Hill Annexation Sources: 1King County Department of Assessments Data; prior year data has been updated with current method of data collection via City cf Renton GIS Services 2Includes adjustements to the tax base for senior citizen exemptions, prior year omits, etc. 3Includes Tax Exempt Property 4King County Assessor Annual Reports Statistical Section, 7-9 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ■ Total Taxable Assessed Value 4 Direct Tax Rate REAL PROPERTY' FISCAL COMMERCIAL INDUSTRIAL RESIDENTIAL LESS: EXEMPT PERSONAL ADJUSTMENTSTO TOTALTAXABLE DIRECT TAX YEAR PROPERTY PROPERTY PROPERTY REAL PROPERTY PROPERTY° 13ASE2 ASSESSED VALUE RATE 2003 $ 1,435,673,700 $ 963,633,350 $ 3,190,304,450 $ (679,999,400) $ 747,879,276 $ 326,341,170 $ 5,983,832,546 3.277 2004 1,507,408,900 955,156,350 3,715,677,750 (715,901,000) 716,313,413 $ 193,976,709 6,372,632,122 3.327 2005 1,641,109,248 1,062,849,250 4,127,049,250 (772,643,900) 656,709,434 $ (17,301,375) 6,697,771,907 3.227 2006 1,926,421,521 1,176,622,619 4,813,353,950 (889,457,300) 636,713,076 $ (329,177,324) 7,334,476,542 3.116 2007 2,192,952,200 1,279,582,200 5,659,232,650 (982,670,250) 754,326,325 $ (532,621,620) 8,370,801,505 2.884 2008 2,792,844,697 1,448,578,000 8,372,238,600 (1,257,849,300) 828,746,994 $ (2,524,881,337) 9,659,677,654 2.624 2009 2,883,148,991 1,520,339,100 7,199,738,295 (1,365,819,700) 885,490,676 $ 2,110,347,418 13,233,244,780 2.369 2010 2,877,658,818 1,728,440,200 7,184,089,489 (1,359,951,195) 840,554,180 $ 613,936,948 11,884,728,440 2.712 2011 3,003,796,896 1,746,154,400 6,654,066,896 (1,636,584,396) 821,141,161 $ 891,891,404 11,480,466,361 2.832 2012 2,971,359,393 1,373,778,056 6,482,467,387 (1,585,047,600) 806,821,188 $ 766,080,093 10,815,458,517 3.100 Note: 2008 and 1009 Adjustments to Base reflect the Benson Hill Annexation Sources: 1King County Department of Assessments Data; prior year data has been updated with current method of data collection via City cf Renton GIS Services 2Includes adjustements to the tax base for senior citizen exemptions, prior year omits, etc. 3Includes Tax Exempt Property 4King County Assessor Annual Reports Statistical Section, 7-9 2012 Comprehensive Annual Financial Report 14.0 12.0 10.0 8.0 6.0 4.0 2.0 TABLE 8 PROPERTY TAX RATES DIRECTAND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS City of Renton, Washington 13.22755 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 City o Consolidated Levy - Special Districts o School Districts Total direct and overlapping Source: King County Codes and Levies ' Special Districts include Emergency Medical Services, Hospital districts, Library and Flood Zones Statistical Section, 7-10 DIRECT RATES OVERLAPPING RATES CITY OF RENTON CONSOLIDATED LEVY SCHOOL DISTRICT TOTAL DIRECT KING COUNTY KING COUNTY Port Total Consolidated DEBT BUILDING TOTAL TOTAL AND FISCAL OPERATING DEBT TOTAL State of OPERATING DEBT (Operating and Levy SPECIAL OPERATING SERVICE FUND SCHOOL OVERLAPPING OVERLAPPING YEAR MILLAGE SERVICE MILLAGE CITY MILLAGE Washington MILLAGE SERVICE MILLAGE Debt) (State, County & Port) DISTRICTS' MILLAGE MILLAGE MILLAGE MILLAGE MILLAGE VILLAGE 2003 3.18871 0.08865 3.27736 2.89680 1.15386 0.19562 0.25895 4.50523 0.33397 1.62358 1.36333 - 2.98691 7.82611 11.10347 2004 3.16022 0.08322 3.24344 2.75678 1.18279 0.24867 0.25402 4.44226 0.32917 1.60492 1.88086 - 3.48578 8.25721 11.50065 2005 3.14843 0.07861 3.22704 2.68951 1.15665 0.22564 0.25321 4.32501 0.32221 1.62332 2.36918 - 3.99250 8.63972 11.86676 2006 3.04482 0.07088 3.11570 2.49787 1.09915 0.22954 0.23330 4.05986 0.80982 1.53290 2.42680 - 3.95970 8.82938 11.94508 2007 2.82148 0.06252 2.88400 2.32535 1.08814 0.20142 0.23158 3.84649 0.76273 1.40073 2.04586 - 3.44659 8.05581 10.93981 2008 2.57052 0.05330 2.62382 2.13233 1.04278 0.16492 0.22359 3.56362 0.96354 1.26082 1.36572 - 2.62654 7.15370 9.77752 2009 2.36923 - 2.36923 1.96268 0.95271 0.14501 0.19700 3.25740 0.88686 1.42951 1.71049 0.30056 3.44056 7.58482 9.95405 2010 2.71184 - 2.71184 2.22253 1.16171 0.12328 0.21597 3.72349 0.94152 1.70401 1.69983 0.33997 3.74381 8.40882 11.12066 2011 2.83207 - 2.83207 2.27990 1.21418 0.12398 0.22366 3.84172 1.47089 1.86118 1.85585 0.35198 4.06901 9.38162 12.21369 2012 3.10000 - 3.10000 2.42266 1.28977 0.12611 0.22982 4.06836 1.41988 2.08341 2.18222 0.37368 4.63931 10.12755 13.22755 Source: King County Codes and Levies ' Special Districts include Emergency Medical Services, Hospital districts, Library and Flood Zones Statistical Section, 7-10 2012 Comprehensive Annual Financial Report A $40 o $35 $30 $25 $20 $15 $10 $5 City of Renton, Washington TABLE 9 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 `1 Tax Levied Collected in Year Levied Sources: 1 Annual Tax Receivable Summary from King County Z Includes Collections and Levy Changes in subsequent years 100% 99% 98% 97% 96% 95% COLLECTIONS 1'2 TOTAL TAX COLLECTED WITHIN THE 1 FISCAL LEVY FOR FISCAL YEAR OF THE LEVY YEAR FISCAL YEAR AMOUNT % OF LEVY 2003 $ 19,486,858 $ 19,149,258 98.3% 2004 20,451,011 20,184,238 98.7% 2005 21,654,069 21,358,689 98.6% 2006 22,796,225 22,339,299 98.0% 2007 24,049,060 23,585,143 98.1% 2008 27,188,522 26,722,301 98.3% 2009 31,058,589 30,249,856 97.4% 2010 32,057,010 31,283,546 97.6% 2011 32,166,084 31,538,875 98.1% 2012 33,333,628 32,904,890 98.7% Sources: 1 Annual Tax Receivable Summary from King County Z Includes Collections and Levy Changes in subsequent years 100% 99% 98% 97% 96% 95% COLLECTIONS 1'2 TOTAL COLLECTIONS TO IN SUBSEQUENT DATE YEARS AMOUNT % LEVY $ 337,535 $ 19,486,793 100.0% 266,741 20,450, 979 100.0% 295,451 21,654,140 100.0% 449,995 22,789,293 100.0% 461,635 24,046,778 100.0% 462,467 27,184,768 100.0% 793,703 31,043,559 100.0% 657,009 31,940,555 99.6% 443,684 31,982,559 99.4% N/A 32,904,890 98.7% Statistical Section, 7-11 2012 Comprehensive Annual Financial Report $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 City of Renton, Washington TABLE 10 SALES TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 W Retail ■ Construction o Manufacturing ■ Transportation o Wholesale ® Automotive V Services V Miscellaneous RETAIL TRADE SECTOR Furniture Electronics and Appliances General Merchandise Misc Retail Trade Others Subtotal Retail OTHER SECTORS Construction Manufacturing Wholesale Automotive Services Miscellaneous Subtotal - Other Sectors Total Sales Tax 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 1,758,082 $ 2,205,114 $ 1,203,942 $ 1,276,644 $ 1,245,901 $ 1,199,045 $ 1,065,605 $ 1,143,289 $ 1,186,244 $ 1,320,786 $ 16,007,404 $ 16,653,819 $ 17,108,455 $ 18,690,943 $ 20,342,195 $ 20,955,889 $ 17,995,840 $ 17,198,187 $ 17,729,735 $ 18,564,671 Source : City of Renton Finance Division in 2007 the State of Washington changed industry classification from the Standard Industry Classification (SIC) to the North American Industry Classification System (NAICS). This change reclassified various other retail activities to the expanded service classification. Statistical Section, 7-12 1,065,416 1,130,621 1,143,188 1,137,586 1,036,569 1,086,334 988,355 962,595 788,699 1,013,876 1,073,144 1,100,217 1,169,225 1,462,858 1,573,716 1,646,351 1,652,442 1,722,213 763,596 862,919 848,834 928,083 658,429 756,662 625,320 558,709 594,226 614,814 1,667,483 1,651,782 2,227,721 2,464,896 1,378,094 1,574,482 1,538,600 1,563,101 1,649,231 1,862,533 4,977,860 5,733,691 6,419,057 6,900,461 5,594,837 6,130,633 5,839,810 5,997,784 6,070,498 6,482,942 2,122,560 2,641,907 2,495,684 2,688,902 3,898,202 4,725,533 2,991,530 2,218,377 1,576,127 1,844,545 1,318,364 1,185,473 1,064,135 1,364,568 983,110 1,050,789 950,113 777,452 1,073,075 1,043,859 1,442,263 1,416,559 1,025,132 1,016,468 1,083,059 1,131,445 915,885 941,315 1,148,660 1,169,432 3,625,878 3,538,502 3,946,163 4,303,221 4,176,747 3,575,928 3,215,641 3,035,251 3,179,418 3,361,196 1,953,254 1,677,315 1,736,569 2,039,090 4,103,240 3,939,201 3,616,076 3,694,342 3,960,151 4,221,446 567,225 460,372 421,715 378,233 503,000 402,360 466,785 533,667 721,805 441,252 11,029,544 10,920,128 10,689,398 11,790,482 14,747,358 14,825,256 12,156,029 11,200,404 11,659,237 12,081,729 $ 16,007,404 $ 16,653,819 $ 17,108,455 $ 18,690,943 $ 20,342,195 $ 20,955,889 $ 17,995,840 $ 17,198,187 $ 17,729,735 $ 18,564,671 Source : City of Renton Finance Division in 2007 the State of Washington changed industry classification from the Standard Industry Classification (SIC) to the North American Industry Classification System (NAICS). This change reclassified various other retail activities to the expanded service classification. Statistical Section, 7-12 2012 Comprehensive Annual Financial Report TABLE 11 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 City of Renton, Washington 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 v General Obligation (Governmental) o Other Long Term (Governmental) V Revenue (Business -Type) OOther Long Term (Business -Type) GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES GENERAL OTHER FISCAL OBLIGATION GENERAL YEAR BONDS OBLIGATION OTHER TOTAL PRIMARY PERCENTAGE REVENUE LONG TERM GOVERNMENT OF PERSONAL BONDS DEBT DEBT INCOME' 2003 32,245,982 DEBT PER 29,070,000 7,637,552 68,953,534 9.40% 2004 30,629,403 1.15% 37,680,000 8,384,138 76,693,541 8.71% 2005 29,107,664 1,196 35,790,000 11,589,789 76,487,453 8.68% 2006 45,584,314 1.09% 33,840,000 10,716,520 90,140,834 8.59% 2007 44,017,551 33,405,000 9,878,951 87,301,502 8.17% 2008 41,938,000 - 43,310,000 8,968,894 94,216,894 8.57% 2009 38,480,000 38,973,547 41,110,000 8,284,962 126,848,509 12.30% 2010 36,425,000 38,511,875 36,955,000 7,357,546 119,249,421 11.21% 2011 50,290,000 38,053,639 34,925,000 6,443,218 129,711,857 11.39% 2012 44,335,000 36,891,722 32,595,000 5,538,933 119,360,656 N/A Source : City of Renton Finance Division 1The percentage of Personal Income column is based on personal income of King County. (See Table 16) Z Other GO debt includes debt issued by related entities that are backed by the City's full faith and credit as well as intergovernmental loans. Statistical Section, 7-13 % of Actual DEBT PER Taxable Value of CAPITA Property 1,256 1.08% 1,385 1.15% 1,346 1.04% 1,545 1.08% 1,448 0.90% 1,196 0.71% 1,516 0.96% 1,383 1.00% 1,401 1.09% 1,271 1.10% Statistical Section, 7-13 2012 Comprehensive Annual Financial Report LEGAL DEBT MARGIN CALCULATION Assessed value Total assessed value Debt limit 1.5% of General purpose limit non -voted 1.0% General purpose limit voted 2.5% General purpose combined limit 2.5% Utility purpose limit, voted 2.5% Open space, park and capital facilities, Total debt limit Debt applicable to limit General obligation bonds Other long term debt Total Debt Less: Amount set aside for repayment of general obligation debt and contracts payable Total net debt applicable to limit Legal debt margin Percentage of net debt to debt limit Source: City of Renton Finance Division TABLE 12 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year City of Renton, Washington 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 5,983,832,546 $ 6,372,632,122 $ 6,697,771,907 $ 7,334,476,542 $ 8,370,801,505 $ 9,659,677,654 $ 13,233,244,780 $ 11,884,728,440 $ 11,480,466,361 $ 10,815,458,517 $ 5,983,832,546 $ 6,372,632,122 $ 6,697,771,907 $ 7,334,476,542 $ 8,370,801,505 $ 9,659,677,654 $ 13,233,244,780 $ 11,884,728,440 $ 11,480,466,361 $ 10,815,458,517 89,757,488 95,589,482 100,466,579 110,017,148 125,562,023 144,895,165 198,498,672 178,270,927 172,206,995 162,231,878 59,838,325 63,726,321 66,977,719 73,344,765 83,708,015 96,596,777 132,331,448 118,847,284 114,804,664 108,154,585 149,595,814 159,315,803 167,444,298 183,361,914 209,270,038 241,491,941 330,831,120 297,118,211 287,011,659 270,386,463 149,595,814 159,315,803 167,444,298 183,361,914 209,270,038 241,491,941 330,831,120 297,118,211 287,011,659 270,386,463 149,595,814 159,315,803 167,444,298 183,361,914 209,270,038 241,491,941 330,831,120 297,118,211 287,011,659 270,386,463 448,787,441 477,947,409 502,332,893 550,085,741 627,810,113 724,475,824 992,493,359 891,354,633 861,034,977 811,159,389 32,245,982 30,629,403 29,107,664 45,584,314 44,017,551 41,938,000 38,480,000 36,425,000 50,290,000 44,335;000 - - - - - - 38,973,547 38,511,875 38,053,639 36,891,722 32,245,982 30,629,403 29,107,664 45,584,314 44,017,551 41,938,000 77,453,547 74,936,875 88,343,639 81,226,722 - - (2,683,997) (3,068,586) (1,392,915) (1,270,936) (367,652) (1,009,555) (1,032,360) (1,801,183) 32,245,982 30,629,403 26,423,667 42,515,728 42,624,636 40,667,064 77,085,895 73,927,320 87,311,279 79,425,539 $ 416,541,459 $ 447,318,006 $ 475,909,226 $ 507,570,013 $ 585,185,477 $ 683,808,760 $ 915,407,464 $ 817,427,313 $ 773,723,698 $ 731,733,849 7.19% 6.41% 5.26% 7.73% 6.79% 5.61% 7.77% 8.29% 10.14% 9.79% Statistical Section, 7-14 2012 Comprehensive Annual Financial Report $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 FISCAL YEAR TABLE 13 PER CAPITA GENERAL OBLIGATION DEBT LAST TEN FISCAL YEARS 2003 2004 2005 2006 GENERAL LESS: OBLIGATION AMOUNTSl DEBT AVAILABLE 2007 NET GENERAL OBLIGATION DEBT City of Renton, Washington 2008 2009 2010 2011 2012 % OF GO BOND DEBT TO ASSESSED 2,3 ASSESSED PER VALUE VALUE CAPITA 2003 $ 32,245,982 $ $ 32,245,982 $ 6,372,632,122 0.51% $ 587 2004 30,629,403 30,629,403 6,697,771,907 0.46% 553 2005 29,107,664 2,683,997 26,423,667 7,334,476,542 0.36% 465 2006 45,584,314 3,068,586 42,515,728 8,370,801,505 0.51% 729 2007 44,017,551 1,392,915 42,624,636 9,659,677,654 0.44% 707 2008 41,938,000 1,270,936 40,667,064 13,233,244,780 0.31% 516 2009 77,453,547 367,652 77,085,895 13,233,244,780 0.58% 922 2010 74,936,875 1,009,555 73,927,320 11,884,728,440 0.62% 813 2011 88,343,639 1,032,360 87,311,279 11,480,466,361 0.76% 943 2012 81,226,722 1,801,183 79,425,539 10,815,458,517 0.73% 846 Source: 1 City of Renton Finance Division z King County Department of Assessments 3 Population Data can be found in Table 16 Statistical Section, 7-15 2012 Comprehensive Annual Financial Report Schools 64% _\ GOVERNMENTAL UNIT City of Renton Direct Debt TABLE 14 DIRECTAND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Port of Seattle R% City of Renton Overlapping Debt 4 King County 3 Port of Seattle Renton School District #403 Issaquah School District #411 Kent School District #415 Fire District 20-1 Fire District 40-1 King County Library City of Renton Overlapping Debt Total Direct and Overlapping Debt v8% City of Renton, Washington Renton 22% DEBT Estimated Percent Estimated Share of OUTSTANDING Applicable overlapping debt $ 81,226,722 100% $ 81,226,722 $ 894,656,000 3.39% $ 30,328,838 312,005,000 3.39% 10,576,970 325,110,000 68.73% 223,448,103 315,155,000 2.47% 7,784,329 187,977,699 0.70% 1,322,987 5,500,000 3.07% 168,911 7,680,000 40.33% 3,097,605 137,405,000 5.42% 7,447,351 $ 284,175,093 $ 365,401,816 Sources: 1 King County Department of Executive Services Z King County Department of Assessments 3 King County's gross outstanding debt excludes proprietary -type debt, debt financed from component unit, and hotel/motel tax debt. ° Overlapping percentages are determined by checking within the levy codes of the reporting district to see which taxing districts overlap with that reporting district. For example, within levy code 2100, the Renton School District and the King County Library district overlap with the city and both have debt. Since they both have debt and they overlap with the City, those two districts are reported and the value within that levy code is reported as overlapping with the school and library districts. Statistical Section, 7-16 2012 Comprehensive Annual Financial Report WATER AND SEWER REVENUE BONDS: 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 City of Renton, Washington TABLE 15 PLEDGED -REVENUE COVERAGE LAST TEN FISCAL YEARS 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 V Water and Sewer Net Revenue available for debt service v Debt Service ©Coverage 2.90 I• 2.09 Revenue Debt Service Ratio Expenses Net Revenue Fiscal without Available for Year Revenuez Depreciation Debt Service Principal Interest Coverage' 1I . I . I . 1,282,115 3.07 I M . IM I . IM I . IM 2005 IE I . IM I ■ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 V Water and Sewer Net Revenue available for debt service v Debt Service ©Coverage Source: City of Renton Finance Division 1 Bond financing requirements are that the average annual coverage is at least 1.25 times the average annual debt service for Water and Sewer revenue bonds. Z Revenue includes connection charges, system development charges, latecomer fees, and interest revenue. Statistical Section, 7-17 Revenue Debt Service Ratio Expenses Net Revenue Fiscal without Available for Year Revenuez Depreciation Debt Service Principal Interest Coverage' 2003 25,934,120 16,990,519 8,943,601 1,635,000 1,282,115 3.07 2004 27,301,230 18,325,863 8,975,367 1,475,000 1,010,268 3.61 2005 27,889,360 18,892,824 8,996,536 1,630,000 1,477,124 2.90 2006 27,750,508 18,850,225 8,900,283 1,680,000 1,430,199 2.86 2007 32,887,272 22,020,642 10,866,630 1,740,000 1,373,036 3.49 2008 32,152,413 23,766,437 8,385,976 1,810,000 1,803,687 3.01 2009 34,795,614 26,894,033 7,901,581 1,890,000 1,758,589 2.17 2010 35,790,870 28,183,489 7,607,381 1,955,000 1,689,455 2.09 2011 43,146,158 28,835,969 14,310,189 2,030,000 1,716,503 3.82 2012 47,426,677 31,097,802 16,328,875 2,115,000 1,529,260 4.48 Source: City of Renton Finance Division 1 Bond financing requirements are that the average annual coverage is at least 1.25 times the average annual debt service for Water and Sewer revenue bonds. Z Revenue includes connection charges, system development charges, latecomer fees, and interest revenue. Statistical Section, 7-17 2012 Comprehensive Annual Financial Report 10% 9% 8% 7% 6% 5% 4% 3% 0% TABLE 16 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS 2003 2004 2005 2006 —*—King County Unemployment Rate POPULATION 1 FISCAL YEAR KING COUNTY RFNTnN PERSONAL INCOME z 2007 2008 2009 2010 City of Renton Unemployment Rate PER CAPITA PERSONAL INCOME 3 KING COUNTY KING COUNTY SCHOOL ENROLLMENT 5 MEDIAN RENTON SCHOOL AGE DISTRICT City of Renton, Washington 2011 2012 UNEMPLOYMENT RATE KING COUNTY RFNI 2003 1,763,440 54,900 80,128,451,000 45,439 36.38 13,046 6.2% 2004 1,775,297 55,360 89,382,811,000 50,348 36.60 13,062 5.2% 2005 1,795,268 56,840 89,432,163,000 49,815 36.83 13,192 4.7% 2006 1,822,967 58,360 99,609,451,000 54,641 36.93 13,397 4.2% 2007 1,847,986 60,290 106,693,888,000 57,735 36.97 13,570 3.6% 2008 1,875,020 78,780 109,927,858,000 58,628 37.00 13,836 4.4% 2009 1,912,012 83,650 103,120,593,000 53,933 37.08 13,977 8.6% 2010 1,937,157 90,927 106,401,739,000 54,927 37.24 13,600 9.1% 2011 1,969,722 92,590 113,922,436,000 57,837 37.40 14,440 8.2% 2012 1,957,000 93,910 N/A N/A 37.72 14,590 6.8% Sources: 1 Washington State Office of Financial Management - prior year data updated to reflect actuals where adjusted 2 U.S. Bureau of Economic Analysis - prior year data updated to reflect actuals where adjusted 3 U.S. Bureau of Economic Analysis. 4 Washington State Office of Financial Management 5 Enrollment is based on entire Renton School District, which includes schools located outside city boundaries but excludes schools of Kent and Issaquah school districts located within Renton city limits. 6 US Bureau of Labor Statistics; annual rates, not seasonally adjusted 6.5% 5.5% 5.0% 4.3% 3.7% 4.6% 9.2% 7.8% 7.0% 6.0% Statistical Section, 7-18 2012 Comprehensive Annual Financial Report EMPLOYER Boeing Company Valley Medical Center Renton School District No. 403 Dot - Federal Aviation Administration Paccar Inc-Attn Tax Dept Providence Wa Regional Svcs City Of Renton Providence Health & Services Puget Sound Educational Services Dist #121 Convergent Outsourcing Inc Walmart Ikea Young C Of Wa LI Columbia Er Solutions City of Renton, Washington TABLE 17 PRINCIPAL EMPLOYERS 2012 2003 EMPLOYEES RANK CITY EMPLOYEES RANK 14,428 1 30.36% 12,568 1 2,267 2 4.77 1,627 2 1,779 3 3.74 1,315 3 1,480 4 3.11 850 5 1,290 5 2.71 1,210 4 1,093 6 2.30 --- --- 722 7 1.52 688 6 476 8 1.00 --- --- 364 9 0.77 --- --- 345 10 0.73 --- --- --- --- --- 477 7 --- --- --- 382 8 --- --- --- 340 9 Total Principal Employers 24,244 Total All other employers 23,279 Total Employees working within Renton 47,523 Source: City of Renton Business license records and individual inquiries 330 10 51.02% 19,787 48.98% 18,829 100.00% 38,616 CITY 32.55% 4.21 3.41 2.20 3.13 1.78 1.24 0.99 0.88 0.85 51.24% Statistical Section, 7-19 2012 Comprehensive Annual Financial Report TABLE 18 FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS FUNCTION General Government Public Safety Police Commissioned Officers Non -Commissioned Officers Fire Commissioned Officers Non -Commissioned Officers Public Works Administration Transportation Systems Utility Systems Maintenance Services Culture and Recreation Parks/Recreation/Facilities & Human Svs Library Museum Golf Course Total City of Renton, Washington 2003 2004 2005 2006 2007 20081 2009' 20103 2011 2012° 96.5 97.5 94.5 89.5 95.0 155.6 163.8 143.3 143.5 147.3 88.0 89.0 91.0 97.0 122.0 124.0 121.0 123.0 123.0 123.0 40.2 41.2 43.2 42.2 49.2 51.2 46.4 44.4 28.4 28.4 105.0 106.0 106.0 106.0 109.0 118.0 137.0 136.0 145.0 145.0 12.0 13.0 13.0 14.0 16.0 17.0 18.0 16.0 16.0 16.0 42.7 42.7 42.5 46.5 49.0 4.0 3.5 3.0 3.0 3.0 33.0 34.5 34.5 35.5 40.5 41.0 37.0 33.0 33.0 33.0 20.8 20.8 20.8 24.8 29.3 36.7 37.7 29.5 29.5 25.5 62.0 62.0 62.0 64.1 71.0 88.0 83.0 78.0 78.0 80.0 77.5 77.5 76.5 76.5 81.0 89.5 86.3 81.8 82.8 83.6 14.0 14.0 13.0 13.0 14.0 14.0 15.0 - - - 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 10.0 10.0 10.0 10.0 10.0 10.0 9.5 9.5 9.5 9.5 602.7 609.2 608.0 620.0 687.0 750.0 759.2 698.5 692.7 695.2 Source: City of Renton Finance Division 1 In 2008, development services moved from public works to community and economic development which is listed under general government. 2 In 2009, increase in Administrative, Judicial & Legal Services includes moving Legal Services in-house and creation of a Communications Division which was a reorganization of staffing from the Finance and Information Services Department and the Mayors Office 3 Operations of the Renton libraries transferred to King County Library System (KCLS) in 2010 as a result of voter -approved annexation 4 Farmer's Market Program was moved from Community and Economic Development Department to Community Services Department in 2012. Statistical Section, 7-20 2012 Comprehensive Annual Financial Report FUNCTION Public Safety Police Physical arrests Parking violations Traffic violations Photo Enorcement Violations Fire Number of calls answered Inspections Transportation Street resurfacing (miles) Solid Waste Utility Recyclables collected (tons/yr) Culture and Recreation Athletic field attendance Community Center admissions Waterworks Utility Metered connection Average daily consumption (thousands of gallons) Peak daily consumption (thousands of gallons) Source: City of Renton TABLE 19 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2003 2004 2005 2006 2007 City of Renton, Washington 2008 2009 2010 2011 2012 3,735 4,280 4,590 2,489 2,925 3,580 3,748 3,464 2,810 1,968 2,742 3,733 3,575 3,520 5,995 5,117 6,795 4,748 4,757 4,855 11,651 10,963 12,866 10,172 9,148 10,705 14,220 13,829 8,805 7,943 --- --- --- --- --- 13,342 27,509 21,157 21,301 22,036 8,582 8,984 9,202 10,096 10,159 12,402 12,840 13,045 12,752 13,667 2,681 2,539 3,438 3,505 3,197 2,772 2,968 2,620 2,300 1,807 4.85 3.67 3.69 3.86 1.59 2.59 3.08 2.65 2.07 2.19 4,389 4,920 4,934 4,843 5,004 5,395 9,653 9,836 12,565 13,509 137,811 156,707 155,000 155,000 91,053 93,000 93,000 93,000 93,000 94,000 172,911 172,537 177,761 177,761 162,476 155,000 150,000 150,000 150,000 155,000 15,181 15,379 16,585 16,668 16,958 17,172 17,295 17,368 17,370 17,422 7,581 7,635 7,306 7,999 8,008 7,388 7,585 6,750 6,650 6,483 14,080 14,248 13,025 15,271 14,750 12,739 14,814 12,826 12,476 11,445 Statistical Section, 7-21 2012 Comprehensive Annual Financial Report TABLE 20 CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARS City of Renton, Washington 1Includes Natural Area acreage, and developed/undeveloped park acreage for Neighborhood Parks, Community Parks, Regional Parks, Special Use Parks and Corridors 2Developed Neighborhood, Community, Regional and Special Use Parks only. Two new parks were part of Benson Hill Annexation not previously accounted for- Parkwood South Div #3 and SE 186th Place Properties. Source: City of Renton Departments Statistical Section, 7-22 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 FUNCTION Public safety Police Stations 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Police Patrol Districts 7.0 7.0 7.0 7.0 7.0 7.0 10.0 10.0 10.0 10.0 10.0 Fire stations 5.0 5.0 5.0 5.0 5.0 5.0 6.0 6.0 6.0 6.0 6.0 Transportation Street (miles) 213.2 213.7 213.7 218.0 224.6 233.7 263.8 263.8 264.5 266.1 266.1 Streetlights 2,851 2,971 3,063 3,149 3,283 3,496 3,726 3,864 3,935 4,015 4,172 Culture and recreation Parks acreage 1,158.0 1,158.0 1,158.0 1,158.0 1,160.0 1,160.0 1,181.0 1,183.0 1,183.0 1205.81 1,210.0 Parks 26.0 26.0 26.0 26.0 26.0 28.0 29.0 30.0 30.0 32.02 32.0 Swimming pools - - 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Tennis courts 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 Community centers 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Waterworks Utility Water mains (miles) 289 291.0 291.1 293.0 295.0 300.0 304.0 305.0 305.0 305.0 306.0 Fire hydrants 3,193 3,240 3,274 3,374 3,440 3,544 3,602 3,624 3,651 3,639 3,655 Sanitary sewers (miles) 176.7 183.5 189.6 193.3 204.9 206.3 215.7 216.4 217.7 219.3 219.9 Storm sewers (miles) 199.4 204.0 209.7 214.8 219.7 222.3 267.5 273.8 274.9 276.1 278.5 1Includes Natural Area acreage, and developed/undeveloped park acreage for Neighborhood Parks, Community Parks, Regional Parks, Special Use Parks and Corridors 2Developed Neighborhood, Community, Regional and Special Use Parks only. Two new parks were part of Benson Hill Annexation not previously accounted for- Parkwood South Div #3 and SE 186th Place Properties. Source: City of Renton Departments Statistical Section, 7-22